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[Markets] World's Most Bearish Hedge Fund Manager: "This Will End Up Being My Worst Year Ever" World's Most Bearish Hedge Fund Manager: "This Will End Up Being My Worst Year Ever"

It is unclear exactly when we entered bizarro world, but we are well and truly in it now. How else does one explain that Horseman Global, the fund which we first dubbed "the world's most bearish hedge fund" and which has only gotten more so with time, most recently clocking in at a near record -100% net short exposure...

... is shutting its European hedge fund, which despite being up 28% YTD has shrunk over the years to manage just $66 million, even as the larger Horseman Global Fund continues to operate despite being down a record 33% YTD?.

According to Bloomberg, the Horseman European Select fund will close at the end of February after returning 28% through November this year. With the fund “set to be one of the most successful European hedge funds of 2019, I feel that this is an opportune time to change course,” manager Stephen Roberts told investors Tuesday. “I will continue to invest by managing my own family office.”

Whether Roberts is indeed merely seeking the quiet and stability of a family office, or simply no longer wishes to be packaged alongside the far more controversial (and underperforming) Global Fund, is unknown but it does add to the already unprecedented pressure crushing Horseman Global CIO, Russell Clark, who as he writes in his latest letter to investors (reposted below) is about to suffer his "worst year ever" following an 8.1% drop in November and a 33% drop YTD, and whose only hope "is a huge plunge in markets at year end."

Below we repost Clark's latest, November letter to investors, even as the fund's AUM has collapsed from $525MM in Dec 2018 to just $138MM currently. While the future of the fund can at best be described as a "going concern", it does not detract from Clark's ideas - traditionally some of the best in the financial realm when it comes to contrarian originality - especially as relates to his continued bearish view of shale and semis, as well as his doomsday idea that Clearinghouses will implode during the next crisis, resulting in a Fed bailout of large, leveraged funds. While it's only a matter of when, not if, that happens, it remains unclear if Clark will be around to trade it.

Your fund lost 8.06% this month. The short book, bond book and forex books all lost money.

This year has not worked out as planned and, unless there is a huge plunge in markets at year end, will end up being my worst year ever. Coming into this year there were a huge number of reasons to be bearish. Credit spreads were widening. The market was beginning to understand the capital destructive nature of the US shale industry. Japanese machine tool orders were plunging and continue to plunge. Auto sales were declining, and global trade was, and is, in decline. On top of that there still exists a huge amount of autocallables that would act as an accelerant to any sell off.

If there was one big misjudgement this year, it was that US restrictions on Huawei would reduce Chinese demand for US technology, given the risks of being blacklisted. What seems to have happened instead is that Chinese firms have front-loaded demand for semiconductors and semiconductor making equipment, so that they have inventory on hand, just in case they get blacklisted. This had led to a very large dislocation between traditional lead indicators for the semiconductor stocks. We have been reducing this short area all year, but despite the current dislocation, the problems of rising Chinese competition are increasing. There are signs that Chinese makers of semiconductor equipment are beginning to gain share among domestic semiconductor producers. Semiconductors are priced as if there will be no down cycle again, much like the view given to commodity stocks not so long ago.

The BIS Quarterly Report was issued on 8th December. While much commentary was on the analysis the BIS gave to the repo market, the much more interesting part of the Quarterly Review comes later, when it discusses portfolio compression. Compression and netting have allowed notional outstanding to stay stable, but the trading volume would be suggestive of a market that is taking 4 times more risk. Regulators (and the BIS) do not focus on this, but JP Morgan and other big members of clearinghouses plainly agree with me.

Clearinghouses have become the center of the financial system, but they do not bear the cost of any mistakes they make in pricing risks. This is borne by other clearinghouse members. But what the BIS note and the note issued by the banks and other users of clearinghouses makes clear is that the market has become very directional, with banks supplying liquidity to the repo market, while leveraged funds are taking liquidity (until 2017 banks were taking liquidity from the system). As the near bankruptcy of a clearinghouse highlighted last year, it is other members that bear the risk when things go wrong, and hence big US banks have acted rationally in looking to reduce liquidity to the repo market, which of course forced the Federal Reserve to act. Unfortunately, this does not solve the problem that risk is mispriced, and the banks will still be on the hook if other members default.

So what do you do if you run a major US bank, and you are feeling uncomfortable about the risks that clearinghouses are taking, but your efforts to reprice risk are thwarted? Well if it was me, I would have to start to think about nuclear options to force the issue. What would that nuclear option be? Namely to threaten to cancel membership to the clearinghouse, and hence get rid of the potential liability you might face. From the documents I have seen, this only requires 10 days notice. Ultimately if risks were priced correctly, leverage fund unwinding trades would cause a market dislocation. The only way to calm markets sustainably, would be for the Federal Reserve to lend directly to large leveraged funds. I guess this is possible, but I would assume you need a crisis first to cross that Rubicon.

I increasingly hear talk that central bank and government activism has ended recessions and possibly bear markets. Maybe this is true, but it seems to me that we are at a turning point. Large financial institutions have been willing to go along with central bank policy since the financial crisis, but risks to big banks and pension funds are all becoming more and more apparent. In a strange twist of fate, private banks might end up taking away the punchbowl from the Federal Reserve and other central banks. Your fund is short equities, long G7 government bonds.

Finally, for those asking, here is a list of Horseman's Top 10 long positions by NAV:

Tyler Durden Tue, 12/17/2019 - 17:05
Published:12/17/2019 4:17:01 PM
[Markets] 'Ok, Boomer'? 'Ok, Fed'! 'Ok, Boomer'? 'Ok, Fed'!

Authored by Charles Hugh Smith via OfTwoMinds blog,

Eventually the younger generations will connect all the economic injustices implicit in 'OK Boomer' with the Fed.

Much of the cluelessness and economic inequality behind the OK Boomer meme is the result of Federal Reserve policies that have favored those who already own the assets (Boomers) that the Fed has relentlessly pumped higher, to the extreme disadvantage of younger generations who were not given the opportunity to buy assets cheap and ride the Fed wave higher.

OK Fed: you've destroyed price discovery, driven housing out of reach of all but the wealthy and hollowed out the economy, all the while patting yourselves on the back for being so smart and fabulous.

OK Fed: you've waged generational war without even acknowledging how disastrous your policies have been for younger generations. You've bloated the paper wealth of everyone old enough to have bought a home 20, 30 or 40 years ago and who's had a Corporate America or government job who's seen their 401K or pension soar because "the Fed has our back" and Fed policies have inflated one bubble in stocks and bonds after another for 25 years.

OK Fed: as a direct consequence of your free-money-for-financiers policies, inflation has gutted the purchasing power of younger generations. As the bogus consumer price (CPI) claims inflation is near-zero year after year, two generations of Americans have been crushed by student loan debt that tops $1.5 trillion-- a debt serfdom that would have been impossible had interest rates been settled by market forces.

The clueless higher education cartel would have been forced to innovate decades ago rather than pass on their administrative bloat to those least able to pay, the students. Without the Fed and other federal agencies, student debt would not have exploded.

OK Fed: as a direct consequence of your pump-up-speculative-excess policies, speculation has ruined the U.S. economy as banks, financiers and corporations all skim hundreds of billions of dollars via leveraging Fed cheap money while younger generations get credit cards with nosebleed interest rates and rapacious banks that charge $25 and up for every overdraft that they engineer by manipulating when deposits are credited.

OK Fed: while you've been hectoring young people to buy assets so they can join your speculative asset-bubble party, they've been dealing with the broken mess of an economy you've created while patting yourself on the back, an economy where only the already-wealthy can buy a house in hot job market regions, where young workers have to work crazy-hard to keep their precarious jobs or get by on the gig economy, a happy-story code phrase for an economy in which corporations have transferred the risk to their workers while they get rich buying back their own shares with cheap Fed money.

OK Fed: eventually the younger generations will connect all the economic injustices implicit in OK Boomer with the Fed that created the ever-widening wealth and income inequality between the generations: those who effortlessly rode the Fed's asset-bubbles to wealth and those who have been priced out of the assets and left the shards of a once-functioning economy, an economy destroyed by the Fed's toxic worship of speculative exploitation and serial asset-bubbles.

As I have repeatedly observed here: if we don't change the way money is created and distributed by the Fed, we change nothing.

*  *  *

My recent books:

Will You Be Richer or Poorer? Profit, Power and A.I. in a Traumatized World (Kindle $6.95, print $11.95) Read the first section for free (PDF).

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($6.95 (Kindle), $12 (print), $13.08 ( audiobook): Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 (Kindle), $8.95 (print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).

*  *  *

If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via

Tyler Durden Tue, 12/17/2019 - 16:46
Published:12/17/2019 3:48:08 PM
[Entertainment] The top 10 books on Apple Books-US The top 10 books on Apple Books-US Published:12/17/2019 1:47:55 PM
[2019 Best CEOs] Like Bill Gates, Microsoft CEO Satya Nadella Is a Bookworm—Here Are His Top 3 Picks Like his predecessor Bill Gates, "without books I can't live," said the Microsoft CEO. Published:12/17/2019 12:46:47 PM
[Entertainment] Three new audiobooks in which a great tale is matched with a great narrator For your listening pleasure, books by John le Carré, Marion Winik and Lynne Truss Published:12/17/2019 11:15:26 AM
[Markets] Blackwater Founder Erik Prince Held Secret Meetings With Maduro Government Blackwater Founder Erik Prince Held Secret Meetings With Maduro Government

As if recent Washington regime change efforts in Venezuela  which on a couple of occasions this year led to brief military coup attempts which were quickly stamped out weren't already shady and murky enough, enter the prince of off-the-books black ops and covert dirty tricks himself

Erik Prince, a private security mogul with ties to the Trump administration, held secret talks in Caracas last month with Venezuela’s vice president after briefing at least one senior U.S. official on his plans, according to people familiar with the situation.

Even though Prince was earlier publicly on record (as recently as April) pushing a plan to use thousands of mercenaries to back coup efforts in favor of US-recognize 'interim president' Juan Guaido, this latest effort revealed in the Bloomberg report appears an unconventional change in tactic by the Trump administration — a possible private back-channel opening of sorts via Prince  perhaps realizing Maduro is here to stay as Washington loses confidence in Guaido's prospects.

Prince, and Venezuelan Vice President Delcy Rodriguez

In Caracas Prince had "proposed a business deal and urged freedom for six imprisoned Citgo executives in the meeting with Vice President Delcy Rodriguez, according to one of the people." It's possible the efforts made headway, given those employees were released to house arrest from prison last week. Rodriguez is an outspoken close ally of Maduro and is under US sanctions.

Details of just what the ultimate goal is of Prince's personal intervention remain unclear, but Maduro was reportedly briefed on the matter. The meeting was held on either Nov. 20 or 21, according to a separate report in Reuters

Among proposals discussed included, according to the report, Prince's suggestion of "sending personnel to train the nation’s police force as well as protecting judges and political candidates to help pave the way for new presidential elections." So it's perhaps part of a new 'unofficial' US administration effort to begin slowly dealing with Caracas, in hopes of influencing a political outcome?

The other interesting context to the revelation is that VP Delcy Rodríguez is a sanctioned individual, meaning discussion of any business arrangement with her without authorization is against US law (not that Prince was every overly concerned with that).

Delcy Rodríguez alongside Venezuela’s President Nicolás Maduro in Caracas in January. Image source: AFP/Getty

Bloomberg speculates further on potentially what's in it for the Venezuelan government:

For the Maduro regime, holding talks with an arch-enemy like Prince makes sense because they could present an opportunity for a deal that would alleviate the financial pressure the oil-producing country is under. While Maduro has successfully managed to stave off Guaido’s bid to take control of the government, top officials have been hamstrung by crippling U.S. economic sanctions.

But interestingly, the State Department claims no knowledge of the visit, with special envoy for Venezuela Elliott Abrams saying in a statement, “Neither the meeting nor any offers made were on behalf of the United States Government and on their face such offers would appear to violate U.S. sanctions.”

No doubt, the administration will continue to talk regime change in public while perhaps secretly using opportunists like Prince as back-channels for concessions, as the situation remains stalemated.

Erik Prince

But then one wonders how Caracas would ever trust someone like the former Blackwater chief. But then again he is accustomed to doing dictatorial regimes' "dirty work" from China to the UAE to that of any top bidder ultimately.

Tyler Durden Sat, 12/14/2019 - 17:00
Published:12/14/2019 4:31:28 PM
[Books] CRB: Land of the free (Scott Johnson) The Claremont Review of Books has just published its new (Fall) issue. The magazine has moved to a new site with a new URL ( Celebrating its twentieth year of publication in its second life, the editors have made the new issue freely accessible for the next few days. They hope to entice readers to become subscribers (subscribe here). This week I am previewing a few reviews and essays from Published:12/13/2019 6:20:53 AM
[Markets] Which Way For Europe On China? Which Way For Europe On China?

Authored by Carl Bildt via Project Syndicate,

Recognizing that the European Union is facing a number of vexing challenges on the world stage, Ursula von der Leyen, the new European Commission president, has promised to lead a “geopolitical Commission.” Echoing this sentiment, Josep Borrell, the new High Representative for Foreign Affairs and Security Policy, has challenged the EU to decide whether it wants to be a global “player,” or just a “playground” for other powers. So, which way will Europe go?

Of all the challenges Europe faces, few are as important as forging a strategic policy for managing its relationship with China. The stakes are enormous. The EU is China’s largest trade partner, and China is the EU’s top trade partner after the United States, with bilateral trade exceeding $1.1 billion per day.

Over the past few years, the US has adopted an increasingly aggressive approach to China. In fact, “confronting” China seems to be one of the few things that unite Americans politically nowadays, even though no single factor is driving US policy. President Donald Trump seems primarily concerned with the bilateral trade deficit, whereas the US security establishment worries about China’s ongoing military and technological development, which could eventually position it to challenge US strategic supremacy.

No one doubts that China’s rise poses a challenge to individual countries and the global balance of power. A world in which the Chinese economy has grown to twice the size of the US economy will be a very different place indeed, even without accounting for rising Chinese military spending. It is understandable that Americans are worried about no longer being the major global power – a position they have enjoyed since supplanting the British Empire over a century ago.

Nonetheless, how the US intends to confront this emerging new reality remains unclear. Some seem to believe decoupling with China, and pressuring other countries to do the same, can frustrate the growth of the Chinese economy, potentially creating the conditions for political or even regime change. Others are skeptical of this strategy, and would prefer more narrowly defined policies geared toward changing specific aspects of Chinese domestic and foreign policy. This approach is less glamorous, but it is also more traditional.

In any case, gut reactions have so far been winning out over careful deliberation, and this will probably remain true for some time to come. The US wants the EU to fall into line with its position; but, other than making that demand clear, it has pursued almost no strategic dialogue with Europe on the issue.

Meanwhile, the debate over China within the EU has been heating up. China may no longer have a Marxist economy, but it certainly still has a Leninist political system. For good reason, many Europeans are sensitive to issues of human rights in Hong Kong, Xinjiang, and elsewhere. Europeans are also rightly worried about economic issues. As the European Commission warned earlier this year (under its previous leadership), China is “an economic competitor in the pursuit of technological leadership, and a systemic rival promoting alternative models of governance.” This language represents a sharp departure from that of previous official EU communiqués.

The next year will be critical. In addition to a regular EU-China summit in Beijing in April, Chinese and European heads of state will hold a special meeting in Leipzig, Germany, next September. An important test for the relationship will be whether the two powers can conclude a comprehensive investment agreement more than six years after starting negotiations. Given these looming opportunities for dialogue, the EU could pursue strategic engagement, rather than broad confrontation, with China. But it takes two to tango, and much will depend on how Chinese policies develop in the meantime.

Putting aside trade and investment questions, the EU must be less complacent with respect to the security challenges that China poses. EU member states should step up their freedom-of-navigation tours in the South China Sea and the Taiwan Strait. And there clearly needs to be more scrutiny of Europe’s growing technological dependence on China in critical areas like 5G infrastructure.

That said, Europe’s best response to China’s growing technological might is to become more competitive in its own right. Should the EU fail at that, no barrier will be high enough to shield it from China’s growing influence. That applies not just to Europe, but also to the US over the long run.

Few observers expected China to transform suddenly into a full-fledged democracy following its accession to the World Trade Organization in 2001. But the country’s repressive turn over the past decade has nonetheless been disappointing to witness. State-owned enterprises are still favored, books are burned, and the Communist Party of China continues to assert its primacy in every domain of Chinese life. How long this will last is anyone’s guess. Dynasties come and go, but in 2021 the CPC will mark the centenary of its founding. Under its rule, China has swung between starkly different models of development.

Whatever happens, China is not going away, and tackling issues from climate change to the unraveling of the global trade system will require its participation. Accordingly, a policy of critical and constructive strategic engagement seems like the most sensible way forward for the EU. Pursuing such a policy in dialogue with the US would redound to everyone’s benefit. But, at the end of the day, the EU must choose its own path.

Tyler Durden Fri, 12/13/2019 - 05:00
Published:12/13/2019 4:21:30 AM
[Books] CRB: Breaking Bad (& more!) (Scott Johnson) The Claremont Review of Books has just published its new (Fall) issue. I reviewed the issue in galley to pick out four pieces to feature for Power Line readers, but have been authorized to let you in on a secret. The magazine has moved to a new site with a new URL ( Celebrating its twentieth year of publication in its second life, the editors have made the new issue Published:12/12/2019 6:23:24 AM
[Politics] 'Don't Write Ethics Books,' Gowdy Trolls Comey on Vindication Blasting fired FBI Director James Comey's claim of vindication of wrongfully spying on the Trump campaign, former Rep. Trey Gowdy, R-S.C., said Comey should stop writing "books on ethics.""I don't know what report Comey read," ... Published:12/11/2019 9:13:06 PM
[Markets] Why "This Sucker Is Going Down" Why "This Sucker Is Going Down"

Authored by Charles Hugh Smith via OfTwoMinds blog,

Once the contagion starts spreading, loose money won't put the fires out.

As the nation's political and economic leaders struggled to contain the 2008 financial meltdown, President George W. Bush famously summed the situation up: "If money doesn't loosen up, this sucker will go down."

Eleven years into the loose money recovery, this sucker is finally going down for reasons that have little to do with tight money and everything to do with the inconvenient fact that none of the structural problems have been addressed, much less actually fixed.

We live in a bizarre world dominated by magical-thinking, a world in which the Federal Reserve creating more dollars out of thin air is supposedly the solution to everything, while all the knotty structural problems--unsupportable pensions and entitlements, unsustainable dependence on debt to fund everything from infrastructure to a new iPhone, a sickcare system that is bankrupting the nation, a higher education system that is looting an entire generation for diplomas with marginal market value, a runaway National Security State that burns trillions on unwinnable wars and lies about it--are left untouched because they're, well, difficult, and it's so much easier to say that looser money will solve everything.

Alas, loose money has created a new set of metastasizing problems that will bring this sucker down: widening wealth-income inequality, the only possible result of our system of creating and distributing new money to banks, financiers and corporations; soaring systemic leverage that few see, much less understand; and perhaps most perverse, yet equally unnoticed, loose money has widened the gap between the real economy and the top layer of arcane finance to the point there is literally no connection at all.

The happy story about debt-dependent capitalism is that thriving companies borrow money from our wunnerful banks to invest in new factories, research, software development, etc., hiring millions of top-notch people--top-notch!--at generous salaries to boost productivity and make the entire nation wealthier.

Alas, it's all a fraud. What actually happens is banks "invest" the new money in faster High Frequency Trading (HFT) computers so they can skim even more profit from the rigged "markets." Productivity increase: zero. Social benefits: zero. Economic benefits to the nation at large: zero.

Virtually all the loose money created by the Fed is socially useless financial activity, enriching the few at the top of the wealth-power pyramid who own the financial machinery of repo's, derivatives, FX swaps, leverage, and all the other tricks of the financial trade that has completely disconnected from the real-world economy.

The conventional media constantly hypes the fantasy that trade deals matter, holiday sales matter, employment numbers matter--none of that matters. The big money is made by gaming the financial system, buying regulatory approval, i.e. legalized looting, funneling a few measly millions to craven politicos who have zero understanding of how the nation's financial system actually works, and then running a monstrous skimming operation behind the complexity thickets of "modern" finance, which all boil down to the same toxic concoction that's destroyed economies throughout history:

-- The unlimited greed of those at the top.

-- No real oversight or limits on financial gaming of the system.

-- Abundant central-bank loose money to fund speculative activity in rigged markets.

-- 100% socially useless financial activity.

-- No limits on leverage, so every $1 of financial legerdemain can spawn a $100 dollar bet.

-- Total dependence on debt to fund the government, consumer spending, corporate buy-backs-- everything.

This sucker is going down, and sooner than we think. The Fed can create trillions out of thin air and give it to banks, financiers and corporations, but they can't force them to actually invest in the nation's real economy or even buy the assets the Fed so desperately wants them to buy, i.e. stocks.

The banks and financiers have used the Fed's trillions to enrich themselves for eleven years, and nothing will stop their legalized looting except a collapse of the entire machine. The great karmic irony is they've rigged and gamed the system so rapaciously, absolutely confident there's no end to the loose money, that they've overlooked the increasing fragility of the entire system they've ruthlessly exploited.

Once the contagion starts spreading, loose money won't put the fires out. The idols and false gods (The Fed et al.) will fail most spectacularly, and the karmic fury will not abate until the every last skim and every last con has been consumed.

*  *  *

My recent books:

Will You Be Richer or Poorer? Profit, Power and A.I. in a Traumatized World (Kindle $6.95, print $11.95) Read the first section for free (PDF).

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($6.95 (Kindle), $12 (print), $13.08 ( audiobook): Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 (Kindle), $8.95 (print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).

*  *  *

If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via

Tyler Durden Wed, 12/11/2019 - 08:59
Published:12/11/2019 8:09:13 AM
[Entertainment] Bill Gates recommends 5 favorite books for 2019 — and looks ahead to ‘Infinite Jest’ Books on sleep, education, American history, world growth and one novel made the cut this year. Published:12/10/2019 10:04:59 AM
[Donald Trump] Charles Kesler: Our political stalemate (Scott Johnson) Charles Kesler is the Dengler-Dykema Distinguished Professor of Government at Claremont-McKenna College and editor of the Claremont Review of Books. We hope to preview the forthcoming issue of the magazine over the rest of this week. This column appears as the Editor’s Note in the issue and is reprinted with permission. Professor Kesler writes: Despite his reputation as a disrupter, Donald Trump has not been able to break the political Published:12/10/2019 6:02:55 AM
[Markets] Schlichter: A 'Safe Space' Society Is A Totalitarian Nightmare Schlichter: A 'Safe Space' Society Is A Totalitarian Nightmare

Authored by Kurt Schlichter, op-ed via,

As the undisputed star of the new film No Safe Spaces – the hit documentary on academia’s descent into Orwellian tyranny features a quick shot of a lawyer letter I wrote to some collegiate gulag apparatchiks – I wholeheartedly recommend that you go see it.

Adam Carolla and Dennis Prager take you on a guided tour of the insanity and evil that has gripped academia, and it’s utterly terrifying. You need to see it not merely to gape at the freak show but to learn what’s coming for society as a whole. The dreary conformity factories that pretend to be providing our next generation of leaders with a higher education have instead embarked on a campaign of indoctrination designed to manufacture a generation of goose-stepping creeps who use their bizarre collection of buzzwords and fetishes as weapons to suppress any kind of dissent.

And the problem is that this PC Nazism is not just limited to academia. Eventually, these daddy-issue cadres are going to get out into the world and contaminate all of our institutions even worse than they are contaminated now. We’ve seen weeks of pretentious ruling caste losers presuming to lecture us on how we should fix the messes they and their pals made. Imagine if they compounded their failure with the desire to burn you at the stake for refusing to concede that a dude can get pregnant.

A dude can’t get pregnant, not ever. And there’s a whole generation of future elitists who would want to cancel you permanently for daring to state this indisputable fact.

The key to understanding what is happening on campuses, and increasingly in society as a whole, is to discard your bourgeois notions of reason and the presumption of good faith. What’s kind of funny is to watch people shake their heads at the incoherence of the leftist lies – what these people say is manifestly false and usually both contradictory and hypocritical. They have no evidence to support their claims, and they ignore contrary evidence. This freaks out the squares because normal people approach disputes with the understanding that facts and evidence and arguments can change one’s positions. But with these people, that doesn’t happen. It can’t happen, because they are not engaged in argument. Rather, they simply assert whatever nonsense they believe will increase their own power.

That’s all it is. This PC leftist garbage is simply about power.

You can’t prove your innocence or change their minds because actual facts are beside the point. The point is to generate a narrative that results in you being deprived of the moral capacity to assert your own rights and interests. You are disenfranchised, totally, by the moral failure that is your race or your sex or your religion or your sexual preference or whatever has been designated as bad this week. That is why we get evil concepts like “white privilege,” “mansplaining” and “heteronormativity” tossed around as if they are conceptual trump cards that instantly silence you merely by being asserted.

Now, as someone of good faith who strives to operate in a universe that makes sense, you might observe that these kinds of prejudgments based on race and sex and so forth seem an awful lot like prejudice based on race and sex and so forth, and you would be right because that is exactly what they are. And you would scratch your head because aren’t these adolescent inquisitors supposedly really upset about prejudice based on race and sex and so forth?

Except they aren’t, because they don’t care about prejudice, except to the extent they can use it as a weapon to get what they want. The left is not against prejudice or bigotry. It is actively in favor of both. It’s just that the targets change and morph based on necessity. Go on social media, if you dare, and find a black conservative or a gay conservative or a conservative woman and see what crap they take from the loving left. The crude hatred would shock and appall even the Democrats who invented and filled the ranks of the KKK. The left is supposed to be in favor of black people and gay people and women people and it takes only a few seconds to realize that this is utterly false. They don’t care about bigotry or prejudice. They care about leftist power, and if bigotry and prejudice help them get more of it then the left is all in.

On the upside, they often turn on each other in internal power struggles where the radicals attempt to out-woke each other to become the king/queen/non-binary monarch of the hill.You’re a person of color? I’ll see your race card and raise you the fact that I was born Dennis but now I’m Denise.

Today on campus, these creeps have power because the administrators tend to be cowed by the left when not in active cahoots with it. The left can even LARP violent revolution because the schools hold back the cops who ought to be beating down and hooking up these black-masked punks. The scary thing is that someday, some of these quad gestapo types are going to be in real positions of power in real society, and they do not believe in rules and they do not believe in rights for anyone who opposes them. Their sole goal is their own power. And to increase their power, they need to take power from someone else. You are the someone else.

In a society they control, you will have no rights, no voice, and no future. Leftism always ends in tyranny and murder, which is why we’re blessed to have the Second Amendment. And if you are ever disarmed and at the mercy of these aspiring monsters, the only safe space will be a mass grave.

*  *  *

The nightmarish end state the left seeks is on full display in Collapse, my hard-hitting yet hilarious sequel to People’s RepublicIndian Country and Wildfire. My novels have been hailed by Bill Kristol as “Appalling,” so that kind of vouches for them!

Kurt will be doing a live video chat tonight (Dec. 9) w/ PJ's Stephen Kruiser at 8:15pm ET for VIP Gold members. Join quickly to be able to take part in the fun.

Tyler Durden Mon, 12/09/2019 - 18:20
Published:12/9/2019 5:31:45 PM
[Markets] Prins: Dark Money Will Push Gold Higher Prins: Dark Money Will Push Gold Higher

Authored by Nomi Prins via The Daily Reckoning,

Even though it’s on rate-cutting hold, the Fed nonetheless keeps engaging in aggressive oversubscribed repo ops, or as we like to call the process, “QE4R.”

QE4R involves offering money to banks in return for short-term U.S. Treasury and mortgage bonds, in shades of 2009.

The fact that the Fed is expanding its balance sheet through these repo operations allows it to pretend it is merely auctioning “adjustment-based” policy moves, rather than problem-based ones, to keep rates from rising and money becoming too expensive for banks.

This provides the Fed a kind of cover during which it can hold off on rate cuts until it deems that data clearly suggest they do otherwise.

Regardless of the reasons for QE4R, this new flow of dark money has the ability to stimulate the stock and bond markets — along with gold.

Although gold prices have rallied on the back of the Fed’s recent balance sheet growing exercise, gold has been rising less quickly than it did during the initial phases of QE in the post-financial crisis period from 2009 through 2011.

However, the stock market has been rising steadily (with some bumps along the way) since the start of the Fed’s QE4R operations. There are several reasons for this phenomenon.

Computer algorithms, ETF-related trading and asset managers for pensions and other forms of retirement funds seeking yields above those of bonds have pushed the market up. So have corporate stock buybacks. There is also the steadfast (and proven true) belief that the Fed will step in whenever it “has to,” as would other central banks around the world.

There’s a reality behind the dark money-infused market euphoria, though. It’s that U.S. economic growth, as well as that of the global economy, has been slowing down and will likely continue to slow.

Shrinking corporate profits in conjunction with lower rates and increased debt loads is not a classic recipe for a prolonged bull market. The fact that bulls continue to run is a mark of just how much dark money can keep markets elevated.

In the past, slowing profits along with more debt and cheap money has more closely reflected a bear market (consider the U.S. stock market in 2000–02, 2007–09 and the Japanese stock market since 1989). Japan’s stock market would be even lower were it not for various QE and ZIRP moves by the Bank of Japan.

U.S. corporate margins may well have already hit a multiyear peak. As we head toward the 2020 U.S. election, it’s hard to see many corporations diverting their debt loads into R&D or investment programs. This could hold true after the elections regardless of which political party wins.

Another reason that the Fed began QE4R is the global shortage of U.S. dollars in money markets. This also happened at the start of the financial crisis in 2008.

The last thing Fed Chairman Jerome Powell wants under his stewardship is a repeat performance. Repo lending rates spiked in September because of this shortage and liquidity problems at the big banks. This continues to this day, as evidenced by the Fed’s term repo lending facilities being often oversubscribed by the largest Wall Street players.

Since Monday, the Fed has pumped $97.9 billion into the market in two parts. One was through overnight repurchase agreements of $72.9 billion. The other was through 42-day repos. The result is that the Fed’s balance sheet has topped the $4 trillion mark and looks to rise from there.

Also, the Fed again increased the amount of short-term cash loans it plans to offer banks to ensure rates remain stable. It now plans to offer $25 billion in cash loans for the 28-day period ended Jan. 6, up from $15 billion previously.

Last week, it increased the size of its 42-day facility for the period ended Jan. 13 by $10 billion, too. This was also based on its recent bank supervisory findings that 45% of U.S. banks holding more than $100 billion in assets have supervisory ratings that are less than satisfactory.

All of this means that the Fed’s easing this year was very much a defensive maneuver. And it continues to act pre-emptively against the potential for a dollar funding squeeze as derivative-trading banks close their books into year-end 2019 through its repo operations.

Though different from the longer-term QE operations the Fed actioned between 2009–2014 that inflated stock, government and corporate bond prices, the result is the same. An artificial stock market rally. And more debt.

The big difference is all of this money manufacturing is now occurring against a backdrop of economic weakness and trade-war and geopolitical uncertainty.

For now, and heading into 2020, there remain six key economic trouble spots in the U.S. alone:

  1. Trade Wars. China trade talks are still going nowhere specific. President Trump has threatened to “raise the tariffs even higher” on Chinese imports if a trade deal cannot be reached by Dec. 15 and went so far as to indicate that he’d be fine if a deal didn’t occur until after the 2020 election. So “phase one,” which was announced over a month ago, has made no real progress…keeping markets knee-jerking on any positive or negative rumors.

  2. U.S. household debt at a high of $14 trillion — $1.3 trillion higher than its prior peak in Q3 2008. This could eventually hurt consumer appetites and dampen U.S. GDP.

  3. U.S. GDP is growing but decelerating. In this 11th year of expansion and easy monetary policy, the expansion may be longer, but it’s also shallower that past expansions.

  4. U.S. $20 trillion national debt is at 104–105% of GDP, having passed 100% in Q3 2012. Though Jerome Powell has stressed to Congress that it must find a way to fix this, the Fed continues to be the largest buyer of U.S. Treasuries, thereby pushing the problem forward of debt growing faster than the economy.

  5. Money supply (M2) has grown since the 1980s, but money velocity (VM2) has declined since 1997, particularly since the financial crisis. That means that local businesses aren’t working together enough to stimulate the foundation of the U.S. economy.

  6. Ongoing quest for risky assets could backfire. These problems were created by central banks. The longer rates are low, the more risk asset managers — i.e., investment funds, pensions funds and long-term insurance companies — take on to meet liabilities. This is exacerbated by slowing economies and means more global exposure to credit and liquidity risk. This increases the underlying instability in the international markets.

Given all of this backdrop, I believe that markets will continue to rally on the back of dark-money operations with volatile periods. However, gold is increasingly an attractive safe-haven investment.

Thus, it’s only a matter of time before gold has a catch-up rally.

Tyler Durden Sun, 12/08/2019 - 13:55
Published:12/8/2019 1:25:01 PM
[Ronald Reagan] The Power Line Show, Ep. 157: OK Boomer: Let’s Cross the Streams! Is Reagan Relevant to Millennials!?!? (Steven Hayward) This episode is either an excursion into intergenerational conflict, or the pilot for a 21st century version of The Odd Couple, where Oscar and Felix are a Millennial and an aging Baby Boomer. This week’s episode is actually a crossover show with The Young Americans, hosted by Millennial sports and policy wonk prodigy Jack Butler of the American Enterprise Institute. Jack recently read my two-volume Age of Reagan books, and Published:12/8/2019 9:54:23 AM
[] Sunday Morning Book Thread 12-08-2019 John K King Used Books, Detroit, MI Rosezella Battles Library, The King's College, New York City--> Good morning to all you 'rons, 'ettes, lurkers, and lurkettes, wine moms, frat bros, crétins sans pantalon (who are technically breaking the rules), wits,... Published:12/8/2019 8:24:44 AM
[Markets] Suppressing Dissent Guarantees Disorder And Collapse Suppressing Dissent Guarantees Disorder And Collapse

Authored by Charles Hugh Smth via OfTwoMinds blog,

The frantic efforts of an exploitative elite to eliminate dissent only accelerates the regime's path to collapse.

Regimes that are losing public support always make the same mistake: rather than fix the source of the loss of public trust--the few enriching themselves at the expense of the many-- the regime reckons the problem is dissent: if we suppress all dissent, then everyone will accept their diminishing lot in life and the elites can continue on their merry way.

What the regimes don't understand is dissent is the immune system of society: suppressing dissent doesn't just get rid of pesky political protesters and conspiracy theorists; it also gets rid of the innovations and solutions society needs to adapt to changing conditions. Suppressing dissent dooms the society to sclerosis, decline and collapse.

Dissent is the relief valve: shut it down and the pressure builds to the point that the system explodes. Regimes that no longer tolerate anything but the party line fall in one of two ways: 1) the pressure builds and the masses revolt, tearing the elite from power or 2) the masses opt-out and stop working to support the regime, so the regime slowly starves and then implodes.

Here in the U.S., the suppression of dissent is the work of the corporate media and the Big Tech monopolies: Facebook, Twitter and Google.  As Mark St.Cyr and I discuss in a new no-holds-barred podcast (1:08 hours, 4 segments), Big Tech is effectively suppressing dissent via shadow banning, de-platforming and de-monetization:

-- shadow banning: the audience who gets to see your content is throttled back to a fraction of your pre-shadow-banning audience. The mechanics are shrouded in secrecy, Stasi-style.

-- de-platforming: the Big Tech monopoly declares you persona non grata for a supposed violation of their Kafkaesque Terms of Service and bans your content from their platform, effectively silencing you.

-- de-monetization: your content is still officially on the platform in truncated form, but the flow of advertising revenue is turned off: you're welcome to post content but you will no longer be able to make any money from it. Enjoy!

When you crush dissent and spend a full year cracking the skulls of protesters, you end up with, well, France's general strikes. I covered the yellow vest protests in some depth a year ago: France in a Nutshell: "The Government Stopped Listening to the People 20 Years Ago" (December 12, 2018)

France's Ghosts of '68: General Strike vs. Macron and the Technocrat Elites (January 16, 2019)

Here in the U.S., the crushing dissent gathered momentum when all dissent was lumped into the tarpits of "fake news" and "Russian propaganda." What better way to throw the baby out with the bathwater than declare any dissent from the approved party line "fake news" and/or "Russian propaganda." The catalyst was a completely fake "list of Russian agents" assembled by an unidentified source called PropOrNot in 2016.

The Washington Post and other corporate media outlets immediately published the baseless accusations without bothering to seek the identity of the accusers or establish any sort of objective standards to judge the validity of the accusation. It was pure Orwell, as I explained at the time: The Washington Post: Useful-Idiot Shills for a Failed, Frantic Status Quo That Has Lost Control of the Narrative (November 27, 2016)

In police-state fashion, Big Tech took the list of accused (including this site), declared all those named guilty and promptly shadow-banned, de-platformed or de-monetized us all without coming clean about how they engineered the crushing of dissent.

In classic Stasi fashion, the mechanics are all black box: the accused are never confronted with their accuser, never provided with the evidence of their "crime," and never given an opportunity to defend themselves against the false accusation.

Everyone on the PropOrNot list was declared guilty until proven innocent, but there was no way to prove our innocence. Kafka, meet Orwell: a completely opaque, privately owned Stasi (Facebook, Twitter, Google) does the elites' dirty work, concealed behind the impenetrable bureaucracy of algorithms, secret guidelines and Terms of Service which can be interpreted in whatever way serves the gatekeepers' interests.

Suppressing dissent guarantees disorder and collapse. Ironic, isn't it? The frantic efforts of an exploitive elite to eliminate dissent only accelerates the regime's path to collapse.

Mark St.Cyr and I discuss these topics as only those who've been suppressed can in our recent podcast. (1:08 hours, 4 segments)

I've addressed the critical role of dissent and the suppression of dissent many times; here's a selection of recent posts:

The Essential Role of Volatility, Stress and Dissent (May 24, 2014)

When It Becomes Serious, First They Lie--When That Fails, They Arrest You (March 16, 2015)

The Demise of Dissent: Why the Web Is Becoming Homogenized (November 17, 2017)

The West's Descent into 'Cultural Revolution' (January 18, 2019)

Which One Wins: Central Planning or Adaptive Networks? (February 19, 2019)

The New Orthodoxy: Blasphemy, Heresy and the New Inquisition (September 19, 2019)

My recent books:

Will You Be Richer or Poorer? Profit, Power and A.I. in a Traumatized World (Kindle $6.95, print $11.95) Read the first section for free (PDF).

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($6.95 (Kindle), $12 (print), $13.08 ( audiobook): Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 (Kindle), $8.95 (print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).

*  *  *

If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via

Tyler Durden Sat, 12/07/2019 - 13:30
Published:12/7/2019 12:47:45 PM
[Markets] The Panopticon Expands The Panopticon Expands

Authored by Eric Peters via,

Precedent always becomes practice.

Having established as legitimate the use of cameras to robotically ticket people for “speeding” and “running” red lights – timed to go red quickly, so as to ensnare as many drivers as possible – it was only a matter of time before the principle was extrapolated – now to include automatically ticketing people for using their cell phones while driving.

But it’s more than just cameras now – and it will be more than just cell phone use that’s targeted for confiscation (of your money, that is).

Because why shouldn’t it be?

If it is okay to steal people’s money (which is what we’re talking about here, shorn of the euphemistic language about “fines”) for those things, why not this thing?

Why not  anything the government and its corporate “partners” who profit from it decide is ungood?

Buckle-up laws, for instance? How about breaking traction?

In Australia – the same place that is the first place to use the AI cameras to “catch” cell phone “violators” – who will be mulcted to the tune of $344-$457 for not harming anyone – performing a burnout is already a major bust that can result in confiscation (and forfeiture) of the offender’s vehicle.

But an armed government worker had to witness  the burnout.

The cameras witness everything – everywhere.

All the time.

network is being erected that will make it impossible to “get away” with ignoring any edict issued by the control freaks and busybodies who lord it over us. Pre-Panopticon, the myriad tyrannical laws on the books had the upside of being to a great extent ignorable.

Armed government workers can’t be everywhere.

Cameras can. They already are.

Have a look around – and up – the next time you’re out driving around. In most parts of the  country these Creepy Cams are perched on top of every traffic signal arm, or curbside.

Armed government worker’s vehicles are being equipped with mobile cameras, also tied into the panopticon. There is talk – and more than just talk – of replacing parking meters in cities with “smart” meters with cameras in them – also tied into the same panopticon.

Soon, wherever you drive – and park – you will be seen. Anything – everything – that is not in ordnung will be noticed. Not by a human. But by an artificial intelligence overlord that – to quote an eerily predictive line from the original Terminator movie, way back in 1984  – cannot be reasoned with or bargained with . . .


Another precedent that was allowed to pass into practice with the adoption of camera enforcement was the vitiation of the government’s obligation to establish guilt before fleecing. This was accomplished by shifting traffic offenses from court-adjudicated to civil administrative actions, where it became (and remains) the obligation of the presumed guilty to – somehow – reverse the camera’s verdict.

The rules of court procedure – of due process – do not apply. The presumed guilty verdict is subject to reversal not by evidence or its lack but rather according to the whim of whomever – or whatever – the government-corporate nexus gives  . . . administrative power to.

You can sometimes send in an “explanation” – and whatever else you like – but it’s perfunctory, like the practice in Elizabethan times of permitting the condemned to say a few words before the executioner lopped off his head. The head-lopping was never in doubt.

Today, if the government wants your money, they’ll take your money (to borrow a turn of phrase from another eerily prescient movie).

There is one upside to all of this, though.

When it becomes impossible to leave your driveway (and maybe not even that) without being observed – and mulcted – people might begin to object. Try to imagine what it would be like if you had to obey every speed limit – to the letter – else payin’ paper. Full stop – and wait a three second count – at every stop sign. Never dare a right-on-red, an HOV “violation” or an unbuckled ride.

No “aggressive” acceleration, either.

Your papers – all of them – always in ordnung.

That’s what’s coming. Unless we decide to reject the principle – and establish a new precedent. There’s still time.

The clock, however, is ticking – and midnight approaches.

*  *  *

If you like what you’ve found here please consider supporting EPautos.  We depend on you to keep the wheels turning!  Our donate button is here.

Tyler Durden Fri, 12/06/2019 - 21:05
Published:12/6/2019 8:12:50 PM
[Markets] Betraying The Constitution: Who Will Protect Us From An Unpatriotic Patriot Act? Betraying The Constitution: Who Will Protect Us From An Unpatriotic Patriot Act?

Authored by John Whitehead via The Rutherford Institute,

“It is the responsibility of the patriot to protect his country from its government.”

- Thomas Paine

While Congress subjects the nation to its impeachment-flavored brand of bread-and-circus politics, our civil liberties continue to die a slow, painful death by a thousand cuts.

Case in point: while Americans have been fixated on the carefully orchestrated impeachment drama that continues to monopolize headlines, Congress passed and President Trump signed into law legislation extending three key provisions of the USA Patriot Act, which had been set to expire on December 15, 2019.

Once again, to no one’s surprise, the bureaucrats on both sides of the aisle—Democrats and Republicans alike—prioritized political grandstanding over principle and their oath of office to protect and defend the Constitution.

As Congressman Thomas Massie (R-Ky.) predicted:

Today, while everyone is distracted by the impeachment drama, Congress will vote to extend warrantless data collection provisions of the #PatriotAct, by hiding this language on page 25 of the Continuing Resolution (CR) that temporarily funds the government. To sneak this through, Congress will first vote to suspend the rule which otherwise gives us (and the people) 72 hours to consider a bill. The scam here is that Democrats are alleging abuse of Presidential power, while simultaneously reauthorizing warrantless power to spy on citizens that no President should have... in a bill that continues to fund EVERYTHING the President does... and waiving their own rules to do it. I predict Democrats will vote on a party line to suspend the 72 hour rule. But after the rule is suspended, I suspect many Republicans will join most Democrats to pass the CR with the Patriot Act extension embedded in it.

Massie was right: Republicans and Democrats have no problem joining forces in order to maintain their joint stranglehold on power.

The legislation passed the Senate with a bipartisan 74-to-20 vote. It squeaked through the House of Representatives with a 231-192 margin. And it was signed by President Trump—who earlier this year floated the idea of making the government’s surveillance powers permanent—with nary a protest from anyone about its impact on the rights of the American people.

Spending bill or not, it didn’t have to shake down this way, even with the threat of yet another government shutdown looming.

Congress could have voted to separate the Patriot Act extension from the funding bill, as suggested by Rep. Justin Amash, but that didn’t fly. Instead as journalist Norman Solomon writes for Salon, “The cave-in was another bow to normalizing the U.S. government’s mass surveillance powers.”

That, right there, is the key to all of this: normalizing the U.S. government’s mass surveillance powers.

In the 18 years since the USA Patriot Act—a massive 342-page wish list of expanded powers for the FBI and CIA—was rammed through Congress in the wake of the so-called 9/11 terror attacks, it has snowballed into the eradication of every vital safeguard against government overreach, corruption and abuse.

The Patriot Act drove a stake through the heart of the Bill of Rights, violating at least six of the ten original amendments—the First, Fourth, Fifth, Sixth, Seventh and Eighth Amendments—and possibly the Thirteenth and Fourteenth Amendments, as well.

The Patriot Act also redefined terrorism so broadly that many non-terrorist political activities such as protest marches, demonstrations and civil disobedience are now considered potential terrorist acts, thereby rendering anyone desiring to engage in protected First Amendment expressive activities as suspects of the surveillance state.

The Patriot Act justified broader domestic surveillance, the logic being that if government agents knew more about each American, they could distinguish the terrorists from law-abiding citizens—no doubt a reflexive impulse shared by small-town police and federal agents alike.

This, according to Washington Post reporter Robert O’Harrow, Jr., was a fantasy that “had been brewing in the law enforcement world for a long time.” And 9/11 provided the government with the perfect excuse for conducting far-reaching surveillance and collecting mountains of information on even the most law-abiding citizen.

Federal agents and police officers are now authorized to conduct covert black bag “sneak-and-peak” searches of homes and offices while you are away and confiscate your personal property without first notifying you of their intent or their presence.

The law also granted the FBI the right to come to your place of employment, demand your personal records and question your supervisors and fellow employees, all without notifying you; allowed the government access to your medical records, school records and practically every personal record about you; and allowed the government to secretly demand to see records of books or magazines you’ve checked out in any public library and Internet sites you’ve visited (at least 545 libraries received such demands in the first year following passage of the Patriot Act).

In the name of fighting terrorism, government officials are now permitted to monitor religious and political institutions with no suspicion of criminal wrongdoing; prosecute librarians or keepers of any other records if they tell anyone that the government has subpoenaed information related to a terror investigation; monitor conversations between attorneys and clients; search and seize Americans’ papers and effects without showing probable cause; and jail Americans indefinitely without a trial, among other things.

The federal government also made liberal use of its new powers, especially through the use (and abuse) of the nefarious national security letters, which allow the FBI to demand personal customer records from Internet Service Providers, financial institutions and credit companies at the mere say-so of the government agent in charge of a local FBI office and without prior court approval.

In fact, since 9/11, we’ve been spied on by surveillance cameras, eavesdropped on by government agents, had our belongings searched, our phones tapped, our mail opened, our email monitored, our opinions questioned, our purchases scrutinized (under the USA Patriot Act, banks are required to analyze your transactions for any patterns that raise suspicion and to see if you are connected to any objectionable people), and our activities watched.

We’re also being subjected to invasive patdowns and whole-body scans of our persons and seizures of our electronic devices in the nation’s airports. We can’t even purchase certain cold medicines at the pharmacy anymore without it being reported to the government and our names being placed on a watch list.

It’s only getting worse, folks.

Largely due to the continuous noise from television news’ talking heads, most Americans have been lulled into thinking that the pressing issues are voting in the next election, but the real issue is simply this: the freedoms in the Bill of Rights are being eviscerated.

The Constitution has been steadily chipped away at, undermined, eroded, whittled down, and generally discarded to such an extent that what we are left with today is but a shadow of the robust document adopted more than two centuries ago. Most of the damage has been inflicted upon the Bill of Rights—the first ten amendments to the Constitution—which historically served as the bulwark from government abuse.

Set against a backdrop of government surveillance, militarized police, SWAT team raids, asset forfeiture, eminent domain, overcriminalization, armed surveillance drones, whole body scanners, stop and frisk searches and the like—all sanctioned by Congress, the White House and the courts—a recitation of the Bill of Rights would understandably sound more like a eulogy to freedoms lost than an affirmation of rights we truly possess.

We can pretend that the Constitution, which was written to hold the government accountable, is still our governing document. However, the reality we must come to terms with is that in the America we live in today, the government does whatever it wants, freedom be damned.

What once were considered inalienable, fundamental “rights”  are now mere privileges to be taken away on a government bureaucrat’s say-so.

To those who have been paying attention, this should come as no real surprise.

As I make clear in my book Battlefield America: The War on the American People, the Constitution has been on life support for some time now, and is drawing its final breaths.

The American government, never a staunch advocate of civil liberties, has been writing its own orders for some time now. Indeed, as the McCarthy era and the wiretapping of Martin Luther King Jr. and others illustrates, the government’s amassing of power, especially in relation to its ability to spy on Americans, predates the passage of the Patriot Act in 2001.

What the Patriot Act and its subsequent incarnations did was legitimize what had previously been covert and frowned upon as a violation of Americans’ long-cherished privacy rights.

After all, the history of governments is that they inevitably overreach.

Thus, enabled by a paper tiger Congress, the president and other agencies of the federal government have repeatedly laid claim to a host of powers, among them the ability to use the military as a police force, spy on Americans and detain individuals without granting them access to an attorney or the courts. And as the government’s powers have grown, unchecked, the American people have gradually become used to these relentless intrusions into their lives.

In turn, the American people have become the proverbial boiling frogs, so desensitized to the government’s steady encroachments on their rights that civil liberties abuses have become par for the course.

Yet as long as government agencies are allowed to make a mockery of the very laws intended to limit their reach, curtail their activities, and guard against the very abuses to which we are being subjected on a daily basis, our individual freedoms will continue to be eviscerated so that the government’s powers can be expanded, the Constitution be damned.

Tyler Durden Fri, 12/06/2019 - 00:05
Published:12/5/2019 11:07:31 PM
[Markets] How To Avoid Civil War: Decentralization, Nullification, Secession How To Avoid Civil War: Decentralization, Nullification, Secession

Authored by Ryan McMaken via The Mises Institute,

It's becoming more and more apparent that the United States will not be going back to "business as usual" after Donald Trump leaves office, and it is easy to imagine that the anti-Trump parties will use their return to power as an opportunity to settle scores against the hated rubes and "deplorables" who dared attempt to oppose their betters in Washington, DC, California, and New York.

Certainly, this ongoing conflict will manifest itself in the culture war through further attacks on people who take religious faith seriously, and on those who hold any social views unpopular among degreed people from major urban centers. The First Amendment will be imperiled like never before with both religious freedom and freedom of speech denounced as vehicles of "hate." Certainly, the Second Amendment will hang by a thread.

But even more dangerous will be the deep state's return to a vaunted position of nearly untrammeled power and obeisance from elected officials in the civilian government. The FBI and CIA will go to even greater lengths to ensure the voters are never again "allowed" to elect anyone who doesn't receive the explicit imprimatur of the American intelligence "community." The Fourth Amendment will be banished forever so that the NSA and its friends can spy on every American with impunity. The FBI and CIA will more freely combine the use of surveillance and media leaks to destroy adversaries.

Anyone who objects to the deep state's wars on either Americans or on foreigners will be denounced as stooges of foreign powers.

These scenarios may seem overly dramatic, but the extremity of the situation is suggested by the fact that Trump — who is only a very mild opponent of the status quo — has received such hysterical opposition. After all, Trump has not dismantled the welfare state. He has not slashed — or even failed to increase — the military budget. His fights with the deep state are largely based on minor issues.

His sins lie merely in his lack of enthusiasm for the center-left's current drive toward ever more vicious identity politics. And, of course, he has been insufficiently gung ho about starting more wars, expanding NATO, and generally pushing the Russians toward World War III.

For even these minor deviations, we are told, he must be destroyed.

So, we can venture a guess as to what the agenda will look like once Trump is out of the way. It looks to be neither mild nor measured.

If the effort at preventing any future Trumps succeeds, it will signal essentially the final victory over so-called "Red State" America.

And then what?

In that situation, half the country may regard itself as conquered, powerless, and unheard.

That's a recipe for civil war.

The Need for Separation

So long as most Americans labor under the authoritarian notion that the United States is "one nation, indivisible" there will be no answer to the problem of one powerful region (or party) wielding unchallenged power over a hapless minority.

Many conservatives naïvely claim that the Constitution and the "rule of law" will protect minorities in this situation. But their theories only hold water if the people making and interpreting the laws subscribe to an ideology which respects local autonomy and freedom for worldviews in conflict with the ruling class. That is increasingly not the ideology of the majority, let alone the majority of powerful judges and politicians.

Thus, for those who can manage to leave behind the flag-waving propaganda of their youths, it is increasingly evident that the only way to avoid a violent conflict over control of the national government is breaking the United States up into smaller pieces. Or at least decentralizing power sufficiently to allow for meaningful autonomy beyond the reach of federal power.

As I've noted in the past, this notion has long been gaining steam in Europe, where referendums on greater local autonomy are growing more frequent.

And conservatives are increasingly seeing the writing on the wall. Among the more insightful of these has been Angelo Codevilla. In 2017, Codevilla, writing in the Claremont Review of Bookslaid out a blueprint for local opposition to federal power and noted:

Texas passed a law that, in effect, closes down most of its abortion clinics. The U.S. Supreme Court struck it down. What if Texas closed them nonetheless? Send the Army to point guns at Texas rangers to open them? What would the federal government do if North Dakota declared itself a “Sanctuary for the Unborn” and simply banned abortion? For that matter, what is the federal government doing about the fact that, for practical purposes, its laws concerning marijuana are being ignored in Colorado and California? Utah objects to the boundaries of national monuments created by decree within its borders. What if the state ignored those boundaries? Prayer in schools? What could bureaucrats in Washington, D.C., do if any number of states decided that what the federal courts have to say about such things is bad?

Now that identity politics have replaced the politics of persuasion and blended into the art of war, statesmen should try to preserve what peace remains through mutual forbearance toward jurisdictions that ignore or act contrary to federal laws, regulations, or court orders. Blue states and red states deal differently with some matters of health, education, welfare, and police. It does no good to insist that all do all things uniformly.

And by 2019, the need for separation was becoming more urgent. Last week Codevilla continued in this line of thinking:

[A]fter the 2020 elections ordinary Americans will have to deal with the same dreadful question we faced in 2016: How do we secure and perhaps restore our fast-diminishing freedom to live as Americans? And while we may wish for help from Trump, we have to look to ourselves and to other leaders for how we may counter the ruling class’s manifold assaults now, and especially in the long term...

The logical recourse is to conserve what can be conserved, and for it to be done by, of, and for those who wish to conserve it. However much force of what kind may be required to accomplish that, the objective has to be conservation of the people and ways that wish to be conserved.

That means some kind of separation.

... [T]he natural, least stressful course of events is for all sides to tolerate the others going their own ways. The ruling class has not been shy about using the powers of the state and local governments it controls to do things at variance with national policy, effectively nullifying national laws. And they get away with it.

For example, the Trump Administration has not sent federal troops to enforce national marijuana laws in Colorado and California, nor has it punished persons and governments who have defied national laws on immigration. There is no reason why the conservative states, counties, and localities should not enforce their own view of the good.

Not even President Alexandria Ocasio-Cortez would order troops to shoot to re-open abortion clinics were Missouri or North Dakota, or any city, to shut them down. As Francis Buckley argues in American Secession: The Looming Breakup of the United States, some kind of separation is inevitable, and the options regarding it are many.

It is notable that Codevilla's strategy is not marked by grandiose gestures of independence or a yearning to re-create the glorious military victories of the days of yore. Such were the mistakes of the Confederates in the mid-nineteenth century.

Interestingly, Codevilla's more sensible approach shares quite a bit in common with the strategies recommended by Hans-Hermann Hoppe in his essay "What Must Be Done." The idea is to assert local control and refuse cooperation with federal policymakers. But with restraint. Hoppe writes:

It would appear to be prudent ... to avoid a direct confrontation with the central government and not openly denounce its authority or even abjure the realm. Rather, it seems advisable to engage in a policy of passive resistance and non-cooperation. One simply stops to help in the enforcement in each and every federal law. One assumes the following attitude: “Such are your rules, and you enforce them. I cannot hinder you, but I will not help you either, as my only obligation is to my local constituents.”

Consistently applied, no cooperation, no assistance whatsoever on any level, the central government’s power would be severely diminished or even evaporate. And in light of the general public opinion, it would appear highly unlikely that the federal government would dare to occupy a territory whose inhabitants did nothing else than trying to mind their own business. Waco, a teeny group of freaks, is one thing. But to occupy, or to wipe out a significantly large group of normal, accomplished, upstanding citizens is quite another, and quite a more difficult thing.

Some will be unable to break out of the mindset that the United States must forever be governed by a singular national policy. They will insist any attempt at decentralization of this sort must necessarily result in violence.

Writing at The American Conservative, Michael Vlahos, for example, appears unconvinced that violence can be avoided. But even he concedes the violence is unlikely to take the form of mass bloodshed as seen in the 1860s:

Our antique civil wars were not bound to formal rules, yet somehow they held to well-etched bounds of expectation. American society today has very different norms and expectations for civil conflict, which certainly will constrain how we fight the next battle.

Today’s America no longer embraces a national landscape of an industrial-lockstep battlefield (think Gettysburg, D-Day). Our next civil war — as social media so eloquently reminds us — will enact its violence on a battle campus of equal pain, if less blood.

Many devotees of perpetual federal supremacy, of course, won't admit even this. Any attempt at decentralization, nullification, or secession is said to be invalid because "that was decided by the Civil War." There is no doubt, of course, that the Civil War settled the matter for a generation or two. But to claim any war "settled things" forever, is clearly nonsense.

It is true, however, that if the idea of a legally, culturally, and politically unified United States wins the day, Americans may be looking toward a future of ever greater political repression marked by increasingly common episodes of bloodshed. This is simply the logical outcome of any system where it is assumed the ruling party has a right and a duty to force the ways of the one group upon another. That is the endgame of a unified America.

Tyler Durden Thu, 12/05/2019 - 18:05
Published:12/5/2019 5:06:50 PM
[Books] Roger Kimball: On the omertà (Scott Johnson) Roger Kimball wears an incredible number of hats, including those of publisher of Encounter Books and editor/publisher of The New Criterion. I wrote Roger early Tuesday morning to ask if he thought I had overlooked anything that needed to be said about the the clamorous silence I wrote about in “The Russia hoax in review.” Roger responded in an email that I am posting with his kind permission below: I Published:12/5/2019 10:38:00 AM
[Markets] What Low-Flation? Household Costs Are Spiraling Out Of Control What Low-Flation? Household Costs Are Spiraling Out Of Control

Authored by Charles Hugh Smith via OfTwoMinds blog,

And how do we pay for these spiraling out of control costs? By borrowing more, of course.

If we had to choose one "big picture" reason why the vast majority of households are losing ground, it would be: the costs of essentials are spiraling out of control. I've often covered the dynamics of stagnating income for the bottom 90%, and real-world inflation, i.e. a decline in purchasing power.

But neither of these dynamics fully describes the relentless upward spiral of the cost basis of our economy, that is, the cost of big-ticket essentials: housing, education and healthcare.

The costs of education are spiraling out of control, stripping households of income as an entire generation is transformed into debt-serfs by student loan debt. The soaring costs of healthcare are a core driver of higher costs in the education complex (and government in general), and to cover these higher costs, counties raise property taxes, which add additional cost burdens to households and enterprises as rents rise.

Rising rents push the cost structure of almost every enterprise and agency higher.

Then there's the asset inflation created by central bank ZIRP (zero interest rate policy) which has inflated a second echo-bubble in housing that has pushed home ownership out of reach of many, adding demand for rental housing that has pushed rents into the stratosphere in Left and Right Coast cities.

The increasing dominance of monopolies and cartels has eliminated competition in sector after sector. Monopolies and cartels skim immense profits even as the value, quality and quantity of their products and services decline: The U.S. Only Pretends to Have Free Markets From plane tickets to cellphone bills, monopoly power costs American consumers billions of dollars a year.

Thanks to their political influence, monopolies and cartels have legalized looting, raising prices and evading anti-trust regulations because they can pay whatever it takes in our pay-to-play political system.

Let's look at a few charts that illustrate the relentless rise in costs:

Do you reckon these two charts are connected--soaring costs and ballooning administrative payrolls?

Student loan debt is soaring above $1.5 trillion, guaranteeing profits to lenders and debt-serfdom to the students exiting with degrees that are in over-supply, i.e. possessing little scarcity value in an over-credentialed economy:

The echo housing bubbles in many locales exceed the nosebleed valuations of the previous bubble:

And how do we pay for these spiraling out of control costs? By borrowing more, of course:

Even at low rates of interest, the cost of servicing skyrocketing debt increases, leaving less net income to support additional borrowing.

What will it take to radically reduce the cost basis of our economy? A fundamental re-ordering that breaks up all the cartels and monopolies that push prices higher even as they deliver lower quality goods and services would be a good start.

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Tyler Durden Thu, 12/05/2019 - 10:45
Published:12/5/2019 10:05:01 AM
[Markets] You Better Not Short; You Better Not Try; Larry Kudlow, Please Tell Them All Why You Better Not Short; You Better Not Try; Larry Kudlow, Please Tell Them All Why

Submitted by Michael Every of Rabobank

The NATO summit saw the expected shenanigans with: Turkey’s President Erdogan stating it will oppose defense of the Baltic region if NATO doesn’t support it in its fight against the Kurds; France’s Macron refusing to do so; and US President Trump and Macron having a public spat, and then uniting in a clash over Turkey and the Kurds and its Russian S-400 missile system, with the word “sanctions” being mentioned by the US president again. Trump also suggested that countries who don’t pay up the 2% of GDP for defence might be dealt with via the trade channel, further politicizing trade as an issue, if it wasn’t already. Markets didn’t pay any attention.

That was because they were too busy being rocked when President Trump stated he is in no rush and “in some ways I think it’s better to wait until after the election” to make a trade deal with China. Not September, as we were told by those ‘in the know’ at certain financial media; not October, as were again told; not November, as we were still told; and not December, and perhaps not early 2020 – but after the US presidential election….which might as well be forever for markets. Especially as Trump will not have any electoral concerns at that point so might just dump the whole idea and go ‘all-in’. Indeed, Commerce Secretary Ross also made clear if “substantial progress” isn’t seen soon then the final 15% tariff tranche is indeed going to happen on 15 December.

The market reaction was clear: US 10-year yields plunged from 1.84% intraday to 1.72%, presumably because of all the inflation now coming from the tariffs, and 2-year yields from 1.62% to 1.55%; the S&P dipped; and CNH went from under 7.04 to over 7.08 and is at 7.0726 at time of writing. Perhaps it will go lower again when people read headlines on Bloomberg like “China Stockpiles Foreign Tech as ‘Silicon Curtain’ Descends”.

If not, it certainly should do given the US House of Representatives just passed legislation 407-1 to impose sanctions on Chinese officials responsible for alleged human rights abuses in Xinjiang, and to prevent the sale of technology to China that can be used in such repression. The Senate measure has already passed, but the House has added provisions that require the president within 120 days to list all officials deemed responsible and to impose visa restrictions and Global Magnitsky Act sanctions; the bill also ties US policy to China to Xinjiang via an annual State Department report to Congress on the issue. As with the recent HKHRDA legislation, it is expected there will now be rapid work to consolidate the two similar bills into one and to pass it to Trump before year-end – again with a veto-proof majority behind it. Indeed, a president who already signed the HKHRDA, and who is about to be impeached by the House on strictly bipartisan lines based on the Democrats just-released report, is not really going to be in a position to veto a bill backed by his own party. China has already vowed a response: banning US-based NGOs and US military visits to Xinjiang? And not getting as much coverage, but very significant, Taiwan is inviting US military experts to the island to advise on how it can bolster its defences: that’s on top of the recent agreement of US arms sales to it.

In which case, for those in markets trying to close out their books for the year-end and to get into the Xmas party spirit--and to pretend that the geopolitical issues I have been warning about as potential landmines for so long will never actually matter--it’s time for a Christmas Carol.

The following needs to be sung to the tune of ‘Santa Claus is Coming to Town’, and is best accompanied by a *large* brandy and a larger dose of tongue-in-cheek:

“Larry Kudlow, Larry Kudlow, Please don’t let this bull market go - tell us

A trade deal is comin’ to town! A trade deal is comin’ to town! A trade deal is comin’ to town!

He's making a list; He's checking it twice; Of all the things about China that’re suddenly nice – so

A trade deal is comin' to town! A trade deal is comin' to town! A trade deal is comin' to town!

He sees when stocks are slipping; He knows when bears awake

He knows the Dow Jones must look good; For Trump’s electoral sake

So you better not short; You better not try; Larry Kudlow, please tell them all why – ‘cos

A trade deal is comin' to town! A trade deal is comin' to town! A trade deal is comin' to town!

A great, great trade deal is comin' to toooooooooooooownnnnn!”

And there will be nowhere singing this more loudly than Australia given that Q3 GDP came in at just 0.4% q/q, a tick weaker than expected vs. an upwardly-revised 0.6% in Q2, and meaning only 1.7% y/y, around half of where the RBA sees the low-productivity/high-net immigration Aussie economy as deserving to grow. The Reserve Bank Governor of course left rates unchanged yesterday at 0.75%, and once again displayed his magic touch in saying that some downside risks to the global economy had lessened recently. Maestro!

What else to wrap with? Kamala Harris is out of the presidential race unless she gets offered VP by someone else; and Trump has stated he wouldn’t want the NHS even if it was offered to him on a silver platter; and Corbyn obviously doesn’t believe him, especially on drug pricing. On which note, the US has just proposed stripping 10-year protections for biologic drugs from generic rivals from the USMCA to speed its passage in Congress, which seems the complete opposite of what Labour is saying the US would do to the UK in a US-UK trade deal.

Tyler Durden Wed, 12/04/2019 - 09:30
Published:12/4/2019 8:37:06 AM
[Markets] Operation Condor 2.0: After Bolivia Coup, Trump Dubs Nicaragua "National Security Threat" And Targets Mexico Operation Condor 2.0: After Bolivia Coup, Trump Dubs Nicaragua "National Security Threat" And Targets Mexico

Authored by Ben Norton via,

After presiding over a far-right coup in Bolivia, the US dubbed Nicaragua a “national security threat” and announced new sanctions, while Trump designated drug cartels in Mexico as “terrorists” and refused to rule out military intervention.

One successful coup against a democratically elected socialist president is not enough, it seems.

Immediately after overseeing a far-right military coup in Bolivia on November 10, the Trump administration set its sights once again on Nicaragua, whose democratically elected Sandinista government defeated a violent right-wing coup attempt in 2018.

Washington dubbed Nicaragua a threat to US national security, and announced that it will be expanding its suffocating sanctions on the tiny Central American nation.

Trump is also turning up the heat on Mexico, baselessly linking the country to terrorism and even hinting at potential military intervention. The moves come as the country’s left-leaning President Andrés Manuel López Obrador warns of right-wing attempts at a coup.

As Washington’s rightist allies in Colombia, Brazil, Chile, and Ecuador are desperately beating back massive grassroots uprisings against neoliberal austerity policies and yawning inequality gaps, the United States is ramping up its aggression against the region’s few remaining progressive governments.

These moves have led left-wing forces in Latin America to warn of a 21st-century revival of Operation Condor, the Cold War era campaign of violent subterfuge and US support for right-wing dictatorships across the region.

Trump admin declares Nicaragua a ‘national security threat’

A day after the US-backed far-right coup in Bolivia, the White House released a statement applauding the military putsch and making it clear that two countries were next on Washington’s target list: “These events send a strong signal to the illegitimate regimes in Venezuela and Nicaragua,” Trump declared.

On November 25, the Trump White House then quietly issued a statement characterizing Nicaragua as an “unusual and extraordinary threat to the national security and foreign policy of the United States.”

This prolonged for an additional year an executive order Trump had signed in 2018 declaring a state of “national emergency” on the Central American country.

Trump’s 2018 declaration came after a failed violent right-wing coup attempt in Nicaragua. The US government has funded and supported many of the opposition groups that sought to topple elected Nicaraguan President Daniel Ortega, and cheered them on as they sought to overthrow him.

The 2018 national security threat designation was quickly followed by economic warfare. In December the US Congress approved the NICA Act without any opposition. This legislation gave Trump the authority to impose sanctions on Nicaragua, and prevents international financial institutions from doing business with Managua.

Trump’s new 2019 statement spewed outlandish propaganda against Nicaragua, referring to its democratically elected government — which for decades has been targeted for overthrow by Washington — as a supposedly violent and corrupt “regime.”

This executive order is similar to one made by President Barack Obama in 2015, which designated Venezuela as a threat to US national security.

Both orders were used to justify the unilateral imposition of suffocating economic sanctions. And Trump’s renewal of the order paves the way for an escalated economic attack on Nicaragua.

The extension received negligible coverage in mainstream English-language corporate media, but right-wing Spanish-language outlets in Latin America heavily amplified it.

And opposition activists are gleefully cheering on the intensification of Washington’s hybrid warfare against Managua.

More aggressive US sanctions against Nicaragua

Voice of America (VOA), the US government’s main foreign broadcasting service, noted that the extension of the executive order will be followed with more economic attacks.

Washington’s ambassador to the Organization of American States (OAS), Carlos Trujillo, told VOA, “The pressure against Nicaragua is going to continue.”

The OAS representative added that Trump will be announcing new sanctions against the Nicaraguan government in the coming weeks.

VOA stated clearly that “Nicaragua, along with Cuba and Venezuela, is one of the Latin American countries whose government Trump has made a priority to put diplomatic and economic pressure on to bring about regime change.”

This is not just rhetoric. The US Department of the Treasury updated the Nicaragua-related sanctions section of its website as recently as November 8.

And in September, the Treasury Office of Foreign Assets Control announced a “more comprehensive set of regulations,” strengthening the existing sanctions on Nicaragua.

Voice of America’s report quoted several right-wing Nicaraguans who openly called for more US pressure against their country.

Bianca Jagger, a celebrity opposition activist formerly married to Rolling Stones frontman Mick Jagger, called on the US to impose sanctions on Nicaragua’s military in particular.

“The Nicaraguan military has not been touched because they [US officials] are hoping that the military will like act the military in Bolivia,” Jagger said, referring to the military officials who violently overthrew Bolivia’s democratically elected president.

Many of these military leaders had been trained at the US government’s School of the Americas, a notorious base of subversion dating back to Operation Condor. Latin American media has been filled in recent days with reports that Bolivian soldiers were paid $50,000 and generals were paid up to $1 million to carry out the putsch.

VOA added that “in the case of the Central American government [of Nicaragua], the effect that sanctions can have can be greater because it is a more economically vulnerable country.”

VOA quoted Roberto Courtney, a prominent exiled right-wing activist and executive director of the opposition group Ethics and Transparency, which monitors elections in Nicaragua and is supported by the US government’s regime-change arm, the National Endowment for Democracy (NED).

Courtney, who claims to be a human rights activist, salivated over the prospects of US economic war on his country, telling VOA, “There is a bit of a difference [between Nicaragua and Bolivia] … the economic vulnerability makes it more likely that the sanctions will have an effect.”

Courtney, who was described by VOA as an “expert on the electoral process,” added, “If there is a stick, there must also be a carrot.” He said the OAS could help apply diplomatic and political pressure against Nicaragua’s government.

These unilateral American sanctions are illegal under international law, and considered an act of war. Iran’s foreign minister, Javad Zarif, has characterized US economic warfare “financial terrorism,” explaining that it disproportionately targets civilians in order to turn them against their government.

Top right-wing Nicaraguan opposition groups applauded Trump for extending the executive order and for pledging new sanctions against their country.

The Nicaraguan Civic Alliance for Justice and Democracy, an opposition front group that brings together numerous opposition groups, several of which are also funded by the US government’s NED, welcomed the order.

Trump dubs drug cartels in Mexico “terrorists,” refuses to rule out drone strikes

While the US targeting of Nicaragua and Venezuela’s governments is nothing new, Donald Trump is setting his sights on a longtime US ally in Mexico.

In 2018, Mexican voters made history when they elected Andrés Manuel López Obrador as president in a landslide. López Obrador, who is often referred to by his initials AMLO, is Mexico’s first left-wing president in more than five decades. He ran on a progressive campaign pledging to boost social spending, cut poverty, combat corruption, and even decriminalize drugs.

AMLO is wildly popular in Mexico. In February, he had a record-breaking 86 percent approval rating. And he has earned this widespread support by pledging to combat neoliberal capitalist orthodoxy.

“The neoliberal economic model has been a disaster, a calamity for the public life of the country,” AMLO has declared. “The child of neoliberalism is corruption.”

When he unveiled his multibillion-dollar National Development Plan, López Obrador announced the end to “the long night of neoliberalism.”

AMLO’s left-wing policies have caused shockwaves in Washington, which has long relied on neoliberal Mexican leaders ensuring a steady cheap exploitable labor base and maintaining a reliable market for US goods and open borders for US capital and corporations.

On November 27 — a day after declaring Nicaragua a “national security threat” — Trump announced that the US government will be designating Mexican drug cartels as “terrorist organizations.”

Such a designation could pave the way for direct US military intervention in Mexico.

Trump revealed this new policy in an interview with right-wing Fox News host Bill O’Reilly. “Are you going to designate those cartels in Mexico as terror groups and start hitting them with drones and things like that?” O’Reilly asked.

The US president refused to rule out drone strikes or other military action against drug cartels in Mexico.

Trump’s announcement seemed to surprise the Mexican government, which immediately called for a meeting with the US State Department.

The designation was particularly ironic considering some top drug cartel leaders in Mexico have long-standing ties to the US government. The leaders of the notoriously brutal cartel the Zetas, for instance, were originally trained in counter-insurgency tactics by the US military.

Throughout the Cold War, the US government armed, trained, and funded right-wing death squads throughout Latin America, many of which were involved in drug trafficking. The CIA also used drug money to fund far-right counter-insurgency paramilitary groups in Central America.

These tactics were also employed in the Middle East and South Asia. The United States armed, trained, and funded far-right Islamist extremists in Afghanistan in the 1980s in order to fight the Soviet Union. These same US-backed Salafi-jihadists then founded al-Qaeda and the Taliban.

This strategy was later repeated in the US wars on Libya and Syria. ISIS commander Omar al-Shishani, to take one example, had been trained by the US military and enjoyed direct support from Washington when he was fighting against Russia.

The Barack Obama administration also oversaw a campaign called Project Gunrunner and Operation Fast and Furious, in which the US government helped send thousands of guns to cartels in Mexico.

Mexican journalist Alina Duarte explained that, with the Trump administration’s designation of cartels as terrorists, “They are creating the idea that Mexico represents a threat to their national security.”

“Should we start talking about the possibility of a coup against Lopez Obrador in Mexico?” Duarte asked.

She noted that the US corporate media has embarked on an increasingly ferocious campaign to demonize AMLO, portraying the democratically elected president as a power-hungry aspiring dictator who is supposedly wrecking Mexico’s economy.

Duarte discussed the issue of US interference in Mexican politics in an interview with The Grayzone’s Max Blumenthal and Ben Norton, on their podcast Moderate Rebels:

Now, a whisper campaign over fears that the right-wing opposition may try to overthrow President Andrés Manuel López Obrador is spreading across Mexico.

AMLO himself has publicly addressed the rumors, making it clear that he will not tolerate any discussion of coups.

“How wrong the conservatives and their hawks are,” López Obrador tweeted on November 2. Referencing the 1913 assassination of progressive President Francisco Madero, who had been a leader of the Mexican Revolution, AMLO wrote, “Now is different.”

“Another coup d’état will now be allowed,” he declared.

In recent months, as fears of a coup intensify, López Obrador has swung even further to the left, directly challenging the US government and asserting an independent foreign policy that contrasts starkly to the subservience of his predecessors.

AMLO’s government has rejected US efforts to delegitimize Venezuela’s leftist government, throwing a wrench in Washington’s efforts to impose right-wing activist Juan Guaidó as coup leader.

AMLO has welcomed Ecuador’s ousted socialist leader Rafael Correa and hosted Argentina’s left-leaning Alberto Fernández for his first foreign trip after winning the presidency.

In October, López Obrador even welcomed Cuban President Díaz-Canel to Mexico for a historic visit.

Trump’s Operation Condor 2.0

For Washington, an independent and left-wing Mexico is intolerable.

In a speech for right-wing, MAGA hat-wearing Venezuelans in Miami, Florida in February, Trump ranted against socialism for nearly an hour, threatened the remaining leftist countries in Latin America with regime change.

“The days of socialism and communism are numbered not only in Venezuela, but in Nicaragua and in Cuba as well,” he declared, adding that socialism would never be allowed to take root in heart of capitalism in the United States.

While Trump has claimed he seeks to withdraw from wars in the Middle East (when he is not occupying its oil fields), he has ramped up aggressive US intervention in Latin America.

Though the neoconservative war hawk John Bolton is no longer overseeing US foreign policyElliott Abrams remains firmly embedded in the State Department, dusting off his Iran-Contra playbook to decimate socialism in Latin America all over again.

During the height of the Cold War, Operation Condor thousands of dissidents were murdered, and hundreds of thousands more were disappeared, tortured, or imprisoned with the assistance of the US intelligence apparatus.

Today, as Latin America is increasingly viewed through the lens of a new Cold War, Operation Condor is being reignited with new mechanisms of sabotage and subversion in play. The mayhem has only begun.

Tyler Durden Tue, 12/03/2019 - 23:50
Published:12/3/2019 10:55:33 PM
[Left Column] Geologist Dr. Don Easterbrook’s new book on solar climate link is out: ‘It is unequivocally clear that climate changes, large & small, are driven by fluctuations of the sun’s magnetic field’


By Geologist Dr. Don J. Easterbrook - Easterbrook is an Emeritus Professor at Western Washington University, a UN IPCC expert reviewer, has authored ten books and 150 journal publications. Presented 31 research papers at international meetings in 13 countries outside the US.

Published:12/3/2019 4:24:20 PM
[TC] Gift Guide: TechCrunch writers recommend their favorite reads from 2019 2019 offered a blistering catalog of books to peruse, on top of the prodigious publishing schedules of the past few years (if you think we are at Peak TV, you might want to check out your local bookstore for a counterpoint). We already checked in with Extra Crunch readers and did a sort of reader’s […] Published:12/3/2019 4:24:20 PM
[Markets] Virginia Gun Owners Could Face Felony Charges Under New 'Paramilitary Activities' Amendment Virginia Gun Owners Could Face Felony Charges Under New 'Paramilitary Activities' Amendment

A proposed amendment to a 30-year-old Virginia law would make it illegal to bring a firearm to any gathering if it can be proven that the goal was to 'intimidate any person or group of persons by drilling, parading, or marching with any firearm."

In short, if someone brings a firearm to a permitted event such as the ill-fated United the Right rally, and it can be argued that their goal was to intimidate Antifa counter-protesters as opposed to carrying in self-defense, that person could be subject to Class 5 felony charges under the amendment introduced by State Senator Louise Lucas (D-18th District).

The amendment stems from a lawsuit brought against Unite the Right organizer (and professional provocateur) Jason Kessler and several militia groups, accusing them of violating the state's existing statute governing "unlawful paramilitary activity." As a result of the lawsuit, "eleven named defendants had signed consent decrees in which they are “permanently enjoined from returning to Charlottesville, Virginia, as part of a unit of two or more persons acting in concert while armed with a firearm, weapon, shield, or any item whose purpose is to inflict bodily harm, at any demonstration, rally, protest, or march.”," according to IREHR.

Of note, the statute does not declare tactical training illegal as has been reported elsewhere, as the existing law - which has been on the books more than 30 years - already makes it illegal if someone "teaches or demonstrates to any other person the use, application, or making of any firearm, explosive, or incendiary device" if said training "will be employed for use in, or in furtherance of, a civil disorder."

Given that most firearms instruction is intended for self-defense in all situations and not specifically during "civil disorder," we don't envision Virginia authorities barging in on training courses anytime soon.

The amendment can be seen below. New portions are italicized.

Offered January 8, 2020
Prefiled November 21, 2019

A BILL to amend and reenact §18.2-433.2 of the Code of Virginia, relating to paramilitary activities; penalty.

Patron-- Lucas
Referred to Committee for Courts of Justice

Be it enacted by the General Assembly of Virginia:

1. That §18.2-433.2 of the Code of Virginia is amended and reenacted as follows:

§18.2-433.2. Paramilitary activity prohibited; penalty.

A person shall be is guilty of unlawful paramilitary activity, punishable as a Class 5 felony if he:

1. Teaches or demonstrates to any other person the use, application, or making of any firearm, explosive, or incendiary device, or technique capable of causing injury or death to persons, knowing or having reason to know or intending that such training will be employed for use in, or in furtherance of, a civil disorder; or

2. Assembles with one or more persons for the purpose of training with, practicing with, or being instructed in the use of any firearm, explosive, or incendiary device, or technique capable of causing injury or death to persons, intending to employ such training for use in, or in furtherance of, a civil disorder; or

3. Assembles with one or more persons with the intent of intimidating any person or group of persons by drilling, parading, or marching with any firearm, any explosive or incendiary device, or any components or combination thereof.

2. That the provisions of this act may result in a net increase in periods of imprisonment or commitment. Pursuant to §30-19.1:4 of the Code of Virginia, the estimated amount of the necessary appropriation cannot be determined for periods of imprisonment in state adult correctional facilities; therefore, Chapter 854 of the Acts of Assembly of 2019 requires the Virginia Criminal Sentencing Commission to assign a minimum fiscal impact of $50,000. Pursuant to §30-19.1:4 of the Code of Virginia, the estimated amount of the necessary appropriation cannot be determined for periods of commitment to the custody of the Department of Juvenile Justice.

Tyler Durden Fri, 11/29/2019 - 22:00
Published:11/29/2019 9:01:15 PM
[Markets] Chinese Crypto Exchange IDAX Locks Cold Wallet As CEO "Goes Missing" Chinese Crypto Exchange IDAX Locks Cold Wallet As CEO "Goes Missing"

Authored by William Suberg via,

Chinese cryptocurrency exchange IDAX has suspended deposits and withdrawals after its CEO allegedly disappeared.

In a blog post on Nov. 29, IDAX, which earlier this week warned it was seeing a run on withdrawals, said the whereabouts of Lei Guorong were currently unknown. 

image courtesy of CoinTelegraph

IDAX: cold wallet access “restricted”

“Since we have announced the announcement on November 24, IDAX Global CEO have gone missing with unknown cause and IDAX Global staffs were out of touch with IDAX Global CEO,” it reads.

The blog post continues that as a precaution, the company’s cold wallet was on lockdown to protect user funds:

“For this reason, access to Cold wallet which is stored almost all cryptocurrency balances on IDAX has been restricted so in effect, deposit/withdrawal service cannot be provided.”

IDAX did not directly link Lei with cold wallet access, nor did it suggest that users’ money was specifically at risk. 

Exchanges feel renewed pressure

The debacle follows a contentious period for cryptocurrency in China after authorities doubled down on the country’s 2017 trading ban last week. As Cointelegraph reported, a sweep saw the central bank vowing to “dispose of” any exchanges it found flouting the ban. 

IDAX stopped serving Chinese users at the start of the week. Its predicament nonetheless provides yet another example of the pitfalls involved when trusting a third party to store cryptocurrency.

Earlier this week, South Korean exchange Upbit likewise halted users’ access to funds after a suspicious transaction saw more than $50 million leave its books at once. 

While investors appear to be waking up to the risks, recent data shows that even institutional traders still overwhelmingly prefer trusting others with their funds.

Tyler Durden Fri, 11/29/2019 - 20:30
Published:11/29/2019 7:30:51 PM
[Markets] A China Trade Deal Just Finalizes The Divorce A China Trade Deal Just Finalizes The Divorce

Authored by Charles Hugh Smith via OfTwoMinds blog,

Each party will continue to extract whatever benefits they can from the other, but the leaving is already well underway.

Beneath the euphoric hoopla of a trade deal with China is the cold reality that the divorce has already happened and any trade deal just signs the decree. The divorce of China and the U.S. was mutual; each had used up whatever benefits the tense marriage had offered, and each is looking forward to no longer being dependent on the other.

Any trade deal is like closing the barn door months after the horses left. Corporate America's supply chains are already leaving China for lower cost, friendlier countries, and for its part China has already made its intentions to escape the grip of the U.S. dollar abundantly clear.

Indeed, China has clearly stated its plan to move up the value chain globally and rely more on its domestic consumers to fuel growth rather than exports, which have been weakening for some time (see chart below).

As for supply chains leaving China for good--have you examined the labels of consumer goods recently? What once invariably read "made in China" increasingly reads "made in..." The reasons are numerous:

1. China's labor costs are soaring. Many other countries have lower-cost labor forces.

2. The welcome mat for foreigners has been pulled away. If you need evidence, look at the swelling flood of ex-pats leaving China for good, an exodus that began years ago.

3. China's workforce is shrinking as the populace ages. The demographics of the one-child policy are remorseless.

4. China's repression of Muslim minorities doesn't seem to bother Islamic governments but it presents a serious issue to global Corporate America.

Imagine what would happen to (say) Apple's reputation if even the tiniest part of an iPhone was traced to China's slave-labor force of Muslim minorities. Whatever Apple might save by keeping its supply chain in China would be more than offset by the global PR damage.

For Corporate America, the lowest-risk strategy is to move the supply chain out of China, the sooner the better: lower costs and lower exposure to IP theft and bad PR.

The tide of Chinese students studying in the U.S. on their government's tab is ebbing. China's authorities are playing the trade war as a patriotic battle, and so why pay for students to study abroad?

Chinese corporations are increasingly reluctant to invest in American assets as skepticism about China's agenda rises.

Signing the trade deal is signing the divorce decree, not a signal of a return to the good old days of wine and romance. Each party will continue to extract whatever benefits they can from the other, but the leaving is already well underway.

*  *  *

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Tyler Durden Fri, 11/29/2019 - 14:15
Published:11/29/2019 1:31:41 PM
[Markets] Holiday Sales May Be Missing In Action Holiday Sales May Be Missing In Action

Authored by Dave Kranzler via Investment Research Dynamics,

I’m sure most of you are  inundated with “Black November,” “70% off” and “clearance” email promotions from the usual cast of brick/mortar/online chain retailers. It started with my inbox in October.   This is because retailers are terrified of what could be one of the worst holiday spending seasons in years.

The mainstream financial media, planted with soundbites from Wall Street snakeoil salesmen, have already created this year’s “the dog ate my homework” excuse for poor holiday spending with the absurd notion that the period between Thanksgiving and Christmas is shorter this year. 

Quite frankly, I would not be surprised if many households used Amazon’s Prime day and easy Amazon credit lines offered to buy holiday gifts early this year.

Speaking of AMZN, it warned that its expected holiday sales would be lower than previous guidance.  And Home Depot lowered its Q4 revenue estimates for the second time in three months.

Perhaps October retail sales offers a glimpse at what we can expect. The headline retail sales report promoted the idea that retail sales “rebounded” in October (recall September retail sales dropped 3%). October’s retail sales reportedly increased 0.3%. The headline number was rounded up from 0.27%. Compare this to the headline 0.36% CPI. This means that real retail sales in October (i.e. ex-inflation) declined.

Keep in mind that a survey of more than 5,400 Americans by the Financial Health Network revealed that 70% of households are struggling financially in some capacity. 17% said they can’t maintain a majority or all aspects of their finances. Another 54% said they’re struggling with at least one aspect of financial stability (likely credit card/auto debt). About 20% of middle class workers are spending more than they earn. This study confirms and reinforces other studies I’ve seen showing similar results.

Core retail sales, which are ex-automobiles and gasoline, increased 0.1%, which was worse than expected. When you think about it, aside from all of the statistical errors from estimating 16 out of 25 categories, the core retail sales ex-inflation was negative. It looks like gasoline sales drove the headline number as it was up 1.1%, which is the result of higher gasoline prices during the month.

Away from food, “core” discretionary categories suffered rather large declines from September. Clothing was down 1%, sporting goods/hobby/books were down 0.8%, furniture store sales dropped 0.9% and electronics/appliance sales were down 0.4%. Consumers also cut back spending at restaurants and bars, with sales dropping 0.3%.

The retail sales numbers for October, preceded by the big drop in retail sales in September, reflect and confirm my view that the consumer is “running out road” with the ability to assume more credit card debt for discretionary expenditures. The results of the survey above suggest that a not insignificant percentage of households need credit cards to make ends meet. This chart nicely summarizes the U.S. household financial conditions:

I suspect the Census Bureau will do its best to impose “seasonal adjustment” distortions at Trump’s behest in order to put the best possible spin on retail sales. But truth is that a majority of households are struggling with a heavy debt load and with real income after taxes that barely covers non-discretionary expenditures. Do not mistake a rising stock market as an indicator that economy is healthy. Right now the largest component of economic activity at 70% of GDP is terminally ill financially.

Tyler Durden Thu, 11/28/2019 - 23:00
Published:11/28/2019 10:25:42 PM
[Markets] Ukraine's IMF Gold & The Gold Carry Trade Ukraine's IMF Gold & The Gold Carry Trade

Authored by Steve Brown via,

Let’s first consider a typical International Monetary Fund (IMF) loan to a sovereign in trouble, and then examine a typical gold carry trade transaction to support a sovereign arms deal.

The intent is to demonstrate the importance of physical sovereign gold holdings in all forms of international trade.

Semi-failed and failed states can only exist by dealing in hard assets of real intrinsic value just as Syria, Venezuela, Iran, and Ukraine have done... and the most liquid of those hard assets is their physical gold.

Central Banks always work with the Security State apparatus when dealing with failed states and recall that the US Central Intelligence Agency funded al Qaeda and funded the war in Syria for example. Just about anything can be made to happen with funding when that funding is based on real resources. One of the most important of those resources is physical gold.

IMF Cartel Example: Ukraine

The IMF’s 2014 aid to Ukraine is based on a unique history however all IMF ‘aid’ packages are in some sense unique. Since we are highlighting the largely hitherto concealed importance of real physical gold in geo-political calculations and operations, Ukraine provides a relevant and timely example of how the banking Cartel operates with gold and may highlight that importance.

According to the 2018 Independent Transparency Index, Ukraine ranks as one of the most corrupt nations in the world. Ukraine ranks 120th out of 180 countries where the 180th – Somalia – is the most corrupt.  But all nations need funding whether corrupt or not, and Ukraine defaulted on its IMF debt in 2001 and then again in 2009 when distribution of an existing IMF loan to Ukraine was frozen.

So, in 2014 why would the IMF strike another “deal” with a nation as corrupt as Ukraine for a whopping $17.5 Bn USD extended funding facility, when it had already defaulted on its previous two IMF loans? The answer lies well beyond the natural gas tariffs paid by Ukraine to the European Union and is founded in gold and state resources as well as geopolitics.

Consider Yanukovych’s attempt to confront the IMF and EU on its new onerous terms to settle Ukraine’s debt to the IMF in 2013, when Yanukovych and Mykola Azarov (then-Ukrainian Prime Minister) protested the IMF’s outrageous imposition of a 40% tariff on natural gas exported from the Ukraine (via the Russian Federation) to Europe. Yanukovych’s IMF ire was all US State needed to impose its will: Ukraine must cooperate with the IMF or take the consequences. Azarov and Yanukovych did risk the consequences and the entire corrupt Ukraine apparatus came tumbling down by February of 2014.

Nevertheless, Washington is aware that replacing one corrupt regime with its own will not pay that failed state’s bills, and Washington does not provide its own funds to the failed states that it creates. After all, that’s not how the Great Game is played. This is not about largesse, it’s about Washington demanding the spoils of war.

Thus in 2014 when Russia diverted its natural gas deliveries to bypass the troubled mess that Washington invoked in Ukraine, Ukraine urgently needed an International Monetary Fund bail-out. The IMF’s “round heels” did not come into play this time however – the IMF demanded a solid ‘guarantee’* for its first installment of funding to Ukraine.

One IMF demand was for Ukraine to setup its own National Anti-Corruption Bureau as a ceremonial gesture, since Ukraine’s deep corruption is endemic, extant, and simply an accepted way of life there.

The other demand was for Ukraine to partly collateralize its IMF loan with gold reserves. We know that because the IMF tells us so(The IMF) may accept gold in the discharge of a member country’s obligations (loan repayment) at an agreed price, based on market prices at the time of acceptance.

And we can prove the IMF-Ukraine 2014 gold transaction by simply looking at the historic fluctuation in Ukraine gold reserves. In October of 2014 – just nine months subsequent to the Maidan coup – Ukraine reduced its gold reserves by fourteen tonnes (metric = 2200 lb per tonne).  Fourteen metric tonnes of Ukraine gold were flown to one of the designated IMF gold depositories: Gold depositories of the Fund shall be established in the United States, the United Kingdom, France, and India as noted by the IMF itself.

But why did the IMF require just fourteen tonnes of the Ukraine’s gold as a loan guarantee? Let’s look at the figures. Fourteen tonnes of gold equates to 30,800 lbs, or 492,800 ounces. At 400 oz per bar 1,232 bars of gold were flown from the Ukraine to the IMF designated depository. At then-prevailing market price — note that the US government still values gold at only $42 per ounce! — Ukraine’s gold provided $640M US dollars’ worth of loan collateral to the IMF.

In sovereign terms, a $640 million guarantee seems trivial. But recall that most aid guarantees are fractionalized at 10%, meaning that Ukraine needed just that much in collateral to finance its first tranche loan from the IMF of $5 Bn USD as received from the IMF in 2015. Ukraine provides just one example regarding the IMF’s extortion of sovereign gold from the failed states it hopes to service.

But gold is not the only important asset a nation can trade in exchange for its debt, the IMF demands much more than a fractionalized gold pay-off as the people of Greece have discovered. Oleksiy Honcharuk the current embattled Ukraine Prime Minister, just announced that Ukraine expects to receive $500M USD from the IMF in exchange for the sale of Ukraine state-owned firms to private buyers.

The point however is that gold has always been an important asset in world trade regardless of those who claim otherwise. And it is just as important now – perhaps more so – than it has ever been; note that states like Burundi, the United Arab Emirates, and Iraq have dramatically increased their gold reserves. And at least the IMF admits to trading in sovereign gold while the US Federal Reserve only admits to trading in gold while actively denying that fact!  (See link)

Gold Carry Trade Arms Deal

Note that the physical gold in this example trade does not move outside of its vault in New York, London, Paris or whichever bullion bank is holding the bars. That’s because the vaults in London, New York, or Switzerland are designated by numbered accounts and those numbered accounts (assigned to a particular vault or to particular group of bars) may alter over time by transaction, but the 400 oz gold bars are seldom transported; only the account numbers and allocated bars in the individual (and many) bullion bank vaults may change.

There are rare exceptions when the gold does move – for example when Venezuela physically repatriated its gold from New York.

The usual classic carry trade is when a sovereign or primary bank simply leases gold from a London Bullion Market Association bank, sells the gold to convert to higher yielding assets, then re-purchases the gold at the end of the lease period to satisfy the lease. The sovereign or dealer will provide security for the transaction (perhaps a percentage of its own gold reserves or other state assets) and pay what is called the Gold Forward interest rate (GOFO is usually 1%) to the bullion bank and return the carry trade gold by re-purchase at then-prevailing gold market prices at the end of the lease.

Central Banks operate the same way, utilizing the same type carry transactions but generally only to support or debase their currency or another currency. (Central Banks also hope that semi-failed states will sell their gold reserves to Central Banks at knock-down prices as Syria did in 2012!)

But the hypothetical scenario below is a different type of carry trade. The example below contests the commonly held premise that belligerents are freely ‘given’ their arms by the major powers. In very unreliable circumstances like Somalia, Sudan, Yemen, and formerly in Eretria etc – the ‘free delivery’ of weaponry by major powers for political reasons is partly true. And in Libya, the Sahel states inherited weaponry after the assassination of Qadaffi.

The idea here is to show the importance of the gold carry trade to Central Banks and their related security state in the provision of arms to failed states by way of collateral and special bank accounting. The carry trade is the financial trade of choice for Central Banks when dealing with failed or semi-failed states, because the gold carry trade provides all parties:

  • Absolute Secrecy

  • Zero public accountability

  • Zero legislative accountability

  • 100% political cover

  • Guaranteed profits, and perhaps even the

  • Spoils of war or

  • Financial collapse to profit Central Banks

  • No limit on the amount of GOFO gold leased

  • Zero risk based on Central Bank accounting

In this typical but hypothetical carry trade arms deal, the Central Bank (called by the fictional name  “CBBI”) hopes to identify a semi-failed or failed state possessing either its own gold reserves or mining resources so that the Central Bank may gain leverage and perhaps state-owned resources too, or even intervene militarily by proxy, by way of a carry trade for arms. Mali springs to mind as one potential current example as does the pending new independent state of Bougainville.

The hypothetical carry trade scenario for our paper finds small embattled Nation ‘X’ in the Sahel with one tonne of gold reserves and X wishes to purchase $5M US dollars value of small arms from Austria for self-defense versus Nation Y. Nation X has limited foreign cash reserves on hand and its own currency is virtually worthless. Nation X cannot qualify for an IMF loan and does not seek one, nor could it. Nation X has some natural resources and does possess the aforementioned gold reserves even if it has a bad credit history. So how is Nation X to get the weaponry?

Nation X contacts the CBBI Central Bank in Europe and receives encouraging news. The CBBI says at current market price $5,000,000 USD in small arms can be traded for just 8 x 400 oz good delivery gold bars that the country already has, plus an additional 100 oz bar. Better than that, the CBBI will negotiate the entire sales deal (including the arms)!

However, Nation X is reluctant to sell its gold. The CBBI instead suggests a two-year gold carry trade lease for $50M (million) US dollars if Nation X will turn over 20% of its reserve gold bars, ie a quantity of sixteen 400 oz ‘good for delivery’ gold bars. At the end of the lease the gold will be returned, the (GOFO) interest will be paid to the CBBI, and Nation X will have found the funds for its weaponry and improve its credit as well.

In other words, Nation X will thus receive $50 million USD from the CBBI when Nation X supplies 20% in security (by supplying sixteen 400 oz gold bars worth approx. $10M) to the CBBI and by agreeing to pay the gold forward rate (usually 1%) to the bank. As a result, Nation X obtains ten times the amount of funding that it sought, far beyond the $5M in small arms needed. Then X can perhaps buy a few ex-Libyan jets and hire mercenaries to fly them all for a 1% loan!

(Note: Nation X has only loaned its gold bars as collateral since Nation X will receive them back at the end of the lease period providing X does not default to the CBBI. Also, the collateral to the bank is not always gold and may consist of state assets as well or instead.)

The CBBI reveals nothing publicly about Nation X’s intent for the funds, and the bank’s governmental Secret Service connections have politically cleared the deal. The CBBI does require Nation X to sign a gold lease document of course, stating X’s return of $50M in gold two years hence at market price, and X must also pay the 1% gold forward interest rate. The CBBI then receives Nation X’s good for delivery gold bars and the deal is done. Nation X receives the proceeds of the gold lease in the currency of its choice – say Chinese yuan – transferred to X’s national bank and all is well, while the brokered gold never left its London vault only the vault account number changed!

The CBBI is more than chuffed since the $10M USD in Nation X physical gold delivered to the CBBI allows the CBBI to leverage those gold reserves to ten times that amount – $100M USD – in leveraged ETF’s or any other debt instrument the bank cares to leverage. All that’s changed with regard to the CBBI lease is the account number on the vault where the $50M in registered gold bars are still held.  So, for an outlay investment of $50M USD equivalent in China yuan – which the bank already had hedged in a CHF account! – the CBBI doubled its own investment in leveraged ETF’s at a stroke.

Now, the bank hopes that Nation X will default since the CBBI received real hard assets from Nation X that the CBBI has leveraged ten times, and the GOFO 1% rate is trivial. Unfortunately, X’s war with Y has gone badly, and after two years Nation X does indeed default on the gold lease and cannot buy the gold back to satisfy the lease. So what is the CBBI to do?

Regardless of X’s default, the Central Bank essentially leased the gold to itself when accounted for as a receivable on its books in perpetuity until satisfied. That means the ‘loss’ appears as an asset on the Central Bank’s balance sheet because the bank’s accounting allows the ‘loss’ on leased gold to appear as a receivable credit. Better yet, the bank leveraged Nation X’s gold – which it now owns – to double its investment on the ETF market. That may appear to be accounting trickery and it is. But this carry trade deal is by no means rare and is quite common even if the collateral is not always physical gold.

NB: in real terms the CBBI is still ‘minus’ the $50M in traded currency but the $50M appears as a credit receivable on the bank’s balance sheet. That’s due to an accounting trick where leased gold is always a receivable regardless of status of the lease. But this type of trade deal is most useful when coupled with political designs on the failed state in conjunction with the nation bank/state’s political goals.

When multiple state assets are involved in gold swaps for currency such transactions can be multi-layered with severe political repercussions for the failed state when things go wrong. But such negative consequences usually impact the failed state only, while aiding the political ambitions of the Central Bank in the lessor country.


We have examined two important tools used by Central Banks above: the IMF gold collateral loan and the gold carry trade, the major point being that Central Banks can and do leverage their gold in many different ways – including the Federal Reserve – in conjunction with the Deep State/Security State apparatus in regard to its political ambitions. But why then did Ukraine go the IMF loan route while ‘Nation X’ took the ‘CBBI’ carry trade deal?

In Ukraine’s case a gold carry trade for a typical lease period is impractical, when Ukraine already has a history with the IMF and is not quite a failed state. Ukraine also possesses significant physical gold reserves that it may use as 10% collateral for such an IMF loan. Whereas an $18Bn USD lease (sale) of physical holdings represents ½ of daily gold trading, where most of those trades are non-allocated (ie not real). Then, at the end of the lease, the gold market could be negatively impacted (gold price goes higher) when the gold is re-purchased to satisfy the lease.

But even if the market could sustain an $18Bn gold lease dump (to provide Ukraine’s funding) a 1% GOFO rate is still a burden, and there is absolutely zero chance that Ukraine could ever satisfy the terms of a typical gold lease. Only the IMF loan makes sense for Ukraine just as the Nation X failed state could never qualify for an IMF loan — so only a carry trade makes sense for X.

Another question is why the bank doesn’t simply front Nation X the funds for its weapons. While covert government operations frequently do that – as the Afghanistan, Iraq, and Syrian insurgencies prove – banks are in business for a profit and Washington cannot service every failed state that it creates. Thus the need for real assets like Central Bank gold in this sort of trade.

Finally, many parts of the world are flooded with weaponry. Where did those weapons come from? Were they always supplied freely by the major powers to create their failed states? From Libya and the Sahel, Middle East and Afghanistan… perhaps we can define ‘money’ as being a claim on the weaponry/ armaments provided by governments and their Central Banks to the rest of the world.

*  *  *

Steve Brown is the author of “Iraq: the Road to War” (Sourcewatch) editor of “Bush Administration War Crimes in Iraq” (Sourcewatch) “Trump’s Limited Hangout” and “Federal Reserve: Out-sourcing the Monetary System to the Money Trust Oligarchs Since 1913”; Steve is an antiwar activist, a published scholar on the US monetary system, and has appeared as guest contributor to The Duran, Fort Russ News, Herland Report, Lew Rockwell Report, The  Ron Paul Institute, and Strategika51

Tyler Durden Tue, 11/26/2019 - 23:25
Published:11/26/2019 10:44:21 PM
[Markets] A $20 Trillion Problem: More Than Half Of China's Banks Fail Central Bank Stress Test A $20 Trillion Problem: More Than Half Of China's Banks Fail Central Bank Stress Test

In our latest look at the turmoil among China's small and medium banks, which included not only the recent bailouts and nationalizations of Baoshang Bank , Bank of Jinzhou, China's Heng Feng Bank, but also the two very troubling bank runs at China's Henan Yichuan Rural Commercial Bank at the start of the month, and then more recently at Yingkou Coastal Bank. 

As we further explained, the reason why so many (for now) smaller Chinese banks have found themselves either getting bailed out or hit by bank runs, is that in a time when China's interbank/repo rates have surged amid growing counterparty concerns, increasingly more banks have been forced to rely almost entirely on deposits to fund themselves, forcing them to hike their deposit rates to keep their funding levels stable.

Meanwhile, cuts in key lending rates since August to stimulate up a slowing economy have only exacerbated net interest margin pressures on banks.

In other words, with less income from lending and without the full suite of funding options available to much larger peers, the interest rates that China’s legion of small banks may have to offer to attract deposits could further undermine their stability. The irony is that to preserve their critical deposit base, small banks have to hike deposit rates even higher to stand out, in the process sapping their own lifeblood and ensuring their self-destruction, or as we dubbed it earlier, China's own version of Europe's "doom loop."

Dai Zhifeng, a banking analyst with Zhongtai Securities, told Reuters the funding difficulties risked distorting small banks’ behavior, making failure even more likely: "Lacking core competitiveness, some of them have turned to high-risk, short-sighted operations," he said, adding that a liquidity crunch was possible at some institutions.

But for a nation with a $40 trillion financial system, double the size of US banks, and well over 4,000 small, medium and massive, state-owned banks, here please recall that the 4 largest banks in the world are now Chinese:

  • ICBC: $4TN
  • China Construction: $3.4TN
  • Agri Bank of China: $3.3TN
  • Bank of China: $3.1TN

... the question how many banks will fail in the near future, is especially relevant not only for China but for the entire world.

Luckily, we got an answer from none other than China's central bank, which on Monday said that China’s banking sector is "showing signs of strain", with more than 13% of 4,379 lenders now considered “high risk” by the central bank.

In other words, take the 5 banks listed above which either suffered a bank run and/or were bailed out or nationalized, and add to them over 500 which are about to suffer the same fate.

As Bloomberg reports, in the PBOC's its 2019 China Financial Stability Report, the high risk category contains 586 banks and financing firms, most of which are smaller rural institutions. The report also comically noted that one bank got a "D" grade this year, meaning it went bankrupt, was taken over or lost its license. No banks were named in the report.

And here is why the next global financial crisis will likely start in some backward Chinese province best known for its massively polluting coal plants, ghost cities and made up GDP data: while foreign and private banks are seen as relatively safe, more than one third of rural lenders were rated "high risk," or those which are near failure.

Additionally, some medium- and small-sized financial institutions received poor ratings because of the slowing economy, with small lenders more sensitive to swings in the economy.

What did the PBOC do with this doomsday list? As Bloomberg reports, the central bank notified each bank of its rating, and required some to increase capital, reduce bad loans, limit dividends and even change management. In short, trillions in Chinese bank (non performing) assets are about to mysteriously disappear off the books while hundreds of local banks scramble to inject liquidity in their balance sheets, effectively removing free liquidity from the interbank market.

Separately, the PBOC also stress tested 30 medium- and large-sized banks in the first half of 2019. In the base-case scenario, assuming GDP growth dropped to 5.3% - or well above where China's real GDP is now - nine out of 30 major banks failed and saw their capital adequacy ratio drop to 13.47% from 14.43%. In the worst-case scenario, assuming GDP growth of 4.15%, or less than 2% below the latest official GDP print, more than half of China's banks, or 17 out of the 30 major banks failed the test. So with the entire Chinese financial system roughly $40 trillion, this suggests that China now has a rather insurmountable $20 trillion problem on its hands.

Separately, a liquidity stress test at 1,171 banks, representing nearly three-quarters of China’s banking sector by assets, showed that 90 failed in the base-case and 159 in the worst-case scenario.

* * *

According to the central bank, it made progress in containing financial risks in the past year, but warned that some potential threats require more time to eliminate. Financial risks can “occur easily” and more frequently as the economy cools and the risk of a slowdown in global growth increases, it said, clearly offering a very non-subtle hint of what is coming.

Faced with this complex situation, the central bank said that it should “stay cool-headed” to keep a balance between economic growth and risk control. It also means that the PBOC is now trapped - on one hand it can't cut rates further as it will push even more small banks into insolvent as per the "doom loop" described earlier, on the other it can't hike rates as then the entire economy would slow, resulting in unprecedented devastation and tens of trillions in bank assets wiped out.

Next year marks the last year in a three-year campaign by policy makers to contain financial risks. The PBOC said it will “fine-tune” its policies to fit the economic situation, ensuring that they aren’t too tight or too loose according to Bloomberg. The general direction of containing financial risks will be unchanged, in other words, despite the clear signs that things are bad and getting worse by the day - yes, there were two bank runs in the past two weeks - after years if not decades without a single bank crisis - the PBOC will do what China has been so good at doing in the past decade when it comes to addressing the unprecedented risks associated with a 320% debt/GDP and a $40 trillion financial system.

Tyler Durden Tue, 11/26/2019 - 22:41
Published:11/26/2019 9:52:46 PM
[Markets] We Can Only Choose One: Our National Economy Or Globalization We Can Only Choose One: Our National Economy Or Globalization

Authored by Charles Hugh Smith via OfTwoMinds blog,

The servitude of society to a globalized economy is generating extremes of insecurity, powerlessness and inequality.

Does our economy serve our society, or does our society serve our economy, and by extension, those few who extract most of the economic benefits? It's a question worth asking, as beneath the political churn around the globe, the issues raised by this question are driving the frustration and anger that's manifesting in social and political disorder.

A recent essay examines these issues in light of Brexit, which the author sees as a manifestation of dramatic but poorly understood changes in Britain's economy over the past 60 years:

How Britain was sold: Why we need to rethink the case for a national capitalism in the age of uncertainty.

"One of the reasons Brexit has become unstuck is that the changing nature of the British economy since the 1970s and 1980s has made it hard to identify what the economic interests of the nation really are.

If nothing else, Brexit has been a long overdue education in the realities of Britain’s economy.

While both liberals and Marxists argue that the nationality of capitalism does not matter, there is a need to rethink the case for a national capitalism in this age of economic inequality, political fracture and geopolitical uncertainty. If nothing else, by embedding the economy more deeply into the nation and the daily lives of its citizens, and by directing itself towards national purposes and having a greater stake in developing national skills and innovations, a national capitalism would underline and reinforce that lost idea of the common good."

It's shocking to recall that Britain had a large and vibrant domestically owned auto industry in the 1960s, and remained a major industrial power / exporter.

Now the primary source of "wealth" (to indicate the inclusion of what may well be phantom wealth as well as real wealth) is the global financialization industry centered in London, which spins off enough income and wealth to attract and support millions of domestic and international migrants.

The author makes a critical distinction between economies which retained domestically domiciled ownership of key industries and resources (Germany, Japan, Italy) and those countries that allowed core industries and resources to be bought (and exploited) by corporations headquartered elsewhere (Britain and Sweden, whose Volvo brand is owned by China's Greely).

If private-sector profit is all that matters-- that is, "the national interest" is defined as the expansion of private-sector wealth-- what does that do to the national economy and society?

This issue is illustrated by what domestic corporations are allowed to be sold to companies domiciled in competing or even potentially hostile nations. Imagine Japan allowing a Chinese company to buy Toyota, or Germany allowing a Chinese company to buy BMW.

In the U.S., Chinese efforts to buy "strategically sensitive" corporations have been rebuffed for self-evident reasons of national security: do we really want a hostile power's companies to control criticial energy, manufacturing, banking and technology industries? The obvious answer is "no."

The neoliberal ideology glorifies the notions that everyone benefits from everything being turned into a global marketplace, in which price/cost are "discovered" by the global market and financial profit is a priori end all to be all: the most profitable transactions will benefit everyone by maximizing the return on capital.

By this neoliberal, globalization logic, every nation should happily sell its core assets if the price is high enough.

The flaws in this notion are glaring: geopolitical conflict hasn't been eradicated by globalization, even as global corporations are erasing national boundaries, and the nations that sold off all their national assets for a quick profit will be an extreme disadvantage in any conflict, as they are essentially hollowed-out shells dependent on (or exposed to leverage wielded by) foreign entities.

The author takes some pains to note that it's very difficult to untangle globalized supply chains. As I've often noted in the blog, China is considered the "source" of Apple's iPhones (i.e. an "exporter" of iPhones), but as little as $6-$12 of the $400 phones actually stays in China: the vast majority of the money flows to parts suppliers around the world and to Apple HQ in Cupertino CA for the marketing, intellectual property/software and branding.

There are still auto assembly plants in Britain, but the parts originate from many other countries and the profits flow overseas.

Does a fully globalized economy serve the national interest, which is fundamentally social and political? Or does globalization hollow out the nation to benefit the few who gain the most from the sloshing around of globalized private capital?

The basic claim of neoliberal globalization is that "free trade" enriches us all by lowering costs of production and boosting the efficiency of capital. But spiraling costs and stagnating productivity suggest this claim is either false or contingent on factors outside the simplistic model of neoliberalism.

My recent book Will You Be Richer or Poorer? Profit, Power and A.I. in a Traumatized World focuses on intangible capital, and certainly national control of key resources and industries is a form of intangible capital, as is autarchy / self-sufficiency. What is the value of not being dependent on other nations for the essentials of food, energy, technology and capital?

We might also ask, what sort of society results from the globalization of the economy? Brexit and many other uprisings against the status quo reflect the inconvenient realities of social decay and disorder: soaring wealth-income inequality, loss of social mobility, decline of economic security, and a winner-take-most economy that favors those with access to cheap credit (to buy up productive assets and buy back stocks) and monopolistic control of domestic and global markets.

Defenders of neoliberalism say that these ills result from sources other than globalization, but as this essay shows, the most fundamental changes in national economies are clearly the result of neoliberal globalization, which glorifies the free flow of capital and credit around the world, exploiting inefficiencies, low-cost labor, untapped resources, lax environmental regulations, corrupt governance and the general dominance of private capital over labor and national identity.

Defenders of neoliberalism defend the hollowing out of national economies by pointing to cheaper consumer prices for goods such as shoes and TVs. This presumes the only thing of any importance is the price consumers pay at the point of purchase: that the domestic job market has been reduced to insecure positions doesn't count, that homes are no longer affordable to domestic workers, that the national identity has been reduced to consumers driven solely by the endless quest for the lowest prices-- none of this has any value or meaning in a neoliberal, borderless world of maximizing profit and shareholder value.

This is not to say that trade is never mutually beneficial: trade and capital flows have been an economic reality for over 3,000 years, dating back to the very lively trade of the Bronze Age. What does need to be challenged is the largely unexamined notion that the critical interests of political entities (nation-states) and societies are magically served by private capital maximizing returns via borderless global markets.

This neoliberal ideology conceals a corrosive reduction of national and social interests to market price and profit, as if a lower price offsets the hollowing out of national economies and the destabilization of the social order.

(Recall that U.S.corporate profits expanded to unprecedented heights once China entered the WTO and became Corporate America's low-wage workshop. If corporations cut production costs by $5, $1 was passed on to the consumer, $4 was pure profit and the reduction in quality--never calculated, of course--was minus $10. In other words, the supposed benefit to consumers ended up being minus $9, as the reduction in quality, quantity and durability offset any modest reduction in price. If we consider all costs, including the decline in quality, moving the supply chain to China was a catastrophe for consumers, despite claims to the contrary.)

What sort of national economy does the U.S. have? It remains an open question, but what is not in doubt is the servitude of society to a globalized economy is generating extremes of insecurity, powerlessness and inequality that are increasingly destabilizing socially, politically and economically.

*  *  *

My recent books:

Will You Be Richer or Poorer? Profit, Power and A.I. in a Traumatized World (Kindle $6.95, print $11.95) Read the first section for free (PDF).

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($6.95 (Kindle), $12 (print), $13.08 ( audiobook): Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 (Kindle), $8.95 (print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).

*  *  *

If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via

Tyler Durden Tue, 11/26/2019 - 18:05
Published:11/26/2019 5:13:43 PM
[Markets] Sebastian Junger: Is Our Material Wealth Undermining Our Happiness & Health? Sebastian Junger: Is Our Material Wealth Undermining Our Happiness & Health?

Authored by Adam Taggart via,

For all modern society has gained, we may have lost what really matters...

One the most personally meaningful podcast interviews we’ve done over the years was Our Evolutionary Need For Community, recorded with Peabody award-winning author Sebastian Junger. Junger is well-known for his NYT-bestselling books The Perfect Storm and War, the latter of which was written after a 15-month tour of duty in the most dangerous outpost in Afghanistan’s Korengal Valley.

Based on his observations while in Afghanistan, Junger noted how much troops in combat valued the social solidarity of their units. In fact, he noted that the loss of this cohesive community, with its sense of purpose and shared responsibility, created prodigious psychological strife when these soldiers returned and tried to re-integrate into civilian life. This dynamic is not just limited to the military; any collection of humans working in tight-knit groups under stress, united in purpose, evidences similar behavior (Peace Corps volunteers, trauma care physicians, etc).

In his excellent book Tribe: On Homecoming and Belonging, Junger explored our evolutionary wiring for community, and paradoxically, how our modern aspirations for “success” and “wealth” attempt to distance ourselves from it — making us unhappier and emotionally unhealthier in the pursuit.

Since recording our initial interview with Sebastian, we’ve often shared the insights from it with the Peak Prosperity tribe at live events and in our writings. So this week we decided to reconnect with Sebastian, and hear how his thoughts and conclusions on the topic have evolved since we last talked with him.

It’s clear that he believes more than ever that the future prosperity of our society will be rooted in rediscovering how to create and foster the communal bonds our tribal ancestors lived by. And that begins by taking an honest look at the narratives, behaviors, and modern conveniences and temptations that keep us trapped in unhappy, unhealthy isolation:

We live in the largest economy in the world. We’re arguably the most powerful country in the world and one of the wealthiest. But we also have some of the highest rates of depression, and suicide, and addiction of any country in the world.

In material terms, we’re doing incredibly well. But in basic human terms, we seem to be in a huge amount of psychological and maybe even spiritual distress. Is our material wealth undermining our psychological health? It’s not a stupid question.

Of course, there are stressors that come with poverty as well. But one thing you lose with affluence is you lose close communal connections with other people. The less you have, the more you need other people to make up for the shortfall. In a poor African village, everyone is pulling their water out of the same well, literally and metaphorically. We mustn’t romanticize poverty, of course, and the stressors that are associated with that and all kinds of other ills. But it does seem to mitigate psychological harm.

One study that I cited in my book, Tribe, was a cross-cultural look at depression levels. People with the highest rates of depression were urban dwellers in North America. That was the highest income group. The lowest levels of depression were people in rural Nigeria. The poorest.

So I look at our society and I think okay, the Amish don’t drive cars. They have very low levels of depression and suicide. The car brings great benefits, but if you really wanted to make a more cohesive communal society, you might think about getting rid of the car. That’s not going to happen. But if you want to really have an honest conversation about solutions to this particular problem, I would say the car is a great stressor in terms of social cohesion.

Another is the smartphone/social media. I think the smartphone is psychologically catastrophic for people. What a misnomer: “social media”. It’s an outright lie to call it :social” when it really is profoundly antisocial. To me it’s like the lie perpetrated by the tobacco industry in the 1970s that tobacco wasn’t bad for you. It’s on that level of deceit. People in Silicon Valley who engineered this stuff, who developed the social medial tools and all the software and the hardware that support them, as parents they’re not allowing their children screen time because they know it’s so toxic.

So when people ask What can we do? I advise going to the nearest body of water, taking your smart phone out of your pocket, and seeing how many skips you can get out of it before it drops to the bottom of the lake forever. That’s something we can each do to rejoin the human community.

Click the play button below to listen to Chris’ interview with Sebastian Junger (46m:28s).

Tyler Durden Tue, 11/26/2019 - 17:25
Published:11/26/2019 4:42:28 PM
[] Stacey Abrams' romance novel in development stage for CBS series You may know her as a former Georgia state politician. You may know her as a whiny loser in the last Georgia gubernatorial election. Stacey Abrams has another career path not so well-known. She's a romance novelist. One of her books is under development with CBS to become a television]] Published:11/26/2019 9:13:08 AM
[Markets] David Stockman Exposes The Ukrainian Influence-Peddling Rings, Part 3 Of 3 David Stockman Exposes The Ukrainian Influence-Peddling Rings, Part 3 Of 3

Authored by David Stockman via,

Read Part 1 here...

Read Part 2 here...

It’s beginning to seem like an assault by the Zulu army of American politics – they just never stop coming.

We are referring to the Russophobic neocon Deep Staters who have trooped before Adam’s Schiff Show to pillory POTUS for daring to look into the Ukrainian stench that engulfs the Imperial City – a rank odor that is owing to their own arrogant meddling in the the internal affairs of that woebegone country.

This time it was Dr. Fiona Hill who sanctimoniously advised the House committee that there is nothing to see on the Ukraine front that involved any legitimate matter of state; it was just the Donald and his tinfoil hat chums jeopardizing the serious business of protecting the national security by injecting electioneering into relations with Ukraine.

She warned Republicans that legitimizing an unsubstantiated theory that Kyiv undertook a concerted campaign to interfere in the election – a claim the president pushed repeatedly for Ukraine to investigate – played into Russia’s hands.

“In the course of this investigation,” Dr. Hill testified before the House Intelligence Committee’s impeachment hearings, “I would ask that you please not promote politically driven falsehoods that so clearly advance Russian interests.”

Folks, we are getting just plain sick and tired of this drumbeat of lies, misdirection and smug condescension by Washington payrollers like Fiona Hill. No Ukrainian interference in the 2016 US election?

Exactly what hay wagon does she think we fell off from?

Or better still, ask Paul Manafort who will spend his golden years in the Big House owing to an August 2016 leak to the New York Times about an alleged "black book" which recorded payments he had received from his work as an advisor to the Ukrainian political party of former president Yanakovych. As we have seen, the latter had been removed from office by a Washington instigated coup in February 2014.

By its own admission, this story came from the Ukrainian government and the purpose was clear as a bell: Namely, to undermine the Trump presidential campaign and force Manafort out of his months-old role as campaign chairman – a role that had finally brought some professional management to the Donald’s helter-skelter campaign for the nation’s highest office.

In the event, this well-timed bombshell worked, and in short order Manafort resigned, leaving the disheveled Trump campaign in the lurch:

…… government investigators examining secret records have found Manafort’s name, as well as companies he sought business with, as they try to untangle a corrupt network they say was used to loot Ukrainian assets and influence elections during the administration of Mr. Manafort’s main client, former President Viktor F. Yanukovych.

Handwritten ledgers show $12.7 million in undisclosed cash payments designated for Mr. Manafort from Mr. Yanukovych’s pro-Russian political party from 2007 to 2012, according to Ukraine’s newly formed National Anti-Corruption Bureau. Investigators assert that the disbursements were part of an illegal off-the-books system whose recipients also included election officials.

In addition, criminal prosecutors are investigating a group of offshore shell companies….. Among the hundreds of murky transactions these companies engaged in was an $18 million deal to sell Ukrainian cable television assets to a partnership put together by Mr. Manafort and a Russian oligarch, Oleg Deripaska, a close ally of President Vladimir V. Putin.

Mr. Manafort’s involvement with moneyed interests in Russia and Ukraine had previously come to light. But as American relationships there become a rising issue in the presidential campaign – from Mr. Trump’s favorable statements about Mr. Putin and his annexation of Crimea to the suspected Russian hacking of Democrats’ emails – an examination of Mr. Manafort’s activities offers new details of how he mixed politics and business out of public view and benefited from powerful interests now under scrutiny by the new government in Kiev.

The bolded lines in the NYT story above tell you exactly where this was coming from. The National Anti-Corruption Bureau had been set up by an outfit called "AntAC", which was jointly funded by George Soros and the Obama State Department. And there can be little doubt that the Donald’s accurate view at the time – that Crimea’s reunification with Mother Russia after a 60 year hiatus which had been ordered by the former Soviet Union’s Presidium – was unwelcome in Kiev and among the Washington puppeteers who had put it in power.

For want of doubt that the Poroshenko government was in the tank for Hillary Clinton, the liberal rag called Politico spilled the beans a few months later. In a January 11, 2017 story it revealed that the Ukrainian government had pulled out all the stops attempting to help Clinton, whose protégés at the State Department had been the masterminds of the coup which put them in office. Thus, Politico concluded,

Donald Trump wasn’t the only presidential candidate whose campaign was boosted by officials of a former Soviet bloc country.

Ukrainian government officials tried to help Hillary Clinton and undermine Trump by publicly questioning his fitness for office. They also disseminated documents implicating a top Trump aide in corruption and suggested they were investigating the matter, only to back away after the election. And they helped Clinton’s allies research damaging information on Trump and his advisers, a Politico investigation found.

…President Petro Poroshenko’s administration, along with the Ukrainian Embassy in Washington, insists that Ukraine stayed neutral in the race…..

But Politico’s investigation found evidence of Ukrainian government involvement in the race that appears to strain diplomatic protocol dictating that governments refrain from engaging in one another’s elections.

While it’s not uncommon for outside operatives to serve as intermediaries between governments and reporters, one of the more damaging Russia-related stories for the Trump campaign – and certainly for Manafort – can be traced more directly to the Ukrainian government.

Documents released by an independent Ukrainian government agency – and publicized by a parliamentarian – appeared to show $12.7 million in cash payments that were earmarked for Manafort by the Russia-aligned party of the deposed former president, Yanukovych.

The New York Times, in the August story revealing the ledgers’ existence, reported that the payments earmarked for Manafort were “a focus” of an investigation by Ukrainian anti-corruption officials, while CNN reported days later that the FBI was pursuing an overlapping inquiry.

Yet Fiona Hill sat before a House committee and under oath insisted that all of the above was a Trumpian conspiracy theory, thereby reminding us that the neocon Russophobes are so unhinged that they are prepared to lie at the drop of a hat to keep their false narrative about the Russian Threat and Putin’s "invasion" of Ukraine alive.

Needless to say, Fiona Hill is among the worst of the neocon warmongers, and has made a specialty of demonizing Russia and propagating over and over flat out lies about what happened in Kiev during 2014 and after. Thus, in one recent attack she claimed,

Russia today poses a greater foreign policy and security challenge to the United States and its Western allies than at any time since the height of the Cold War. Its annexation of Crimea, war in Ukraine’s Donbas region, and military intervention in Syria have upended Western calculations from Eastern Europe to the Middle East. Russia’s intervention in Syria, in particular, is a stark reminder that Russia is a multi-regional power…..

There is not a single true assertion in that quotation, of course, but we cite it for a very particular reason. Shifty Schiff & his impeachment tribunal have brought in Hill – and Lt. Colonel Vindman, Ambassador Taylor, George Kent and Tim Morrison previously – in order to created an echo chamber.

That’s right. The Dems are parroting the neocon lies – whether they believe them or not – in order to propagate the impression that the Donald is undermining national security in his effort to take a different posture on Russia and Ukraine, and is actually bordering on treason.
Thus, Adam Schiff repeated the false neocon narrative virtually word for word at the opening of the public hearings:

“In 2014, Russia invaded a United States ally, Ukraine, to reverse that nation’s embrace of the West, and to fulfill Vladimir Putin’s desire to rebuild a Russian empire.”

That’s pure rubbish. It’s based on the Big Lie that the overwhelming vote of the Russian population of Crimea in March 2014 was done at the gun point of the Russian Army. And that event, in turn, is the lynch-pin of the hoary canard that Putin is seeking to rebuild the Soviet Empire.

So it is necessary to review the truth once again about how Russian Crimea had been temporarily appended to the Ukrainian SSR during Soviet times.

The allegedly "occupied" territory of Crimea, in fact, was actually purchased from the Ottomans by Catherine the Great in 1783, thereby satisfying the longstanding quest of the Russian Czars for a warm-water port. Over the ages Sevastopol then emerged as a great naval base at the strategic tip of the Crimean peninsula, where it became home to the mighty Black Sea Fleet of the Czars and then the Soviet Union, too.

For the next 171 years Crimea was an integral part of Russia (until 1954). That span exceeds the 170 years that have elapsed since California was annexed by a similar thrust of "Manifest Destiny" on this continent, thereby providing, incidentally, the United States Navy with its own warm-water port in San Diego.

While no foreign forces subsequently invaded the California coasts, it was most definitely not Ukrainian and Polish rifles, artillery and blood which famously annihilated The Charge Of The Light Brigade at the Crimean city of Balaclava in 1854; they were Russians defending the homeland from Turks, French and Brits.

And the portrait of the Russian "hero" hanging in Putin’s office is that of Czar Nicholas I – whose brutal 30-year reign brought the Russian Empire to its historical zenith. Yet despite his cruelty, Nicholas I is revered in Russian hagiography as the defender of Crimea, even as he lost the 1850s war to the Ottomans and Europeans.

At the end of the day, security of its historic port in Crimea is Russia’s Red Line, not Washington’s. Unlike today’s feather-headed Washington pols, even the enfeebled Franklin Roosevelt at least knew that he was in Soviet Russia when he made port in the Crimean city of Yalta in February 1945.

Maneuvering to cement his control of the Kremlin in the intrigue-ridden struggle for succession after Stalin’s death a few years later, Nikita Khrushchev allegedly spent 15 minutes reviewing his "gift" of Crimea to his subalterns in Kiev.

As it happened, therefore, Crimea became part of the Ukraine only by writ of one of the most vicious and reprehensible states in human history – the former Soviet Union:

On April 26, 1954. The decree of the Presidium of the USSR Supreme Soviet transferring the Crimea Oblast from the Russian SFSR to the Ukrainian SSR…..Taking into account the integral character of the economy, the territorial proximity and the close economic and cultural ties between the Crimea Province and the Ukrainian SSR….

That’s right. Washington’s hypocritical and tendentious accusations against Russia’s re-absorption of Crimea imply that the dead-hand of the Soviet presidium must be defended at all costs – as if the security of North Dakota depended upon it!

In fact, the brouhaha about "returning" Crimea is a naked case of the hegemonic arrogance that has overtaken Imperial Washington since the 1991 Soviet demise.

After all, during the long decades of the Cold War, the West did nothing to liberate the "captive nation" of Ukraine – with or without the Crimean appendage bestowed upon it in 1954. Nor did it draw any red lines in the mid-1990’s when a financially desperate Ukraine rented back Sevastopol and the strategic redoubts of the Crimea to an equally pauperized Russia.

In short, in the era before we got our Pacific port in 1848, and even during the 170-year interval since then, America’s national security has depended not one whit on the status of Russian-speaking Crimea. That the local population has now chosen fealty to the Grand Thief in Moscow over the ruffians and rabble who have seized Kiev amounts to a giant: So what!

The truth is, when it comes to Ukraine there really isn’t that much there, there. Its boundaries have been morphing for centuries among the quarreling tribes, peoples, potentates, Patriarchs and pretenders of a small region that is none of Washington’s damn business..

Still, it was this final aggressive drive of Washington and NATO into the internal affairs of Russia’s historic neighbor and vassal, Ukraine, that largely accounts for the demonization of Putin. Likewise, it is virtually the entire source of the false claim that Russia has aggressive, expansionist designs on the former Warsaw Pact states in the Baltics, Poland and beyond.

The latter is a nonsensical fabrication. In fact, it was the neocon meddlers from Washington who crushed Ukraine’s last semblance of civil governance when they enabled ultra-nationalists and crypto-Nazis to gain government positions after the February 2014 putsch.

As we indicated above, in one fell swoop that inexcusable stupidity reopened Ukraine’s blood-soaked modern history. The latter incepted with Stalin’s re-population of the eastern Donbas region with “reliable” Russian workers after his genocidal liquidation of the kulaks in the early 1930s.

It was subsequently exacerbated by the large-scale collaboration by Ukrainian nationalists in the west with the Nazi Wehrmacht as it laid waste to Poles, Jews, gypsies and other “undesirables” on its way to Stalingrad in 1942-43. Thereafter followed an equal and opposite spree of barbaric revenge as the victorious Red Army marched back through Ukraine on its way to Berlin.

So it may be fairly asked. What beltway lame brains did not chance to understand that Washington’s triggering of “regime change” in Kiev would reopen this entire bloody history of sectarian and political strife?

Moreover, once they had opened Pandora’s box, why was it so hard to see that an outright partition of Ukraine with autonomy for the Donbas and Crimea, or even accession to the Russian state from which these communities had originated, would have been a perfectly reasonable resolution?

Certainly that would have been far preferable to dragging all of Europe into the lunacy of the current anti-Putin sanctions and embroiling the Ukrainian factions in a suicidal civil war. The alleged Russian threat to Europe, therefore, was manufactured in Imperial Washington, not the Kremlin.

In fact, in 1989 and 1990, the George H. W. Bush administration assured Soviet leader Mikhail Gorbachev that if he accepted German unification, the West would not seek to exploit the situation through any eastward expansion – not even by “one inch,” as then-secretary of state James Baker assured Gorbachev. But Bill Clinton reneged on that commitment, moving to expand NATO on an eastward path that eventually led right up to the Russian border.

So Robert Merry said it well in his excellent piece on the entire neocon Ukraine Scam that is being paraded before the Schiff Show.

NATO, with just 16 members in 1990, now includes 29 European states, with all of the expansion countries lying east of Germany. As this was unfolding, Russian leaders issued stern warnings about the consequences if America and the West sought to include in NATO either Ukraine or Georgia. Both are considered as fundamental to Russian security.

True, many in western Ukraine have pushed for greater ties to the West and wanted their elected president, Viktor Yanukovych, to respond favorably to Western financial blandishments. But Yanukovych, tilting toward Russia, eschewed NATO membership for Ukraine, renewed a long-term lease for the Russian Black Sea Fleet in Sevastopol, and gave official status to the Russian language. These actions eased tensions between Ukraine and Russia, but they inflamed Ukraine’s internal politics. And when Yanukovych abandoned negotiations aimed at an association and free-trade agreement with the European Union in favor of greater economic ties to Russia, pro-Western Ukrainians, including far-right provocateurs, staged street protests that ultimately brought down Yanukovych’s government. Victoria Nuland gleefully egged on the protesters. The deposed president fled to Russia.

Nuland then set about determining who would be Ukraine’s next prime minister, namely Arseniy Yatsenyuk. “Yats is our guy,” she declared to U.S. ambassador to Ukraine Geoffrey Pyatt. When Pyatt warned that many EU countries were uncomfortable with a Ukrainian coup, she shot back, “Fuck the EU.” She then got her man Yats into the prime minister position, demonstrating the influence that enables US meddling in foreign countries.

That’s when Putin rushed back to Moscow from the Winter Olympic Games at Sochi to protect the more Russian-oriented areas of Ukraine (the so-called Donbass in the country’s east and Crimea in the south) from being swallowed up in this new drama. He orchestrated a plebiscite in Crimea, which revealed strong sentiment for reunification with Russia (hardly the “sham referendum” described by Taylor) and sent significant military support to Donbass Ukrainians who didn’t want to be pulled westward.

The West and America have always been, and must remain, wary of Russia. Its position in the center of Eurasia – the global “heartland,” in the view of the famous British geographic scholar Halford Mackinder – renders it always a potential threat. Its vulnerability to invasion stirs in Russian leaders an inevitable hunger for protective lands. Its national temperament seems to include a natural tendency towards authoritarianism. Any sound American foreign policy must keep these things in mind.

But in the increasingly tense relationship between the Atlantic Alliance and Russia, the Alliance has been the more aggressive player – aggressive when it pushed for NATO’s eastward expansion despite promises to the contrary from the highest levels of the US government; aggressive when it turned that policy into an even more provocative plan for the encirclement of Russia; aggressive when it dangled the prospect of NATO membership for Ukraine and Georgia; aggressive when it sought to lure Ukraine out of the Russian orbit with economic incentives; aggressive when it helped foster the street coup against a duly elected Ukrainian government; and aggressive in its continued refusal to appreciate or acknowledge Russia’s legitimate geopolitical interests in its own neighborhood.

George Kent and William B. Taylor Jr., in their testimony last week, personified this aggressive outlook, designed to squeeze Russia into a geopolitical corner and trample upon its regional interests in the name of Western universalism. If that outlook continues and leads to ever greater tensions with Russia, it can’t end well.

That is, what is being desperately defended on Capitol Hill is not the rule of law, national security or fidelity to the Constitution of the United States., but a giant Neocon Lie that is needed to keep the Empire in business, and the world moving ever closer to an utterly unnecessary Cold War 2.0 between nation’s each pointing enough nuclear warheads at the other to destroy the planet.

*  *  *

David Stockman was a two-term Congressman from Michigan. He was also the Director of the Office of Management and Budget under President Ronald Reagan. After leaving the White House, Stockman had a 20-year career on Wall Street. He’s the author of three books, The Triumph of Politics: Why the Reagan Revolution FailedThe Great Deformation: The Corruption of Capitalism in America and TRUMPED! A Nation on the Brink of Ruin… And How to Bring It Back. He also is founder of David Stockman’s Contra Corner and David Stockman’s Bubble Finance Trader.

Tyler Durden Mon, 11/25/2019 - 22:25
Published:11/25/2019 9:38:03 PM
[Markets] Darn, This Is Inconvenient: Apple Is Destroying The Planet To Maximize Profits Darn, This Is Inconvenient: Apple Is Destroying The Planet To Maximize Profits

Authored by Charles Hugh Smith via OfTwoMinds blog,

Strip-mining the planet to maximize profits isn't progressive or renewable - it's just exploitive and destructive.

How do we describe the finding that the planet's most widely-owned super-corporation is destroying the planet to maximize its smartphone sales and profits? Shall we start with "inconvenient?" Yes, we're talking about Apple, famous for coercing customers to upgrade their Apple phones and other gadgets if not annually then every couple years, as the most effective way to maximize profits.

Unfortunately, smartphones require stripmining the planet, as described in this report, Smartphones Are Killing The Planet Faster Than Anyone Expected Researchers are sounding the alarm after an analysis showed that buying a new smartphone consumes as much energy as using an existing phone for an entire decade.

Smartphones are particularly insidious for a few reasons. With a two-year average life cycle, they're more or less disposable. The problem is that building a new smartphone--and specifically, mining the rare materials inside them--represents 85% to 95% of the device's total CO2 emissions for two years. That means buying one new phone takes as much energy as recharging and operating a smartphone for an entire decade.

despite the recycling programs run by Apple and others, "based on our research and other sources, currently less than 1% of smartphones are being recycled," Lotfi Belkhir, the study's lead author, tells me.

The researchers point out that mobile apps actually reinforce our need for these 24/7 servers in a self-perpetuating energy-hogging cycle. More phones require more servers. And with all this wireless information in the cloud, of course we're going to buy more phones capable of running even better apps.

Google, Facebook, and Apple have all pledged to move to 100% renewable energy in their own operations. In fact, all of Apple's servers are currently run on renewable power. "It's encouraging," says Belkhir of these early corporate efforts. "But I don't think it'd move the needle at all."

As consumers, we have more reason than ever to hesitate when it comes to our next shiny tech splurge. The bottom line is that we need to buy less, and engage less, for the health of this entire planet.

This is true not just for Apple, of course, but for Samsung and other manufacturers, but Apple has the rose-tinted "progressive" reputation, and so we should start with Apple, which has always been particularly aggressive in crippling the functionality of older products with a variety of tried and true tricks to force customers to buy a new device (sorry, Bucko, your old phone can't handle OS X.yz so it's now a useless brick).

It's not just CO2--smartphone components demand the expansion of environmentally destructive mining for essentials such as lithium:

Climate Change's Great Lithium Problem: The future of technology metal mining in South America and elsewhere could look eerily similar to centuries of colonial exploitation, dressed up as environmentalism: American highways could buzz with Teslas traveling between sprawling suburban rooftops and office parks decked out in solar panels, all premised on capitalist profiteering and disregard for indigenous rights.

What would happen to Apple's gargantuan profits were it to design, build and market smartphones and other devices to last a decade or longer? We all know what would happen: sales and profits would fall off a cliff, and hundreds of billions of dollars in stock market "wealth" would vanish as Apple stock declined to align with much lower profits and the end of the "endless growth" story.

(Apple enthusiasts claim Apple TV and other services will replace profits from phones, but at this point that is speculation without much supporting evidence.)

The disastrous environmental, social and political consequences of maximizing sales and profits regardless of "externalities" is not just Apple's problem--it's the entire developed world's problem. As for Apple's vaunted "renewable power"--the alternative energy technologies are not actually renewables, they're actually just "replaceables," in analyst / author Nate Hagens' succinct terminology; solar panels and wind turbines must be replaced every 20 years or so, if not earlier, and as a result their lifecycle costs are permanently high.

What looks "paid for" in year 19 suddenly becomes expensive in year 21.

Stripmining the planet to maximize profits isn't progressive or renewable--it's just exploitive and destructive. "Renewable power," blah blah blah-- corporate PR is no replacement for making truly durable-for-a-decade products that drastically reduce the disastrous environmental, social and political consequences of ever higher growth chasing ever higher profits.

*  *  *

My recent books:

Will You Be Richer or Poorer? Profit, Power and A.I. in a Traumatized World (Kindle $6.95, print $11.95) Read the first section for free (PDF).

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Tyler Durden Mon, 11/25/2019 - 17:05
Published:11/25/2019 4:07:03 PM
[Markets] The Difference Between Investing & Speculation The Difference Between Investing & Speculation

Authored by Lance Roberts via,

Are you an “investor” or a “speculator?” 

In today’s market the majority of investors are simply chasing performance. However, why would you NOT expect this to be the case when financial advisers, the mainstream media, and WallStreet continually press the idea that investors “must beat” some random benchmark index from one year to the next.

But, is this “speculation” or “investing?” 

Think about it this way.

If you were playing a hand of poker, and were dealt a “pair of deuces,” would you push all your chips to the center of the table?

Of course, not.

The reason is you intuitively understand the other factors “at play.” Even a cursory understanding of the game of poker suggests other players at the table are probably holding better hands which will lead to a rapid reduction of your wealth.

Investing, ultimately, is about managing the risks which will substantially reduce your ability to “stay in the game long enough” to “win.”

Robert Hagstrom, CFA penned a piece discussing the differences between investing and speculation:

“Philip Carret, who wrote The Art of Speculation (1930), believed “motive” was the test for determining the difference between investment and speculation. Carret connected the investor to the economics of the business and the speculator to price. ‘Speculation,’ wrote Carret, ‘may be defined as the purchase or sale of securities or commodities in expectation of profiting by fluctuations in their prices.’”

Chasing markets is the purest form of speculation. It is simply a bet on prices going higher rather than determining if the price being paid for those assets are selling at a discount to fair value.

Benjamin Graham, along with David Dodd, attempted a precise definition of investing and speculation in their seminal work Security Analysis (1934).

An investment operation is one which, upon thorough analysis, promises safety of principal and a satisfactory return. Operations not meeting these requirements are speculative.”

There is also very important passage in Graham’s The Intelligent Investor:

“The distinction between investment and speculation in common stocks has always been a useful one and its disappearance is a cause for concern. We have often said that Wall Street as an institution would be well advised to reinstate this distinction and to emphasize it in all its dealings with the public. Otherwise the stock exchanges may some day be blamed for heavy speculative losses, which those who suffered them had not been properly warned against.”

Indeed, the meaning of investment has been lost on most individuals. However, the following 10-guidelines from legendary investors of our time will hopefully get you back on track.

10-Investing Guidelines From Legendary Investors

1) Jeffrey Gundlach, DoubleLine

“The trick is to take risks and be paid for taking those risks, but to take a diversified basket of risks in a portfolio.”

This is a common theme that you will see throughout this post. Great investors focus on “risk management” because “risk” is not a function of how much money you will make, but how much you will lose when you are wrong. In investing, or gambling, you can only play as long as you have capital. If you lose too much capital but taking on excessive risk, you can no longer play the game.

Be greedy when others are fearful and fearful when others are greedy. One of the best times to invest is when uncertainty is the greatest and fear is the highest.

2) Ray Dalio, Bridgewater Associates

“The biggest mistake investors make is to believe that what happened in the recent past is likely to persist. They assume that something that was a good investment in the recent past is still a good investment. Typically, high past returns simply imply that an asset has become more expensive and is a poorer, not better, investment.”

Nothing good, or bad, goes on forever. The mistake that investors repeatedly make is thinking “this time is different.” The reality is that despite Central Bank interventions, or other artificial inputs, business and economic cycles cannot be repealed. Ultimately, what goes up, must and will come down.

Wall Street wants you to be fully invested “all the time” because that is how they generate fees. However, as an investor, it is crucially important to remember that “price is what you pay and value is what you get.” Eventually, great companies will trade at an attractive price. Until then, wait.

3) Seth Klarman, Baupost

“Most investors are primarily oriented toward return, how much they can make and pay little attention to risk, how much they can lose.”

Investor behavior, driven by cognitive biases, is the biggest risk in investing. “Greed and fear” dominate the investment cycle of investors which leads ultimately to “buying high and selling low.”

4) Jeremy Grantham, GMO

“You don’t get rewarded for taking risk; you get rewarded for buying cheap assets. And if the assets you bought got pushed up in price simply because they were risky, then you are not going to be rewarded for taking a risk; you are going to be punished for it.”

Successful investors avoid “risk” at all costs, even it means under performing in the short-term. The reason is that while the media and Wall Street have you focused on chasing market returns in the short-term, ultimately the excess “risk” built into your portfolio will lead to extremely poor long-term returns. Like Wyle E. Coyote, chasing financial markets higher will eventually lead you over the edge of the cliff.

5) Jesse Livermore, Speculator

“The speculator’s deadly enemies are: ignorance, greed, fear and hope. All the statute books in the world and all the rule books on all the Exchanges of the earth cannot eliminate these from the human animal….”

Allowing emotions to rule your investment strategy is, and always has been, a recipe for disaster. All great investors follow a strict diet of discipline, strategy, and risk management. The emotional mistakes show up in the returns of individuals portfolios over every time period. (Source: Dalbar)

6) Howard Marks, Oaktree Capital Management

“Rule No. 1: Most things will prove to be cyclical.

Rule No. 2: Some of the greatest opportunities for gain and loss come when other people forget Rule No. 1.”

As with Ray Dalio, the realization that nothing lasts forever is critically important to long term investing. In order to “buy low,” one must have first “sold high.” Understanding that all things are cyclical suggests that after long price increases, investments become more prone to declines than further advances.

7) James Montier, GMO

“There is a simple, although not easy alternative [to forecasting]… Buy when an asset is cheap, and sell when an asset gets expensive…. Valuation is the primary determinant of long-term returns, and the closest thing we have to a law of gravity in finance.”

“Cheap” is when an asset is selling for less than its intrinsic value. “Cheap” is not a low price per share. Most of the time when a stock has a very low price, it is priced there for a reason. However, a very high priced stock CAN be cheap. Price per share is only part of the valuation determination, not the measure of value itself.

8) George Soros, Soros Capital Management

“It’s not whether you’re right or wrong that’s important, but how much money you make when you’re right and how much you lose when you’re wrong.”

Back to risk management, being right and making money is great when markets are rising. However, rising markets tend to mask investment risk that is quickly revealed during market declines. If you fail to manage the risk in your portfolio, and give up all of your previous gains and then some, then you lose the investment game.

9) Jason Zweig, Wall Street Journal

“Regression to the mean is the most powerful law in financial physics: Periods of above-average performance are inevitably followed by below-average returns, and bad times inevitably set the stage for surprisingly good performance.”

The chart below is the 3-year average of annual inflation-adjusted returns of the S&P 500 going back to 1900. The power of regression is clearly seen. Historically, when returns have exceeded 10% it was not long before returns fell to 10% below the long-term mean which devastated much of investor’s capital.

10) Howard Marks, Oaktree Capital Management

“The biggest investing errors come not from factors that are informational or analytical, but from those that are psychological.”

The biggest driver of long-term investment returns is the minimization of psychological investment mistakes.

As Baron Rothschild once stated: “Buy when there is blood in the streets.” This simply means that when investors are “panic selling,” you want to be the one they are selling to at deeply discounted prices. Howard Marks opined much of the same sentiment: “The absolute best buying opportunities come when asset holders are forced to sell.”

As an investor, it is simply your job to step away from your “emotions” for a moment and look objectively at the market around you. Is it currently dominated by “greed” or “fear?” Your long-term returns will depend greatly not only on how you answer that question, but to manage the inherent risk.

“The investor’s chief problem – and even his worst enemy – is likely to be himself.” – Benjamin Graham

As I stated at the beginning of this missive, “Market Timing” is not an effective method of managing your money. However, as you will note, every great investor through out history has had one core philosophy in common; the management of the inherent risk of investing to conserve and preserve investment capital.

“If you run out of chips, you are out of the game.”

Tyler Durden Mon, 11/25/2019 - 11:58
Published:11/25/2019 11:06:59 AM
[TC] Scribd raises $58M for subscription e-books and audiobooks Scribd has raised $58 million in new funding led by growth firm Spectrum Equity. The company first launched as a document-sharing service in 2007 before creating an e-book subscriptio in 2013. It now offers access to a library of e-books, audiobooks, newspapers and magazines for $8.99 per month. (Access is unlimited for most subscribers, but […] Published:11/25/2019 5:05:49 AM
[Markets] The Origins Of Thought Police... And Why They Should Scare Us The Origins Of Thought Police... And Why They Should Scare Us

Authored by Jon Miltimore via The Foundation for Economic Education,

There are a lot of unpleasant things in George Orwell’s dystopian novel 1984. Spying screens. Torture and propaganda. Victory Gin and Victory Coffee always sounded particularly dreadful. And there is Winston Smith’s varicose ulcer, apparently a symbol of his humanity (or something), which always seems to be “throbbing.” Gross.

None of this sounds very enjoyable, but it’s not the worst thing in 1984. To me, the most terrifying part was that you couldn’t keep Big Brother out of your head.

Unlike other 20th-century totalitarians, the authoritarians in 1984 aren’t that interested in controlling behavior or speech. They do, of course, but it’s only as a means to an end. Their real goal is to control the gray matter between the ears.

“When finally you surrender to us, it must be of your own free will,” O’Brien (the bad guy) tells the protagonist Winston Smith near the end of the book.

We do not destroy the heretic because he resists us: so long as he resists us we never destroy him. We convert him, we capture his inner mind, we reshape him.

Big Brother’s tool for doing this is the Thought Police, aka the ThinkPol, who are assigned to root out and punish unapproved thoughts. We see how this works when Winston’s neighbor Parsons, an obnoxious Party sycophant, is reported to the Thought Police by his own child, who heard him commit a thought crime while talking in his sleep.

"It was my little daughter," Parsons tells Winston when asked who it was who denounced him.

"She listened at the keyhole. Heard what I was saying, and nipped off to the patrols the very next day. Pretty smart for a nipper of seven, eh?”

We don’t know a lot about the Thought Police, and some of what we think we know may actually not be true since some of what Winston learns comes from the Inner Party, and they lie.

What we know is this: The Thought Police are secret police of Oceania—the fictional land of 1984 that probably consists of the UK, the Americas, and parts of Africa—who use surveillance and informants to monitor the thoughts of citizens. The Thought Police also use psychological warfare and false-flag operations to entrap free thinkers or nonconformists.

Those who stray from Party orthodoxy are punished but not killed. The Thought Police don’t want to kill nonconformists so much as break them. This happens in Room 101 of the Ministry of Love, where prisoners are re-educated through degradation and torture. (Funny sidebar: the name Room 101 apparently was inspired by a conference room at the BBC in which Orwell was forced to endure tediously long meetings.)

Orwell didn’t create the Thought Police out of thin air. They were inspired to at least some degree by his experiences in the Spanish Civil War (1936-1939), a complicated and confusing affair. What you really need to know is that there were no good guys, and it ended with left-leaning anarchists and Republicans in Spain crushed by their Communist overlords, which helped the fascists win.

Orwell, an idealistic 33-year-old socialist when the conflict started, supported the anarchists and loyalists fighting for the left-leaning Second Spanish Republic, which received most of its support from the Soviet Union and Josef Stalin. (That might sound bad, but keep in mind that the Nazis were on the other side.) Orwell described the atmosphere in Barcelona in December 1936 when everything seemed to be going well for his side.

The anarchists were still in virtual control of Catalonia and the revolution was still in full swing ... It was the first time that I had ever been in a town where the working class was in the saddle,

he wrote in Homage to Catalonia.

[E]very wall was scrawled with the hammer and sickle ... every shop and café had an inscription saying that it had been collectivized.

That all changed pretty fast. Stalin, a rather paranoid fellow, was bent on making Republican Spain loyal to him. Factions and leaders perceived as loyal to his exiled Communist rival, Leon Trotsky, were liquidated. Loyal Communists found themselves denounced as fascists. Nonconformists and “uncontrollables” were disappeared.

Orwell never forgot the purges or the steady stream of lies and propaganda churned out from Communist papers during the conflict. (To be fair, their Nationalist opponents also used propaganda and lies.) Stalin’s NKVD was not exactly like the Thought Police—the NKVD showed less patience with its victims—but they certainly helped inspire Orwell’s secret police.

The Thought Police were not all propaganda and torture, though. They also stem from Orwell’s ideas on truth. During his time in Spain, he saw how power could corrupt truth, and he shared these reflections in his work George Orwell: My Country Right or Left, 1940-1943.

...I saw newspaper reports which did not bear any relation to the facts, not even the relationship which is implied in an ordinary lie. I saw great battles reported where there had been no fighting, and complete silence where hundreds of men had been killed. I saw troops who had fought bravely denounced as cowards and traitors, and others who had never seen a shot fired hailed as the heroes of imaginary victories; and I saw newspapers in London retailing these lies and eager intellectuals building emotional superstructures over events that had never happened.

In short, Orwell’s brush with totalitarianism left him worried that “the very concept of objective truth is fading out of the world.”

This scared him. A lot. He actually wrote, “This kind of thing is frightening to me.”

Finally, the Thought Police were also inspired by the human struggle for self-honesty and the pressure to conform. “The individual has always had to struggle to keep from being overwhelmed by the tribe,” Rudyard Kipling once observed.

The struggle to remain true to one’s self was also felt by Orwell, who wrote about “the smelly little orthodoxies” that contend for the human soul. Orwell prided himself with a "power of facing unpleasant facts"—something of a rarity in humans—even though it often hurt him in British society.

In a sense, 1984 is largely a book about the human capacity to maintain a grip on the truth in the face of propaganda and power.

It might be tempting to dismiss Orwell’s book as a figment of dystopian literature. Unfortunately, that’s not as easy as it sounds. Modern history shows he was onto something.

When the Berlin Wall came down in November 1989, it was revealed that the Stasi, East Germany’s secret police, had a full-time staff of 91,000.

When the Berlin Wall came down in November 1989, it was revealed that the Stasi, East Germany’s secret police, had a full-time staff of 91,000. That sounds like a lot, and it is, but what’s frightening is that the organization had almost double that in informants, including children. And it wasn’t just children reporting on parents; sometimes it was the other way around.

Nor did the use of state spies to prosecute thoughtcrimes end with the fall of the Soviet Union. Believe it or not, it’s still happening today. The New York Times recently ran a report featuring one Peng Wei, a 21-year-old Chinese chemistry major. He is one of the thousands of “student information officers” China uses to root out professors who show signs of disloyalty to President Xi Jinping or the Communist Party.

The First Amendment of the US Constitution, fortunately, largely protects Americans from the creepy authoritarian systems found in 1984, East Germany, and China; but the rise of “cancel culture” shows the pressure to conform to all sorts of orthodoxies (smelly or not) remains strong.

The new Thought Police may be less sinister than the ThinkPol in 1984, but the next generation will have to decide if seeking conformity of thought or language through public shaming is healthy or suffocating. FEE’s Dan Sanchez recently observed that many people today feel like they’re “walking on eggshells” and live in fear of making a verbal mistake that could draw condemnation.

That’s a lot of pressure, especially for people still learning the acceptable boundaries of a new moral code that is constantly evolving. Most people, if the pressure is sufficient, will eventually say “2+2=5” just to escape punishment. That’s exactly what Winston Smith does at the end of 1984, after all. Yet Orwell also leaves readers with a glimmer of hope.

“Being in a minority, even a minority of one, did not make you mad,” Orwell wrote.

“There was truth and there was untruth, and if you clung to the truth even against the whole world, you were not mad.”

In other words, the world may be mad, but that doesn’t mean you have to be.

Tyler Durden Thu, 11/21/2019 - 20:25
Published:11/21/2019 7:47:32 PM
[Markets] Deal On, Deal Off: Futures Jump And Slide Amid Barrage Of Conflicting Trade Headlines Deal On, Deal Off: Futures Jump And Slide Amid Barrage Of Conflicting Trade Headlines

Stocks bounced around over the past 24 hours amid an optimistic/pessimistic headline barrage that triggered wave after wave of buying then selling then buying again, as the standoff between the world’s two largest economies expanded beyond trade, reducing the odds of a "phase-one" deal this year and forcing investors to shed risky assets.

The barrage of news, facts, rumor, innuendo, speculation and outright lies, started around noon on Wednesday, when Reuters reported that the trade deal could be delayed into 2020, while Global Times' EIC sniped periodically from his twitter account warning that China is ready for full-blown trade war. Futures then staged their latest miraculous comeback, gravitating around the "gamma gravity" of S&P 3,100 before the House passed the Bill of support for Hong Kong protestors just after 5pm, once again spooking futures, especially after Bloomberg reported that Trump would likely sign the bill. Futures then slid to session lows again before rebounding on a Bloomberg report that China's top trade negotiator Liu He was "cautiously optimistic" if "confused" at a dinner on Wednesday, even if Bloomberg failed to point out that due to the magic of time zones, the dinner took place some 12 hours earlier. A few hours later, around 2am, futures pushed to session highs after China's commerce ministry said that China will "strive to reach an initial trade agreement" with the United States as both sides keep communication channels open. The good mood lasted for about an hour, when senior Chinese diplomat Wawng Yi said China "resolutely opposes" US lawmakers passing the Hong Kong human rights bill. Then, pessimism quickly turned to optimism just after 5am when the WSJ reported that China invited US trade negotiators to Beijing for further talks. The burst higher quickly faded when algos read a little deeper into the article to find that the phone call invitation took place last week, long before all the latest turmoil took place. As the WSJ added "US negotiators said they would be willing to meet in person, but would be reluctant travel all the way to China, unless they make it clear that it would make commitments on IP protection, forced technology transfers and ag purchases." Needless to say, there was no trip.

All of this leaves us roughly where we started, with S&P futures virtually unchanged, as shown in the summary below.

And as the WSJ's Lingling Wei summarized this ping-ponging back and forth, this is what the main impasse is currently:

  • China resisting US request to guarantee ag purchase;
  • China balks at stronger language on IP and tech without guarantee on tariff rollback, while U.S. doesn't want to agree to tariff move until they get Chinese commitment.

Or as another twitter commentator summarized, "Both sides are locked in a game of chicken, and the clock is ticking towards Dec. 15th."

"The cracks in equity market sentiment widened a little further yesterday, although this setback remains modest in the context of the index gains enjoyed so far in Q4," said Ian Williams, economics & strategy research analyst at Peel Hunt.

So with November almost over, and a December 15 tariff hike looming without any plan for a meeting between Trump and Xi in place, let along agreement on a deal, where does all this leave us? As Reuters puts it, investors had hoped for a U.S.-China trade deal by mid-November but the absence of one, and Washington’s bill to support protesters in Hong Kong, has brought progress grinding to a halt. With U.S. President Donald Trump seen as likely to sign the bill, Deutsche Bank said this "could risk progress toward a phase one trade deal."

On the other hand, since neither news nor fundamentals matter, European shares and US equity futures bounced back from day lows in late morning trade as fresh reports emerged that China has invited top U.S. trade negotiators for a new round of face-to-face talks in Beijing... only for it to be later revealed that the invitation took place last week.

In any case, the trade-sensitive German blue-chip index was down 0.2%, recovering from a 0.9% fall, after the Wall Street Journal reported Beijing hopes the round of talks can take place before next Thursday's Thanksgiving holiday in the United States. Thyssenkrupp AG shares tumbled, after the steelmaker said it was suspending dividend payments and warned of deepening losses; the move helped the Stoxx 600 fall to its lowest intraday level since Nov. 1; basic resources, financial services and technology lead the drop, dropping as much as 1%.

U.S. S&P 500 futures were marginally down, having dropped as much as 0.6% in Asian trade (see chart above). The S&P 500 had hit a record high as recently as Tuesday on trade deal hopes, but Washington’s move on Hong Kong derailed the rally.

Earlier in the session, MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.1% to a near three-week lows, with Hong Kong's Hang Seng tumbling 1.6% while Japan's Nikkei dropped 0.5%. Chinese mainland shares dropped 0.3%. Asian stocks retreated for a second day, led by technology firms, as the House passage of a bill supporting Hong Kong protesters stoked concern that trade talks between Beijing and Washington would collapse. Japan’s Topix edged lower for a third day as electric-appliance makers and pharmaceutical companies weighed on the gauge. The Shanghai Composite Index dropped, dragged lower by large insurers and banks. India’s Sensex fluctuated, with gains in financial stocks offsetting concerns about slowing economic growth.

Meanwhile, investors who had sought the safety of government bonds, the yen and gold in early trade shifted back from those positions after China reportedly invited U.S. negotiators for talks. German government bond yields bounced back from two-week lows, while the 10-year U.S. Treasuries yield rose to 1.7551% off three-week lows touched earlier in the day.

In FX, the Bloomberg Dollar Spot Index reversed modest gains to drop 0.1% on the day, still up 0.1% on the week so far after the optimistic comment’s by China’s chief trade negotiator. The Chinese yuan meanwhile cut some losses after hitting three-week lows, and were last trading at 7.0210 to the dollar in onshore trade. The Japanese yen, which rallied almost 1% from more than five-month lows, was flat against the greenback. The euro gained slightly and was last trading at $1.1083 ahead of the release of minutes of the European Central Bank's most recent policy meeting.

“Our short-term strategy remains fairly cautious, as markets are very narrowly driven — every positive piece of news in trade negotiations sends markets higher, while any disappointment sinks,” said Marija Veitmane, Senior Strategist at State Street Global Markets. “This makes it very hard for investors to build positions in risk trades.”

In commodities, oil prices dipped, paring some of the 2% gains made on Wednesday after a better-than-expected U.S. crude inventories report and as Russia said it would continue its cooperation with OPEC to keep the market balanced. Global benchmark Brent futures dropped 0.4% to $62.08. U.S. West Texas Intermediate (WTI) crude futures were down 0.4% at $56.73 per barrel in early Thursday trade. Spot gold gains to trade 0.2% lower at $1,468.91 per ounce as of 1127 GMT.

In geopolitics, US Defence Secretary Esper said US does not regret taking high road on halting joint drills, while he added that North Korea's response was not positive and that he hasn't heard of reports to withdraw troops from South Korea.

Turning to the day ahead, we’ll get the Philadelphia Fed’s business outlook for November, existing home sales and the leading index for October, and weekly initial jobless claims. Finally, the OECD will be releasing their economic outlook, and we’ll get earnings from Thyssenkrupp and Macy’s. Back on this side of the Atlantic, the opposition Labour Party will be launching their election manifesto today.

Market Snapshot

  • S&P 500 futures little changed at 3,110.25
  • STOXX Europe 600 down 0.7% to 401.20
  • MXAP down 0.7% to 163.42
  • MXAPJ down 1.1% to 520.98
  • Nikkei down 0.5% to 23,038.58
  • Topix down 0.1% to 1,689.38
  • Hang Seng Index down 1.6% to 26,466.88
  • Shanghai Composite down 0.3% to 2,903.64
  • Sensex down 0.2% to 40,565.32
  • Australia S&P/ASX 200 down 0.7% to 6,672.91
  • Kospi down 1.4% to 2,096.60
  • German 10Y yield unchanged at -0.346%
  • Euro up 0.1% to $1.1086
  • Italian 10Y yield fell 4.4 bps to 0.855%
  • Spanish 10Y yield rose 0.6 bps to 0.431%
  • Brent futures down 0.4% to $62.15/bbl
  • Gold spot down 0.2% to $1,468.85
  • U.S. Dollar Index down 0.1% to 97.80

Top Overnight News from Bloomberg

  • U.S. President Donald Trump is expected to sign legislation passed by Congress supporting Hong Kong protesters, setting up a confrontation with China that could imperil a long-awaited trade deal between the world’s two largest economies
  • China’s chief negotiator, Liu He, told one of the attendees at Wednesday night’s dinner that he was “confused” about the U.S. demands, but was confident the first phase of an agreement could be completed
  • U.S. House clears legislation showing support for pro-democracy protesters in Hong Kong by requiring an annual review of whether the city is sufficiently autonomous from Beijing to justify its special trading status, defying objections from China
  • Labour leader Jeremy Corbyn will urge voters in the U.K. election to take down bankers and billionaires who “profit from a rigged system.” Corbyn will launch an all-out assault on the wealthiest people in Britain on Thursday, when he unveils an election manifesto
  • U.K. Prime Minister Boris Johnson blew the lid off his Conservative Party’s biggest election tax-cut pledge so far, in a chaotic and disjointed announcement in which he repeatedly got the details wrong
  • European Central Bank is nearing a decision to launch a review of its policy strategy, chief economist Philip Lane said Wednesday, as officials struggle to boost inflation despite years of massive stimulus
  • U.S. envoy Gordon Sondland said Rudy Giuliani demanded a quid pro quo from Ukraine by holding up a White House meeting unless the country’s leader announced investigations that would benefit Trump politically
  • Former Israeli military chief Benny Gantz failed to muster enough support in parliament to form a government and dislodge Prime Minister Benjamin Netanyahu, bringing the nation closer to its third election in a year
  • Oil jumps the most since the first of the month as American crude stockpiles at a key storage hub shrank by the most since August
  • U.K. government borrowing is on the rise even before the winner of next month’s election opens up the spending taps
  • Oil and gas companies operating in Norway raised their investment forecast for next year, thanks to more projects and also higher costs on some developments
  • Indonesia’s central bank left its key interest rate unchanged at 5% on Thursday after four straight cuts but reduced the proportion of funds banks must hold in reserve, a move to stimulate Southeast Asia’s largest economy
  • Former U.S. Secretary of State Henry Kissinger said the U.S. and China were in the “foothills of a Cold War,” and warned that the conflict could be worse than World War I if left to run unconstrained

Asian equity markets declined across the board with risk sentiment rattled by increased trade pessimism after source reports noted the US-China phase one deal may not be completed this year and US President Trump suggested China is not stepping up to the level he wants. In addition, the House passage of the Hong Kong rights bill which President Trump is expected to sign, added another front to the trade uncertainty. ASX 200 (-0.7%) and Nikkei 225 (-0.5%) traded negatively with Australia dragged by underperformance in trade sensitive sectors such as tech, materials, and industrials, while Tokyo exporters suffered the ill-effects from safe-haven flows into the domestic currency. Hang Seng (-1.6%) and Shanghai Comp. (-0.3%) were also downbeat on the trade-related doubts and with China media outlets continuing to voice their backlash to the US ‘interference’, while the losses in Hong Kong initially snowballed as all components in its benchmark index briefly resided in the red, although there was mild relief following comments from Chinese Vice Premier Liu He who was cautiously optimistic about reaching an agreement and remained confident despite being confused regarding US demands. Finally, 10yr JGBs were underpinned by the early safe-haven demand although gains were later capped as advances in T-notes stalled around the 130.00 level and with the BoJ only in the market today for Treasury Discount bills.

People's Daily commentary stated the Hong Kong Human Rights and Democracy Act is a piece of wastepaper that interferes in China's internal affairs, while China Global Times tweeted that the US Senate's move on Hong Kong bill will hurt US investments in Hong Kong and may lead to retaliation citing an expert. Elsewhere, CNBC's Yoon tweeted that China will double down on attacks of US Congress after the House passed legislation supporting Hong Kong protesters, while she suggested both China and the US will not want to link the Hong Kong bill to current trade talks and also tweeted the Chinese feel the US is the one that needs to make the next move with tariff rollbacks to show sincerity, make deal “balanced” and give Beijing face.

Chinese Premier Li said China's economy maintained stable performance this year and that China will keep macro policies stable, while it needs to use all possible means to lower real interest rates. Premier Li added China will stick to its reform agenda and that both foreign and domestic companies will be treated as equals regardless of ownership structure.

Top Asian News

  • Bankers Say Hong Kong’s Rich Are Ensuring Their Cash Can Escape
  • Czech Tycoon’s Home Credit Cancels $1.5 Billion Hong Kong IPO
  • China Still Has Room for Monetary Policy, Ex-PBOC Head Zhou Says
  • India to Privatize Oil Refiner, Ship Owner in Big Sales Push

Major European bourses (Euro Stoxx 50 -0.7%) are lower across the board but off worst levels, as hopes for a prompt US/China phase 1 trade accord fade on a series of negative developments. However, global equities were lifted off overnight lows on more upbeat comments from Chinese Vice Premier Liu, who said he is cautiously optimistic about agreeing a Phase One deal with US and remains confident but confused about US demands, whilst the WSJ report on China inviting US negotiators for a meeting also aided sentiment. Sectors are mostly in the red, barring Telecoms (-0.1%), with the more defensive Utilities (+0.2%) and Consumer Staples (-0.2%) holding up slightly better. In terms of notable movers; Tobacco names Imperial Brands (+0.8%) and British American Tobacco (+3.0%) received a boost from the news that US regulators have dropped a plan to sharply reduce nicotine content in cigarettes, with the former affected by ex-divs. Topping the Stoxx 600 chart is Centrica (+8.2%), who maintained its FY outlook, which some desks noted is a positive turn around after a series of downgrades to its outlook. Conversely, the notable Stoxx 600 loser is Royal Mail (-16.2%), who warned that revenue and cost headwinds could possibly result in a break-even or loss-making position for UK business in 2020-21 whilst warnings that its transformation plan to expand its parcels business internationally was behind schedule. Another laggard is ThyssenKrupp (-10.3%), sinking post-earnings on the news that the Co. will not achieve its medium-term targets set for 2020/21, with a weak economy weighing on margins, thus its peers Salzgitter (-1.4%) and ArcelorMittal (-2.2%) are lower in sympathy. Elsewhere, Fiat Chrysler (-1.8%) is under pressure after General Motors yesterday filed a racketeering lawsuit against Fiat Chrysler and three former executives, asserting that it bribed UAW officials to get more favourable contract terms. A Fiat Chrysler spokesperson said that the Co. believes GM is trying to disrupt its merger with PSA (-0.6%), who opened lower in sympathy but have since come off worst levels. Separately, LVMH (-1.1%) upped its offer for Tiffany & Co. to USD 130/shr the previous USD 120/shr offer, prompting Tiffany to open its books and thus upping the chances of a deal, according to sources. Finally, Sanofi (+1.6%) sharply reversed early losses on the news that the Co. is mulling options for its USD 30bln consumer health unit.

Top European News

  • U.K. Budget Deficit Widens Before Election Spending Bonanza
  • Bouygues Is Said to Seek Partners for $2.2 Billion Fiber Work
  • Gazprom Unit Offers $3.3 Billion of Gas Giant’s Shares Today
  • CMA Opens Investigation Into Hasbro, Entertainment One Deal

In FX, the broad Dollar and Index have drifted off overnight highs in early EU trade in wake of upbeat comments from China’s MOFCOM, who reaffirmed determination to reach a Phase One deal whilst dismissing rumours of disagreements in discussions. This follow comments from Chinese Vice Premier overnight who expressed cautious optimism regarding a deal. However, markets are gathering focus around the Hong Kong Human Rights bill, which was almost unanimously passed by the House overnight, with sources stating that US President Trump plans to sign the bill, which could be on his desk as soon as today. The bill could potentially imperil the trade deal between the two nations and is facing fierce backlash from Chinese officials. DXY remains below 98.00 (having shown little reaction to the FOMC Minutes) and has dipped under its 21 DMA and WMAs both coinciding around 97.86-87 to a session low of 97.80. The CNH meanwhile remains little changed on the day, albeit choppy as it balances trade optimism with potential ramifications from the HK bill. USD/CNH trades near the bottom of its current 7.0350-0530 range having earlier dipped below its 100 DMA (7.0428). CNH then saw a mild bout of strength amid sources reports noting that China last week invited US negotiators for further talks.

  • AUD, NZD, JPY - All modestly firmer and moving in tandem to the weakening USD as conflicting trade sentiment provide little to move on, although late source reports on China inviting US negotiators underpinned the antipodeans and influence mild outflow in the JPY. AUD climbed off overnight lows (0.6785) to reclaim 0.6800+ status ahead of its 50 DMA at 0.6812 (with AUD 1bln expiring at strikes 0.6800-10) whilst its Kiwi counterpart remains above 0.6400 (0.6424 current intraday high) having earlier tested the figure to the downside. Similarly, safe-havens remain firmer; USD/JPY trades just above 108.50 (current intraday range 108.30-66) looking ahead to a barrage of option expiries at 108.25-35 (1.7bln), 108.40-50 (2.7bln) abd 108.65-75 (1.3bln), whilst technicians will be eyeing resistance and support 108.74 (21 DMA) and 108.27 (50 DMA) respectively.
  • EUR, GBP - Once again, Sterling and the Single currency move in lockstep to the Dollar with little on the domestic front to spark individual movements ahead of the Labour manifesto release later today. Cable took out touted offers at 1.2945 ahead of more at 1.2950 with around 1bln in options expiring at 1.2955-65 and a further 1.8bln around 1.2990-1.300. Meanwhile, EUR/USD eclipsed its 100 DMA at 1.1087-88 in early trade with the next level to the upside its 21 WMA at 1.1094. Large options expiries for the pair reside at 1.1090 (1.4bln) and 1.1100-10 (1bln) for today’s NY cut, with little fireworks expected from the ECB Minutes.

In commodities, the crude complex is modestly lower on Thursday morning, reflective of the markets cautious tone following a litany of mixed US/China trade updates, although in the context of yesterday’s post bullish EIA Inventory data upside the moves are relatively small. Front month WTI and Brent contracts are subdued under 57/bbl and modestly above USD 62/bbl, some way off yesterday’s USD 57.40 and USD 62.80/bbl highs. In terms of crude specific news flow; the Norwegian Q4 oil investment survey revealed that 2019’s figure was revised slightly higher NOK 183bln, while the 2020 figure came in at NOK 182.7bln. Although lower than their expectations, Nordea notes that “the survey did not yet cover some big field developments such as Balder X which we assumed would be included”. In terms of metals, gold was consolidating between the USD 1470-1475/oz levels but saw some mild downside in recent trade on the WSJ source article. Market caution is, however, exerting downward pressure on Copper, which is heading towards weekly lows around USD 2.614/lbs after hitting weekly highs yesterday at USD 2.666/lbs.

US Event Calendar

  • 8:30am: Philadelphia Fed Business Outlook, est. 6, prior 5.6
  • 8:30am: Initial Jobless Claims, est. 218,000, prior 225,000; Continuing Claims, est. 1.68m, prior 1.68m
  • 9:45am: Bloomberg Consumer Comfort, prior 58; Bloomberg Economic Expectations, prior 49
  • 10am: Leading Index, est. -0.2%, prior -0.1%
  • 10am: Existing Home Sales, est. 5.49m, prior 5.38m; Existing Home Sales MoM, est. 2.04%, prior -2.2%

DB's Jim Reid concludes the overnight wrap

I’ve been trying to predict the future of markets for nearly 25 years now and for the vast majority of that time have written an annual outlook. The fact that we published a new credit strategy one yesterday for 2020 suggests that I may not have got it 100% right every single year in the last quarter of a century and therefore still need to work. So maybe the people you should listen to for the year ahead no longer have to write outlooks!! Assuming you can’t find them then here is our view. Within the team we all think spreads will be wider in 2020 but there is a bit of disagreement on the magnitude. At one end Michal thinks that whilst valuations are stretched, it’s too early to price in the end of the cycle and he only has mild widening. At the other end I think the US cycle looks more vulnerable the nearer you get to 2021 - partly but not solely due to 2019’s yield curve inversions. So no certainties here but elevated risks. The 2020 US election could also be a big risk to markets depending on the Democratic candidate chosen. This risk could of course dissipate early in 2020 or could build. We don’t know yet but probability weighted outcomes suggest some risk premium is needed for it. In the note we show our trade preferences. For example, we expect further decompression between IG and HY, prefer US to EU HY and like Sterling IG. For more see the link here . This is the top level macro credit strategy view. Next week the team will do more detailed IG and LevFin 2020 notes with much more granularity about these universes.

Onto markets and back on October 11th, President Trump and China Vice President Liu He had a meeting and public briefing at the White House to confirm the “Phase One” arrangement. Indeed, looking back at the transcript this line from Mr Trump stands out, “We have come to a deal, pretty much, subject to getting it written. It’ll take probably three weeks, four weeks, or five weeks. As you know, we’re going to be in Chile together for a big summit. And maybe it’ll be then, or maybe it’ll be sometime around then.”

That summit in Chile was supposed to be last weekend before the domestic issues there led to it being cancelled. Nevertheless, it is now nearly six weeks since that trade breakthrough and rather than the market simply wondering when it will be signed there has to be a small but growing risk as to whether it gets signed at all.

Indeed, US markets were volatile again yesterday as trade news reverberated and outweighed earnings results. The S&P 500 dropped as much as -0.92% before retracing to end -0.38%. The DOW and NASDAQ were down a similar amount, -0.51% and -0.40% respectively. The initial move lower was driven by a Reuters article saying that a US-China trade deal might not get finished this year, citing sources close to the White House. However, Deputy Press Secretary Judd Deere then came out and said that “negotiations are continuing and progress is being made,” which arrested the decline and helped equities stabilise. For his part, President Trump spoke to reporters and said that he is fine with the status quo situation of tariffs on imports from China. He also said that “China would much rather make a trade deal than I would, I don’t think they’re stepping up to the level that I want.” Separate from the conflicting headlines about an imminent deal, the longer-term issue of US concern over the situation in Hong Kong came again to the fore, as the House of Representatives unanimously passed the same bill that the Senate passed unanimously on Tuesday.

The bill will now go straight to President Trump’s desk quicker than expected, since the two chambers no longer need to reconcile differences in language. This will force Trump to decide whether to accept the legislation, which could risk progress towards a phase one trade deal, or veto it and possibly face an override if two thirds of each chamber votes to overrule his veto. If he takes no action over the next ten days, the bill will automatically become law anyway. Bloomberg have a story this morning saying that “a person familiar” with events say he will sign it.

As a reminder, the bill requires the US State Department to certify each year whether Hong Kong should retain its special status and also places sanctions on those involved in human rights abuses. Reacting to the bill, the HK government said overnight that allowing the legislation to become law “would send the wrong signal to violent protesters, which doesn’t help in cooling the situation.”

Risk off is the theme in Asia this morning as a quick refresh of our screen shows that the Nikkei (-0.70%), Hang Seng (-1.65%), Shanghai Comp (-0.48%) and Kospi (-1.71%) are all trading in the red alongside almost all other markets in the region. However, most indices are off their respective intraday lows on positive trade comments by China’s top trade negotiator Liu He (more below). Elsewhere, futures on the S&P 500 are down -0.25% and yields on 10y USTs are down -1.5bps.

We also got a fresh set of trade headlines overnight with China’s Vice Premier Liu He saying in a private speech that he was “cautiously optimistic” about reaching a phase one deal. However, the speech which got reported by Bloomberg overnight, was made before the latest developments in the HK bill. In other news, President Trump said that he’s “looking at” exempting the iPhone maker from tariffs on goods imported from China while touring an Apple Inc. assembly plant in Texas.

Back to yesterday and in Europe, the STOXX 600 (-0.41%) also posted a small loss, while the DAX (-0.48%) was down similarly. Sovereign bonds advanced with bund yields down -0.7bps, while BTPs outperformed (-4.3bps).Ten-year Treasuries fell -4.1bps, while the US yield curve flattened for a 6th successive session, with the 2s10s -2.3bps to 16.2bps. Oil prices gained +2.45%, as official US data showed a smaller-than-expected build in stockpiles. The details for the report were also bullish, with a large increase in exports and a jump in refinery utilisation.

Regarding those positive earnings, both Target (+14.08%) and Lowe’s (+3.88%) bucked the previous day’s trend and surged to record highs yesterday as both companies raised their forecasts. The positive releases were in contrast to the poor Home Depot and Kohl’s announcements the previous day. On the whole, it’s been a pretty good earnings season, and of the 468 S&P 500 companies who’ve reported, 79% have reported a positive surprise on earnings for an aggregate beat of 4.75%. And in Europe, of the 414 in the STOXX 600 who’ve released, 58% have had a positive earnings surprise for an aggregate beat of 3.22%.

The FOMC minutes yesterday were full of interesting tidbits but bare on new substance. Officials continue to see risks as tilted to the downside, though some “have eased a bit.” Most officials now see rates as “well calibrated” after the October cut, though a couple of officials who supported the cut viewed it as a close call. There was an extended discussion about alternative monetary policy tools, with all participants agreeing that negative interest rates are currently an unattractive option. Many raised concerns about the prospect of capping long-term yields in a yield curve control-type framework, but a majority “saw greater benefits in using balance sheet tools to cap shorter-term interest rates and reinforce forward guidance.” As for nearer-term policy signals, there were disagreements about the pros and cons of starting a standing repo facility, which probably reduced the likelihood that any new program is announced before year-end.

In Europe, ECB Chief Economist Lane said that the institution is likely to launch a review of its policy strategy, possibly in a similar way to the Fed’s current policy review. He said that “we will make decisions fairly soon,” but emphasised that they want to take their time designing it before implementation.

Elsewhere in Europe, the European Commission gave its opinions on the draft budgets of Euro Area members yesterday. For 8 countries, including France, Italy and Spain, the Commission said that “the Draft Budgetary Plans pose a risk of non-compliance with the Stability and Growth pact in 2020.” Furthermore, their document said that “Belgium, Spain, France and Italy show declining or even negative primary balances, with debt only marginally declining or not declining at all, according to the Commission 2019 autumn forecast. … they are not taking sufficient advantage of recent declines in interest expenditure in order to reduce their debt ratios.” Italy in particular was identified as a risk, with the document saying that the “short-term sustainability of Italian public finances appears vulnerable to increases in the cost of debt issuance.”

Before we wrap up with yesterday’s data and the day ahead, yesterday we went live with the latest podcast from our Podzept series, where DB’s head of European Utilities Research, James Brand, shares his insights on ‘decarbonising heating’. Heating and cooling represents around half of all EU energy use and almost a quarter of all EU emissions. If European countries are serious about substantially reducing emissions, emissions from heating will need to be tackled. Click here to access or subscribe to Podzept on iTunes or Spotify.***

Recapping yesterday’s data releases, we saw further positive signs for US housing in the MBA’s weekly mortgage application index. Although weekly mortgage applications were down -2.2% last week, the purchase index rose to 270.4, its highest level since early July. It comes after the previous day saw US building permits rise to their highest level since the crisis. In terms of other data, German producer prices fell -0.6% yoy (vs. -0.4% expected), which was the biggest fall since September 2016. Meanwhile in Canada, inflation remained at +1.9% in October, in line with expectations, which comes ahead of Bank of Canada Governor Poloz speaking later today, so it’ll be interesting to see to what extent the possibility of rate cuts at the December meeting are left open. The current market pricing for a cut is at 22.7%.

Turning to the day ahead, from central banks we can expect the ECB’s account of their October monetary policy meeting, as well as policy decisions from South Africa and Indonesia. We’ll also hear from the ECB’s Mersch and de Guindos, along with the Fed’s Kashkari and Mester. In terms of data, we’ll get the Euro Area’s advance consumer confidence reading for November, French business confidence for November and the UK’s public finances for October. And from the US we’ll get the Philadelphia Fed’s business outlook for November, existing home sales and the leading index for October, and weekly initial jobless claims. Finally, the OECD will be releasing their economic outlook, and we’ll get earnings from Thyssenkrupp and Macy’s. Back on this side of the Atlantic, the opposition Labour Party will be launching their election manifesto today.

Tyler Durden Thu, 11/21/2019 - 07:57
Published:11/21/2019 7:11:42 AM
[Markets] Boeing's 737 Officially Loses Title Of World's Most Popular Jet To Airbus A320 Boeing's 737 Officially Loses Title Of World's Most Popular Jet To Airbus A320

The competition with Airbus that led to Boeing cutting corners on the 737 Max to begin has now cost the jet its title as the world's most popular plane.

The Airbus A320 has now officially seized the title of the world's best selling narrow-body airliner, overtaking Boeing's 737 and 737 Max models, according to RT. Boeing's 737 was once the best selling commercial aircraft of all time, but that domination is now slipping away. 

The Airbus A320 had attracted a total of 15,193 orders while the similar class 737 has 15,136 orders on its books as of October. 

Boeing is still ahead when it comes to deliveries, but that gap is closing quickly also. In October, Airbus shipped 77 aircraft to customers, 59 of which were A320s, while Boeing had only delivered 20 planes. 

Airbus is slowly fulfilling the mission put forth for the A320 project when it was developed nearly 3 decades ago: challenge the 737 in the narrow-body jet market and become the aircraft of choice for many airlines in Europe and beyond. Airbus now says that one A320 family jet takes off or lands somewhere in the world every 1.6 seconds. 

Both jets are similar in nature, despite the Boeing plane being slightly more spacious:

"Both A320 and 737 feature the six-abreast seating, but from a passenger’s point of view, the American jet is slightly more spacious as its cabin is 15cm wider. Airbus catches up by increasing the jet’s fuel-efficiency, reducing the noise footprint or cutting operational costs."

And things look like they could still be getting worse, before they get better, for Boeing.

Boeing's newest jet, the 737 Max has been grounded across the world after two fatal crashes that killed 346 people. The crashes have been blamed on carelessness and overlooking features of the plane's MCAS systems.

Additionally, yesterday, the NTSB recommended additional retrofits and changes to the 737 as the result of its investigation into last year's deadly engine blast on a Southwest flight. 


Tyler Durden Wed, 11/20/2019 - 19:25
Published:11/20/2019 6:38:47 PM
[Markets] Futures Slide After House Joins Senate In Landslide Vote Defying China, Backing Hong Kong Protesters: What Does Trump Do Now? In Landslide Vote, US House Joins Senate In Defying China, Backing Hong Kong Protesters

One day after the Senate unanimously passed a Bill backing Hong Kong's pro-democracy protesters, and spawning a wave of complaints and threats from China which warned it would retaliate, moments ago the U.S. House of Representatives followed in the footsteps of the Senate, and in a nearly unanimous vote cleared legislation supporting pro-democracy protesters in Hong Kong by requiring an annual review of whether the city is sufficiently autonomous from Beijing to justify its special trading status, defying objections from China.

The bill, S. 1838, which would require annual reviews of Hong Kong’s special status under U.S. law and sanction officials deemed responsible for human rights abuses and undermining the city’s autonomy, passed the House 417-1 late on Wednesday afternoon setting up a confrontation with Beijing that could imperil a long-awaited trade deal between the world’s two largest economies.

The bill now goes to Trump as soon as Thursday to be vetoed or signed into law, according to a congressional aide.

While the White House declined to comment on whether Trump will sign the legislation, Trump's position is now acutely precarious because Congress would easily be able to override any veto. If Trump signs the bill, he could torpedo the trade talks, while refusing to sign it would give his political opponents a chance to attack him for being weak on China, while at the same time facing an ongoing impeachment process.

"The Congress is sending an unmistakable message to the world that the United States stands in solidarity with freedom-loving people of Hong Kong and that we fully support their fight for freedom,” Speaker Nancy Pelosi said on the House floor. “This has been a very unifying issue for us."

Trump has been silent as the Hong Kong protests escalated into violence in recent weeks, even as lawmakers of both parties demanded action on the measure. Chinese officials quickly responded to the bill’s Senate passage Tuesday, saying Beijing “firmly” opposes the congressional action, which it considers a grave violation of international law.

“We stand in solidarity with the people of Hong Kong,” said Republican Representative Chris Smith, who has been pushing the legislation since Hong Kong protests in 2014. “There will be strong sanctions, other ramifications for this crackdown.”

After dropping 24 hours ago when the Senate first passed the bill, US equity futures dipped modestly following news of the bill's passage in the House.

Meanwhile, as markets keep an eye on what Trump will do now, they will also be looking at China's response. As we reported earlier, the Global Times editor in chief Hu Xijin tweeted early on Wednesday that "China wants a deal but is prepared for the worst-case scenario, a prolonged trade war."

To be sure, any aggressive response by China to the bill's passage will not only make the passage of any trade deal in 2019 impossible, but will likely lead to even more antagonism and escalation in the coming months, something which Trump has been eager to avoid with the presidential elections less than a year ago.

On the other hand, even though China's Xi Jinping doesn’t have to worry about electoral pressure - as he recently crowned himself ruler for life - he also wants to stop the bleeding and avoid more tariff increases, including one still due to take place in December. And Xi may be under pressure within the Communist Party: A rare leak to the New York Times this week of internal documents showing human-rights abuses in Xinjiang signaled some dissent in China’s opaque political system.

Beijing has other options too: beyond merely delaying trade talks, it could hit out at U.S. companies (most notably Apple), halt cooperation on enforcing sanctions related to North Korea and Iran, recall the Chinese ambassador to the U.S. or downgrade diplomatic relations. It could also further tighten rare earth metal exports.

Yet according to many, the most likely outcome is that for all its huffing and puffing, China will do, well, nothing. After all, when it comes to Hong Kong, Trump already has enormous leverage, and as Bloomberg notes, under the Hong Kong Policy Act of 1992, the U.S. president can issue an order removing the special trading status that underpins its economy, potentially with devastating consequences.

And since Beijing realizes will only do that if extremely provoked, it is likely to limit itself to “very high-sounding, rhetorical responses” rather than concrete actions hitting American economic interests, according to Willy Lam, an adjunct professor at the Chinese University of Hong Kong’s Centre for China Studies, who has authored numerous books on Chinese politics.

“The Chinese will, of course, cry foul, but the real reaction may not be that severe,” Lam said. “They will watch the situation and make a judgment later.”

We'll find out in the next several days if this take was correct.

Tyler Durden Wed, 11/20/2019 - 17:28
Published:11/20/2019 4:43:24 PM
[World] BOOK REVIEW: 'C.S. Lewis: A Very Short Introduction'

Clive Staples Lewis wrote “about 40 books” in his lifetime, according to the Encyclopaedia Britannica. How many of them can you name without assistance?

This reviewer gave it a go and came up with 19 books, including six of the seven Narnia books, two of the space trilogy novels and ... Published:11/20/2019 1:07:01 PM

[Markets] Feds Charge Former Baltimore Mayor With Fraud, Tax Evasion Over Book Scandal  Feds Charge Former Baltimore Mayor With Fraud, Tax Evasion Over Book Scandal 

Former Baltimore Mayor Catherine Pugh has been indicted on federal charges of wire fraud, tax evasion, and conspiracy to defraud the US, reported Fox 45 News Baltimore


Pugh has been in hiding for 7 to 8 months, is expected to surrender to US Marshals Service in the next 24 hours before her hearing in US District Court in Baltimore on Nov. 21 at 1 pm. est. 

Pugh went missing in Apr. after the FBI and IRS raided her home amid speculation, she was involved in a brazen kickback scheme involving sales of her "Healthy Holly" book series. 

The former mayor of Baltimore was accused of using her position to secure agreements worth hundreds of thousands of dollars from the University of Maryland Medical System and managed-care consortium KaiserPermanente. The contracts were arrangements to purchase thousands of copies of Pugh's "Healthy Holly" books, a series written by Pugh.

Pugh was sitting on the organization's board when she received the book deal from the University of Maryland system. And shortly after she received a payment from KaiserPermanente, the company received a $48 million contract from the city. Though we're sure, that's just a coincidence. Furthermore, some of the "Healthy Holly" copies that Pugh sold to the University of Maryland Medical System remain unaccounted for, and some suspect they may never have been printed.

"Our elected officials must place the interests of the citizens above their own," said United States Attorney Robert K. Hur. "Corrupt public employees rip off the taxpayers and undermine everyone's faith in government. The US Attorney's Office and our law enforcement partners will zealously pursue those who abuse the taxpayers' trust and bring them to justice."

"The people of Maryland expect elected officials to make decisions based on the public's best interests, not to abuse their office for personal gain," said Special Agent in Charge Jennifer Boone of the FBI's Baltimore Division. "Catherine Pugh betrayed the public's trust. The FBI will continue to diligently work to detect fraud and corruption and hold those who violate this trust accountable."

The next significant development will be Pugh surrendering herself to US Marshals within the next 24 hours, but then again, there's always a chance that a corrupt politician may flee. 

Tyler Durden Wed, 11/20/2019 - 09:25
Published:11/20/2019 8:36:31 AM
[1c150c08-2344-5a69-b346-b18850baf71b] Tom Del Beccaro: Impeachment hearings Day 3 – Top 7 takeaways Day Three of the House Intelligence Committee impeachment hearings is in the books and by any reasonable account, it was a long and bad day for impeachment advocates. Published:11/19/2019 11:34:22 PM
[Markets] C.J. Hopkins: Reclaiming Your Inner Fascist C.J. Hopkins: Reclaiming Your Inner Fascist

Authored (satirically) by C.J.Hopkins via The Unz Review,

OK, we need to talk about fascism. Not just any kind of fascism. A particularly insidious kind of fascism. No, not the fascism of the early 20th Century. Not Mussolini’s National Fascist Party. Not Hitler’s NSDAP. Not Francoist fascism or any other kind of organized fascist movement or party. Not even the dreaded Tiki-torch Nazis.

It’s the other kind of fascism we need to talk about. The kind that doesn’t come goose-stepping up the street waving big neo-Nazi flags. The kind we don’t recognize when we’re looking right at it.

It’s like that joke about the fish and the water … we don’t recognize it because we’re swimming in it. We’re surrounded by it. We are inseparable from it. From the moment we are born, we breathe it in.

We are taught it by our parents, who were taught it by their parents. We are taught it again by our teachers in school. It is reinforced on a daily basis at work, in conversations with friends, in our families and our romantic relationships. We imbibe it in books, movies, TV shows, advertisements, pop songs, the nightly news, in our cars, at the mall, the stadium, the opera … everywhere, because it is literally everywhere.

It doesn’t look like fascism to us. Fascism only looks like fascism when you’re standing outside of it, or looking back at it. When you are in it, fascism just looks like “normality,” like “reality,” like “just the way it is.”

We (i.e., Americans, Brits, Europeans, and other citizens of the global capitalist empire) get up in the morning, go to work, shop, pay the interest on our debts, and otherwise obey the laws and conform to the mores of a system of power that has murdered countless millions of people in pursuit of global-hegemonic dominance. It has perpetrated numerous wars of aggression. Its military occupies most of the planet. Its Intelligence agencies (i.e., secret police) operate a worldwide surveillance apparatus that can identify, target, and eliminate anyone, anywhere, often by remote control. Its propaganda network never sleeps, nor is there any real way to escape its constant emotional and ideological conditioning.

The fact that the global capitalist empire does not call itself an empire, and instead calls itself “democracy,” doesn’t make it any less of an empire. The fact that it uses terms like “regime change” instead of “invasion” or “annexation” makes very little difference to its victims. Terms like “security,” “stability,” “intervention,” “regime change,” and so on are not meant for its victims. They are meant for us … to anesthetize us.

The empire is “regime-changing” Bolivia currently. It has “regime-changed” most of Latin America at one time or another since the Second World War. It “regime-changed” Iraq, Libya, Yugoslavia, Indonesia … the list goes on. It very much wants to “regime-change” Iran, which it “regime-changed” back in the 1950s, before the Iranians “regime-changed” it back. It would love to “regime-change” Russia and China, but their ICBMs make that somewhat impractical. Basically, the empire has been “regime-changing” everyone it can since the end of the Cold War. It has run into a little bump in Syria, and in Venezuela, but not to worry, it will get back there and finish up eventually.

Now, let’s be clear about this “regime-change” business. We’re talking about invading other people’s countries, and orchestrating and sponsoring coups, or otherwise overthrowing their governments, and murdering, torturing, and oppressing people. Sending in terrorists, death squads, and such. We have organizations that train guys to do that, i.e., to round people up, take them out to the jungle, or the woods, or wherever, rape the women, and then summarily shoot everyone in the head. We pay for this kind of thing with our taxes, and our investments in the global corporations that our militaries and intelligence agencies serve. We know this is happening. We can google this stuff. We know “where the trains are going,” as it were.

And yet, we do not see ourselves as monsters.

The Nazis didn’t see themselves as monsters. They saw themselves as heroes, as saviors, or just as regular Germans leading regular lives. When they looked at the propaganda posters which surrounded them (as the Internet surrounds us today), they didn’t see sadistic mass-murderers and totalitarian psychopathic freaks. They saw normal people, admirable people, who were making the world a better place.

They saw themselves. They saw “the good guys.”

This is primarily how propaganda works. It isn’t meant to fool anybody. It is there to represent “normality” (whatever “normality” happens to be in whatever empire one happens to inhabit). It is Power’s way of letting us know what it wants us to believe, how it wants us to behave, who our official enemies are. Its purpose isn’t to mislead or deceive us. It is an edict, a command, an ideological model … to which we are all expected to conform. Conform to this ideological model, and one is rewarded, or at least not punished. Deviate from it, and suffer the consequences.

It is a question of obedience, not one of truth.

This is why it doesn’t matter that there is no actual “Attack on America,” and that the Russians didn’t “hack,” “subvert,” “meddle in,” or otherwise significantly “influence” the 2016 presidential election or otherwise put Donald Trump in office. John Brennan and the CIA say they did, and the corporate media say they did, so all Good Americans have to pretend to believe it. Likewise, it also doesn’t matter if an organization like the OPCW collaborated with the empire’s regime-change specialists who staged a “chemical weapons attack” on helpless women and children in Douma (because, no matter what the empire did or didn’t do, Assad is a Russian-backed, baby-gassing devil!), or if The Guardian just makes up stuff about Julian Assange out of whole cloth and prints it as news.

This is also why, when The Guardian runs an enormous color propaganda photo of a beneficent-looking Hillary Clinton and her soon-to-be-Democratic senator daughter posing as our last line of defense against the Invasion of the Putin-Nazis, and as the future of Western democracy, and whatever, on the cover of its cultural Review, this isn’t perceived as propaganda. Never mind that this woman (i.e., Hillary) is directly responsible for the deaths and misery of God knows how many innocent people in the course of her lucrative service to the empire. Never mind that this is the same exact person that sadistically cackled on national television when the empire’s associates anally knife-raped and murdered Muammar Gaddafi in Libya, and then transformed a developed African country into a hellish human-slavery market.

For fascists (and authoritarian personalities generally), facts are completely beside the point. The point is to robotically conform to the ideology (or hysterical ravings) of whatever leader or system of power happens to be in charge of things.

Authoritarian personality types are skilled at determining exactly who that is (i.e, who is really in charge of things) and obsequiously currying favor with them. For some, this is an innate talent; others have this talent conditioned into them (or beaten into them) over the course of years. Either way, the result is the same.

Put a bunch of random people together in a group and give them a problem to solve, or a complex project or objective to accomplish. Don’t give them any organizational guidance, just put them in a room and watch what happens.

The first thing that happens is … a “leader” emerges. Someone (or a few people) decides that someone needs to be in charge of this project, and they feel pretty strongly that it should be them. If more than one such “leader” emerges, or if the need for a leader itself is challenged, a struggle for power will immediately ensue. The aspiring “leaders” will compete for the support of the “followers” in the group. Sides will be taken. Eventually, a “leader” will be chosen. Occasionally, this will happen openly, but, more often than not, it will happen unconsciously. Someone in the group will want to dominate … and the rest of the group will want them to dominate. They will experience discomfort until a “leader” is established, and they will feel an enormous sense of relief once one is, and they can surrender their autonomy.

I assume you’re familiar with the Milgram experiment, but, if not, you should probably read up on that, and maybe read Adorno’s The Authoritarian Personality. It’s a bit outdated, and over-focused on the Nazis (it was originally published in 1950), but I think you’ll get the general idea. Once you’ve done that, turn on your television, or your radio, or scan the news on the Internet, or walk down any big city street and compare the content on the digital billboards, movie posters, and advertisements to historical fascist propaganda … that is, if your boss will let you leave the workplace long enough to do that, which he probably will if you ask him in that special way you have learned over time that he likes and generally tends to respond to.

Sorry, I didn’t mean to get inside your mind. That’s kind of a fascistic thing to do.

Look, the point is, we all have an “Inner Fascist,” with whom we are either acquainted or not. I’m a playwright and a novelist, which means I’ve got a big, fat, Sieg-heiling Inner Fascist goose-stepping around inside my head. I invent whole worlds, which I dictatorially control. I put people in them and make them say things. It doesn’t get much more fascistic than that. The way I see it, my art is how I sublimate my Inner Fascist, so that he doesn’t run around invading Poland, exterminating the Jews, or “regime-changing” Bolivia.

I’m not a psychiatrist, or a fascism expert, but I figure this is probably the most we can do … recognize, acknowledge, and find some way to sublimate our Inner Fascists, because, I guarantee you, they’re not going away. (If you don’t believe me, go watch that Planet Earth episode featuring the fascist chimpanzees.) Seriously, I recommend you do this. Get acquainted with your Inner Fascist, in an appropriate set and setting, of course. Give him something safe to dominate and then let him go totally totalitarian. You’ll be doing yourself and the rest of us a favor.

Ironically, it is those who are not acquainted with their Inner Fascists (or who deny they have one) who are usually the first to make a big public show of loudly denouncing “fascism,” brandishing their “anti-fascist” bona fides, accusing other people of being “fascists,” and otherwise desperately projecting their Inner Fascists onto those they hate, and want to silence, if not exterminate. This is one of the hallmarks of repressed Inner Fascism … this compulsion to control what other people think, this desire for complete ideological conformity, this tendency, not to argue with, but rather, to attempt to destroy anyone who disagrees with or questions one’s beliefs.

We all know people who behave this way. If you don’t, odds are, one of them is you.

So, please, if you haven’t done so already, get acquainted with your “Inner Fascist,” and find him something harmless to do, before he … well, you know, starts singing hymns to former FBI directors, or worshipping the CIA, or Obama, or Trump, or Hillary Clinton, or supports the empire’s next invasion, or coup, or just makes a desperate, sanctimonious ass of you both on the Internet.

I’m not kidding. Reclaim your “Inner Fascist.” It might sound crazy, but you will thank me someday.

*  *  *

C. J. Hopkins is an award-winning American playwright, novelist and political satirist based in Berlin. His plays are published by Bloomsbury Publishing (UK) and Broadway Play Publishing (USA). His debut novel, ZONE 23, is published by Snoggsworthy, Swaine & Cormorant Paperbacks. He can be reached at or

Tyler Durden Tue, 11/19/2019 - 21:25
Published:11/19/2019 8:34:28 PM
[Markets] Political And Social Conflict Is Accelerating: Here's Why... Political And Social Conflict Is Accelerating: Here's Why...

Authored by Charles Hugh Smith via OfTwoMinds blog,

All the status quo "fixes" only hasten the collapse of the status quo.

That economic, social and political conflict is accelerating is self-evident. What's open to debate are the core drivers of conflict / disorder /unraveling.

Here's the core self-reinforcing dynamic in my view:

1. The status quo elites can no longer mask soaring costs of essentials nor soaring wealth / income inequality between the top .01% (Oligarchs), the top 9.99% who enrich the Oligarchs with their discretionary spending and technocratic/managerial labor, and the bottom 90% who are rapidly losing ground on all fronts: economic, social and political.

2. The elites' "fixes" to the social / political conflicts unleashed by the rigged financial system and winner take most economic order are politically expedient, meaning they don't actually address the sources of conflict, they merely paper them over with PR as a means of preserving the elites' wealth and power.

3. The elites' fundamental financial "fix" is to create trillions in newly issued currency and distribute it to the banks, financiers, super-wealthy families and global corporations-- the top .01% Oligarchs.

4. This "fix" accelerates the asymmetric distribution of wealth by enabling the already-wealthy to buy more productive assets, fund stock buybacks, etc., while forcing the bottom 90% to borrow money from the Oligarchs to make ends meet: the rich get richer, the poor get more indebted.

5. The only possible output of these inputs (political expediency to preserve the elites' wealth and power, the creation and distribution to the Oligarch class of trillions in new currency) is the acceleration of the very erosion that fueled social / political conflicts in the first place. In effect, the elites' "fixes" are accelerating the conflicts that will ultimately lead to their downfall.

This is why the unraveling cannot be reversed or stopped: all the enormous efforts being expended by the elites to maintain the status quo exactly as it is now, with the vast majority of wealth and power in their hands, preclude the structural changes needed to re-set the status quo onto a more sustainable (i.e. more transparent, productive, efficient and decentralized) and less rigged-to-benefit-the-few path.

All the status quo "fixes" only hasten the collapse of the status quo. My longtime colleague Gordon T. Long has laid out the stages of this inevitable descent into conflict and collapse in a series of charts which we discuss in our latest video conversation Coming Era of Political & Social Conflict (29:13).

These stages are predictable because human nature is predictable. That elites will follow a pathway of expediency to preserve their wealth and power is predictable, and this pathway includes the debauchment of currency (printing ever greater sums to add to their wealth and placate the masses), the substitution of credit for capital, the political disenfranchisement of the masses, increasingly oppressive financial repression and social / political conflicts that spiral out of control as the inherently unstable financial house of cards collapses.

Since the elites won't allow an orderly re-set that reduces their wealth and power, the re-set will result from spiraling conflicts and the collapse of all that is viewed as permanent, i.e. the financial and political status quo.

Don't think it won't happen just because it hasn't happened yet.

*  *  *

My recent books:

Will You Be Richer or Poorer? Profit, Power and A.I. in a Traumatized World (Kindle $6.95, print $11.95) Read the first section for free (PDF).

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($6.95 (Kindle), $12 (print), $13.08 ( audiobook): Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 (Kindle), $8.95 (print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).

*  *  *

If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via

Tyler Durden Tue, 11/19/2019 - 16:25
Published:11/19/2019 3:32:02 PM
[Markets] The Rise Of Tech Totalitarianism The Rise Of Tech Totalitarianism

Authored by James Kirkpatrick,

The Wall Street Journal just published a shocking expose, How Google Interferes With Its Search Algorithms and Changes Your Results, [by Kirsten Grind, Sam Schechner, Robert McMillan and John West November 15, 2019], revealing not only that Google is exploiting its market power in ways the clearly raise anti-trust questions, but also that it shadow-bans sites that promote “hate or violence” even if “expressed in polite or even academic-sounding language”—i.e. and all immigration patriots. This confirms the terrifying message of Michael Rectenwald’s new book Google Archipelago: The Digital Gulag and the Simulation of Freedom: the combination of Woke Capital and monopoly power is turning America into an open-air prison.

Rectenwald is a liberal academic who was chased out of New York University for dissenting mildly from the “pronoun wars” and the Leftist demand for blanket approval of transgenderism [I was a liberal NY prof, but when I said the left was going too far, colleagues called be a NAZI & treated me like a RUSSIAN SPY, RT, November 12, 2019]. In his book, he shows the Left is consumed by collective hysteria, a theme with which readers are familiar, and also that the ideology of “Corporate Socialism” and the emerging “Internet of Things” is making it impossible to escape from a repressive system.

Rectenwald lays out several terms that encapsulate his ideas—the eponymous Google Archipelago, Big Digital, Corporate Socialism, Google Marxism, etc.

  • The “Google Archipelago” is “the corporate leftist centralized system of Big Digital.”

  • “Big Digital” is the “mega-data services, media, cable, and internet services, social media platforms, Artificial Intelligence (AI) Agents, apps, and the developing Internet of Things” [the increasing ability and dependence of ordinary applications of operating online].

  • “Corporate Socialism” is an economic and political system under which a private monopoly or private oligopolies rather than that state eliminates competition and controls all production.

  • “Google Marxism”—originally a concept developed by George Gilder, who argued that Google assumed like Marx that the contemporary mode of production is the ultimate mode, with the only remaining issues are questions of distribution.

Rectenwald adds further that Google Marxism, “like “socialism with Chinese characteristics,” manifests as state-supported monopoly capitalism, and “actually existing socialism” [meaning the actual economic conditions that exist, rather than the “free markets” or “democracy” that are claimed to exist] for everyone else.

It’s an unclear definition and he occasionally links it with corporate socialism. But basically what he’s getting at is that Google commands the flow of information and uses this control to further its ideological and commercial objectives, which are often the same thing

In fact, Rectenwald’s concepts often overlap each other, and the recurring academic jargon may baffle the reader who hasn’t read his Foucault.

Yet his three major themes are easy to identify.

The first major theme: the promotion of far-Left social causes through major corporations.

As New York Times token conservative columnist Ross Douthat has noted, Woke Capital offers consumers symbolic rather than economic values. [The Rise of Woke Capital, NYT, February 28, 2018] Rectenwald calls these “rhetorical placebos in lieu of costlier economic concessions”—placebos which incidentally support “the elite’s agendas of identity politics, gender pluralism, transgenderism, lax immigration standards, sanctuary cities, and so on.” Rectenwald suggests this may be an effort by corporations to avoid higher taxes and regulations.

However, he also suggests a deeper ideological agenda, citing the recent notorious Gillette ad deconstructing masculinity. It turns out the co-founder of Gillette, King Camp Gillette (1855-1932, right) was also a “socialist utopian,” who railed against competition and dreamed of creating a “World Corporation.” Thus instead of the masses seizing the means of production, companies would continuously merge, eventually creating a “great Corporate Mind” that would have “life everlasting” and “all knowledge of all men.”

Gillette’s wild ravings seem uncannily accurate when it comes to

the second major theme: the emerging total control over human information possessed by Big Tech.

Users voluntarily provide data to corporations like Google and Facebook, which they can sell to advertisers. (Mark Zuckerberg himself referred to his trusting subscribers who had done this as “dumb f***s”.) They know us better than we know ourselves.

At the same time, these “private” corporations can also distort what information is provided to users and determine who can compete in the digital marketplace. And because of corporations’ “authoritarian Leftism,” this means that conservatives and patriots can be deplatformed, competitors to Establishment media removed, and Big Tech left in control the “public space” even while being technically “private.” In short, tech companies are taking on governmental roles.

Instead of the Internet freeing discussion, Rectenwald notes accurately that we’re witnessing “the disappearance of public discursive space.” Speech outside the digital sphere is irrelevant, but who can speak inside is determined by companies that practice “blatant double standards, egregious bias, politically-motivated designations of ‘fake news,’ and tilted search engine algorithms.”

In Rectenwald’s striking phrase, tech companies “have acted like referees of a game in which they are also players, taking sides in political contests and the culture wars.”

Naturally, this also means being able to massively manipulate election results by controlling the flow of information and deplatforming independent voices. This could mean that any “democratic vote” is essentially fake and illegitimate, because the outcome is determined in advance. Real political power is found not in Congress or the voting booth, but within the search algorithms and among the moderators of Facebook, Google/YouTube, Twitter, and Instagram.

This is obviously the area most relevant to readers, because and other sites have directly felt the cost of Big Tech censorship. Tulsi Gabbard is directly attacking Big Tech for its control over Americans’ freedom of speech.

Yet President Trump has done little to address these problems. In fact, the president’s much touted NAFTA replacement actually provides Big Tech with additional protections by specifically allowing companies to censor based on political views. His “Social Media Summit” didn’t feature anyone who had actually been banned [Trump’s Pathetic ‘Social Media Summit,’ by Gregory Hood, American Renaissance, July 16, 2019].

The Trump Administration isn’t serious about this. But if it doesn’t get serious in the time that’s left, defeat in 2020 is practically guaranteed.

The third major theme: Rectenwald argues that we are entering an age of practically unlimited tyranny, because we will be required to operate in a digital space endlessly patrolled by far-Left radicals.

Instead of an “Internet specially designed for individual expression and liberation,” the Internet is reshaping us, mutilating individuals “fit to inhabit it.” “Google Marxism” is destroying individual expression and creating a hive mind.

This will accelerate when the “Internet of Things” truly takes off and every application will be required to operate in an online space, with the “Internet ubiquitous, coextensive with the world at large.” We will never “go online” we will always be operating in cyberspace.

“The Internet is not imprisoned,” Rectenwald writes, “but it may become a prison, and once liberated, the world at large might become a digital gulag.”

This may sound dystopian science fiction. But in some ways it has already occurred. Under China’s social credit system, individuals can be tracked in the “real world” and the services they use and rights they possess are dependent on their standing within the digital system.

Consider also the drive towards cashless societies and its potential for tyranny.

Now imagine how such a system would work within the U.S.. Imagine if every time you tried to make a purchase, use an appliance, or engage with someone, the other person or company had instant access to the information Facebook, Google, and other “Big Data” wanted them to have.

Certain individuals would essentially be cut off from social life. You would be technically “free” to speak or operate a business, but cut off from the digital marketplace, your legal rights and economic viability would be essentially non-existent. There would also be no way out of the system, because everyone and everything, everywhere, would always be connected to the network.

Rectenwald examines the implications of Artificial Intelligence, particularly the way such systems are developing to predict human behavior. He expresses concern not just about the somewhat fantastic prospect of “’robot swarms’ gone awry, but the more fundamental question of whether humans will simply keep outsourcing decision-making to algorithms and AI.

Entire industries and basic human functions could presumably be performed more efficiently and effectively by AI. Furthermore, when it comes to distribution of resources, a sufficiently developed AI would be capable of “identifying, tracking, surveilling, algorithmically steering, digitally jailing, and ultimately controlling populations to degrees that would have made Stalin or Mao green with envy.” One possible future: a “docile, algorithmically-directed or even algorithmically-dictated populace, one that is unemployed and probably living on a Universal Basic Incomebecause their labor is unnecessary.”

This raises the deepest questions. What does democracy, citizenship, or identity mean under such a system?

And while all this may sound bizarre, consider how you, the reader, already live in such a way to avoid negative mentions of your name online. Already, we live are in a system where a single media attack, magnified by social media companies that promote certain stories and suppress others, can shape a person’s entire life.

The ancient bonds of family, church, nation and law are as nothing in the face of a systemic digital assault. An individual’s ability to hold a job is already heavily dependent on Google results. What happens when there are no more escapes? What happens when everyone, everywhere, receives the information the elite wants them to know, even if it’s “fake news?”

This is unlimited tyranny. It also reduces each person into simply a part of a centrally directed System. One can already glimpse the bars of the emerging digital cage.

The solution? Conservatives must rethink their opposition to “the state” and realize the real threat to our liberties comes from Big Tech, not “Big Government.”

In the time that’s left, conservatives who value their faith and identity and progressives who don’t want to exist as mere corporate puppets must unite to guarantee free speech online. There should also be more systemic regulation, if not wholesale breaking up, of social media companies.

If we don’t do these things, contemporary China will seem like a libertarian utopia compared to what’s coming.

And thanks to Rectenwald, we can’t say we weren’t warned.

Tyler Durden Mon, 11/18/2019 - 23:45
Published:11/18/2019 10:56:44 PM
[Markets] If Not-QE Is QE, Then Is Not-A-Blowoff-Top A Blowoff Top? If Not-QE Is QE, Then Is Not-A-Blowoff-Top A Blowoff Top?

Authored by Charles Hugh Smith via OfTwoMinds blog,

Can $300 billion, or $600 billion, or even $1 trillion continue to prop up an increasingly risk-riddled, fragile $330 trillion global bubble in overvalued assets?

When is "Not-QE" QE? When Federal Reserve Chairperson Jerome Powell declares QE is not QE. We can constructively recall the story that Abraham Lincoln famously recounted in 1862:

 'If I should call a sheep's tail a leg, how many legs would it have?'


'No, only four; for my calling the tail a leg would not make it so.'

Calling QE not-QE doesn't make it different than QE, but it does communicate the Fed's panicky desire to mask its stupendous injection of financial cocaine into the financial system. The Fed's level of panic is noteworthy, as is the absurd transparency of its laughable attempt to conceal its panic.

In the same fashion, the financial media is loudly declaring the current blowoff top in stocks is not a blowoff top. The delicious irony here is these denials are reliable markers of blowoff tops: the louder the denials, the greater the odds that this is in fact the blowoff top that many pundits have been expecting for some time, but always in the future.

Garsh darn it, maybe the future has arrived. The financial media denied the Q4 1999 - Q1 2000 blowoff top was a blowoff top, and it repeated its denial of a blowoff top in housing in 2006-2007. The pundits of 1929 also denied the Q3 blowoff top in stocks was a blowoff top.

If you want a reliable signal that the blowoff top has peaked, listen to the screechy adamance of the deniers. The list of reasons why blowoff tops can't be blowoff tops is practically endless: sentiment isn't bullish enough, there's a Wall of Worry for stocks to climb (overlooking the inconvenient reality that there is always a Wall of Worry), the consumer is still looking good, corporate earnings will rebound, the soft patch is behind us, the Internet will grow for decades to come, they're not making any more land, capital flows favor higher asset prices, we owe it to ourselves (paging Paul Krugman--the Keynesian Cargo Cult is about to dance the humba-humba around the campfire and you're needed...), debt doesn't matter (it never matters until it does), price-earning ratios have plenty of room to move higher, and everyone's favorite, don't fight the all-powerful Fed (and we command you not to look behind the curtain while we worship false gods and wave dead chickens).

But nonetheless, blowoff tops in asset bubbles remain a feature of asset overvaluation, which by the way has once again reached historic extremes (GDP to equity valuation, etc.)

This introduces the other reliable indicator of blowoff tops: this time it's different. It's always different at blowoff tops, but not in the way that proponents of eternally rising asset valuations imagine.

Even geniuses misread blowoff tops. Popular culture has it that Isaac Newton made money in the South Sea Company bubble, sold for a handsome profit and then re-entered at a much higher price, losing a fortune when the blowoff top collapsed. Some historians have argued that this account is not accurate, but new research verifies that Newton did miscalculate and lose a fortune: Newton's financial misadventures in the South Sea Bubble:

This paper presents extensive new evidence that while Newton was a successful investor before this event, the folk tale about his making large gains but then being drawn back into that mania and suffering large losses is almost certainly correct. It probably even understates the extent of his financial miscalculations.

Which brings us to the present blowoff top that is widely presented as not-a-blowoff-top because of XYZ, with XYZ boiling down to the omnipotence and omniscience of the Federal Reserve. The implicit belief currently holding sway (just as various implicit beliefs enabled the South Sea Bubble in 1720 and the bubbles in 1929, 2000 and 2008, to name but a few of a rogue's gallery of blowoff tops) is the Fed has complete control of interest rates and the stock and bond markets, and the evidence for this belief is the Fed's unparalleled success in inflating asset bubbles in stocks, bonds and real estate for a decade, a managerial feat now in its 11th year.

The possibilities that the Fed's manipulation--oops, management--of markets might suffer from diminishing returns, or that markets might still be prone to nonlinear events generated by emergent properties of complex systems are dismissed as so unlikely that there's no point in even discussing them.

All of which brings us to the Fed's painfully obvious panic and pathetic attempt to conceal their panic, factors that are illustrated on this chart of the Fed balance sheet, which has suddenly exploded higher by $300 billion.

If everything's just peachy in global banking and the U.S. economy, why the sudden mainlining of $300 billion of financial cocaine into the collapsing veins of the financial system?

Just for context, that $300 billion is more than the entire GDP of Chile and a host of other nations. While the Fed's $4 trillion balance sheet (up from a mere $800 billion prior to the Global Financial Meltdown in 2008) has jaded us to large numbers, $300 billion is still a monumental sum of "money" (i.e. currency created out of thin air by the Fed to distribute to banks, financiers, the super-wealthy and corporations.)

We might want to recall here that the global asset bubble the Fed is attempting to keep inflating is several orders of magnitude larger: well north of $300 trillion in 2018. (It's also worth recalling here that the Fed is not just the central bank of the USA, it's also the central bank of last resort for the entire global economy. Much of the $23 trillion in loans, guarantees and backstops the Fed issued in 2008-2009 propped up non-U.S. banks and institutions.)

Can $300 billion, or $600 billion, or even $1 trillion continue to prop up an increasingly risk-riddled, fragile $330 trillion global bubble in overvalued assets? Just as a matter of scale, the answer is "not likely." The key variable here the belief of participants in the omnipotence and omniscience of the Fed.

If the Fed can no longer keep the global bubbles inflating, then the bubble-sustaining belief that the Fed is in effect a new god will lose its self-predictive feedback loop: stocks go up because we believe the Fed will push them higher, so we buy stocks and our buying pushes stocks higher, doing the Fed's work for it.

Blowoff tops are rarely identified in the present. Even geniuses get fooled. But if we look at one simple indicator--the number of financial types denying this is a blowoff top and the number calling this the blowoff top of the entire 11-year Fed-induced frenzy of over-valuation-- we have to conclude that the odds favor this being the blowoff top nobody expected until some far-off moment in the future. Well just maybe the future has arrived, but nobody noticed.

*  *  *

My recent books:

Will You Be Richer or Poorer? Profit, Power and A.I. in a Traumatized World (Kindle $6.95, print $11.95) Read the first section for free (PDF).

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($6.95 (Kindle), $12 (print), $13.08 ( audiobook): Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 (Kindle), $8.95 (print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).

*  *  *

If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via

Tyler Durden Mon, 11/18/2019 - 08:11
Published:11/18/2019 7:22:57 AM
[Markets] Greatest Economy Ever: Small Businesses Forced To Use GoFundMe To Stay Solvent Greatest Economy Ever: Small Businesses Forced To Use GoFundMe To Stay Solvent

While most people think of GoFundMe as a way to raise money for medical debt, funeral costs or small personal items, things have gone so well for our "greatest economy ever" that it is now being used as a tool by small businesses to raise cash. 

Struggling businesses are now using the site, ranging from comic book stores to drive-in movie theaters, according to the Wall Street Journal. Small businesses have opened campaigns across 19 countries.

GoFundMe's Chief Executive Rob Solomon said: “These independent businesses become pillars in a community, and when they can’t stay open, the communities really rally.”

Books of Wonder

One company, Books of Wonder in Manhattan has raised $23,000 toward a $250,000 goal for moving expenses. Its owner, Peter Glassman, says he needs the money to move the store from 18th Street to a more affordable and high trafficked space in the Flatiron District. He has struggled to pay his $600,000 annual lease, he said. A previous location of his store served as the inspiration for the children's bookshop in the movie "You've Got Mail". 

In 2012, Glassman raised $100,000 using Indiegogo to keep his doors open. 

He said of his customers and donors: “They understand that the things that have gone wrong for us are things beyond our control. The attitude is, ‘It’s a miracle you’re still here.’”

On GoFundMe, customers can cash out everything they raise, regardless of whether or not they hit their goal. The website charges a 2.9% free. 

Nicky Perry/WSJ

Jessica Walker, president and chief executive of the Manhattan Chamber of Commerce, said:

"Small and midlevel independent businesses are squeezed by rising rents, minimum-wage increases and mandatory sick leave. Crowdfunding can help fill the gap."

She continued: “If a business is struggling, it’s much harder to get a bank loan. It’s most helpful to people, such as women and people of color, who don’t necessarily have access to a ton of wealth within their networks or an abundance of angel investors waiting in the wings.”

Nicky Perry, who owns a British grocery, the restaurant Tea & Sympathy and the fish-and-chip shop A Salt & Battery in Greenwich Village, has a similar story. She started a GoFundMe to raise $100,000 and has raised about $52,000 so far. 

She commented: “We just couldn’t pay the rent. The rent is so astronomical.”

Tea and Sympathy/WSJ

She has already cut costs by changing payroll companies, reducing headcount and redoing its menu. She says she would consider turning to GoFundMe again in the future, should she need it. Reaction to her fundraiser has been "overwhelmingly positive", she said.

Perry said: “We couldn’t believe it. I’ve had little old ladies on two different occasions waiting for me outside on my bench to give me $50 checks.”

Bruce Bachenheimer, a professor at the Lubin School of Business at Pace University, said that the GoFundMe campaigns provide more than just money - they provide reassurance. 

After a successful campaign, owners may say “‘I should hang on, I should keep going,’” Bachenheimer concluded.

Tyler Durden Sun, 11/17/2019 - 17:55
Published:11/17/2019 5:21:54 PM
[Markets] Medicare-For-All "Socialism" Is Just Another Racket Medicare-For-All "Socialism" Is Just Another Racket

Authored by Charles Hugh Smith via OfTwoMinds blog,

The entire system of health needs to be re-organized from the ground up, and funding the rackets will only speed the collapse of the system.

The core problem with "socialist" proposals such as Medicare-for-All is that they don't actually fix what's broken--they just expand existing rackets such as the healthcare/sickcare racket, the higher education racket, and so on.

Let's start by separating "real socialism" (state ownership of the means of production) from "faux socialism" (the state borrows trillions of dollars to fund self-serving public-private rackets).

The basic idea of classic socialism is that state ownership of the means of production enables the state to harvest the surplus production and invest it in the public good. If the state is organized as a democracy, then the public gets a say in defining "the public good" and changing course if the national surplus is being mal-invested or diverted into the hands of the few under the guise of "the public good."

What's being labeled "socialist" in present-day U.S.A. is nothing more than the state borrowing from future generations to fund profiteering rackets today. It's hardly a secret that the U.S. spends twice as much per person on healthcare but trails the pack of other developed nations in actual health. (See infographic below for the facts, which I have discussed here for 14 years.)

Problem #1 is robust health isn't profitable, while managing chronic lifestyle diseases and pushing needless/harmful medications and procedures are immensely profitable.

Problem #2 is the external costs of destructive but oh-so-profitable products are not paid by either producers or consumers at the point of purchase. The tobacco industry offers an example of this decoupling of "price discovery" and externalities that manifest years or decades later.

Selling tobacco was and is an enormously profitable venture, but only because the full costs of tobacco use manifest many years after the products are purchased and consumed, and these costs do not fall on the tobacco producers but on the consumers (who suffer terrible health consequences and early death), and on the healthcare system and society at large, which must absorb the staggering direct cost of dealing with the diseases caused by tobacco addiction and the indirect costs of lost productivity and early death.

For every $1 of profit the tobacco companies earned, $100 of future external costs were imposed on the consumers of tobacco and society at large. If the full external costs were levied at the point of sale, tobacco would be extremely expensive, and if the true risks had been advertised as heavily as the products themselves, the tobacco companies' liability exposure would have made the packaging and selling of tobacco an unprofitable business.

To maintain profitability, the tobacco companies engaged in a decades-long campaign to mask the real-world health consequences of using their products. The goal was three-fold: hide the well-known consequences of tobacco addiction, maintain that tobacco wasn't addictive, and maintain that it wasn't unhealthy, decoupling the sale of tobacco from the eventual costs.

The same dynamic is in play with America's food industry. Garbage in, garbage out: garbage "food" in, garbage health out.

This plays perfectly into sickcare's PR, which is that there is a magic handful of oh-so-profitable pills one can swallow to "fix" all the disorders caused by a garbage diet and near-zero fitness. And in case your doctor didn't adequately explain the wunnerful benefits of the magic handful of oh-so-profitable pills, Big Pharma helpfully spends billions of dollars on ads to promote a magical-thinking belief that some new med or procedure will "fix" complex, inter-connected metabolic disorders created by poor diet and an absence of fitness.

Medicare-for-All is simply a way to fund the racket as painlessly as possible, which is to borrow from future generations to fund profiteering rackets in Big Ag, Big Pharma, Big Packaged Food/Fast Food, and so on--the equivalents of Big Tobacco.

Just as smokers were encouraged to kill themselves without being aware of the eventual consequences of tobacco addiction, consumers of highly processed foods are killing themselves without being aware of the eventual consequences.

The promoters of Medicare-for-All offer a Band-Aid to fund the racketeering nature of U.S. healthcare: we're gonna tax the billionaires and they'll pay for the racket. It would be comical if it wasn't so painfully obvious that in our pay-to-play political circus, any new tax bill will be larded with exceptions and loopholes.

Let's say the "tax the rich" proposals raise $50 billion -- woohoo. But this is a drop in the bucket of additional costs incurred by Medicare-for-All, which could easily top $500 billion a year.

Nobody pushing Medicare-for-All dares connect the dots between garbage in, garbage out lifestyles and an unsustainably costly healthcare system of gargantuan waste, fraud, shameless profiteering, needless/harmful med and procedures, etc., a system which consumes twice as much money per person as our developed-world competitors for a measure of national health that is, if we're honest with ourselves (gasp), actually declining.

The entire system of health needs to be re-organized from the ground up, and funding the rackets will only speed the collapse of the system.

U.S. Healthcare Spending, courtesy of Peter G. Peterson Foundation

*  *  *

My recent books:

Will You Be Richer or Poorer? Profit, Power and A.I. in a Traumatized World (Kindle $6.95, print $11.95) Read the first section for free (PDF).

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The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 (Kindle), $8.95 (print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).

*  *  *

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Tyler Durden Sat, 11/16/2019 - 12:30
Published:11/16/2019 11:41:18 AM
[Markets] Globalists Openly Admit To Population Control Agenda - And That's A Bad Sign... Globalists Openly Admit To Population Control Agenda - And That's A Bad Sign...

Authored by Brandon Smith via,

Eugenics and population control are long time hobbies of the financial elites. In the early 1900's, the Rockefeller Foundation and the Carnegie Institute were deeply involved in promoting Eugenics laws in the US. These laws led to the forced sterilization of over 60,000 American citizens in states like California and thousands of rejected marriage licenses. The Eugenics programs in the US were only a beta test though, as the Rockefellers then transferred their programs over to Germany under Hitler and the Third Reich in the 1930's, were a true widespread eugenics-based population control program was introduced.

The targets of population reduction were based on ethnic background, but also “mental intelligence” and economic status. The Carnegie Institute even established a “Eugenics Records Office” called Cold Springs Harbor Laboratory in 1904, which collected genetic data on millions of Americans and their families with the intent of controlling their numbers and erasing certain traits from the US population. The Cold Springs Harbor Laboratory still exists today and presents itself as a kind of philanthropic endeavor to help humanity.

Public knowledge of the globalists and their population control agenda was carefully swept under the rug in the US after the exposure of Nazi programs post-WWII. The word “eugenics” became a very ugly one and all the effort the elites put into promoting it as a legitimate science was ruined. However, they were not going to give up on their precious ideology.

In the late 1960's into the 1970's there was a resurgence of population control rhetoric coming out of globalist circles. Under the supervision of the UN and some related scientific groups, the Club Of Rome was formed. A prominent part of the Club of Rome's agenda was population reduction. In 1972 the group of “scientists” under the UN's direction published a paper called 'The Limits Of Growth', which called for greatly reduced human population in the name of “saving the environment”. This effort was directly linked to another agenda – the institution of a global government that could handle and enforce population controls on a wide scale.

The elites had found a new scientific front for their eugenics obsession: Climate science. In the early 1990's the Club Of Rome published a book called 'The First Global Revolution'. In it they state:

In searching for a common enemy against whom we can unite, we came up with the idea that pollution, the threat of global warming, water shortages, famine and the like, would fit the bill. In their totality and their interactions these phenomena do constitute a common threat which must be confronted by everyone together. But in designating these dangers as the enemy, we fall into the trap, which we have already warned readers about, namely mistaking symptoms for causes. All these dangers are caused by human intervention in natural processes. and it is only through changed attitudes and behaviour that they can be overcome. The real enemy then is humanity itself.”

The statement comes from Chapter 5 – The Vacuum, which covers their position on the need for global government. The quote is relatively clear; a common enemy must be conjured in order to trick humanity into uniting under a single banner, and the elites see environmental catastrophe, caused by mankind itself, as the best possible motivator. It also outlines the perfect rationale for population control – Mankind is the enemy, therefore, mankind as a species must be kept under strict supervision and his proliferation must be restricted.

The Club of Rome and the UN agenda have always been intimately connected. In the 1990's at the same time 'The First Global Revolution' was being published, UN assistant secretary general Robert Muller was publishing his manifesto which is now collected on a website called 'Good Morning World'. Muller argues that global governance must be achieved using the idea of “protecting the Earth” and environmentalism as the key components. Through fear of environmental Apocalypse, the public could be convinced to accept global government as a necessary nanny state to keep society from destroying itself.

In a paper titled 'Proper Earth Government: A Framework And Ways To Create It' Robert Muller outlines how climate change could be used to convince the masses of the need for global government. Integral to his plan were the introduction of a new “global religion”, and population controls.

It should come as no surprise that the UN established the Intergovernmental Panel On Climate Change (IPCC) and that this panel and it's offshoots are now at the forefront of the argument for population reduction. As we close in on the end date for the UN's Agenda 2030, which calls for a radical shift of human production from oil and other large scale energy sources into small scale “renewable energies”, there is only 10 years left for the globalists to achieve their goals if they hope to meet their announced deadline. This would require a violent change in human society and most of all industrialized nations.

The human population would have to be reduced dramatically in order to survive on the meager energy output of renewables alone. A disaster of epic proportions would have to take place soon so that the globalists could then spend the next decade using the resulting fear to convince the surviving population that global governance is needed. Without aggressive crisis and change most people would never go along with the UN's agenda, out of simple desire for self preservation. Even many leftists, once exposed to the true nature of carbon controls and population reduction, might have second thoughts when they realize they could be affected.

The key to understanding people who cheer for population control or population reduction is that these people always assume that THEY will be the survivors and inheritors of the Earth after the culling.  They never assume that they will be the one's put on the chopping block.

In 2019, the population agenda is being ramped into high gear and the public is being carefully conditioned over time to accept the idea that man-made climate change is real and population is the source of the problem.  Recently, a groups of scientists partially funded by something called the “Worthy Garden Club” claimed 11,000 signatures on a statement for the need for population reduction in the name of saving the Earth from global warming.

The statement cites all the same long debunked IPCC and UN climate change propaganda as the reasons why the Earth is on the verge of annihilation. The fact of the matter is, climate scientists have been consistently caught red handed manipulating their own data to show the intended outcome of global warming. They have even been caught trying to adjust their own data from 20 years ago in order to match it more closely to the rigged data they publish today.

The Worthy Garden Club is a strangely sterile group and there doesn't seem to be any list of their patrons and who funds them. However, the mainstream media was quick to pick up on the statement from the “11,000 scientists” and tie it to statements made by the UN's IPCC.

Population control has also been brought up consistently as an issue in the 2020 Presidential Election race. Bernie Sanders argued for birth control measures in poor countries. Elizabeth Warren promoted abortion by saying it was as safe as “getting your tonsils removed”. She has consistently promoted the carbon control agenda of the UN and was, interestingly, a member of the University Of Texas Population research Center in the 1980s. And, Green New Deal politicians are throwing their support behind the statements from the Worthy Garden Club on population reduction.

This is the first time I have seen the argument for population reduction used so blatantly and widespread in the mainstream media, and it suggests to me that a trend is forming. For years I have warned my readers that they will know when the globalists are about to pull the plug on the current system when they start talking about their criminality openly. When they admit to their agenda in a free way, this means they are close to a global reset and do not care anymore who knows about it. The openness of the plan to cut world population is becoming apparent.

Strangely, there has been little mention of the fact that the world population, in the west most of all, is actually in decline. Far from exploding beyond the Earth's capacity, people are barely having enough children to keep the current population stable. It would appear that the globalist agenda is already in motion. Through engineered economic disintegration, the population is being slowly reduced.  However, this slow decline may not be enough to satisfy the globalists.

How many people would the globalists like to kill off to achieve their utopian aspirations?  Well, globalist Ted Turner in a moment of honesty said when confronted by We Are Change that the population should be reduced to 2 billion down from 7 billion.

The primary issue here beyond the moral horror show of eugenics is, who gets cut? And furthermore, who gets to decide who gets cut? Who gets to decide if you can have children or not? Who gets to decide if you are allowed to access resources to produce and make a living or not? Who gets to decide if the global economy will sustain the population or not? Who pulls the trigger on the culling of the population?

As history has shown us, it is always the elites that end up in the position of deciding the fates of millions or billions. From the Rockefeller Foundation sterilization programs in the US in the early 1900's to the UN today, the globalists, a veritable death cult, are desperate to conjure a rationalization as to why they should be the ones to allow or deny human life based on lies like man-made climate change.  They don't believe in the climate change threat, THEY were the people that fabricated it.  So, what is the core reason behind all of this?

A reduced population completely dependent on limited energy sources might be easier to dominate.  But I have another theory – they are psychopaths looking for a socially justifiable way to kill as many people as possible. Why? because they enjoy it.

*  *  *

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Tyler Durden Fri, 11/15/2019 - 23:45
Published:11/15/2019 11:09:42 PM
[Markets] David Stockman Exposes The Ukrainian Influence-Peddling Rings, Part 1 David Stockman Exposes The Ukrainian Influence-Peddling Rings, Part 1

Authored by David Stockman via,

Last night we heard some knucklehead on the War Channel (CNN) braying about Ukraine as a vitally important "ally and strategic partner". The implication, of course, was that the Donald’s attempted squeeze play on its new President was dangerously undermining national security.

What unadulterated tommyrot!

The safety and security of the American homeland has absolutely nothing to do with it. That’s because Ukraine is a no count, strategically irrelevant patch of earth that was long ago ruined by the old Soviet Union, and thereafter turned into an economic trainwreck by its own corrupt oligarchs – along with plenty of help from Washington interventionists.

The latter spent the post-Soviet years fomenting "color revolutions" and attempting to steer its politics toward the west and NATO membership. But when the Ukrainian people elected a pro-Russian president in 2010 and all efforts to bribe and bully him westward failed, Washington instigated, funded and instantaneously recognized an illegal putsch on the streets of Kiev in February 2014.

That blatant, unprovoked assault on a sovereign nation, in turn, set in motion a destructive civil war internally; a dangerous and utterly unnecessary politico-military confrontation with Russia on its own doorstep; and, now, a hysterical campaign by the House Dems and their Deep State allies to impeach a duly-elected American president for the sin of wading into the very cesspool of corruption that the Washington establishment itself foisted upon this hapless, $150 billion sliver of a failed state and crippled economy.

The latest dispatch from the Wall Street Journal on the stench wafting westward from Kiev reveals more about the rotten foundation of UkraineGate than its authors probably understood.

Burisma Holdings’ campaign to clean up its image in the West reached beyond the 2014 hiring of Hunter Biden, son of the then-U.S. vice president, to include other well-connected operatives in Washington, according to officials in both countries and government records.

The Ukrainian company, owned by tycoon Mykola Zlochevsky, also hired a lobbyist with close ties to then-Secretary of State John Kerry, as well as a consulting group founded by top officials in the Clinton administration that specialized in preparing former Soviet-bloc countries to join NATO (Blue Star Strategies).

Soon the efforts bore fruit. With the help of a New York-based lawyer, Mr. Zlochevsky’s U.S. consultants argued to Ukrainian prosecutors that criminal cases against the company should be closed because no laws had been broken.

Burisma later became a sponsor of a Washington think tank, the Atlantic Council, whose experts are often cited on energy and security policy in the former Soviet Union.

Simple translation: Zlochevsky was an ally, officeholder (minister of ecology and natural resources) and inner-circle thief in the ousted government of Viktor Yanukovych. He therefore needed to powder the pig fast and thoroughly in order to hold onto his ill-gotten billions.

Mykola Zlochevsky, former employer of Hunter Biden and current partner of the Atlantic Council

So he hired the best Washington influence peddlers that money could buy under the circumstances. First up was Hunter Biden, because his old man was running point on what amounted to the puppet government Washington had installed in Kiev, and Devon Archer, because he was a former bundler for former Senator (and then Secretary of State) John Kerry.

But so as to leave no stone unturned, Zlochevsky also had Burisma hire another Washington influence peddler just one month after Biden the Younger joined the board in April 2014. Again, according to the WSJ, the additional lobbyist firepower came from one,

David Leiter of Washington lobbying firm M.L. Strategies….. Mr. Leiter was John Kerry’s chief of staff when Mr. Kerry was a U.S. senator from Massachusetts….According to disclosure records, Mr. Leiter, who also had worked for the Energy Department, lobbied on behalf of Burisma on “promoting transparency and good corporate governances” at both chambers of Congress, the State Department, the Treasury Department, the Energy Department, and US AID.

Needless to say, only in Imperial Washington would all the above named arms of the US government care a whit about "transparency and good governance" at a two-bit gas producer in Ukraine. During 2018, for example, the company produced the trivial sum of 1.3 BCF of natural gas and booked revenues of just $400 million – a rounding error in just about any energy market that matters.

But as it happened, Washington was calling the shots in Kiev, and Burisma needed its government licenses and gas concessions. So the lobbying happened on the banks of the Potomac where the real power was actually exercised.

Finally, the Clinton wing of the Washington racketeering system had to be covered, too – hence the above mentioned Blue Star Strategies. And the bolded sentence from the WSJ story quoted below tells you all you need to know about its business, which was to "….help former Soviet countries prepare for NATO consideration".

That’s right. With the Soviet Union gone, its 50,000 tanks on the central front melted-down for scrap and the Warsaw Pact disbanded, the rational order of the day was to declare "mission accomplished" for NATO and effect its own disbandment.

The great parachuter and then US president, George Bush the Elder, could have actually made a jump right into the giant Ramstein Air Base in Germany to effect its closure. At that point there was no justification for NATO’s continued existence whatsoever.

But the Clinton Administration, under the baleful influence of Washington busybodies like Strobe Talbot and Madeleine Albright, went in just the opposite direction. In pursuit of Washington’s post-1991 quest for global hegemony as the world’s only superpower and putative keeper of the peace, they prepared the way for the entirety of the old Warsaw Pact to join NATO.

So doing, however, they also laid the planking for a revival of the cold war with the Kremlin. As the father of containment and NATO during the late 1940s, Ambassador George Kennan, observed at the time, the Clinton Administration’s policy of expanding NATO to the very doorstep of Russia was a colossal mistake.

It not only violated Bush the Elder’s pledge to Gorbachev at the time of German reunification that NATO would not be expanded "by a single inch to the east", but also set Washington on a confrontation path with the rump state of Russia that posed no threat whatsoever to America’s homeland security.

Moreover, in the case of Ukraine specifically, it had not simply been a Warsaw Pact "captive nation" like Poland or the Czech Republic. It had actually been an integral component of the old Soviet Union, and before that a vassal and sometimes province of Czarist Russia.

As the 1897 map below indicates, what is today Ukraine barely even existed as an independent state (dark yellow area) during the final centuries of the Russian Empire; and the Russian-speaking regions in what is today eastern Ukraine (yellow area on the map) had actually been known as "New Russia" owing to the Czarist policy of settling Russians there to provide a bulwark against encroachments by the Ottoman Turks.

Indeed, Crimea (orange area) had been actually purchased from them by Catherine the Great in 1783 to complete the Russification of the region north of the Black Sea. It had never been even remotely a part of Ukraine until its mainly Russian-speaking population was transferred to the Soviet Socialist Republic of the Ukraine by Khrushchev in 1954 as a reward to his Ukrainian compatriots for their support during the post-Stalin struggle for power in Moscow.

Moreover, the Ukrainian Soviet Republic, which had been largely incorporated by Moscow in 1923, had a modern bloody history that was always a civil war waiting to happen.

To wit, western Ukraine had sided with the Nazi and Hitler’s Wehrmacht as it brutally made its way through Ukraine to the siege of Stalingrad during WWII, while eastern Ukraine had lined up with the Red Army during its equally bloody campaign of destruction and revenge as it chased the defeated Nazi army back to Berlin after 1943.

So the very idea that Ukraine should be induced to join NATO was beyond the pale – and most especially after Washington had recruited modern-day political descendants of the WWII pro-Nazi brigades to replace the Yanukovych government in March 2014. Washington’s obtuseness to this history reflected pure imperial arrogance.

What is worse, of course, is that no count apparatchiks from the Clinton machine – Sally Painter and Karen Tramontano – had cashed in on this madness by setting up a practice in helping Washington to meddle in places where not an iota of homeland security was at stake.

Image result for 19th century map of the Ukraine as part of czarist Russia

As the Wall Street Journal noted, Blue Star Strategies had no compunction about using its Clinton and Biden connections in behalf of Burisma – notwithstanding the odor of oligarchical corruption which surrounded it,

Blue Star Strategies, which has been lauded in the West for its work to help former Soviet countries prepare for NATO consideration. Its founders: Sally Painter, a senior adviser to the Commerce Department in the Clinton administration, and Karen Tramontano, a deputy chief of staff in the Clinton White House.

At about the time of Mr. Shokin’s dismissal, Blue Star helped Burisma hire lawyer John D. Buretta, who argued before prosecutors in Ukraine that cases against Burisma should be closed, according to one Ukrainian official and others familiar with the matter.

“I thought I was meeting someone who was going to help with the investigations, and all he wanted to talk about was why they should be closed,” said one former Ukrainian prosecutor who met with Mr. Buretta.

So that’s how the Imperial City rolls. People make policies which extend the Empire while in office – as did these Clintonistas with the NATO expansion project – and then cash-in afterwards by peddling influence in the corridors of the beltway on behalf of Washington’s newly acquired vassals and supplicants.

In this case, all roads lead to the Atlantic Council, which is the semi-official "think tank" of NATO in Washington and is infested with Russophobes and Clinton/Biden operatives. The latter, of course, make a handsome living peddling anti-Putin propaganda – the better to grease the Washington purse strings for unneeded military spending and foreign aid, security assistance and weapons sales to the "front line" states allegedly in the path of Kremlin aggression.

In fact, so-called think tanks like the Atlantic Council are thinly disguised lobbying arms for both the Empire’s foreign supplicants as well as the U.S. agencies which feed them. Thus, in the racketeering wards of the Imperial City weapons contractors and foreign purchasers make common cause. So do the dispensers and recipients of foreign aid, security assistance and the multitude of Washington propaganda programs run through the State Department, Endowment for Democracy, Board for International Broadcasting and countless more.

In fact, the network of one hand washing the other is so pervasive and massive that it is not surprising that foreign policy and national security have become one giant racket enveloped in a bipartisan consensus in favor in intervention and meddling in the fairest parts of the planet.

The entire Ukraine intervention project, for instance, has been heavily choreographed by the Atlantic Council, which in turn derives its ample funding from virtually all parties – domestic and foreign – to the Empires far flung rackets.

Thus, US government contributors include the Pentagon, the U. S. State Department, the US Air Force, the US Navy, the Air Force Academy, the US Army War College, National Endowment for Democracy and even NATO itself.

Then there is an endless litany of foreign governments and quasi-official institutions including the British Foreign and Commonwealth Office, the United Arab Emirates (UAE) and embassies, foundations and sovereign funds representing Denmark, South Korea, Australia, Japan, Hungary, Sweden, Norway, Germany, Romania, Netherlands, Hong Kong and countless more.

Not surprisingly, the roster of military/industrial/intelligence contractors and international energy and financial institutions runs on for pages. It includes Chevron, HSBC Holdings, BP America Inc., Lockheed Martin Corporation, Raytheon, United Technologies, Boeing, ExxonMobil, Textron, Statoil, Bank of America, ConocoPhillips, JPMorgan and dozens more.

Also, amply represented in its contributor lists are other foreign policy advocacy and funding institutions including The Wallenberg Foundations, the Soros Open Society Foundations, the Rockefeller Brothers Fund, Arabia Foundation, Center for International Strategic Studies, the Starr Foundation, the Smith Richardson Foundation, the Carnegie Foundation etc.

Finally, there is an endless list of everyone and their brother who does business in Washington lead by the Victor Pinchuk Foundation. The latter is the influence peddling front of Ukraine’s leading billionaire who essentially stole much of its iron and steel industry after the Soviet Union collapsed and has been a leading funder of the Clinton Foundation ($6 million) and various Russophobe think tanks in addition to the Atlantic Council.

But that additional list also includes such odds and sots as Facebook, Inc., Google, Inc., Squire Patton Boggs, Starbucks Coffee Company, Twitter, McKinsey & Company, CNN and dozens more.

So it is not surprising that Burisma quickly put its money where its spotted reputation could be cycled through a refurbishment process at the Atlantic Council. Indeed, in an extensive expose, Max Blumenthal noted exactly hour the Atlantic connection came about:

Even with Hunter Biden on his company’s board, Zlochevsky was still seeking influential allies in Washington. He found them at the Atlantic Council in 2017, literally hours after he was cleared of corruption charges in Ukraine.

On Jan. 19, 2017 – just two days after the investigation of Zlochevsky ended – Burisma announced a major “cooperative agreement” with the Atlantic Council.

The deal was inked by the director of the Atlantic Council’s Eurasia program, a former U.S. ambassador to Ukraine named John Herbst.

Since then, Burisma helped bankroll Atlantic Council programming, including an energy security conference held this May in Monaco, where Zlochevsky currently lives.

The story actually gets even more convoluted from there as we will essay in Part 2.

As it turns out, virtually the entire caste of whistleblowers and Deep State testifiers now being called before the Impeachment Tribunal were in one way or another organized, financed or sponsored by the Atlantic Council.

*  *  *

David Stockman was a two-term Congressman from Michigan. He was also the Director of the Office of Management and Budget under President Ronald Reagan. After leaving the White House, Stockman had a 20-year career on Wall Street. He’s the author of three books, The Triumph of Politics: Why the Reagan Revolution FailedThe Great Deformation: The Corruption of Capitalism in America and TRUMPED! A Nation on the Brink of Ruin… And How to Bring It Back. He also is founder of David Stockman’s Contra Corner and David Stockman’s Bubble Finance Trader.

Tyler Durden Fri, 11/15/2019 - 05:00
Published:11/15/2019 4:07:25 AM
[Markets] Understanding The Deep State's Propaganda Understanding The Deep State's Propaganda

Authored by Eric Zuesse via The Strategic Culture Foundation,

Propaganda is essential to the Deep State’s operation...

The Deep State is the small number of people who control the organizations that donate the majority of the funds which finance the political careers of national officials, such as Presidents, Prime Ministers, and members of the national legislature. Almost always, the members of the Deep State are the controlling stockholders in the international corporations that are headquartered in the given nation; and, therefore, the Deep State is more intensely interested in international than in purely national matters. Since most of its members derive a large portion of their wealth from abroad, they need to control their nation’s foreign policies even more than they need to control its domestic policies. Indeed, if they don’t like their nation’s domestic policies, they can simply relocate abroad. But relocating the operations of their corporations would be far more difficult and costly to them. Furthermore, a nation’s public know and care far less about the nation’s foreign than about its domestic policies; and, so, the Deep State reign virtually alone on the nation’s international issues, such as: which nations will be treated as “allies” and which nations will instead be treated as “enemies.” Such designations are virtually never determined by a nation’s public. The public just trust what the Government says about such matters, like, for example, the US regime’s standard allegation, for decades, that “Iran is the leading state sponsor of terrorism”, which is clearly a blatant lie.

Iran, of course, is the world’s leading Shia nation, whereas Saudi Arabia is the world’s leading Sunni nation; and the US aristocracy are bonded to the aristocracies of both Saudi Arabia and Israel, against Iran. This allegation against Iran has always been promoted by the royal family who own Saudi Arabia, the Saud family, and also by the billionaires who control Israel, as well as by the billionaires who control the US So: this allegation is by the Deep State, which controls at least these three countries: US, Saudi Arabia, and Israel.

But, as was just said, this allegation by the Deep State is false: On 9 June 2017, I headlined “All Islamic Terrorism Is Perpetrated by Fundamentalist Sunnis, Except Terrorism Against Israel” and listed 54 terrorist attacks which had been prominent in US-and-allied media during 2001-2017, and all of them except for a few that were against Israel were attacks by Sunni groups — not affiliated with Iran. Subsequently, Kent R. Kroeger’s 16 May 2019 study “Is Iran the biggest state sponsor of terrorism?” concluded that overwhelmingly the majority of terrorist attacks ever since 1994 have been by Sunni groups, but he attributed the attacks by Yemen’s Shiite Houthis against Sunni Saudi Arabia as being “terrorist” attacks, even though these were instead actually responses to the Sauds’ war against, and to eliminate, Houthis in Yemen. Also, Kroeger attributed those Houthi actions to “Iran,” which is absurd. (The Houthis simply did not like being exterminated. And the US, of course, supplied the weapons and the military planning, for this attempted ethnic cleansing operation.) There were many other methodological flaws. And yet, still, even with its methodological flaws, Kroeger, concluded: “The distorted US propagandized image of Iran’s aggression looming over the Middle East is, frankly, ‘fake news.’” This is how untrustworthy the Deep State’s ‘news’ actually is. The term “fake news” is, in fact, misleading (or itself fake news) if it is not referring to the Deep State’s propaganda. In my 27 November 2017 “How the US Came to Label Iran the Top State Sponsor of Terrorism”, I described specifically the Deep State’s operation that had created the phrase “Iran is the leading state sponsor of terrorism”. But this is the way the Deep State operates, routinely, on all international issues. It operates by deceit. This is how it achieves the consent of the public, whom it actually rules. This is entirely consistent with the scientific findings about the United States, that it is a dictatorship, not a democracy. All of the evidence is consistent.

The Deep State here is the US-and allied Deep State, no merely national organization. It consists mainly of America’s billionaires, plus of the billionaires in US-allied countries such as UK, France, Saudi Arabia, UAE, and Israel — but many more (including, for example, in Honduras, Brazil, etc.). These people number fewer than 2,000 in total, and they do deals together, and their contacts with one-another are both direct person-to-person, and indirect by means of representatives or agents. However, America’s billionaires lead the US-and-allied Deep State. That’s to say, the leaders are among the 607 US billionaires, the people who mainly fund American national political campaigns and candidates — and these 607 individuals determine who will get an opportunity to become a US President or member of Congress, and who won’t. For example: these individuals don’t necessarily select the politician who will become America’s President, but they do select who will get the opportunity to be among the serious contenders for that position. (Basically, what the mullahs do in Iran, these super-rich do in America. Whereas in Iran the clergy rule, in America the aristocracy rule.)

One, in particular, is George Soros, and this article will detail the views of one of his many beneficiaries. Another of these billionaires is Charles Koch, but he will not be discussed here, and inside the United States he is popularly considered to be an enemy of George Soros, only because the two men oppose each other on domestic issues. (Billionaires tend to be much more concerned with, and united about, foreign affairs than about domestic affairs, though they do oppose both their taxation and their regulation — they are for ‘free markets’, both domestically and abroad, and yet they also favor imposition of economic sanctions against countries which resist becoming controlled by them, and so they don’t really favor free markets except to the extent that free markets favor their own increase in power and thus tend toward oligopoly and away from competition.) Both men are much more alike than different, and both represent what’s called “neoliberalism,” which is the universal ideology of billionaires, or at least of all billionaires who donate to (i.e., invest in) politicians. Only few billionaires don’t invest in politicians; and, though politicians disagree with one-another, almost all of them are neoliberals, because politicians who aren’t that are not funded by the Deep State (the billionaires). The foreign policies of neoliberals are called “neoconservative” and this means supporting regime-change in any country that’s labeled by billionaires and their government an “enemy” nation. So, “neoconservative” is merely an extension of “neoliberal”: it favors extending neoliberalism to other nations — it is internationally aggressive neoliberalism; it is imperialistic neoliberalism. It is fascism, but so is neoliberalism itself fascist; the difference between the two is that neoconservatism is the imperialistic extension of fascism — it is the imperialistic fascism that, in World War II, was represented by the three Axis powers — Germany, Italy, and Japan — not by the purely domestic fascism that was represented by Spain. Whereas Spain was merely neoliberal, the Axis were also neoconservative (expansionist neoliberal), and the latter is what the Allies in WW II were warring against. But now the US has emerged as the world’s leading neoconservative regime, invading and occupying country after country, none of which had ever invaded nor even threatened to invade the United States. Propaganda is necessary in order to ‘justify’ doing that. This article will describe how that’s done.

The Deep State doesn’t concern domestic issues, because virtually all of its members control international corporations, and the Deep State is almost entirely about international issues: foreign policies, diplomacy, military issues, and international spying agencies called “intelligence agencies” — extending the empire. The Deep State controls all of that, regardless of what Party is nominally in power. (The public care little about foreign policy, pay little attention to it, and believe the government when it alleges that “national security” is about protecting them, and not about expanding the power and wealth of the billionaires.)

The dictatorship of the US Deep State really is more international than national; it provides the continuity in international relations, when it chooses and defines which nations (which foreign governments) are “allies” (meaning “we sell arms to them”) and which are instead “enemies” (meaning “we should sanction them and maybe even bomb them”). Both allies and enemies are essential in order for the military-industrial-press-government complex (here: “MIPGC”) to thrive, and the Deep State controls the entire MIPGC. In other words: the Deep State is an international empire, and, as such, its supreme aspiration is to conquer (via subversion, sanctions, coups, and/or invasions) all countries that it labels as “enemies.”

The way that the Deep State views things, there is no need for an ‘enemy’ to threaten or invade the United States in order for it to be “an enemy,” but, instead, the United States and its allies possess a God-given right to impose sanctions against, or coups overthrowing, or invasions of, any country they choose, so long as they can criticize that other country for being a ‘dictatorship’, or for ‘violating human rights’, or for otherwise doing what the Deep State itself actually does more than any other government on this planet does (and particularly does it to its selected ‘enemies’ — such as were Iraq, Libya, Syria, Iran, Venezuela, and any other country that’s either friendly toward, or else an ally of, Russia, which is the other nuclear super-power, and the Deep State’s central target).

However, though those few super-wealthy individuals (in addition to the general public’s taxes) fund its operations, their many operatives are true-believing followers (believers in neoliberalism-neoconservatism), and this is the reason why the masters fund those individuals’ careers. It’s why these masters provide the platforms and personal connections and employment which enable the true-believers to advance, while opponents of the Deep State (i.e., opponents of the billionaires’ collective dictatorship) cannot find any billionaires to patronize them. In a society that has extremely concentrated wealth, this means that there will be virtual penury for opponents of the billionaires’ collective dictatorship. Especially the major politicians need patrons amongst the aristocracy, the billionaires, in order to have successful careers.

The beneficiary of the Deep State who will be exemplified, discussed, and finally quoted, here, will be Jacek Rostowski, who is also known as Jan Anthony, and as Jan Anthony Vincent-Rostowski. Wikipedia’s article on him opens:

Jan Anthony Vincent-Rostowski, also known as Jacek Rostowski (Polish pronunciation: ['jan 'vint?s?nt r?s't?fsk?i]; born 30 April 1951, London) is a British-Polish[1] economist and politician who served as Minister of Finance and Deputy Prime Minister of the Republic of Poland.

He was a candidate for Change UK in London at the 2019 European Parliament election in the United Kingdom.[2]

It also says:

From 1995 he has been Professor of Economics and was the head of the Department of Economics at the Central European University in Budapest during the periods: 1995–2000 and 2005–2006.[9] …

Later career[edit]

Rostowski was a member of Britain’s Conservative Party. In the beginning of 2010, it was announced that two months prior[15] he has become member of the Civic Platform party (PO). In the wake of the Parliamentary Elections of 2011, he became Member of Parliament, being elected from the list of Civic Platform Party (PO).[16]

In late 2015, Prime Minister Ewa Kopacz appointed Rostowski as her top political adviser.[17]

Vincent-Rostowski has published around 40 academic papers on European enlargement, monetary policy, currency policy and the transformation of post communist economies. He is the author of academic books including Macroeconomic Instability in Post-Communist Countries published by Oxford University Press.

On November 3rd, the Ukrainian ‘news’-medium Apostrophe interviewed him, and published the interview in Ukrainian. (The interviewee isn’t fluent in Ukrainian, but the article’s translator into Ukrainian isn’t identified.) What will be posted here is an English translation of that Ukrainian original.

The English “About” page on Apostrophe’s site says:

Apostrophe started in August 2014.

The site was aimed to prepare informational and analytical materials, presentations of important events in politics, economics, society and culture. Apostrophe’s editorial policy is based on principles of impartiality, precision and veracity, velocity, objectivity and balance in the presentation of information. Apostrophe sticks to journalism ethical standards. That is why published materials should not propagate violence, cruelty, cause racial, national or religious hatred. Apostrophe is a proponent of the common humanism values, peace, democracy, social progress and human rights.

The project functions with the direct participation and use of the resources of the International Centre for Policy Studies (ICPS). Apostrophe’s idea lies within the framework of synergy between journalists and analysts.

The “About” page on the International Centre for Policy Studies (ICPS) says:

ICPS was founded in 1994 upon the initiative of the Prague-based Open Society Institute (OSI). At that moment, ICPS was the first independent think-tank in Ukraine.

The Open Society Institute was founded by George Soros. He also founded the Central European University in Budapest, where the interviewee was employed for five years.

Those are just the obvious ways in which the interviewee had been funded and advanced by Mr. Soros.

Soros also had helped to fund the overthrow of the democratically elected and internationally non-aligned President of Ukraine in 2014 and to replace him with a nazi anti-Russian regime which serves as a terrific asset for the US-and-allied Deep State, because of Ukraine’s having a 1,625-mile border with the country that the US-installed regime in Ukraine hates: Russia (hates it because the Deep State craves, above all, to control also the other nuclear super-power; so, this is hatred-on-command).

A basic presumption of that interview, both by the interviewer and by the interviewee, is the Russian Government’s being wrong in everything, and the Ukrainian Government’s — the regime which Obama (another of Soros’s beneficiaries) had installed — being right in everything. Here is this interview, as an illustrative example of how propaganda is professionally done:

ORIGINAL OF THIS ARTICLE (in Ukrainian) (now translated here into English):

Apostrophe: How would you describe the current state of security in the European region?

Jan Anthony: Since 2014, military security has become a more important topic of discussion in Europe. After all, the events in Crimea and Donbass caused shock. After a long period of time, when defence issues were put on the back burner, they are now again becoming an important factor in the European security environment. Now there are serious problems requiring high priority and serious solutions. And, of course, there are other problems that relate to the same issue — the fight against terrorism, for example.

The EU and NATO work very closely together to prepare for different types of threats. Now there is a return to a potential military conflict with Russia. In addition, there is an unsustainable security situation in the south, in Africa, because of the conflict in Libya, and in the Sahara. They can also pose a terrorist threat. Therefore, the issue of European security has become more complex than it was 5-10 years ago.

“You specialize in managing military conflicts. How do you think the conflict in Ukraine can be solved?

“Conflict management and conflict resolution are different things. Now I see attempts to create a more positive context in the Donbass issue. We need to return to the Minsk agreements as a basic resolution on the conflict. As you know, discussions are under way on the so-called Steinmeier formula. Therefore, now there is an opportunity to return to the discussion of how the Minsk agreements should be implemented. There are serious questions about the sequence of points — what should be done in the first place. And there is also the question of how to confirm the parties’ compliance with their obligations, because now there is a very low level of trust among the participants. Therefore, everything that will be done, it is necessary to immediately demonstrate — behold, it is fulfilled.

How about the implementation of Minsk? Especially given that it has not worked for almost 5 years.

“As I see it, no one is discussing any alternatives now. Perhaps among the people discussing ways to implement the agreements, there are other options, but I have no idea what they can be. The Minsk agreements are still in the spotlight.

“Let’s talk about Crimea. What are the threats on the peninsula?

“With Crimea it’s a different story than with Donbass. In Crimea there are facilities that can be a base for Russian nuclear weapons, including the Russian navy, capable of carrying nuclear weapons in the Black Sea. [NOTE HERE: Obama’s takeover of Ukraine was originally aimed at taking over Russia’s naval base in Crimea and installing an even larger US naval base there, against Russia.]

“So the main threat is nuclear weapons?

“Of course, it is an extremely serious threat by its nature. Any use of it would be disastrous.

“Will the Kremlin decide to use these weapons in the near future? Or is it just a way to intimidate the West?

“The primary objective of nuclear weapons is deterrence. This is the main goal with which Russia placed it in Crimea.

“Is it possible to compare the situation with the Cuban crisis?

“I would not say that these two situations are similar. There the crisis came very, very close to escalating into an armed conflict. I don’t think we’re going to get to that level of confrontation. [NOTE HERE: Both the interviewer and the interviewee ignore that instead of the Soviet Union’s 1962 attempt to place nuclear missiles on the island of Cuba 95 miles from America’s border, the US ploy now is to place its nuclear missiles right on Russia’s 1625-mile border with Russia — the discussants’ assumption reverses the actual threat, and thus insults their readers’ — or else their own — basic intelligence.] But now it is a very dangerous situation. We need to find more stable mechanisms that cannot be developed by comparing the situation to the Cuban crisis.

“How can the Western world force Russia to take its weapons from Crimea?

“Of course, the sanctions have had an effect. I’m sure they’ll stay — I don’t see any reason to take them off. International pressure on Russia will continue. Normalization of relations with it is impossible as long as the current situation in Crimea remains. And since Russia has no intention of leaving the peninsula, we will live for a long time in difficult relations with it, including sanctions, as well as cooperation of Western countries, taking into account possible military confrontation.

“Let’s recall the attack on Ukrainian military vessels in the Kerch Strait, which occurred almost a year ago. How can we avoid the threat of further Russian attacks on Ukrainian and foreign ships?

“Ukraine has lost control of part of its navigation, as well as guaranteed access to the Sea of Azov — and this is a complex problem. This issue must therefore remain the focus of international attention. Ukraine should have access to the water area and carry out commercial operations in ports. Georgia faced the same problem — the loss of control over navigation in a certain area. A special mechanism is needed to address these issues. But I have no suggestions on what it should be.

“Russia recently blocked international waters in the Black Sea and thus blocked trade routes. How should the international community respond to such behaviour?

“We must respect the International Convention on Navigation. We must continue to conduct military exercises in the Black Sea and it is important that NATO countries participate in them. Of course, there remains a risk that Russia will also organize its exercises. I think the ships will enjoy the freedom of navigation established by the International Convention. Some issues may need to be discussed more broadly for the sake of a future long-term convention. We need to make it more relevant to modern security requirements. It is important to revise time limits on stay in the Black Sea for NATO ships. Nato’s defence and deterrence plans should also be changed. NATO must have greater access to the Black Sea and its naval forces spend more time there.

“Does the need to renegotiate international agreements on the weakness of international institutions, as well as their unpreparedness for strikes by Russia, speak?

“Many countries have entered into bilateral agreements with Russia to ensure their confidence in the use of the sea. I think such deals need to be modernized, as well as add another agreement, which spells out a mechanism for discussing maritime incidents on the basis of international organizations, for example, under the OSCE umbrella. This will avoid misunderstandings that may arise from disregard for the rules.

In the case of deliberate violations, for example, when military exercises block part of the Black Sea, other measures of influence will have to be used. And in that case, there must be a clear international response. If you look at the 2014 NATO summit at Brussels, there have been decisions that have had a very tough response in the event of any crisis. The only question is what to do to Ukraine, which is not a member of the Alliance and does not obey its decisions.

“Regarding Russian military power. During the “Grom-2019” exercises, which were held recently under the personal guidance of Vladimir Putin, the nuclear submarine cruiser K-44 “Ryazan” fired only one ballistic intercontinental missile R-29R. The other missile just didn’t come out of the mine. This is not the first time that the Russian army has failed. So the question arises, is Russia really a threat to peace, all this is just a demonstration?

“Russia can solve the problems that you have named. But no one doubts that it has an extremely powerful nuclear arsenal. Despite some problems with weapons, Russia is still very strong.

“The Kremlin has promised to develop short- and medium-range missiles and deploy them to confront the West (in fact, they already exist — Iskanders). Does this mean that now the situation in Europe is close to the state of the Cold War, when the USSR and the West deployed iCBM for mutual deterrence?

“Yes, Russia has already developed and deployed the ICBM. We don’t know if they’re all equipped with nuclear weapons. But for the balance of power, NATO must have a significant force with nuclear weapons.

There are differences with the Cold War. Then there was complete separation and no contact between East and West. And now we have significant economic cooperation. It is still possible to hold political discussions, including with the participation of intergovernmental organizations. So now the situation is not quite the same as during the Cold War. But, as I said, the security situation in Europe is very difficult and relations with Russia deteriorate. The absence of signs that this deterioration is coming to an end is worrying. There are no very effective ways to improve relations with Russia. Therefore, there are different reasons for concern.

“The Kremlin sent the S-400 division and the Panzir-S battery to Serbia to the Russian Air Defense Forces. This is, in fact, Russian military exercises near the EU. [NOTE HERE: The problem isn’t that Russia is moving too close to the EU — such as the discussants imply — but that NATO has moved right up to Russia’s borders. Again, the presumption insults readers’ — and/or their own — basic intelligence.] Is this preparation for a strike against the West?

“Serbia’s position is that they want to have good relations with both their neighbors and NATO countries, but also with Russia. Serbia is also training with NATO countries. Serbia wants a balance of power, but in the event of a conflict it will support EU membership. It is politically and economically related to Western countries. Therefore, I do not believe that such exercises are the Kremlin’s preparation for an attack on the EU.

“How would you assess the military threats to Europe in Ukraine, Belarus and Moldova?

“It is difficult to answer because these are three different countries and the situation in each of them is completely different from the other.

“Ukraine and Moldova have similar situations. Russian soldiers are still in Transnistria – the only difference is that the conflict there is frozen.

“Yes, they are there, but they do not fight like in Ukraine.

Do you believe that this frozen conflict can continue?

“Today we think it’s not very likely.

“Is Europe expecting a military strike from Russia?

“No, we don’t expect it and we don’t expect it. But we do not rule it out, we allow it in our defense plans. Preparations are under way for these attacks, which means that their probability is reduced.

“Russia invests heavily in European political parties like the French National Front or the League of the North in Italy. Is there any evidence that the Kremlin is investing in “militia” in EU countries and supplying weapons to Europe to shake up the situation. Perhaps it is funding crime to influence the situation in the EU?

“There have been many investigations into ties with the Kremlin, in particular financial ties from politicians. The EU discusses a lot of cyber threats, the possibility of attacks on infrastructure, as well as information attacks. But I have never seen the Kremlin supply weapons to non-state organizations, especially criminal groups.

“Russia has taken up the settlement of the issue in Syria. What’s going on out there now?

“Officially, Russia is helping Bashar al-Assad’s forces gain control over Syrian territory. But what is happening now is, from the Kremlin’s point of view, the formation of a single strategic space, including the Black Sea and the eastern Mediterranean. Russia has free access to the Black Sea and now the Russian Navy has gained much greater access to the waters of the eastern Mediterranean. They plan to use this strategic space for a possible confrontation with NATO forces.

“How can this affect Europe?

“It’s a very difficult question. One issue of concern is the influx of refugees and temporarily displaced persons to Turkey and Europe. On the other hand, again, Russia’s creation of a single strategic space, interference in the Mediterranean.

“Let’s go back to Ukraine. You are a nuclear safety expert. We have many nuclear power plants, can they pose a threat to the world in the event of full-scale aggression?

“Yes, this is a very big threat, first of all for Ukraine itself, then for the rest of the world. One of the Ukrainian officials stated that this is why there was a significant revision of the concept of Ukraine’s security. It includes so-called “internal threats” to nuclear equipment and the creation of national protection, will protect and defend nuclear reactors. I think that the threat to the infrastructure of the nuclear power plant in Ukraine is real. But the Ukrainian government takes this seriously and takes the necessary measures.


As can be clearly seen there, the basic method of the Deep State’s propagandists is to ask questions which have assumptions that are the reverse of reality, and to answer these questions in ways that confirm those falsehoods.

This is what many millions of people get paid to do.

And it creates “Big Brother” or the Deep State here, just as, in 1948, George Orwell might have been thinking that it would do in 1984. And a good example of how the Deep State ‘justifies’ itself in America, is shown here.

Tyler Durden Thu, 11/14/2019 - 23:45
Published:11/14/2019 11:03:08 PM
[Markets] The Digital Money Revolution The Digital Money Revolution

Authored by Huw van Steenis via Project Syndicate,

The rapid pace and sheer scale of innovation in digital currencies and mobile payments indicates that a monetary revolution is forthcoming. The choice for governments and central banks is whether to stand in front of a train that is gaining steam, or get on board and reap the benefits.

How radically will digital currencies change our methods of exchange and the way that we think about money? With innovation in digital payments barreling ahead, these questions are now commanding the attention of the World Economic Forum and other international institutions.

Regardless of how Facebook’s own digital-currency moonshot, Libra, fares, it has already provided a wake-up call for firms and policymakers around the world.

“If revolution there is to be, let us rather undertake it than undergo it,” Otto von Bismarck once said.

The question for policymakers is not whether to try to shape the digital-money revolution, but how.

Digital money is already a key battleground in finance, with technology firms, payment processing companies, and banks all vying to become the gateway into the burgeoning platform-based economy. The prizes that await the winners could be huge. In China, Alipay and WeChat Pay already control more than 90% of all mobile payments. And in the last three years, the four largest listed payment firms – Visa, Mastercard, Amex, and PayPal – have increased in value by more than the FAANGs (Facebook, Apple, Amazon, Netflix, and Google). In a way, Libra is actually crashing the party late.

The opportunities offered by digital money are clear. Across Western countries, moving money is overly costly and inefficient, and those who end up paying the most are often the ones who can least afford to do so. As I argued in a report for the Bank of England (BOE) earlier this year, improving these processes could yield significant returns and social benefits.

Moreover, the needs – the potential returns – are even greater in many emerging markets, particularly when it comes to cross-border payments. According to the World Bank, the average cost of sending international peer-to-peer remittances averages around 7% of the sum. Efforts to improve the main payment channels are ongoing. TransferWise, for example, claims to have reduced the average cost of cross-border transfers for its clients to 0.74%. But less well-trodden routes remain a challenge, owing to the hurdles posed by anti-money-laundering rules and poor data quality.

Given the concerns that Libra has raised, some central banks have begun to explore the option of issuing their own digital tokens. Others are studying the thorny legal and regulatory challenges posed by digital money, so that they can safeguard monetary and financial stability. For her part, Lael Brainard, a governor on the US Federal Reserve Board, recently suggested that the risks of cryptocurrencies outweigh the benefits. By contrast, the People’s Bank of China is forging ahead – though not toward the decentralized or “permissionless” blockchain model envisioned by crypto enthusiasts. The PBOC wants to use cryptography to issue tokens to mainstream banks, which will then be passed on to customers within the existing two-tiered banking system.

Hence, if the European Central Bank (or others) wanted to be the first central bank to issue digital money, the opportunity is there for the taking. To policymakers considering the options presented by digital money, I would offer five recommendations from my BOE report.

First, monetary authorities should create the infrastructure to enable alternative payment methods to connect to one another. The private sector can flourish when central banks act as a platform for innovation, as BOE Governor Mark Carney has shown by granting non-bank payment firms access to the BOE payments system. But success will depend on how easily new providers can access the central-bank infrastructure, which will require well-designed application programming interfaces through which to receive and share information.

Second, policymakers should usher in the next generation of payments regulation. Rules need to be updated to reflect the increasing complexity and shifting risks of the current system. As the cost of payments falls, the value of data will grow. Yet existing rules pertaining to data sharing, security, and liability are mostly rudimentary. Given the flurry of new entrants, there is a case to be made for tiering regulation – as the Singaporeans have done – and stress-testing payment firms for their financial resilience and cyber-security protections.

Third, governments need to champion better digital identification, which is essential to improving financial inclusion, curbing cyber fraud, and reducing costs. Some countries have already made impressive progress on this front. India, for example, has largely cracked the identification problem with its Aadhaar program, which dramatically simplifies the process through which networks can know their customers. Countries that do not have a tradition of issuing national ID cards have more work to do, but their governments can cooperate with the private sector, or use existing high-quality national data sets such as passport and tax numbers.

Fourth, all countries need to support stronger messaging standards to improve cross-border payments, reduce costs, and prevent fraud. Just as postal codes help mail get to the right place, so too could better tagging of payment senders and recipients.

Fifth, and critically, policymakers need to create a roadmap for the decline of cash. In Sweden, cash payments have fallen by 80% over the past decade, and many other developed markets are just 5-10 years behind. Digital payments bring many benefits, but the Swedish experience shows that without a coordinated plan, the pace of change risks excluding some groups in society. As payment habits shift, each country will need a strategy to improve its payments infrastructure – including broadband and mobile-telephony networks – so that no one is left behind.

Payments innovation is moving at a dizzying pace. Some ideas may fail to get off the ground, while others may need to pivot to become commercially viable. Other issues, like market dominance or cyber-security risks, will undoubtedly become more prominent in policy debates. On balance, however, the economic and social benefits of a frictionless, fraud-free, and trusted global payments system will likely outweigh the risks.

Tyler Durden Thu, 11/14/2019 - 17:45
Published:11/14/2019 5:01:45 PM
[Markets] "What's Moral Is What's Legal... And What's Legal Is For Sale" "What's Moral Is What's Legal... And What's Legal Is For Sale"

Authored by Charles Hugh Smith via OfTwoMinds blog,

The anti-social carnage unleashed by Corporate America's "lock-in" / negative network effects has no real limits.

Here's the U.S.economy in a nutshell: Corporate America is an anti-social Black Plague, gorging on cartel-monopoly profits reaped from negative network effects running amok, enriching the few at the expense of the many and concentrating political power in the hands of the most rapacious, anti-democratic corporate sociopaths.

Let's start with network effects: the conventional definition is "When a network effect is present, the value of a product or service increases according to the number of others using it."

So for example, when telephone service was only available to a few users, its value was limited. As more people obtained telephone service, the value of the network increased to both its owners and to users, who could reach more people and conduct commerce more easily as a result of having telephone service.

In the conventional analysis, negative network effects occur from "congestion," i.e. the network is adding new users so quickly that "more users make a product less valuable."

But this superficial analysis misses the fatally anti-social consequences of corporate negative network effects, a dynamic described by analyst Simons Chase in this essay. Here is an excerpt:

Even the most imaginative and far-reaching narratives about non-obvious economic fragility and off balance sheet risks are mere rants without constructive ideas about causes and solutions.

Consider network effects, the popular economic construct applied to market concentration and increasing returns for strategies pursued by some leading tech companies. This dynamic economic agent is also known as demand side economies of scale.

W. Brian Arthur, the economist credited with first developing the theory, described the condition of increasing returns as a game of strategic positioning and building up a user base to the point where 'lock in' of dominant players occurs. Companies able to tap network effects have been rewarded with huge valuations and highly defensible businesses.

But what about negative network effects? What if the same dynamic applies to the U.S.'s pay-to-play political industry where the government promotes or approves of something through a policy, subsidy or financial guarantee due to private sector influence.

Benefits accrue only to the purchaser of the network effects, and consumers, induced by the false signal of large network size, ultimately suffer from asymmetric risk and experience what I'm calling a loss of intangible net worth for each additional member after the 'bandwagon' wares off.

If this were the case, then you would see companies experience rapid revenue growth (out of line with traditional asset leverage models), executives accumulating huge fortunes and political campaign coffers swelling.

But the most striking feature would be the anti-social outcomes, the ones not available without the instant critical mass of government-supported network effects, the ones that, at scale, monetize a society's intangible net worth.

Some products tied to these metrics include: prescriptions drugs, junk food targeting children, mortgages, diplomas, and social media. The list of industries that are likely to have gained through the purchasing of network effects in D.C. maps closely to the decay that is visible in U.S. society.

The loss of intangible capital and other manifestations of non-obvious economic fragility (to use Simons' apt phrase) is the subject of my latest book, Will You Be Richer or Poorer? Profit, Power and A.I. in a Traumatized World, in which I catalog the anti-social consequences of negative network effects and other forces eroding our nation's intangible capital.

Consider Facebook, a classic case of negative network effects running amok, creating immensely anti-social consequences while reaping billions in profits: Facebook isn't free speech, it's algorithmic amplification optimized for outrage (

The full social cost of social media's negative network effects are difficult to tally, but studies have found that loneliness and alienation are correlated to how many hours a day individuals spend on social media. (An Internet search brings up dozens of reports such as NPR’s Feeling Lonely? Too Much Time On Social Media May Be Why.)

Facebook is trying to leverage its social media "lock-in" to issue its own global currency and both Facebook and Google are trying to offer banking services without any of the pesky regulations imposed on legitimate banks. (Will $10 million in lobbying do the trick? How about $100 million? We've got billions to "invest" in corrupting and controlling public agencies and political power.)

Once Corporate America locks in cartel-monopoly power, i.e. you have to use our services and products, the corporate sociopaths use their billions in market cap and profits to buy the sociopaths in government. Pay-to-play is the real political machinery; "democracy" is the PR fig-leaf to mask the private sector "lock-in" (monopoly) and the public-sector "lock-in" (regulatory influence, anti-competitive barriers to entry, the legalization of corporate fraud, cooking the books, embezzlement, etc.)

Consider Boeing, an effective monopoly which used $12 billion in profits to buy back its own shares and "invested" millions in buying political influence so it could minimize public-sector oversight.

Rather than spend the $12 billion designing a new safe aircraft, Boeing cobbled together a fatally flawed design dependent on software, as described in The Case Against Boeing (The New Yorker) to maximize the profitability of its "lock-in".

Google is running amok on so many levels, it's difficult to keep track of its anti-social "let's be evil, it's so incredibly profitable" agenda: Google's Secret 'Project Nightingale' Gathers Personal Health Data on Millions of Americans (Wall Street Journal). The goal, of course, is to reap more billions in profits for insiders and corporate sociopaths.

The anti-social carnage unleashed by Corporate America's "lock-in" / negative network effects has no real limits. Consider the essentially limitless private and social damage caused by Big Tech: Child Abusers Run Rampant as Tech Companies Look the Other Way (New York Times).

Then there's the opioid epidemic, whose casualties run into the hundreds of thousands, an epidemic that was entirely a creature of Corporate America seeking to maximize "lock-in" profits by buying regulatory approval and pushing false claims that the corporate products were safe and non-addictive.

Note the media sources of these reports: these are the top tier of American journalism, not some easily dismissed alt-media source.

What does this tell us? It tells us the anti-social consequences are now so extreme and so apparent that the corporate media cannot ignore them. Once Corporate America locks-in market, financial and political power, it acts as a virulent Black Plague on the social order, legitimate democracy, and an entire spectrum of intangible social capital including the rule of law.

As Simons put it: 

"The ethical dimension underpinning the whole system is this: what's moral is what's legal and what's legal is for sale." Where does this Black Plague pathology take us? To a collapse of the status quo which enabled it, cheered it, and so richly rewarded it.

*  *  *

My recent books:

Will You Be Richer or Poorer? Profit, Power and A.I. in a Traumatized World (Kindle $6.95, print $11.95) Read the first section for free (PDF).

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($6.95 (Kindle), $12 (print), $13.08 ( audiobook): Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 (Kindle), $8.95 (print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).

*  *  *

If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via

Tyler Durden Thu, 11/14/2019 - 14:26
Published:11/14/2019 1:36:37 PM
[Markets] Now That We've Incentivized Sociopaths... Guess What Happens Next Now That We've Incentivized Sociopaths... Guess What Happens Next

Authored by Charles Hugh Smith via OfTwoMinds blog,

As long as central banks create and distribute trillions in conscience-free credit to conscience-free financiers and corporations, the incentives for sociopathy only increase.

"Sociopath" is a word we now encounter regularly in the mainstream media, but what does it mean? Here is a list of 16 traits, many of which are visible in lionized corporate and political leaders and entrepreneurs.

One key trait is a lack of moral responsibility or conscience; the sociopath feels no remorse if he/she takes advantage of people or exploits them.

Sociopaths are masters of superficial charm, intelligence and confidence, and adept at massaging or misrepresenting reality up to and including outright lying to persuade others or get their way.

Like all psychological syndromes (manic depression, autism, bipolar disorder, etc.), there is a wide spectrum of sociopathological traits, some of which may offer some adaptive benefits (and hence their continued presence in the human genome). In other words, an individual can have a few of the traits in greater or lesser proportions.

Thus the modern BBC Sherlock Holmes (played by Benedict Cumberbatch) describes himself as a "high-functioning sociopath" (though many contest this diagnosis of the original Holmes in Arthur Conan Doyle's stories).

Anyone who has read Walter Isaacson's biography of Steve Jobs can readily see manifestations of sociopathy in Jobs: his famous "reality distortion field," his refusal to accept that he'd fathered a daughter, his lack of empathy, his wild emotional swings (from verbal abuse to weeping), his dietary extremes, his charm, so quickly turned on or off, his uneven parenting, and so on. His obsessive-compulsive behavior was also on full display. Yet Jobs is lauded and even worshiped as a genius and unparalleled entrepreneur. Was this the result of his sociopathological traits, or something that arose despite them?

The ledger of costs and benefits of Jobs' output is weighted by the global benefits of the products he shepherded to market and the hundreds of billions of dollars in sales and net worth he generated for investors while the head of Apple. Though narcissistic in many ways (with the resulting negative effects on many of his intimates), Jobs was clearly focused on creating "insanely great" products that would benefit customers and users. Despite his sociopathological traits, there is no evidence he set out to deceive anyone with the objective of exploiting their good will or belief in his vision to skim billions of dollars from unwary investors.

But the ledgers of others manifesting sociopathy are far less beneficial, as the billions of dollars they generated were in essence a form of fraud.

The rise and fall of WeWork is a recent textbook example of sociopathy reaping enormous financial gains for the sociopaths without creating any actual value. There are plenty of media accounts of the founders' excesses (including the goal of becoming the world's first trillionaire), some of which we might have expected to raise flags in venture capitalists, board members, etc., but these traits were overlooked in the rush for all involved to garner billions of dollars in fees and net worth when WeWork went public.

This example (among many) illustrates that sociopathy is incentivized in our socio-political-economic system, and sociopathic "winners" are lionized as epitomes of ambitious success. (The entire charade of the stock market rising due to Federal Reserve-enabled stock buybacks is an institutionalized example of sociopathy.)

Correspondent Tom D. recently summarized the core dynamic and consequence of this systemic incentivization of sociopathy:

I've been a successful business owner, but I'm not a sociopath--I deliver value to my customers, my investors, and I don't move forward if I see anyone being substantially hurt by my actions.

My peers and I look at organizations such as WeWorks, see the rewards reaped by the sociopathic leaders, and realize we are at a constitutional disadvantage working within such a system.

I could never conceive of taking a $700-900m payday at the expense of investors for whom I've generated no value whatsoever.

I simply could not do it.

If 'out-sociopathing' the sociopaths is what it takes to 'succeed' in todays business climate-- I'll fail.

So I don't try.

From the sociopath's standpoint, that's probably a feature not a bug--one that helps keep effective competition out of the marketplace.

I wonder how much of civilizational decline is simply due to good people accepting their lot and opting out.

If the system incentivizes conscience-free sociopaths more than it incentivizes those creating real value, the system will eventually fall into the equivalent of Gresham's law ("bad money drives out good money"): the con-men and fraudsters will drive out entrepreneurs with a conscience who create real value for customers, investors and society at large.

If we look at recent IPOs and compare them to the Apple IPO, it seems we've already reached that point. Apple went public as a highly profitable company. Uber, Lyft, Beyond Meat and WeWork (if their IPO fraud hadn't been revealed) are all unprofitable, in some cases losing billions of dollars with little prospect for eventual profits.

Venture capital folks explain this by noting that the flood of central bank credit-money-creation has generated trillions of dollars of liquid capital seeking "the next big thing" that will "disrupt" existing models and therefore generate billions in profits.

This pinpoints one key source of the incentivization of sociopaths: central banks' creation of trillions of dollars of conscience-free capital seeking a quick profit anywhere on the planet, by any means available.

Conscience-free capital is an easy mark for a conscience-free sociopath. It's a marriage made in heaven, a perfect match.

Those with a conscience are essentially squeezed out of the system. The choice is binary: either play and lose or opt out.

I've written about "opting out" since 2009, since it was one of the few options available to commoners in the final decline of the Western Roman Empire. If we feel we're at a systemic disadvantage, i.e. the system is rigged against us, opting out makes much more sense than sacrificing oneself in a fruitless battle to stay alive in a system that incentivizes amoral sociopaths.

If we consider what generates outsized success in our rapidly changing economy, we find a variety of factors supporting "winner take most" asymmetric gains. As economist Michael Spence has observed, those who develop new business models earn outsized gains because new forms of capital and labor that are scarce create the most value.

Many of these new business models disintermediate existing models, obsoleting entire layers of middlemen and management.

Netflix is a good example: the move from mailing CDs to streaming content obsoleted cable companies. Now Disney is disrupting Netflix by launching its own streaming service at $6.99 a month, offering content that cable subscribers had to pay $60+ a month to access via a "premium" cable add-on, most of which they didn't even use.

In contrast, WeWork sold itself as a "tech innovator" when in fact it was simply a commercial real estate packager, leasing large spaces and chopping them up into small spaces with common areas and a few services.

How does our system incentivize sociopathy? By focusing exclusively on short-term gains reaped from IPOs (initial public offerings) and by blindly seeking "the next disruptor that will generate billions," the system is easy prey for charming sociopaths who can tell a good (if not quite truthful) story.

The amoral sociopath with the story attracts amoral sociopaths in venture capital, banking and politics, as these fields are all focused on short-term, outsized, quickly skimmed gains, regardless of the consequences to investors or society at large.

What would change this incentivization of sociopathy? Ending the Federal Reserve's delivery of trillions of dollars in conscience-free capital to sociopaths and limiting the VC-IPO flim-flam machine would be a start, but given Wall Street's dependence on these profits and the millions the Street gives to political campaigns, this is politically unfeasible. Any such regulation that reaches Congress will be watered down or larded with loopholes.

There may be no way to excise the incentives for sociopathy, because the incentives all favor the sociopaths' most fertile ground: the Federal Reserve's money spigot of nearly free money for the most sociopathological financiers and corporations; amoral, conscience-free greed; the worship of short-term gains, regardless of consequences, and the extreme profitability of rigged games and The Big Con PR ("we're only evil when it's profitable, which is, well, all the time".)

As long as central banks create and distribute trillions in conscience-free credit to conscience-free financiers and corporations, the incentives for sociopathy only increase, and the incentives for everyone else to opt out increase proportionately.

What happens next? The dead wood of sociopathy is ignited by a random lightning strike, and the entire financial system (and the economy it feeds) burns to the ground in an uncontrollable conflagration of blowback, consequence and karma.

*  *  *

My recent books:

Will You Be Richer or Poorer? Profit, Power and A.I. in a Traumatized World (Kindle $6.95, print $11.95) Read the first section for free (PDF).

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($6.95 (Kindle), $12 (print), $13.08 ( audiobook): Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 (Kindle), $8.95 (print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).

*  *  *

If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via

Tyler Durden Tue, 11/12/2019 - 08:30
Published:11/12/2019 7:46:49 AM
[Markets] Remember Why We Celebrate Veterans Day Remember Why We Celebrate Veterans Day

Authored by Michael Graham via,

101 years ago, a man who started out as a conscientious objector to World War I became that conflict’s greatest American hero when he and just a few other soldiers captured 132 German prisoners.

Sgt. Alvin York knew why he fought, and it wasn’t to make money. When Madison Avenue and Hollywood came looking for endorsements, he refused and said, “This uniform ain’t for sale.”

A generation later, when America appeared to be headed toward a second World War, many asked why we should bother, when the so-called “War to End All Wars” didn’t do any such thing. York was there to explain why America must fight once again.

“Liberty and freedom and democracy are so very precious that you do not fight to win them once and then stop,” York said.

“Liberty and freedom and democracy are prizes awarded only to those peoples who fight to win them and then keep fighting eternally to hold them.”

One man who listened and understood was James Battcock, a young Navy seaman. He left his family in 1944 aboard the USS Montpelier to face Japan near the end of the second great war.

In a diary he kept for his family, he wrote about the suicide planes that attacked his ship as they sailed past Pearl Harbor toward the Japanese coast.

“Four suicide planes dove at our ship, shot three down, one explode[d] 25 yds from port beam,” he wrote in 1944. The next year he added, “Still at Okinawa… suicide planes in area.”

And in a letter to his 5-year-old son that he wasn’t sure would ever be seen, he explained why he would leave his wife and two children to sail one third of the way around the world:

“I enlisted because to my way of thinking, when my country is in danger, I think it is my duty to help her all I can, and I want you to be proud of me, as I was of my father,” Battcock wrote.

“I want you to know that wherever I go I will try my best, and if it is God’s will that I should be taken from my little family, then I will die happy fighting for my country, as I would want my son to do if ever our country is in danger.”

Alvin York’s name is in all the history books, and in all likelihood you never heard of James Battcock. But they are just two of 41 million ordinary Americans who have worn the uniform since the first shots of the Revolution were fired at Lexington.

It is warriors like these who we honor on Veterans Day: York, Battcock and the millions just like them who came before — and after. We celebrate those men and women because they see more clearly than most that our ability to enjoy liberty and freedom is contingent upon our willingness to fight for it.

And we praise them for stepping in and preserving this nation for our families, just as Battcock did so many years ago for his little son.

At the end of the Korean War, President Eisenhower met with a few dozen wounded men and said their nation needed to see them in uniform, as a reminder of why we’re privileged to live our extraordinary lives in America.

He told them they can never put their uniforms away, and that they live to remind their fellow citizens why they sleep soundly at night.

Today, this nation sees its veterans, and honors them — and remains in awe of those who love America so much that they would risk everything to protect it.

Tyler Durden Mon, 11/11/2019 - 09:50
Published:11/11/2019 9:10:56 AM
[Markets] Who Wants To Destroy The World? Who Wants To Destroy The World?

Authored by Phil Torres via OneZero,

For most of human history, the question of who would want to destroy the world didn’t much matter. The reason, of course, was that that no individual or group of humans could demolish civilization or cause our extinction. Our ancestors just didn’t have the tools: no amount of spears, arrows, swords, or catapults would have enabled them — even the most bloodthirsty and misanthropic — to have inflicted harm in every corner of the world.

This changed with the invention of the atomic bomb. While scholars often identify 1945 as the year that human self-annihilation became possible, a more accurate date is 1948 or 1949, since this is when the United States stockpiled enough nuclear weapons (about 100) to have initiated a hemisphere-spanning “nuclear winter.” (See this work in progress for why I’m focusing on 100 nuclear weapons as a threshold.) A nuclear winter occurs when soot from burning cities significantly reduces the amount of sunlight reaching Earth’s surface for a period of months or years, thereby causing temperatures to plummet and famines to ensue. Quite unsettlingly, it wasn’t until the 1980s — decades after we had enough nukes to blot out the sun — that the nuclear winter phenomenon was first identified, although lingering questions remain even today.

The U.S. monopoly on world-ending power didn’t last long: by 1953, the Soviet Union had likewise expanded to 100 weapons. Now there were two nations on Earth that could obliterate civilization. But again, this didn’t last very long. The United Kingdom joined the club of potential world-enders around 1962, China around 1971, and France around 1973, with Israel, Pakistan, and India becoming members of this club in the 2010s. Hence, in less than a century, the world went from containing zero actors capable of unilaterally destroying the world to eight.

This is a scary situation. Unfortunately, it’s getting worse — much worse. The reason is that states are no longer the only players in the game. Thanks to new technologies, nonstate actors such as terrorist groups and lone wolves are getting in on the action, too, and they might be a lot more willing than national governments to push the proverbial doomsday button.

My own research suggests that the percentage of people who would push a doomsday button, if it were placed within finger’s reach, is fairly small, but the absolute number is unacceptably high. Even a quick Google search seems to affirm this. Consider the following answers, taken from different online sources, to the question of whether one would destroy the world if one could (quoting typos and all):

“Yes. It is obvious that we gain nothing from living and there is a huge amount of human suffering that I find quite unjustifiable. The complete annihilation of the human race would be the greatest act of compassion ever.”

“Yes, we suck as a human race.”

“Yes. Because you all are assholes. And this is not a joke I would love to push something that ends humanity. I always thought about it and now there is the question about that topic and I am happy to say I want you all dead everyone single one of you fuckers. Please give me the chance to wipe out humanity.”

“My view is that Mankind is a plague… I vote to destroy mankind and let nature start over.”

“The human animal is the only evil animal in the animal kingdom. We destroy everything… I email the president weekly and beg him to push the button and stop the madness already.”

“In the short time we’ve been on this planet, humans have already destroyed so much. We destroy ecosystems, and kill off entire species of animals… The world would be better off without humans as a whole.”

Of course, saying something definitely isn’t the same as doing it. Even so, can we be fully certain that not a single person in the world would attempt to follow through on his or her annihilatory fantasies? One way to approach this question is to look for historical examples of groups or people who both expressed a desire to kill everyone and committed some terrible act or acts of violence. The combination of these two phenomena implies that such people would be willing to act on their omnicidal (meaning killing everyone) impulses and willingly, perhaps even eagerly, push a doomsday button. So are there such examples?

Unfortunately, yes. Lots of them. And they seem to fall into a handful of basic categories.

Consider the disturbing case of Eric Harris, the psychopathic mastermind behind the 1999 Columbine High School massacre. His journal is full of all sorts of genuinely horrifying, ghoulish fantasies. On several occasions, he explicitly mentions his burning desire to extinguish humanity. At one point. he writes: “If you recall your history the Nazis came up with a ‘final solution’ to the Jewish problem. Kill them all. Well, in case you haven’t figured it out yet, I say ‘KILL MANKIND’ no one should survive.”

Elsewhere, Harris mused, “I think I would want us to go extinct,” to which he added, “I have a goal to destroy as much as possible… I want to burn the world” and “I just wish I could actually DO this instead of just DREAM about it all.”

When Harris and Dylan Klebold, his partner in crime, perpetrated their massacre in Columbine, they were equipped with garden-variety weapons. Dangerous to be sure, but hardly capable of “burning the world.” Can there be any doubt, though, that if Harris — who was relatively intelligent and liked math and science — had had access to some of the advanced technologies of tomorrow, he would have, when committing suicide, tried to go out with a much bigger bang?

The Columbine massacre had a huge influence on later rampage shooters, some of whom also dreamt of omnicide. For example, in 2007, an 18-year-old Finnish student named Pekka-Eric Auvinen shot several people at his school, which he also tried to burn down. Like Harris, he wrote about “a final solution” as “the death of the entire human race,” and described his massacre as “an operation against humanity with the purpose of killing as many people as possible.” Yet another rampage shooter from Finland, Matti Saari, wrote in his suicide note, “I hate the human race, I hate mankind, I hate the whole world, and I want to kill as many people as possible.”

Then, of course, there was Elliot Rodger, the incel psychopath who killed seven people and injured 14 in the 2014 Isla Vista killings. In a video shot one day before the rampage, he said in no uncertain terms: “I hate all of you. Humanity is a disgusting, wretched, depraved species. If I had it in my power, I would stop at nothing to reduce every single one of you to mountains of skulls and rivers of blood. And rightfully so. You deserve to be annihilated. And I’ll give that to you.”

School shooters and other lone wolves have idiosyncratic motives, such as a misanthropic hatred of humanity, or a desire to retaliate against women for perceived romantic and sexual slights. Together, though, they comprise a relatively cohesive category of omnicidal actors, and a relatively unpredictable one at that.

Another type of omnicidal actor comes in the form of apocalyptic terrorists who believe that to save the world, it must first be destroyed. ISIS, arguably the largest and richest terrorist group in history, is a paradigm case. While some members of ISIS probably didn’t hold apocalyptic beliefs, the leadership most certainly did — and they made strategic decisions based on these beliefs. The man who essentially founded ISIS, Abu Musab al-Zarqawi, believed that Islam’s version of Armageddon was about to unfold around the small Syrian town of Dabiq. Hence, the name of the group’s propaganda magazine, Dabiq. After the U.S. military killed al-Zarqawi in 2006, leadership of ISIS transferred to Abu Ayyub al-Masri, a fevered apocalypticist who insisted that the Islamic end-of-days messianic figure, the “Mahdi,” was about to appear in Iraq. Like al-Zarqawi, he based his strategy on his apocalyptic belief — and it backfired. He soon met his end at the hands of Western forces.

Both of these individuals really believed that the end was nigh, and that it was their duty to use violence — catastrophic violence, to be more specific — to bring about the apocalypse. ISIS members talked about acquiring nuclear weapons, releasing deadly pathogens, and building dirty bombs. I personally haven’t spoken to a single terrorism scholar who doesn’t think that ISIS would have gleefully pushed a “destroy-the-world” button, especially if Western forces were marching toward Dabiq.

But ISIS is far from the only apocalyptic group. Famously, the doomsday cult Aum Shinrikyo attempted to trigger Armageddon by releasing sarin in the Tokyo subway in 1995. Here in the U.S., more than a dozen hate groups subscribe to Christian Identity, an apocalyptic worldview that endorses the use of catastrophic violence as a means of triggering a “race war” that will initiate the end of the world. And one of the bloodiest conflicts in human history, the Taiping Rebellion, involved an apocalyptic movement called the “Taiping Heavenly Kingdom.” This was led by a man named Hong Xiuquan, who believed that he was the brother of Jesus Christ, “commissioned by the Lord of Heaven to slay the devil-demons (Manchus) whose rule had brought ruin to China.”

A final type of omnicidal actor lingers within the outermost fringe of radical environmentalist, anarcho-primitivist, and Neo-Luddite ideologies. Ted Kaczynski, better known as the Unabomber, provides an example par excellence. Beginning in 1978, Kaczynski perpetrated numerous domestic terrorist attacks, killing three people and injuring 23 others. A former UC Berkeley mathematics professor and Harvard alumnus, Kaczynski didn’t wish for humanity to go extinct. Rather, he wanted to trigger a global revolution against industrial society, with the ultimate goal of causing its collapse. Kaczynski ultimately didn’t care whether his revolution would cause people to die, since in his utilitarian calculus the ends would justify the means. As Kaczynski wrote in 1995: “This revolution may or may not make use of violence; it may be sudden or it may be a relatively gradual process spanning a few decades. Its object will be to overthrow not governments but the economic and technological basis of the present society.”

In contrast, other actors in this category have explicitly embraced pro-extinction convictions. For example, the Gaia Liberation Front (GLF), an ecoterrorist group, holds as their mission “the total liberation of the Earth, which can be accomplished only through the extinction of the Humans as a species.” In advocating this, they argue that “if any Humans survive, they may start the whole thing over again. Our policy is to take no chances.”

How might they accomplish their omnicidal aims? GLF contends that bioengineering is “the specific technology for doing the job right of annihilating humanity — and it’s something that could be done by just one person with the necessary expertise and access to the necessary equipment.” They continue: “…genetically engineered viruses… have the advantage of attacking only the target species. To complicate the search for a cure or a vaccine, and as insurance against the possibility that some Humans might be immune to a particular virus, several different viruses could be released (with provision being made for the release of a second round after the generals and the politicians had come out of their shelters).”

This parallels an anonymous article in the Earth First! Journal, published in 1989, meaning that this idea has been around for a while: “Contributions are urgently solicited for scientific research on a species specific virus that will eliminate Homo shiticus from the planet. Only an absolutely species specific virus should be set loose. Otherwise it will be just another technological fix. Remember, Equal Rights for All Other Species.”

While the most radical fringe of the environmentalist movement has avoided the limelight in recent years, some experts, such as the terrorism scholar Frances Flannery, expect a resurgence as climate and biodiversity crises worsen. This poses an obvious danger in a world replete with bullets and bombs; but it poses an existential threat in a world of cheap and easy gene editing. Technologies such as gene drives, digital-to-biological converters, and CRISPR-Cas9 are making it increasingly feasible to synthesize designer pathogens that could be far more devastating than anything found in nature.

Are there any solutions to the problems posed by virus-toting omnicidal maniacs? One hard-to-avoid — and completely terrifying — answer is mass surveillance. This could take the form of what the philosopher Jeremy Bentham called a “panopticon,” whereby the state (perhaps run by computer programs designed specifically to govern — a form of government called “algocracy”) monitors every action of its citizens. The obvious danger is that this could collapse into tyrannical totalitarianism, which itself constitutes an existential risk.

Another possibility involves what the science fiction writer, David Brin, dubs the “transparent society.” This would make surveillance egalitarian, so to speak: everyone would be able to see what everyone else is doing all the time, thereby enabling those watched to watch the watchers. Brin doesn’t argue that this is an ideal situation, only that it’s a better situation than one in which the state has all the power. Perhaps a total loss of privacy is the cost of existential security.

Alternatively, I have previously claimed that, in order to reduce the risks posed by malicious agents like those mentioned above, society should prioritize mitigating climate change and ecological destruction. Both phenomena are threat multipliers and threat intensifiers, which means that they’ll introduce new problems while making old problems even worse. Better environmental policies would lower the threat posed by ecoterrorists, whose fundamental complaint — “Humans are stupidly destroying the biosphere” — is scientifically accurate. Such policies would also decrease the number and severity of natural disasters, which could fertilize apocalyptic fervor among religious extremists. As the terrorism scholar Mark Juergensmeyer has remarked, “radical times will breed radical religion,” a hypothesis apparently supported by the rise of ISIS during the Syrian civil war.

Moving forward, people who care about human survival need to think hard not just about the various technologies that will become available, but about the types of actors who might try to use these technologies for catastrophic ill. The future of the human race could quite literally depend on it.

Tyler Durden Sun, 11/10/2019 - 22:30
Published:11/10/2019 9:39:50 PM
[Markets] Doug Casey On What Happens When Socialists Win Elections Doug Casey On What Happens When Socialists Win Elections


International Man: Earlier this year, it became apparent a socialist would win Argentina’s presidential election.

The Argentine peso lost 30% of its value in a single day. The same day, in US dollar terms, the value of the Argentine stock market was cut in half.

Doug, you spend a lot of time in Argentina and the Southern Cone. What’s your take on the situation? Is Argentina headed for another currency collapse?

Doug Casey: Cristina Fernández de Kirchner was elected vice president and Alberto Fernández was elected president in the October 27 election. They basically destroyed the incumbent Mauricio Macri.

It’s a real pity because Macri is a decent human being whose heart was is in the right place politically and economically. But he was too timid. He did too little too late. Typical of “conservatives” everywhere, he didn’t make a moral argument to the populace. He made no effort to pull the corrupt fascist welfare state out by its roots, explaining why it’s destructive and why the state is the cause, not the cure, of the country’s problems. Instead, he just made some marginal improvements around the edges, and made things more comfortable for the Peronists now that they’re back in office.

And—since he’s associated with the free market—he actually discredited the free market.

In any event, Argentina is going back into the toilet. Who knows what kind of new stupidities, in addition to the usual old stupidities, the two Fernándezes are going to impose upon the country?

On the bright side—but only for tourists—Argentina is one of the cheapest countries in the world right now. That’s because the currency has collapsed. Good news for tourists and foreign speculators but a disaster for Argentines, most of whom have all their savings and earn their salaries in the increasingly worthless peso.

If you’re a long-term believer in Argentina or if you want to enjoy a great lifestyle, now’s the time to go shopping there. Real estate is at bargain levels again. There’s really no bid for a lot of properties. In Buenos Aires an apartment costs 5–10% of its equivalent in New York or London.

Things are definitely in crisis in Argentina. But the fact is that just about every other country in the world is heading in the wrong direction—at a faster or slower rate—certainly including the United States, Canada, and countries in western Europe. The socialists, the fascists, and the jingoists are in the ascendant all over the world.

There are many reasons for this. One is that Marxist-oriented professors have been indoctrinating the younger generation in high school and college for decades. The left has totally taken over educational systems everywhere. The average person has been inculcated with perverse and destructive ideas about economics, politics, philosophy, and ethics from roughly age 6 to age 22. It’s hard to get these things out of their heads once they’ve learned them in their youth.

Also, remember that, especially since the end of the 19th century, “democracy”—really just a polite form of mob rule—has been the world’s ruling ideology. It’s resulted in the politicization of all areas of society. When every parliament or legislature in the world meets, they believe it’s not just their right but their duty to pass new laws. And that’s idiotically applauded as a good thing by the hoi polloi. Those laws tell you what you must do and what you must not do and designate penalties if you don’t obey. And all that legislation, which accrues like barnacles on a ship’s hull, has to be paid for with taxes.

Fortunately, science and technology are still advancing at the rate of Moore’s Law. Unfortunately, the world is degenerating politically at about the same rate. Argentina is not an aberration from that point of view. It’s just a generation or so “ahead” of the United States in sliding down the slippery slope.

That said, it’s more important than ever that you have a crib in a second country, no matter where you live—because anything can happen anywhere. If you can afford it and are able to do so, you should have a backup plan someplace else in the world.

International Man: As you said, Argentina isn’t the only country headed down a path toward economic hardship. Governments around the world are printing dollars, pounds, euros, pesos, and what have you by the trillions, and the trend seems to be accelerating. How do you see this playing out in the next few years?

Doug Casey: We’re going into what I’ve styled the Greater Depression. We entered the leading edge of a gigantic financial and economic hurricane in 2007 and went through it in 2008 and 2009, and now we’re in the eye of the storm.

It’s a very big hurricane, and the storm has a very big “eye,” but we’re now approaching the trailing edge. When we go into the storm’s trailing edge, it’s going to be much longer lasting, much different, and much worse than what we experienced in 2008—if anybody remembers how scary that was.

It’s going to be accompanied by social, cultural, and probably military upsets as well. Now’s the time to prepare. It’s going to be one for the record books, and not just in the United States. It’s going to happen all over the world, because all the world’s central banks and governments think the same way. They’re all bankrupt and trying to solve the problems they’ve created by printing up more currency and passing more laws. It’s bad news.

International Man: Americans are growing increasingly sympathetic to socialist ideas and politicians that promise “free stuff.” How does this trend translate into a situation like what’s happening in Argentina?

Doug Casey: The world’s governments—prominently including the US’s—are creating massive new amounts of fiat money as we speak. So far, most of this money has gone into the financial markets, creating gigantic bubbles in stocks, bonds, and real estate. A lot of people are relying on these artificially high values. They’re going to get hurt.

Over the coming decade, governments and their central banks are going to destroy their national currencies. The average guy—if he’s able to save at all—saves in dollars, euros, or yen, etc. He’s going to be wiped out.

The rich will continue to get richer, because they stand next to the fire hose of money being created. The middle and lower classes resent the politically favoured classes getting more. The middle and bottom levels of society could see real social upset, with catastrophic political ramifications.

It’s one of the reasons the odds favor Trump losing in 2020. I say that as someone who bet that he’d win in 2016. If the economy gets ugly, you’re going to get one of these absolutely crazy socialists or welfare statists that we see lined up on the Democratic debate stage. The best case is that somebody like Bloomberg—basically kind of a mellower Trump—steps in for the Democrats.

On the off chance that Trump wins in 2020, then the storm is going to definitely break during his next administration. That guarantees that the crazy Democrats—which is to say the socialists, radical welfarites, and cultural Marxists—are going to win in the next election. The conflict in basic belief systems between the Red and Blue counties is so acrid and radical—it’s the kind atmosphere you see before a civil war.

Who knows what either the Red or Blue people will do? They’re capable of absolutely anything. None of it good. I don’t see a way out.

But let’s go back to Argentina for a minute. As I said, the US is only about a generation behind the Argentines, and the Argentine electorate has been totally corrupted. The place is a blueprint for where the United States is going.

The US’s size, accumulated capital, and the productivity of its people have insulated it from a lot of the stupid things its government and the Fed have done. But if the US destroys its currency—and it’s well on the way to doing so—it will be much worse than when the Argentines destroy their currency.

Argentines have hundreds of billions of dollars stored abroad in foreign banks. When the Argentine peso collapses, that money can be brought into Argentina to pick up the bargains and bring capital into the country to get things going again.

If the US dollar is destroyed, however, it will be completely different.

First, the dollar is the major asset of most banks all around the world. It’s actually the world’s currency. If the dollar goes, it’s going to destroy their balance sheets.

Second, people all over the world who have foreign bank accounts generally save in dollars. They’re going to be devastated.

Third, Americans don’t have a lot of money abroad to bring back into the country to get things going again. In fact, the US government has made it quite hard for the average American to diversify internationally.

Fourth, the major US export for decades hasn’t been wheat or Boeings. It’s been dollars. The foreign trade deficit of $600 billion per year has given Americans an artificially high standard of living for many years. Nice foreigners give us real goods in exchange for fiat dollars. When confidence in the dollar collapses, Americans will feel it.

So, it’s going to be extremely serious when the chickens come home to roost this time. It’s a consequence of what the Federal Reserve is doing to the dollar. They’re inflating it—but they call that “Quantitative Easing.”

The Chinese symbol for the word crisis is a combination of the symbols for danger and opportunity. I’ve been pointing out the danger part, but I also want to point out the opportunity part of the equation.

The good news is that precious metals should go on a really wild run up in price. If you own a lot of gold and silver, you should not only be insulated from many of these financial and economic problems, but you should gain in relative terms.

The cheapest part of the market right now is gold and silver mining stocks. There’s going to be a panic into these stocks; they’re the only part of the stock market that offers real upside.

It’s a good-news/bad-news type of thing. The good news being that if you position yourself now, you should be able to profit from what’s going to happen. The bad news is that in a real depression everybody loses; the winners are merely the ones who lose the least.

The important thing to remember is that most of the real wealth in the world will still exist no matter how bad the Greater Depression is, and your share of it can grow if you allocate capital properly now.

International Man: The 2020 presidential election is just around the corner. Whether Donald Trump gets reelected or a Democratic candidate wins, how do you think it will affect the overall economic situation in the US?

An avalanche of money printing to finance deficit spending seems certain no matter who wins.

Doug Casey: As I said before, if Trump is reelected because the economy holds together until November 2020—which I doubt—it’s definitely going to collapse on his next term in office.

Trump is incorrectly associated with the free market and capitalism. Trump is basically a statist who thinks the government really ought to control the economy—but in the way he thinks best. Once again capitalism—what’s left of it—will be blamed in the next crisis, and in the following election the socialists will grab the economy in a stranglehold and choke it to death.

In a way, it doesn’t matter if the socialists win this time or the next time. The trend is in motion, and a real crisis seems inevitable.

I think the United States is going to be hard to recognize in five years. That’s not even counting the fact that the US government might have a serious war with the Iranians, the Chinese, or the Russians. None of this is necessary, but it’s probable.

International Man: What can people do to protect themselves and prevent the crisis from wiping them out?

Doug Casey: Buy physical gold and silver. Speculate in mining stocks. Be aware that commodities in general— and especially agricultural commodities like corn, soybeans, cattle, hogs, coffee, orange juice—are all very, very cheap.

It’s likely that we’re going to see an explosion in some or all of these things over the next few years. Last but not least, start getting into some—or all—of the second- and third-generation cryptocurrencies. My colleague Marco Wutzer, who knows about ten times more than anyone else in the field, makes an excellent case that some of them have 1,000-to-one potential from current levels.

*  *  *

Marco just released a new exclusive video on what he thinks is the most compelling crypto play right now. Click here to watch it now.

Tyler Durden Sun, 11/10/2019 - 20:30
Published:11/10/2019 7:38:23 PM
[Markets] 'Resistance'... Are Futile 'Resistance'... Are Futile

Via Monty Pelerin's World,

The status quo is always difficult to alter. Resistance is a normal reaction to change.  The current theatrics in Washington, DC are especially revealing.

Donald Trump is many things to many people. His supporters believe him to be a savior of the American system and way of life. His opponents see him as a threat, Both views are correct. From the beginning, I viewed Mr. Trump as a wrecking ball:

… there has never been an inauguration speech like this one. Contrary to Pogo, Trump defined the enemy and it was not us. This wrecking ball clearly differentiated between the average man and the parasites who inhabit Washington.

The speech was populist all the way. It was anti-establishment all the way.  Clear demarcation lines were drawn. I sense that war was declared on Washington, DC today. There will be no compromise. Either Trump will be destroyed or he will dismantle much of the Washington establishment.

This assessment has been validated by subsequent events. The winner of this existential battle is still in doubt. That itself is rather remarkable. What appeared to be a quixotic crusade now takes on heroic aspects, at least for many outside Washington. What once seemed impossible no longer does.

Don Quixote Trump still may not be favored in his battle against Goliath but the odds have shifted. The American people have been awakened to how the elites have exploited them. Whether Trump wins this battle or not, the Deep State has lost the war. They have been exposed as ruthless, lying exploiters. Don Quixote has suddenly become Goliath.

The peasants have been enlightened. The true nature of current American government has been exposed. No amount of polished rhetoric can undo this knowledge. Attempts to do so will bring out the pitchforks.

Below Jeffrey Lord reviews Kimberly Strassel’s new bestseller Resistance (At All Costs): How Trump Haters Are Breaking AmericaThis book details the resistance against Trump. The organism we know as the Deep State is doing its best to destroy this foreign body. The State knows  its vulnerability to an awakening of the masses and its exposure. As Ms. Strassel says:

For every Resistance leader who daily makes an inflated claim about Trump’s destruction of democracy, there is a more quiet, average American who is deeply alarmed by the legitimate and lasting harm this movement is causing.

What fascinating times we live in. Donald Trump, the unlikeliest of heroes, may singlehandedly have taken down the Deep State. He exposed it. Sunlight and the American people will remedy whatever he cannot.

Here is Mr. Lord’s review of Strassel’s book:

Resistance (At All Costs): Kimberley Strassel’s Home Run - A searing profile of Trump haters and the movement that drives them.

by Jeffrey Lord

“From the FBI’s unprecedented counterintelligence investigation into the Trump campaign, to state defiance of the president’s federal immigration law, to media partisanship, to the drive-by character assassination of Trump Supreme Court nominee Brett Kavanaugh, the president’s foes have thrown aside norms, due process, and the rule of law.”

So begins the cover of Kimberley Strassel’s new bestseller, Resistance (At All Costs): How Trump Haters Are Breaking America.

Strassel, a star Wall Street Journal columnist, zeroes in on the decidedly serious problem that all this insane, foaming hatred of a duly elected president has brought to the country.

There is nothing wrong, Strassel correctly notes, with being a Trump critic. Presidents have always had critics, something that comes with the job. But the spread of a virulent Trump hatred is something quite different, and is, Strassel writes, “proving far more corrosive to our institutions and rule of law than anything of which it has accused the president.”

As she notes, the very term “the Resistance” is associated throughout history with movements designed to fight “occupying powers” as, say, the French Resistance came to life to fight the forces of the occupying Nazi Germany. And once one goes down that road, as has the Trump-hating Resistance, the Resisters “view themselves as justified in taking any action necessary to get rid of the occupier.”

Set loose the Department of Justice and the FBI to spy on a presidential campaign? No problem. Ambush a Supreme Court nominee “with uncorroborated sexual assault allegations”? No problem. Use “the impeachment process for political retribution”? No big deal.

This, says Strassel, “has been the behavior of the Resistance leaders, and it has already caused harm to vital institutions.”

Yes indeed. And none more prominent than the self-inflicted massive damage the Justice Department, the FBI, and the “mainstream media” have done to their own credibility. It is in fact alarming, as Strassel notes,

that huge swaths of the country no longer trust the Justice Department or the FBI to administer equal justice. Or that, according to a 2018 Axios poll, 72% of Americans believe that “traditional major news sources report news they know to be fake, false or purposely misleading” — including 92% of Republicans and 79% of independents.

On and on go the Resistance assaults on the very fabric of the American nation, including a demand to abolish the Electoral College, an institution that lies at the very heart of the democracy that demands all American states have an equal voice in their government.

Nowhere has this assault been more evident than in the Federal Bureau of Investigation. Strassel devotes an entire chapter to the FBI as run by the Trump-hating James Comey. The absolutely perfect title of the chapter is “J. Edgar Comey.”

In that chapter, Strassel absolutely fillets Comey and his band of Trump-hating FBI bureaucrats. She begins by reeling off the list of the disgraced:

Director Jim Comey: fired for insubordination. Deputy Director Andy McCabe: terminated for lying to investigators. Senior Counterintelligence Agent Peter Strzok: dismissed for partisan bias. General Counsel James Baker: reassigned and then out on resignation — part of a federal criminal leak investigation. These were just the highlights among a dozen senior FBI leaders who were fired or faded away. They included chief of staff James Rybicki; lawyer Lisa Page; the assistant director of the Counterintelligence Division, Bill Priestap; the head of the National Security Division, Michael Steinbach; the FBI’s top congressional liaison, Greg Brower; and the assistant director for public affairs (and 33-year FBI veteran), Michael Kortan.

The list of corrupt FBI leaders is as stunning for its length as it is for its depth. The damage they have inflicted on that venerable organization is considerable.

Strassel also delves into the shenanigans behind the Mueller report episode and the Deep State. Of the latter she opens with this serious truth about the performance of various actors in the Trump-hating Resistance that is the Washington bureaucracy:

If hell hath no fury like a woman scorned, Washington has no fury like a civil servant defied. Trump has no need to travel to a Resistance rally to meet his opponents; they work for him.

Bingo. And this will be seen in crystal-clear fashion next week when Congressman Adam Schiff finally gets around to opening his impeachment hearings and using career civil servants who are deeply impressed with the ideas that they, and not the elected president of the United States, run American foreign policy.

Strassel ends with this wisdom:

For every Resistance leader who daily makes an inflated claim about Trump’s destruction of democracy, there is a more quiet, average American who is deeply alarmed by the legitimate and lasting harm this movement is causing.

Exactly right. When I hit the road for speeches I am greeted repeatedly by audiences of Americans absolutely furious at what they are seeing unfold. And make no mistake, they see the attacks on President Trump by the Resistance as thinly disguised attacks on … themselves.

Eventually, the Trump era will pass, as history rolls on. But what is immeasurably important in this era is for the star journalists of the day to write the books that will provide future leaders with an up-close and unerring documentation of the biggest political scandal in American history and the Resistance movement that was its driving force.

Kimberley Strassel’s Resistance (At All Costs): How Trump Haters Are Breaking America is indeed one of those books — a home run and a decidedly instructive one.

Tyler Durden Sun, 11/10/2019 - 13:30
Published:11/10/2019 12:35:55 PM
[Entertainment] Memoir by Mariah Carey to be published thanks to Andy Cohen A memoir by Mariah Carey is on the list of titles from Andy Cohen Books Published:11/7/2019 11:48:37 AM
[] SAD! Mark Halperin gets DRAGGED after sales figures of his 'How to Beat Trump' book released Wow, this is pretty sad given how much hype it got and the number of top Dems involved in its publication:

You mean to tell us that Anthony Scaramucci can't sell books?

Maybe Mika and Joe Scarborough bought them all:

And here endeth the "Halperin rehab tour":

More commentary:

Published:11/7/2019 9:48:07 AM

[Markets] Corporate Profits Are Worse Than You Think Corporate Profits Are Worse Than You Think

Authored by Lance Roberts via,

Corporate profits are worse than you think.

In a recent post, I discussed the deviation of the stock market from corporate profitability. To wit:

“If the economy is slowing down, revenue and corporate profit growth will decline also. However, it is this point which the ‘bulls’ should be paying attention to. Many are dismissing currently high valuations under the guise of ‘low interest rates,’ however, the one thing you should not dismiss, and cannot make an excuse for, is the massive deviation between the market and corporate profits after tax. The only other time in history the difference was this great was in 1999.”

It isn’t just the deviation of asset prices from corporate profitability which is skewed, but also reported earnings per share. As I have discussed previously, the operating and reported earnings per share are heavily manipulated by accounting gimmicks, share buybacks, and cost suppression. To wit:

“The tricks are well-known: A difficult quarter can be made easier by releasing reserves set aside for a rainy day or recognizing revenues before sales are made, while a good quarter is often the time to hide a big ‘restructuring charge’ that would otherwise stand out like a sore thumb.

What is more surprising though is CFOs’ belief that these practices leave a significant mark on companies’ reported profits and losses. When asked about the magnitude of the earnings misrepresentation, the study’s respondents said it was around 10% of earnings per share.

This is also why EBITDA has become an ineffective measure of financial strength. As I noted in “What To Watch For This Earnings Season:”

“It should come as no surprise that companies manipulate bottom line earnings to win the quarterly ‘beat the estimate’ game. By utilizing ‘cookie-jar’ reserves, heavy use of accruals, and other accounting instruments they can mold earnings to expectations.

‘The tricks are well-known: A difficult quarter can be made easier by releasing reserves set aside for a rainy day or recognizing revenues before sales are made, while a good quarter is often the time to hide a big ‘restructuring charge’ that would otherwise stand out like a sore thumb.

What is more surprising though is CFOs’ belief that these practices leave a significant mark on companies’ reported profits and losses. When asked about the magnitude of the earnings misrepresentation, the study’s respondents said it was around 10% of earnings per share.’

“As shown in the table, it is not surprising to see that 93% of the respondents pointed to ‘influence on stock price’ and ‘outside pressure’ as the reason for manipulating earnings figures. For fundamental investors this manipulation of earnings skews valuation analysis particularly with respect to P/E’s, EV/EBITDA, PEG, etc.”

Ramy Elitzur, via The Account Art Of War, expounded on the problems of using EBITDA.

“Being a CPA and having an MBA, in my arrogance I thought that I am well beyond such materials. I stood corrected, whatever I thought I knew about accounting was turned on its head. One of the things that I thought that I knew well was the importance of income-based metrics such as EBITDA and that cash flow information is not as important. It turned out that common garden variety metrics, such as EBITDA, could be hazardous to your health.”

The article is worth reading, and chocked full of good information; however, here are four-crucial points:

  1. EBITDA is not a good surrogate for cash flow analysis because it assumes that all revenues are collected immediately and all expenses are paid immediately, leading, as I illustrated above, to a false sense of liquidity.

  2. Superficial common garden-variety accounting ratios will fail to detect signs of liquidity problems.

  3. Direct cash flow statements provide a much deeper insight than the indirect cash flow statements as to what happened in operating cash flows. Note that the vast majority (well over 90%) of public companies use the indirect format.

  4. EBITDA just like net income is very sensitive to accounting manipulations.

The last point is the most critical. As discussed above, the tricks to manipulate earnings are well-known which inflates the results to a significant degree making an investment appear “cheaper” than it actually is.

As Charlie Munger once said:

“I think that every time you see the word EBITDA, you should substitute the word ‘bullshit’ earnings.”

What About Those Corporate Profits?

Currently, the deviation between reported earnings and corporate profits is one of the largest on record. This is an anomaly that should, in reality, not exist.

However, it is worse than it appears.

There is an interesting company included in the calculation of corporate profits which is not widely recognized in most analysis. If you are astute follower of our blog, you may recognize this particular company by the size of their balance sheet as shown below.

Yes, you guessed it (and it’s in the title). It’s the Federal Reserve.

When the Treasury Department pays interest one the debt, an expense to the U.S. Government, the Federal Reserve takes that in as “profits” which is reported on their balance sheet. Then, at the end of the year, the Fed remits a portion of the “revenue” back to the Government.

These profits,” which are generated by the Federal Reserve’s balance sheet, are included in the corporate profits discussed here. As shown below, actual corporate profitability is weaker if you extract the Fed’s profits from the analysis.

To put this into perspective, the Federal Reserve generates more profit in the last quarter than Apple, Microsoft, JP Morgan, Facebook, Google, and Intel COMBINED.

It’s quite amazing.

Nonetheless, since the Fed’s balance sheet is part of the corporate profit calculation, we must include them in our analysis. While the media is focused on record operating profits, reported corporate profits are roughly at the same level as their were in 2011. Yet, the market has been making consistent new highs during that same period.

The detachment of the stock market from underlying profitability guarantees poor future outcomes for investors. But, as has always been the case, the markets can certainly seem to “remain irrational longer than logic would predict,” but it never lasts indefinitely.

Profit margins are probably the most mean-reverting series in finance, and if profit margins do not mean-revert, then something has gone badly wrong with capitalism. If high profits do not attract competition, there is something wrong with the system, and it is not functioning properly.” – Jeremy Grantham

As shown, when we look at inflation-adjusted profit margins as a percentage of inflation-adjusted GDP we see a clear process of mean-reverting activity over time. Of course, those mean reverting events are always coupled with recessions, crisis, or bear markets.

More importantly, corporate profit margins have physical constraints. Out of each dollar of revenue created there are costs such as infrastructure, R&D, wages, etc. Currently, one of the biggest beneficiaries to expanding profit margins has been the suppression of employment, wage growth, and artificially suppressed interest rates which have significantly lowered borrowing costs. Should either of the issues change in the future, the impact to profit margins will likely be significant.

The chart below shows the ratio overlaid against the S&P 500 index.

I have highlighted peaks in the profits-to-GDP ratio with the green vertical bars. As you can see, peaks, and subsequent reversions, in the ratio have been a leading indicator of more severe corrections in the stock market over time. This should not be surprising as asset prices should eventually reflect the underlying reality of corporate profitability.

It is often suggested that, as mentioned above, low interest rates, accounting rule changes, and debt-funded buybacks have changed the game. While that statement is true, it is worth noting that each of those supports are artificial and finite in nature.

Another way to look at the issue of profits as it relates to the market is shown below. When we measure the cumulative change in the S&P 500 index as compared to the level of profits, we find again that when investors pay more than $1 for a $1 worth of profits there is an eventual mean reversion.

The correlation is clearer when looking at the market versus the ratio of corporate profits to GDP. (Again, since corporate profits are ultimately a function of economic growth, the correlation is not unexpected.) 

It seems to be a simple formula for investors that as long as the Fed remains active in supporting asset prices, the deviation between fundamentals and fantasy doesn’t matter. 

It is hard to argue that point. However, with investors paying more today than at any point in history for each $1 of profit, the next mean reversion will be a humbling event.

But, that is just history repeating itself.

Tyler Durden Thu, 11/07/2019 - 08:10
Published:11/7/2019 7:16:30 AM
[Markets] Russia, China, & The European Peninsula Russia, China, & The European Peninsula

Authored by Godfree Roberts via The Saker blog,

Eurasia has most of the world’s wealth, resources, and population — yet there is very low economic connectivity. A Sino-Russian partnership can collectively create a gravitational pull that allows them to capture the geoeconomic levers of power by creating an alternative to the Western-centric model. This entails developing new global value chains that captures the high-value activities in strategic industries and energy markets, developing new transportation corridors through Eurasia and the Arctic, and constructing new financial instruments such as development banks, trade/reserve currencies, technical standards, and trade regimes. Russia’s comparative advantage derives from its geographical expanse by developing an East-West corridor connecting Northeast Asia with Europe, and a North-South Corridor that links India, Iran and Russia. Moscow sees itself as a stabilising factor in Eurasia by bringing together the entire continent with economic connectivity to ensure that it becomes multipolar and no one state or region can dominate.

The EU stands to lose much from Russia’s Greater Eurasia ambitions. Russia’s original Greater Europe project, which they EU rejected, would have endowed the EU with a powerful ally to collectively project influence deep into the Eurasian continent. In contrast, Russia’s new Greater Eurasia initiative will marginalise the EU’s role across Eurasia as socio-economic and political decisions will be made by BRICS, the Eurasian Economic Union, the Shanghai Cooperation Organisation, and the Belt and Road Initiative. The EU is faced with a dilemma as it has strong economic incentives to cooperate with the development taking place in Greater Eurasia, yet this would contribute to the shift away from the Western-centric geoeconomic infrastructure. Glenn Diesen. The Global Resurgence of Economic Nationalism.

Halford Mackinder said we don’t think of Asia and Europe as a single continent because sailors couldn’t voyage around it. Today the Northeast Passage, NEP, along Russia’s northern coast, links the Pacific and Atlantic coasts while a network of pipelines and air, rail, road and fiber routes are knitting Mackinder’s World Island into ‘Eurasia’ despite Kissinger’s warning, “Domination by a single power of either of Eurasia’s two principal spheres–Europe or Asia–remains a good definition of strategic danger for America. For such a grouping would have the capacity to outstrip America economically and, in the end, militarily.”

As the West pursues an increasingly dystopian future, Russia and China are knitting Mackinder’s World Island into a vast, increasingly prosperous community. Their vision is so seductive, their alliance so strong, their weapons so advanced and their pockets so deep that their momentum is almost unstoppable. Russia’s leaders–Putin, Lavrov, Nabiullina, Siluanov and Shoygu–is the best in the country’s history and, as President Trump observed, China’s matches it, “People say you don’t like China. No, I love them. But their leaders are much smarter than our leaders. It’s like taking the New England Patriots and Tom Brady and having them play your high school football team.” President Xi has visited Moscow more than any other capital city  and as of August 2019, he and his Russian counterpart Vladimir Putin had met thirty times and Xi gave Putin China’s first-ever friendship medal, calling him “my best, most intimate friend.” Here are Eurasia’s  current trade, security, and cooperation blocs. After the June, 2019 Conference on Interaction and Confidence-Building Measures in Asia (CICA) in Dushanbe, Tajikistan, Putin stressed that all of them should be integrated.

*  *  *

Colonial nations lost their political and economic freedom because imperial centers of capital needed to control resources crucial for their survival, wealth, and power. This is the real meaning of the terms ‘national security’ and ‘national interest.’ Powerful nations’ ‘national security’  is the control of an economic empire of subject states and the strategies through which this is carried out are ‘national security secrets.’ They practice the antithesis of what they preach. Their trumpeting of peace, freedom, justice, rights, democracy, and majority rule disguises those strategies for controlling other people and their resources be kept secret. The most pernicious is that multi-party democracy and a free press and must precede successful development. In fact, such a combination ends all hope of development. No nation has ever developed under multiparty democracy nor, as Lee Kwan Yew observed, with a free press,

The Philippines press enjoys all the freedoms of the US system but fails the people: a wildly partisan press helped Philippines politicians flood the marketplace of ideas with junk and confuse and befuddle the people so that they could not see what their vital interests were in a developing country. And, because vital issues like economic growth and equitable distribution were seldom discussed, they were never tackled and the democratic system malfunctioned. Look at Taiwan and South Korea: their free press runs rampant and corruption runs riot. The critic itself is corrupt yet the theory is, if you have a free press, corruption disappears. Now I’m telling you, that’s not true. Freedom of the press, freedom of news critics, must be subordinated to the overriding needs of the integrity of Singapore and to the primacy of purpose of an elected government.

Russia and China offer an alternative to the imperialist model: security without coercion, aid without conditions and, instead of the WTO’s agreements that prevent sustainable development, trade and development pacts to promote it.

The blocs in play are the European Union; The Eurasian Economic Union; The Shanghai Cooperative Organization; The Association of Southeast Asian Nations; The Regional Comprehensive Economic Partnership; The Belt and Road Initiative. Note that all but one of these are Russo-Chinese. Let’s look at them in more detail.

The European Union, occupying Eurasia’s Western peninsula, is tired of the status quo. President Macron said, “We are undoubtedly experiencing the end of Western hegemony over the world…Things change, and they have been deeply shaken by the mistakes of Westerners in certain crises, by the choices that have been made by Americans for several years..And then there is the emergence of new powers whose impact we have probably underestimated for a long time. China is at the forefront, but also the Russian strategy, which has, it must be said, been pursued more successfully in recent years…They think about our planet with a true logic, a true philosophy, an imagination that we’ve lost a little bit.” [Saker’s Translation]. Mark Carney, Governor of the Bank of England added, “The world’s reliance on the US dollar won’t hold’ and needs to be replaced by a new international monetary and financial system… It is worth considering how an SHC [synthetic hegemonic currency] in the IMF could support better global outcomes.”6 Germany is completing Nord Stream II and installing Huawei despite US threats, and Hungary, Greece, and Italy are turning east. One more downturn in the US economy (where manufacturing is already in recession) and the rest of the EU will follow. Turkey’s President Erdogan, on NATO’s Eastern flank, said he bought Russia’s S-400 so Turkey could safely withdraw from NATO: his country is already a dialog partner in the world’s largest security association, the SCO.

The Shanghai Cooperative Organization, SCO.   (Russia, Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, India, China, and Pakistan; with Afghanistan, Iran, Mongolia and Belarus as observers and Armenia, Azerbaijan, Cambodia, Nepal, Sri Lanka and Turkey as dialog partners).

The SCO is the world’s largest security organization and counts four nuclear powers among its members. Its objectives are to (i) strengthen relations among member states; (ii) promote cooperation in political affairs, economics and trade, scientific-technical, cultural, and educational spheres and in energy, transportation, tourism, and environmental protection; (iv) safeguard regional peace, security, and stability; and (v) create a democratic, equitable international political and economic order. SCO members have completed an intergovernmental agreement facilitating international road transport and are finalizing one on rail transport. The Bishkek Declaration, adopted by SCO members, emphasizes the security guarantees of the Central Asian Nuclear-Weapons-Free Zone Treaty, the ‘unacceptability of attempts to ensure one country’s security at the expense of other countries’ security,’ and condemns ‘the unilateral and unlimited buildup of missile defense systems by certain countries or groups of states.’ Iranian President Hassan Rouhani, speaking to Presidents Putin, Xi, Modi and Imran Khan, blasted the US as ‘a serious risk to stability in the region and the world” and offered preferential treatment for all fellow SCO nations, companies, and entrepreneurs to invest in Iran’s market. Xi responded that Beijing will keep developing ties with Tehran ‘no matter how the situation changes.’

ASEAN. Established in 1967, the Association of Southeast Asian Nations–Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam–agreed  to accelerate their region’s economic growth, social progress and cultural development through joint endeavors in the spirit of equality and partnership in order to strengthen the foundation for a prosperous and peaceful community and to promote regional peace and stability through abiding respect for justice and the rule of law in the relationship among countries in the region and adherence to the principles of the United Nations Charter. Russia and China are strategic ASEAN partners but, though ASEAN had a much longer dialog partnerships with the Western countries like America and the EU, none of them proposed a free trade agreement for ASEAN. China did so in 1988 and then concluded the ASEAN-China FTA in record time with the result that total trade between ASEAN and China, $8 billion in 1991, grew to $600 billion in 2018 with a goal of $1 trillion by 2024.

The Regional Comprehensive Economic Partnership, (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam, China, Japan, India, South Korea, Australia and New Zealand). The world’s largest trade bloc, the RCEP accounts for half the world’s economy and, in contrast to the WTO, is biased in favor of developing nations and excludes investor-state dispute settlement (ISDS) mechanisms that advantage private corporations over states.

The Belt and Road InitiativeScheduled to launch on June 1, 2021, the BRI integrates four billion people in one-hundred thirty countries across Eurasia, Africa, Latin America and the South Pacific. BRI focuses on policy coordination, infrastructure connectivity, unimpeded trade, financial integration and people-to-people ties. It is building power plants in Pakistan, train lines in Hungary and ports from Africa to Greece, replacing Western institutions, refashioning the global economic order, forging new ties, creating new markets, deepening economic connections and strengthening diplomatic bonds. Iran is a key BRI node and Tehran sees it as the way to full integration into the Eurasian economic ecosystem. Cargo transiting from all over India via the International North-South Transport Corridor, INSTC, to the Iranian port of Bandar Abbas reduces shipping costs to Europe by forty percent. The INSTC will soon merge with BRI’s global transport network.

The BRI’s Eurasian Land Bridge exemplifies its cooperative model. Added value production–like assembling component parts from different origins–can be conducted tax free in its border Free Trade Zones, where wages are one-fifth of China’s. This allows for the addition of lower cost labor, depending upon the location, to be factored into the overall production cost rather than being exposed to one salary band in just one country. Goods entering these FTZs are considered to be outside customs borders, so attract no customs duty or VAT, and companies operating within them are exempt from all taxes. The nodes: Huoergousi Export Processing Zone (China-Kazakhstan Border); Khorgos Eastern Gate Special Economic Zone (Kazakhstan); Aktau Special Economic Zone (Kazakhstan); Alat Free Trade Zone (Azerbaijan); Poti Free Industrial Zone (Georgia); Hualing-Kutaisi Free Industrial Zone (Georgia). Turkey’s East Anatolia Free Trade Zone is the most interesting, since Turkey’s Custom Union with the EU admits Turkish origin goods free of tax. Over 6,300 trains made the journey last year, one every ninety minutes. Trans-Eurasia transit time has fallen from three weeks to two, and should be ten days by 2024. Ultimately, Russia aims to connect China’s northern provinces with Eurasia via the

The Trans-Siberian and the Chinese Eastern Railway–with Chita in China and Khabarovsk in Russia, are already totally interconnected. Across the spectrum, Moscow aims at maximizing return on the crown jewels of Russia’s Far East; agriculture, water resources, minerals, lumber, oil and gas. Construction of liquefied natural gas (LNG) plants in Yamal vastly benefits China, Japan and South Korea. The same applies to gateway Vladivostok, Eurasia’s entry point for both South Korea and Japan, as well as Russia’s entry point to Northeast Asia. Kazakhstan shows how Greater Eurasia and BRI are complementary: Astana is a member of both the BRI and the EAEU.


The Polar Silk Road sea route is five-thousand miles shorter than the Suez route that runs mostly in Russia’s coastal waters. In 2010 the first cargo ship sailed the entire route without icebreaker assistance and in 2017 the Christophe de Margerie became the first ever ice-breaking LNG carrier to transport LNG from the Yamal peninsula through the Bering Strait and south to Japan and China. Russia’s Sovcomflot and Novatek signed an agreement with China’s Cosco Shipping and the Silk Road Fund to establish a Maritime Arctic Transport joint venture to manage an ice-breaking tanker fleet in the transportation of LNG for current and planned Novatek projects including Yamal LNG, Arctic LNG 2 and others.

Pipelineistan. The IEA calculates that oil will remain the world’s dominant source of energy in 2040, accounting for one-fourth of global energy consumption. Russia accounts for fifteen percent of the world’s energy reserves and the Persian Gulf region for 65%. Russian and Chinese-built pipelines are distributing this energy wealth across the continent resurrecting the South Stream gas pipeline to supply Europe as an extension of TurkStream after the Trump administration also furiously opposed the Nord Stream 2. Russian gas will start flowing to Turkey via TurkStream this year and Russia and Bulgaria have begun work on the Balkan Stream Pipeline to carry gas to the southern EU.

The Global Electric Interconnect. Beijing launched GEIDCO in 2016, an ultra-high voltage grid that will transmit clean energy around the globe continually, following the sun. GEIDCO has seven regional offices, forty global offices, six-hundred regional and national members and has invested $1.6 trillion in eighty generation and transmission projects across Eurasia, Latin America, Africa, Europe and North America.

The Digital Silk Road. The DSR is strengthening internet infrastructure, deepening space cooperation, developing common technology standards, and improving the efficiency of policing systems among Belt and Road countries. It gathers space-based remote sensing data for multiple projects along the BRI and China is promoting BeiDou-2, its global satellite navigation system as an alternative to America’s GPS. Pakistan, Laos, Brunei, and Thailand have already adopted BeiDou. Construction has begun on the Pakistan East Africa Cable Express, connecting Pakistan to Kenya and Djibouti. In 2012, under one percent of Myanmar’s population had broadband access but the country expects to launch 5G broadband service by 2025, leapfrogging even Singapore.

Russia and China’s Electronic Funds Silk Road will Replace the US-dominated SWIFT network.

The Silk Road International Bank AIIB guarantees a trillion dollars annually in long-term, low interest loans for regional infrastructure, poverty reduction, growth and climate change mitigation and allows Eurasia’s four billion savers to mobilize local savings that previously had few safe or creative outlets. Nothing could be more sensible for the new Pipelineistan deal than to have it settled in yuan. Beijing would pay Gazprom in that currency (convertible into rubles); Gazprom would accumulate the yuan; and Russia would then buy myriad made-in-China goods and services in yuan convertible into rubles. The merger of Russia’s Mir payment system and China’s Union Pay appears inevitable because their bilateral trade is growing by an astonishing half a billion dollars a month and Beijing’s fully convertible digital yuan may debut as soon as this year, adding to the fun.

Invulnerability to attack. In the past eighteen months, Russia and China have demonstrated their ability to defend themselves against any attack and, in turn, to destroy every city in the United States inside forty-five minutes. They now operate from a position of strength, particularly in Eurasia.


According to Chinese philosopher Xunzi, there were three types of leadership: humane authority, hegemony and tyranny. Humane authority begins by creating a desirable model at home that inspires people abroad. Xunzi, proposed that, though hegemons know how to win wars, “The ruler who makes his own state act correctly will attain international primacy.” The domestic determines the international and, since humane authority based on morality rather than power, is superior to hegemony it is more important to win over people than territory. States wishing to exercise humane authority must be the first to respect the norms they advocate and leaders of high ethical reputation and great administrative ability will attract other states. “To be compassionate in great matters and overlook the small makes one fit to become lord of the covenants. Loving friends, being friendly with the great, rewarding your allies and punishing those who oppose you, the lord of the covenants has a definite duty and his moral standing should match it.” Presiding over the meetings of other states grants international recognition of humane authority. Two centuries later, Confucius summarized Xunzi thus, “Moral superiors and inferiors relate to each other like wind and grass: grass must bend when the wind blows over it”.

A warming, moral wind is blowing across Eurasia and the pieces are coming together.

Tyler Durden Thu, 11/07/2019 - 03:30
Published:11/7/2019 2:48:47 AM
[Markets] 45 Population-Control Quotes That Expose The Elites' Plan To Cut The Number Of People On The Planet 45 Population-Control Quotes That Expose The Elites' Plan To Cut The Number Of People On The Planet

Authored by Michael Snyder via,

At one time, the elite at least attempted to conceal their boundless enthusiasm for population control from the general public, but now they aren’t even trying to hide it anymore. On Tuesday, an alarming new study that advocates global population control as one of the solutions to the “climate emergency” that we are facing was published in the journal BioScience. This document has already been signed by 11,258 scientists from 153 different countries, and it openly calls for a reduction in the human population of our planet. This has always been the endgame for the climate change cult, but now a big push is being made to make the public believe that there is a “scientific consensus” that this is necessary.

You can find a summary of the report here, and I would very much encourage you to read it, because it is essentially a blueprint for where the elite intend to take humanity in the years ahead.

But in order to achieve their goals, first they are going to have to convince us that planetary disaster is imminent, and in this study the authors boldly tell us “that planet Earth is facing a climate emergency”

Scientists have a moral obligation to clearly warn humanity of any catastrophic threat and to “tell it like it is.” On the basis of this obligation and the graphical indicators presented below, we declare, with more than 11,000 scientist signatories from around the world, clearly and unequivocally that planet Earth is facing a climate emergency.

Sounds pretty scary, right?

So what solutions are they proposing?

Well, the study breaks down the necessary solutions into six basic groupings

The letter focuses on six key objectives: replacing fossil fuels; cutting pollutants like methane and soot; restoring and protecting ecosystems; eating less meat; converting the economy to one that is carbon-free and stabilising population growth.

If that sounds a lot like “the Green New Deal”, that is because it is a lot like “the Green New Deal”.

It is the sixth “objective” that concerns me the most. Because the truth is that they don’t want to just “stabilize” the global population.

According to the study, the population of the Earth really needs to be “gradually reduced”…

Still increasing by roughly 80 million people per year, or more than 200,000 per day (figure 1a–b), the world population must be stabilized—and, ideally, gradually reduced—within a framework that ensures social integrity. There are proven and effective policies that strengthen human rights while lowering fertility rates and lessening the impacts of population growth on GHG emissions and biodiversity loss. These policies make family-planning services available to all people, remove barriers to their access and achieve full gender equity, including primary and secondary education as a global norm for all, especially girls and young women (Bongaarts and O’Neill 2018).

But if humans are the primary driver of climate change, and if we only have about 12 years before we reach the point of no return as Alexandria Ocasio-Cortez has suggested, will a “gradual” reduction of the human population really be enough to satisfy the climate change zealots?

For true believers in the cause, there would be no faster way of turning this crisis around than to radically reduce the population of the planet. According to them, every one of us has “a carbon footprint”, and as the population grows the climate change crisis only gets worse. So a logical extension of this thinking would be that anyone that can find a way to significantly reduce the global population would literally be “saving the planet”. To you and I, the idea of millions or billions of people dying is absolutely horrific, but for those that have fully embraced the climate change narrative such an outcome would be extremely desirable.

And of course population control has been an obsession among the global elite for a very long time. Way before “global warming” and “climate change” were popularized, those at the top end of the social pyramid have been dreaming of dramatically culling the herd.

To demonstrate this, I would like to share with you 45 quotes that prove the elite really do want to dramatically reduce the number of people on the planet…

1. Charles Darwin (his thinking is at the foundation of so many of our scientific theories today): “At some future period, not very distant as measured by centuries, the civilised races of man will almost certainly exterminate and replace throughout the world the savage races. At the same time the anthropomorphous apes, as Professor Schaaffhausen has remarked, will no doubt be exterminated. The break will then be rendered wider, for it will intervene between man in a more civilised state as we may hope, than the Caucasian and some ape as low as a baboon, instead of as at present between the negro or Australian and the gorilla.”

2. Bill Gates: “The problem is that the population is growing the fastest where people are less able to deal with it. So it’s in the very poorest places that you’re going to have a tripling in population by 2050. (…) And we’ve got to make sure that we help out with the tools now so that they don’t have an impossible situation later.”

3. Bernie Sanders: “In poor countries around the world where women do not necessarily want to have large numbers of babies, and where they can have the opportunity through birth control to control the number of kids they have, is something I very, very strongly support.”

4. UK Prime Minister Boris Johnson: “The primary challenge facing our species is the reproduction of our species itself…It is time we had a grown-up discussion about the optimum quantity of human beings in this country and on this planet…All the evidence shows that we can help reduce population growth, and world poverty, by promoting literacy and female emancipation and access to birth control.”

5. UK Television Presenter Sir David Attenborough: “The human population can no longer be allowed to grow in the same old uncontrolled way. If we do not take charge of our population size, then nature will do it for us.”

6. Paul Ehrlich, a former science adviser to president George W. Bush and the author of “The Population Bomb”: “Solving the population problem is not going to solve the problems of racism… of sexism… of religious intolerance… of war… of gross economic inequality. But if you don’t solve the population problem, you’re not going to solve any of those problems. Whatever problem you’re interested in, you’re not going to solve it unless you also solve the population problem.”

7. Dave Foreman, the co-founder of Earth First: “We humans have become a disease, the Humanpox.”

8. CNN Founder Ted Turner: “A total population of 250-300 million people, a 95% decline from present levels, would be ideal.”

9. Japan’s Deputy Prime Minister Taro Aso: about medical patients with serious illnesses: “You cannot sleep well when you think it’s all paid by the government. This won’t be solved unless you let them hurry up and die.”

10. David Rockefeller: “The negative impact of population growth on all of our planetary ecosystems is becoming appallingly evident.”

11. Richard Branson: “The truth is this: the Earth cannot provide enough food and fresh water for 10 billion people, never mind homes, never mind roads, hospitals and schools.”

12. Environmental activist Roger Martin: “On a finite planet, the optimum population providing the best quality of life for all, is clearly much smaller than the maximum, permitting bare survival. The more we are, the less for each; fewer people mean better lives.”

13. HBO personality Bill Maher: “I’m pro-choice, I’m for assisted suicide, I’m for regular suicide, I’m for whatever gets the freeway moving – that’s what I’m for. It’s too crowded, the planet is too crowded and we need to promote death.”

14. Al Gore: “One of the things we could do about it is to change the technologies, to put out less of this pollution, to stabilize the population, and one of the principal ways of doing that is to empower and educate girls and women. You have to have ubiquitous availability of fertility management so women can choose how many children to have, the spacing of the children… You have to educate girls and empower women. And that’s the most powerful leveraging factor, and when that happens, then the population begins to stabilize and societies begin to make better choices and more balanced choices.”

15. MIT professor Penny Chisholm: “The real trick is, in terms of trying to level off at someplace lower than that 9 billion, is to get the birthrates in the developing countries to drop as fast as we can. And that will determine the level at which humans will level off on earth.”

16. Julia Whitty, a columnist for Mother Jones: “The only known solution to ecological overshoot is to decelerate our population growth faster than it’s decelerating now and eventually reverse it—at the same time we slow and eventually reverse the rate at which we consume the planet’s resources. Success in these twin endeavors will crack our most pressing global issues: climate change, food scarcity, water supplies, immigration, health care, biodiversity loss, even war. On one front, we’ve already made unprecedented strides, reducing global fertility from an average 4.92 children per woman in 1950 to 2.56 today—an accomplishment of trial and sometimes brutally coercive error, but also a result of one woman at a time making her individual choices. The speed of this childbearing revolution, swimming hard against biological programming, rates as perhaps our greatest collective feat to date.”

17. Colorado State University Professor Philip Cafaro in a paper entitled “Climate Ethics and Population Policy”: “Ending human population growth is almost certainly a necessary (but not sufficient) condition for preventing catastrophic global climate change. Indeed, significantly reducing current human numbers may be necessary in order to do so.

18. Professor of Biology at the University of Texas at Austin Eric R. Pianka: “I have two grandchildren and I want them to inherit a stable Earth. But I fear for them. Humans have overpopulated the Earth and in the process have created an ideal nutritional substrate on which bacteria and viruses (microbes) will grow and prosper. We are behaving like bacteria growing on an agar plate, flourishing until natural limits are reached or until another microbe colonizes and takes over, using them as their resource. In addition to our extremely high population density, we are social and mobile, exactly the conditions that favor growth and spread of pathogenic (disease-causing) microbes. I believe it is only a matter of time until microbes once again assert control over our population, since we are unwilling to control it ourselves. This idea has been espoused by ecologists for at least four decades and is nothing new. People just don’t want to hear it.”

19. Kofi Annan, UN Secretary-General from 1997-2006: “The idea that population growth guarantees a better life — financially or otherwise — is a myth that only those who sell nappies, prams and the like have any right to believe.”

20. Thoraya Ahmed Obaid, UN Under-Secretary-General from 2000-2010: “We cannot confront the massive challenges of poverty, hunger, disease and environmental destruction unless we address issues of population and reproductive health.”

21. Bill Nye: “In 1750, there were about a billion humans in the world. Now, there are well over seven billion people in the world. It more than doubled in my lifetime. So all these people trying to live the way we live in the developed world is filling the atmosphere with a great deal more carbon dioxide and other greenhouse gases than existed a couple of centuries ago. It’s the speed at which it is changing that is going to be troublesome for so many large populations of humans around the world.”

22. Actress Cameron Diaz: “I think women are afraid to say that they don’t want children because they’re going to get shunned. But I think that’s changing too now. I have more girlfriends who don’t have kids than those that do. And, honestly? We don’t need any more kids. We have plenty of people on this planet.”

23. Democrat strategist Steven Rattner: “WE need death panels. Well, maybe not death panels, exactly, but unless we start allocating health care resources more prudently — rationing, by its proper name — the exploding cost of Medicare will swamp the federal budget.”

24. Matthew Yglesias, a business and economics correspondent for Slate, in an article entitled “The Case for Death Panels, in One Chart”: “But not only is this health care spending on the elderly the key issue in the federal budget, our disproportionate allocation of health care dollars to old people surely accounts for the remarkable lack of apparent cost effectiveness of the American health care system. When the patient is already over 80, the simple fact of the matter is that no amount of treatment is going to work miracles in terms of life expectancy or quality of life.”

25. Planned Parenthood Founder Margaret Sanger: “All of our problems are the result of overbreeding among the working class”

26. Gloria Steinem: “Everybody with a womb doesn’t have to have a child any more than everybody with vocal chords has to be an opera singer.”

27. Jane Goodall: “It’s our population growth that underlies just about every single one of the problems that we’ve inflicted on the planet. If there were just a few of us, then the nasty things we do wouldn’t really matter and Mother Nature would take care of it — but there are so many of us.”

28. U.S. Supreme Court Justice Ruth Bader Ginsburg: “Frankly I had thought that at the time Roe was decided, there was concern about population growth and particularly growth in populations that we don’t want to have too many of.”

29. Planned Parenthood Founder Margaret Sanger: “The most merciful thing that the large family does to one of its infant members is to kill it.”

30. Salon columnist Mary Elizabeth Williams in an article entitled “So What If Abortion Ends Life?”: “All life is not equal. That’s a difficult thing for liberals like me to talk about, lest we wind up looking like death-panel-loving, kill-your-grandma-and-your-precious-baby storm troopers. Yet a fetus can be a human life without having the same rights as the woman in whose body it resides.”

31. Paul Ehrlich: “Basically, then, there are only two kinds of solutions to the population problem. One is a ‘birth rate solution,’ in which we find ways to lower the birth rate. The other is a ‘death rate solution,’ in which ways to raise the death rate — war, famine, pestilence — find us.”

32. Alberto Giubilini of Monash University in Melbourne, Australia and Francesca Minerva of the University of Melbourne in a paper published in the Journal of Medical Ethics: “[W]hen circumstances occur after birth such that they would have justified abortion, what we call after-birth abortion should be permissible. … [W]e propose to call this practice ‘after-birth abortion’, rather than ‘infanticide,’ to emphasize that the moral status of the individual killed is comparable with that of a fetus … rather than to that of a child. Therefore, we claim that killing a newborn could be ethically permissible in all the circumstances where abortion would be. Such circumstances include cases where the newborn has the potential to have an (at least) acceptable life, but the well-being of the family is at risk.”

33. Nina Fedoroff, a key adviser to Hillary Clinton: “We need to continue to decrease the growth rate of the global population; the planet can’t support many more people.”

34. Barack Obama’s primary science adviser, John Holdren: “A program of sterilizing women after their second or third child, despite the relatively greater difficulty of the operation than vasectomy, might be easier to implement than trying to sterilize men.”

35. Another quote from John Holdren: “If population control measures are not initiated immediately and effectively, all the technology man can bring to bear will not fend off the misery to come.”

36. David Brower, the first Executive Director of the Sierra Club: “Childbearing [should be] a punishable crime against society, unless the parents hold a government license … All potential parents [should be] required to use contraceptive chemicals, the government issuing antidotes to citizens chosen for childbearing.”

37. Maurice Strong: “Either we reduce the world’s population voluntarily or nature will do this for us, but brutally.”

38. Thomas Ferguson, former official in the U.S. State Department Office of Population Affairs: “There is a single theme behind all our work–we must reduce population levels. Either governments do it our way, through nice clean methods, or they will get the kinds of mess that we have in El Salvador, or in Iran or in Beirut. Population is a political problem. Once population is out of control, it requires authoritarian government, even fascism, to reduce it…”

39. Mikhail Gorbachev: “We must speak more clearly about sexuality, contraception, about abortion, about values that control population, because the ecological crisis, in short, is the population crisis. Cut the population by 90% and there aren’t enough people left to do a great deal of ecological damage.”

40. Jacques Costeau: “In order to stabilize world population, we must eliminate 350,000 people per day. It is a horrible thing to say, but it is just as bad not to say it.”

41. Finnish environmentalist Pentti Linkola: “If there were a button I could press, I would sacrifice myself without hesitating if it meant millions of people would die”

42. Author Dan Brown: “Overpopulation is an issue so profound that all of us need to ask what should be done.”

43. Prince Phillip, husband of Queen Elizabeth II and co-founder of the World Wildlife Fund: “In the event that I am reincarnated, I would like to return as a deadly virus, in order to contribute something to solve overpopulation.”

44. Ashley Judd: “It’s unconscionable to breed, with the number of children who are starving to death in impoverished countries.”

45. Charles Darwin: “With savages, the weak in body or mind are soon eliminated; and those that survive commonly exhibit a vigorous state of health. We civilised men, on the other hand, do our utmost to check the process of elimination; we build asylums for the imbecile, the maimed, and the sick; we institute poor-laws; and our medical men exert their utmost skill to save the life of every one to the last moment. There is reason to believe that vaccination has preserved thousands, who from a weak constitution would formerly have succumbed to small-pox. Thus the weak members of civilised societies propagate their kind. No one who has attended to the breeding of domestic animals will doubt that this must be highly injurious to the race of man. It is surprising how soon a want of care, or care wrongly directed, leads to the degeneration of a domestic race; but excepting in the case of man himself, hardly any one is so ignorant as to allow his worst animals to breed.”

As you can see, this kind of thinking goes all the way back to Charles Darwin.

The elite really do look down on all the rest of us with great disdain, and let us hope that their goal of dramatically reducing the size of the human population is not realized any time soon.

Tyler Durden Wed, 11/06/2019 - 16:40
Published:11/6/2019 3:43:46 PM
[Books] Close encounter of the Glenn kind (Scott Johnson) Encounter Books commissioned Ben Weingarten to interview Glenn Reynolds in connection with Glenn’s Encounter Books pamphlet The Social Media Upheaval (video below). Episode 5 in the Close Encounters series, the interview takes up Glenn’s belief in the need to use antitrust laws to break up collusive big tech companies and his response to libertarian critiques of such a plan as well as the corrosive impact of social media on its Published:11/6/2019 6:40:19 AM
[Markets] 'Omniviolence' Is Coming And The World Isn't Ready 'Omniviolence' Is Coming And The World Isn't Ready

Authored by Phil Torres via,

In The Future of Violence, Benjamin Wittes and Gabriella Blum discuss a disturbing hypothetical scenario. A lone actor in Nigeria, “home to a great deal of spamming and online fraud activity,” tricks women and teenage girls into downloading malware that enables him to monitor and record their activity, for the purposes of blackmail. The real story involved a California man who the FBI eventually caught and sent to prison for six years, but if he had been elsewhere in the world he might have gotten away with it. Many countries, as Wittes and Blum note, “have neither the will nor the means to monitor cybercrime, prosecute offenders, or extradite suspects to the United States.”

Technology is, in other words, enabling criminals to target anyone anywhere and, due to democratization, increasingly at scale.

Emerging bio-, nano-, and cyber-technologies are becoming more and more accessible. The political scientist Daniel Deudney has a word for what can result: “omniviolence.” The ratio of killers to killed, or “K/K ratio,” is falling.

For example, computer scientist Stuart Russell has vividly described how a small group of malicious agents might engage in omniviolence:

“A very, very small quadcopter, one inch in diameter can carry a one-or two-gram shaped charge,” he says.

“You can order them from a drone manufacturer in China. You can program the code to say: ‘Here are thousands of photographs of the kinds of things I want to target.’ A one-gram shaped charge can punch a hole in nine millimeters of steel, so presumably you can also punch a hole in someone’s head. You can fit about three million of those in a semi-tractor-trailer. You can drive up I-95 with three trucks and have 10 million weapons attacking New York City. They don’t have to be very effective, only 5 or 10% of them have to find the target.”

Manufacturers will be producing millions of these drones, available for purchase just as with guns now, Russell points out, “except millions of guns don’t matter unless you have a million soldiers. You need only three guys to write the program and launch.”

In this scenario, the K/K ratio could be perhaps 3/1,000,000, assuming a 10-percent accuracy and only a single one-gram shaped charge per drone.

That’s completely—and horrifyingly—unprecedented. The terrorist or psychopath of the future, however, will have not just the Internet or drones—called “slaughterbots” in this video from the Future of Life Institute—but also synthetic biology, nanotechnology, and advanced AI systems at their disposal. These tools make wreaking havoc across international borders trivial, which raises the question: Will emerging technologies make the state system obsolete? It’s hard to see why not.

What justifies the existence of the state, English philosopher Thomas Hobbes argued, is a “social contract.”

People give up certain freedoms in exchange for state-provided security, whereby the state acts as a neutral “referee” that can intervene when people get into disputes, punish people who steal and murder, and enforce contracts signed by parties with competing interests. 

The trouble is that if anyone anywhere can attack anyone anywhere else, then states will become - and are becoming - unable to satisfy their primary duty as referee. It’s a trend toward anarchy, “the war of all against all,” as Hobbes put it - in other words a condition of everyone living in constant fear of being harmed by their neighbors.

Indeed, in a recent paper, “The Vulnerable World Hypothesis,” published in Global Policy, the Oxford philosopher Nick Bostrom argues that the only way to defend against a global catastrophe is to employ a universal and invasive surveillance system, what he calls a “High-tech Panopticon.” Sound dystopian? It sure does to me.

“Creating and operating the High-tech Panopticon would require substantial investment,” Bostrom writes, “but thanks to the falling price of cameras, data transmission, storage, and computing, and the rapid advances in AI-enabled content analysis, it may soon become both technologically feasible and affordable.”

Bostrom is well-aware of the downsides—corrupt actors in a state could exploit this surveillance for totalitarian ends, or hackers could blackmail unsuspecting victims. Yet the fact is that it may still be a better option than suffering one global catastrophe after another. 

How can societies counterattack omniviolence? One strategy could be a superintelligent machine—essentially, an extremely powerful algorithm—that’s specifically designed to govern fairly. We could then put the algorithm in political charge and, insofar as it governs as something like a “Philosopher King,” not worry constantly about the data collected being misused or abused. Of course, this is a fantastical proposal. Even the real-world use of AI in the justice system is fraught with problems. But at this point, do we have a better idea for preventing the collapse of the state system under the weight of widespread technological empowerment?

Perhaps a completely new idea will emerge that can preserve the current system—if we even want it preserved. Or perhaps emerging technologies won’t empower people as much as I and others anticipate. It could be that offensive technologies will actually lag behind defensive technologies, making it very difficult to execute a successful attack. It could also be that before omniviolence and democratization undercut the state, civilization collapses because of climate change-linked stressors like lethal heatwaves, megadroughts, coastal flooding, rising sea-levels, melting glaciers and polar ice caps, desertification, food supply disruptions, disease outbreaks, biodiversity loss, species extinctions, and mass migrations. If we ended up living as hunter-gatherers again, the main worry would be sticks and stones, not designer pathogens and artificial intelligence.

Civilization is an experiment. We may not get the results we’re expecting. So humanity would do well to hope for the best but prepare for the worst.

*  *  *

Phil Torres is a scholar of global catastrophic risks, and author of several books. His essay, “Superintelligence and the Future of Governance: On Prioritizing the Control Problem at the End of History,” appears in the 2018 anthology, Artificial Intelligence Safety and Security

Tyler Durden Tue, 11/05/2019 - 23:25
Published:11/5/2019 10:42:58 PM
[Markets] Schlichter: Trump Is Derailing The Elite's Gravy Train Schlichter: Trump Is Derailing The Elite's Gravy Train

Authored by Kurt Schlichter, op-ed via,

Like the garbage French elite of long ago, our American garbage elite of today has learned nothing and forgotten nothing.

For four years, it has been focused entirely on deep-sixing Donald Trump for his unforgivable crime of demanding that our ruling caste be held accountable for its legacy of failure. Instead of focusing on not being terrible at their job of running America’s institutions, our elitists have decided that the real problem is us Normals being angry about how they are terrible at their job of running America’s institutions.

So, let’s imagine that they finally vanquish Trump, though every time they come up against him they end up dragging themselves home like Ned Beatty after a particularly tough canoe trip.

What happens then?

What happens then is that it’s back to business as usual, and for decades, business as usual for our garbage elite has not merely been running our institutions badly but pillaging and looting our country for power, prestige and cash.

The difference is that in the future they will be much more careful to ensure that no one who is not in on the scam will ever again come anywhere near the levers of power. You can already see it – the demands that we defer to the bureaucrats they own, the attacks on the idea of free expression, and the campaign to disarm us. Their objective is no more Trumps, just an endless line of progressive would-be Maduros with the march toward despair occasionally put on pause for a term by some Fredocon Republican who hates us Normals just as much as the Dems, but won’t admit it until after he’s out of office.

Our garbage elite talks a good game about its service and moral superiority, but if our betters were actually better than us, we would not be having this national conversation about how awful they are.

The fact is that what they want to do is go back to the way it was before Trump, back to 2015, aka the year 1 BT – Before Trump. Back then, progressive Democrats got their bizarre social pathologies normalized. Moderate Democrats got money, power and an open season on the local talent. Corporate types represented largely by squishy Republicans got globalism and the ability to ship our jobs out and import Third World serfs in. And the fake conservatives of Conservative, Inc., got to cash in without the necessity of actually conserving anything.

The only people that the old system didn’t work for were the American people.

It’s important to remember and to always remind yourself, that everything our elite says about its motives and morals is a lie and a scam. Take the whole #MeToo thing. This was supposed to be some sort of revolutionary rebellion against the sexual exploitation of the powerless by the powerful. It’s not, and never was. Rather, it’s simply an internal power struggle among and within the elites to reallocate power among snooty people who don’t give a damn about you or me.

The fall of Harvey Weinstein or Matt Lauer or any of the other bigwigs means nothing to the conservative single mom being exploited by the Democrat donors who own Walmart. It was actually striving female members of the elite – actresses, models, media figures, executives – leveraging the monstrosity of the creeps at the top to increase their own power within the elite. Do you see any of these #MeToo heroines, now that they have taken their scalps, helping their non-elite sisters out in Gun-Jesusland? Yeah, right. They are lining up with the rest of their elite pals to shaft us.

What you do see is excuses. They excuse Bill Clinton and his enabler Felonia Milhous von Pantsuit. They excuse Gropey Joe. They are in the process of excusing Katie Hill, whose naked hairbrush photo has ensured that none of us will ever sit on a hotel room chair again. Why no outrage? Why no concern? Because taking out Stumbles McMyturn or Hoover’s Dad or Congresswoman Every Man’s Lesbian Fantasy Destroyer does not help the faction of the elite that benefited from #MeToo. That would help us, but not the elite. Throuple Gal was exposed by Townhall’s peppery sister site Redstate, not the mainstream media, and the mainstream media is horrified – not by her furniture defilement but that word of it got through the gate they yearn to keep.

The simple fact is that they desperately want Trump out so they can return to the good old days of winks, nods, and payoffs.

Look at the Biden Family Crime Syndicate and the antics of the junior capo of the Cosa Nose Candy. In what universe is it A-OK that the crack-fueled Johnny Appleseed of paternity suits that is Joe’s snortunate son was cashing in on $50K a month in sweet, sweet Ukrainian gas gold just weeks after Ensign Biden got booted because he tooted? And then there’s riding on Air Force Two to the NBA’s favorite dictatorship for some commie ducats. Now there are even some Romanian shenanigans too – is there a single country on earth that Totally-Not-Senile Joe didn’t shake down for the benefit of his daughter-in-law’s second hubby?

But our garbage elite’s garbage media seems amazingly uninterested in all this – it’s fascinated by the timing of a situation room snap after Trump unleashed the Army’s Delta Force on al-Baghdadi and by dog medal memes, but the Veep’s boy’s bag-mannery is not merely of no interest but is something they close their fussy phalanx ranks around to protect. Keep in mind, the premise underlying the whole star chamber impeachment festival of onanism is that Donald Trump, America’s chief law enforcement officer, was somehow wrong and bad and double-plus ungood because he allegedly asked the Ukrainians, “Hey, what’s the dealio with the Columbia Kid’s pay-offs?”

In a non-bizarro political universe, the proper reaction to the Prezzy demanding, “You best fork over the evidence on these manifestly corrupt antics involving the Vice-President of the United States or we’re cutting you off from the American taxpayers’ feeding trough,” would be, “Hell to the yeah, four more years! Four more years!’

But it’s not, because the elite likes its sexual abuse and its foreign cash and its total lack of accountability to us, the Normals, the people who are supposed to be the ones that our elite is working for. The elite has not learned its lesson. It has not admitted that it sucks and resolved to stop sucking.

Instead, it has doubled down. And if it gets power again, it will act to solve what it sees as the most urgent problem facing America – the fact that we the people have the ability to reject the elite’s utter incompetence and surpassing greed and elect someone with a mandate to burn down the whole rotten edifice.

If the elitists get power again, they are never letting go of it, not without a fight. And now, doesn’t the elite’s obsessive fixation on shutting down conservative dissent, eliminating competing institutions (like religious entities), and disarming law-abiding Americans make a lot more sense?

*  *  *

Our garbage elite is outraged over the success of my action-packed yet hilarious novels of America torn apart by liberal malice, People’s RepublicIndian Country and Wildfire. In a few weeks, Number IV, Collapse, will drop. They call these books “appalling.” They don’t want you to read them. That’s better than any blurb!

Tyler Durden Tue, 11/05/2019 - 20:05
Published:11/5/2019 7:07:53 PM
[Opinion] Can Democrats Legally Benefit from Criminal Dishonesty?

By Amanda Alverez -

Ever wonder the number of people believing they could commit the perfect crime? There are many books and movies exposing such attempts and even hilarious ‘really dumb failed criminal plots.’ Could it be possible to accept Democrats have succeeded for many years? At least until Donald J. Trump arrived in ...

Can Democrats Legally Benefit from Criminal Dishonesty? is original content from Conservative Daily News - Where Americans go for news, current events and commentary they can trust - Conservative News Website for U.S. News, Political Cartoons and more.

Published:11/5/2019 5:14:05 PM
[Markets] Rabo: Markets Scream Risk On Today... Until Trump Or Navarro Make Clear They Oppose Cutting Tariffs Rabo: Markets Scream Risk On Today... Until Trump Or Navarro Make Clear They Oppose Cutting Tariffs

Submitted by Michael Every of Rabobank

So it’s another day where we are thrown a mass of trade-related news to try to scythe through towards common sense.

First, there is the ASEAN summit, wrapping up just round the corner (and a million miles) from me here in Bangkok. Some trade deals were done: New Zealand, for example, will get even easier access to Chinese markets…in the same week that two Chinese nationals studying at a NZ private school decided to parade up and down Auckland in PLA dress uniforms, including swords, while waving the Chinese flag. However, the Regional Comprehensive Economic Partnership (RCEP) fell through after India once again walked away on concerns over its relative power differential with China – just as it did from the Belt and Road Initiative.

What’s the pattern to trade there? Short India, long everyone else in the region? Or a recognition that the larger players, who are less reliant on trade, are seeing a very different picture to the smaller players, who have no choice but to look to free trade, even though they see the larger issues just as clearly. If so, Risk On or Risk Off?

More importantly, China then threw a spanner into the works of the much-hyped “phase one” US-China trade ‘deal’ via a surprise insistence on the removal of 15% tariffs on USD112bn worth of goods imposed on 1 September – otherwise they won’t sign. What a tactical surprise that must be to someone who wrote in The Art of the Deal: “I've read hundreds of books about China over the decades. I know the Chinese. I've made a lot of money with the Chinese. I understand the Chinese mind.” Risk Off!

More surprising is the FT is reporting the US is considering doing exactly that. Risk On! But really? Only if by “the US” the story writers mean “some doves within the White House”, because the story makes clear US hawks oppose the concession and Trump himself is regarded as an obstacle rather than a proponent. Perhaps not a surprise given it would open him up to charges of looking weak on China, having been wrong on tariffs, and being a poor negotiator – he also wrote "The worst thing you can possibly do in a deal is seem desperate to make it. That makes the other guy smell blood, and then you're dead," in The Art of the Deal. Of course, that won’t stop markets screaming Risk On today – until Trump or Navarro make clear they are opposed. CNY is already testing back towards 7, bond yields are higher, and US stock futures are suggesting another all-time high. After all, we have an election in just under a year, so anything goes, right?

Plus, it’s been so long since the markets were given any gifts. I mean, it’s been literally days since an extra 25bp Fed rate-cut was tossed their way. And weeks since the Fed ramped up its Repo operations to a QE scale (even if we aren’t allowed to call it QE). It was certainly time for another goodie to be thrown our way, right?

Perhaps underlining why we seem reliant on increasingly desperate measures, and statements, to keep asset markets happy, consider this peach of piece of advice from new ECB President Lagarde: “We should be happier to have a job than to have our savings protected.” Quite the humdinger, the more you play it over in your mind. Equally, so was Hong Kong’s TVB reporting that the ear of a LegCo candidate “dropped off” over the weekend. On the trade news, on the idea that having a job is all that matters, and that human anatomy can ‘plop’ to the floor by itself, I must again share this classic Blackadder moment:

Nursie: Another good idea. You’re so clever today, you’d better make sure your foot doesn’t fall off.

Queenie: Is that what happens when you have a good idea? Your foot falls off?

Nursie: Certainly is. My brother had the idea of cutting his toenails with a scythe, and his foot fell off!

Tyler Durden Tue, 11/05/2019 - 08:52
Published:11/5/2019 8:04:57 AM
[Markets] The Middle Class Is Now The 'Muddle Class' The Middle Class Is Now The 'Muddle Class'

Authored by Charles Hugh Smith via OfTwoMinds blog,

The net result is the muddle class has the signifiers but not the wealth, power, capital or agency that once defined the middle class.

The first use of the phrase The Muddle Class appears to be The rise of the muddle classes (Becky Pugh, in January 2007. The "muddle" described the complex nature of defining "the middle class," which includes education, class origins, accents, and many other financial, social and cultural signifiers.

Comedian Jason Manford claimed to have coined the term in June 2013"I've invented a new term; 'Muddle Class'. When you find yourself being working class AND middle class at the same time."

I'm using the term to describe the economic class that has the social signifiers of middle class status but little to no ownership of meaningful capital or control of their own financial security. In other words, this class "muddles through" the erosion of their purchasing power and economic security, claiming the social status of "middle class" while their financial status is impoverished when compared to the security of previous generations of "middle class."

Social status signifiers include: college diplomas, advanced degrees, overseas travel, aspirational dining and consumer goods, home ownership, etc. But where previous generations were building meaningful capital and assets that could be passed down to their offspring, the assets of the "muddle class" are either negligible or highly contingent on the speculative bubble du jour (stocks, bonds, housing).

The more meaningful economic metrics for middle class status are:

1. Household indebtedness, i.e. how much of the income is devoted to debt service, and

2. How much of the household spending is funded by debt.

  • If debt overwhelms assets, this financial fragility is not "middle class."

3. The ability of the household to set aside substantial savings / capital investment.

  • If the household is unable to save enough to weather financial crises, this financial fragility is not "middle class."

4. The security of the households' employment.

5. The dependence of the household wealth on speculative asset bubbles inflated by central bank policies.

  • If owner's net equity in a house is 10% to 20% of the value (the rest being mortgage debt), a modest deflation of the housing bubble will wipe out all their equity and leave them underwater, i.e. owing more than the house is worth. This financial fragility is not "middle class."

6. The percentage of the household income that is unearned, i.e. derived not from labor but from productive assets.

If all the household income is earned and there is no accumulation of income from capital (assets), then this is the definition of the working class.

7. The exposure of the households' employment to automation, AI or offshoring.

8. How much of the household income is government transfers: benefits, subsidies, etc.

  • Households that depend on government transfers to get by are not "middle class."

The muddle class is losing ground not just in financial security and agency (control of capital), but in intangible capital, a topic I explore in my new book Will You Be Richer or Poorer? Profit, Power and A.I. in a Traumatized World: the intangible capital of social mobility, positive social roles, employment stability, political power and a host of other forms of capital that define "middle class" as much as a college diploma or home ownership.

The middle class has been transformed into the muddle class by a number of forces:

1. Neoliberal globalization and ideology has eroded employment security by offloading risk onto workers while fragmenting the family structure via turning everything into a global market.

2. The 4th Industrial Revolution (software, robotics, digital technologies) is disrupting previously stable employment, making earned income contingent and prone to disruption.

3. The destruction of interest earned on savings and the rise of central-bank fueled speculation has forced households to either lose ground by holding cash or gamble in the rigged casino of global markets--a gamble most will lose by design.

4. The ceaseless rise of non-discretionary costs has eroded the purchasing power of wages, while the winner take most speculative economy has reduced labor's share of the economy (see chart below).

The net result is the muddle class has the signifiers but not the wealth, power, capital or agency that once defined the middle class. Signifiers may have social value, but not the sort of financial value that can be handed down or converted into tangible capital.

*  *  *

My recent books:

Will You Be Richer or Poorer? Profit, Power and A.I. in a Traumatized World (Kindle $6.95, print $11.95) Read the first section for free (PDF).

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($6.95 (Kindle), $12 (print), $13.08 ( audiobook): Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 (Kindle), $8.95 (print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).

*  *  *

If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via

Tyler Durden Tue, 11/05/2019 - 08:07
Published:11/5/2019 7:13:53 AM
[Markets] SoftBank's 'Conglomerate Discount' Balloons To $130 Billion As Investors Bet Worst Is Yet To Come SoftBank's 'Conglomerate Discount' Balloons To $130 Billion As Investors Bet Worst Is Yet To Come

After a suite of marquee investments blew up in the company's face over the summer, SoftBank, the Japanese telecoms giant with a massive VC arm attached, is preparing to face its first real 'day of reckoning' this week when it reports Q2 earnings, according to the FT and Nikkei Asian Review. The results will be released after the close of Japanese markets on Wednesday.

Masayoshi Son

Most analysts expect a grim showing: In the span of a few months, SoftBank Chairman Masayoshi Son's reputation as one of the world's most successful momentum investors has been totally eviscerated. The company's stake in ride-share darling Uber has generated an on-paper loss of 30%. What's worse, Son has insisted on throwing even more money at WeWork parent 'The We Company' in a desperate attempt to stave off an imminent bankruptcy, which would have stuck SB with losses in the billions of dollars.

In the latest indication of just how little faith investors' have in the company, Nikkei points out that SoftBank's 'valuation discount', the gap between its valuation in public markets and its net asset value, has swollen to $130 billion.

Take the group's net debt figure of $45 billion (which excludes 10 trillion yen of debt held in subsidiaries and is the figure that Son prefers to use), add that to SoftBank's market capitalization of $81 billion, and its enterprise value is $126 billion. This is essentially the all-in cost of buying the company.

Against that, however, SoftBank has around $191 billion of quoted assets on its balance sheet, the largest of which is a 26% stake in Alibaba Group Holding, the Chinese e-commerce giant. It also owns U.K. chip designer Arm, which SoftBank has on its books at $25 billion, and another $8 billion of assorted assets it classifies as "others." Add it all up, and SoftBank owns around $224 billion of assets.

In addition, however, there are over 80 tech companies in the Vision Fund - such as ride-hailing giants Didi Chuxing and Grab, Indian hotel startup Oyo, and Chinese social media company ByteDance. SoftBank estimates its one-third share of these are worth $32 billion.

Add all these assets together and the total comes to $256 billion - or $130 billion more than the company is worth on the market. This is the "conglomerate discount," and it appears to have widened since Son railed about it in the past.

SoftBank and Son are still desperately trying to court Saudi Arabia and convince Crown Prince MbS to commit to backing a planned second iteration of its Vision Fund (which Saudi Arabia backed to the tune of $45 billion from its sovereign wealth fund). However, even before WeWork's valuation imploded, leading to the scrapping of its planned IPO and an embarrassingly public rescue that involved the ouster of co-founder and CEO Adam Neumann, there was talk that the Saudi's would sit this one out.

Courtesy of the FT

As SoftBank sees it, the Saudis owe it another chance: In the aftermath of Jamal Khashoggi's murder inside a Saudi consulate in Istanbul, SoftBank stood by the kingdom, even as Wall Street executives and other business leaders in the West cancelled plans to attend last year's Future Investment Initiative (better known as MbS's "Davos in the Desert") while publicly contemplating whether to sever all business ties to the kingdom, according to the FT.

One year later, those grievances appear to have been forgotten. But sparse attendance at Son's speech at this year's FII was seen as emblematic of the reputational hit that Son had taken in the aftermath of the WeWork blowup.

Analysts quoted by Nikkei said that unless SoftBank can pull off the turnaround at WeWork, reviving its valuation will be difficult.

"It cannot be helped that SoftBank's [WeWork] investment is seen as a failure," said Mitsunobu Tsuruo, analyst at Citigroup Global Markets Japan. "Investors are worried whether [it] will be the last negative material to affect SoftBank and its shares."

"We believe that unless the WeWork episode is resolved, SoftBank improves disclosure and clarifies its strategy, there is no solid anchor" to its net asset value, said Atul Goyal, analyst at Jefferies Securities.

On the other hand, another analyst argued that the double-digit slump in SoftBank's share price this year has completely priced in the WeWork fiasco, and that the SoftBank shares have nowhere to go but up from here.

"We think the impact of this [WeWork] event is now priced in and expect the shares to rebound," SMBC Nikko Securities wrote in an Oct. 25 report.

A successful IPO from one of the Vision Fund's 80 other portfolio companies could provide exactly the catalyst that the company needs. A listing for TikTok owner ByteDance in Hong Kong could accomplish this. Whatever happens, a successful offering will almost certainly need to happen outside of the US, since American markets have repeatedly shown this year that they have little appetite left for richly valued unicorns following a nearly uninterrupted string of IPO flops, from Uber & Lyft, to Slack, Peloton and others.

A successful IPO would certainly help, after WeWork's failed share float. ByteDance, the owner of social media app TikTok, which was valued at $75 billion in an October 2018 fundraising led by SoftBank, is reportedly considering a listing in Hong Kong.

Then again, one IPO might not be enough; many professional asset managers now see Vision Fund backing as an obvious counter-indicator, as one hedge fund manager told the FT. After all, when it comes to valuing its portfolio companies, SoftBank has been so wrong, so many times, that rebuilding trust and faith in its abilities could prove to be an impossible task.

"If SoftBank says this is the value, how much of that should you believe?" says Kirk Boodry, a tech analyst at Redex Holdings who publishes on research platform Smartkarma. One hedge fund investor says backing from the Vision Fund is "an immediate cue to sell."

And though SoftBank has scored several huge wins in recent years (it still owns a massive stake in Alibaba), investors in the Vision Fund largely missed out on those wins.

According to the FT, Vision Fund executives are counting on a $30 billion investment from Saudi Arabia for V2. But MbS has reportedly told advisors and other insiders that, while he would like to reward Son's loyalty, his advisors are vehemently against it.

Tyler Durden Mon, 11/04/2019 - 21:50
Published:11/4/2019 9:04:34 PM
[Markets] US Issues $20M Reward For Return Of US Agent, "Longest Held" Hostage In Iran US Issues $20M Reward For Return Of US Agent, "Longest Held" Hostage In Iran

A flurry of US-Iran related activity on the 40th anniversary of the American hostage crisis and the Islamic revolution that sparked it: after Iran earlier on Monday announced it took steps to double its uranium enrichment capacity via new advanced centrifuges, Washington has answered by slapping new sanctions on Mojtaba Khamenei, the second son of Iran’s Supreme Leader Ali Khamenei, as well as eight advisers of Iran's top cleric, including the head of judiciary Ebrahim Raisi, and Iran’s Armed Forces General Staff and its chief, General Mohammad Bagheri.

Crucially, the United States Treasury also announced a $20 million reward for info on the return of Bob Levinson, who is believed to have been held hostage by the Iranian government since his disappearance from Iran's Kish Island in 2007.

Levinson is the longest held American hostage inside the Islamic Republic, and multiple efforts to free him or gain knowledge of his whereabouts have come up empty over the years. It's believed he came under suspicion of Iran's intelligence agencies due to his being a former Drug Enforcement Administration and FBI agent.

Indeed years ago it was revealed that he was likely working as a contractor for the CIA. According to a recent Newsweek profile of Levinson:

Levinson, an ex–FBI agent well into a second career as a private detective, had disappeared over a decade earlier from a hotel on Iran's Kish Island. He had been seen only twice since then, first in a hostage video his family received from unknown intermediaries in 2010, then in photos three years later, showing the then-63-year-old increasingly haggard and begging for help.

At first, the U.S. government claimed it had no knowledge of why Levinson, an expert on Russian organized crime, had gone to Iran. The Iranian regime denied it was holding him. But in 2013, the Associated Press and other news outlets revealed that the ex-agent had gone to Kish on an off-the-books CIA mission to probe high-level Iranian money laundering.

The United States has reportedly long been engaged in secretive efforts to secure his release, but little is as yet known of his status. 

Concerning the new sanctions announced Monday, the US Treasury stated in its press release that it is targeting "Iran’s inner circle responsible for advancing regime’s domestic and foreign oppression," or what it also describes as “Khamenei’s network”.

This follows broader economic sanctions on Iran's energy, auto, banking, and other major sectors after the May 2018 Trump administration pullout of the 2015 nuclear deal. 

Office of the Iranian Supreme Leader via AP.

US Secretary of State Mike Pompeo said of the new sanctions: "The designation seeks to block funds from flowing to a shadow network of Khamenei’s military and foreign affairs advisers who have for decades oppressed the Iranian people, supported terrorism, and advanced destabilizing policies around the world."

"While the Iranian regime’s decision to jail our diplomats has cast a 40-year shadow over our relations, the United States knows that the longest-suffering victims of the Iranian regime are the Iranian people," he added, referencing the 40th anniversary of the 1979 crisis, which went for 444 days. 

Tyler Durden Mon, 11/04/2019 - 20:30
Published:11/4/2019 7:33:43 PM
[Markets] The Metamorphosis Of The Deep State The Metamorphosis Of The Deep State

Authored by Edward Curtin via,

It gets funny, this shallow analysis of the deep state that is currently big news. There’s something ghoulish about it, perfectly timed for Halloween and masked jokers. What was once ridiculed by the CIA and its attendant lackeys in the media as the paranoia of “conspiracy theorists” is now openly admitted in reverent tones of patriotic fervor. But with a twisted twist.

The “Deep State” has been redefined as career bureaucrats doing their patriotic duty

It was two years ago, early in the Trump administration, when The New Yorker and Salon, among many others, were asserting in no uncertain terms that there was no deep state in the United States, and so Trump had nothing to fear from that quarter since it was a figment of his paranoia.

Kit Knightly, writing in the Off-Guardian, brilliantly demolished this spurious propaganda at the time in a must read reminder of how tricksters play their games.

The corporate mass-media has recently discovered a “deep state” that they claim to be not some evil group of assassins who work for the super-rich owners of the country and murder their own president (JFK) and other unpatriotic dissidents (Malcom X, MLK, RK, among others) and undermine democracy home and abroad, but are now said to be just fine upstanding American citizens who work within the government bureaucracies and are patriotic believers in democracy intent on doing the right thing.

This redefinition has been in the works for a few years, and it shouldn’t be a surprise that this tricky treat was being prepared for our consumption a few years ago by The Council on Foreign Relations.

In its September/October 2017 edition of its journal Foreign Affairs, Jon D. Michaels, in “Trump and the Deep State: The Government Strikes Back,” writes:

Furious at what they consider treachery by internal saboteurs, the president and his surrogates have responded by borrowing a bit of political science jargon, claiming to be victims of the “deep state,” a conspiracy of powerful, unelected bureaucrats secretly pursuing their own agenda.

The concept of a deep state is valuable in its original context, the study of developing countries such as Egypt, Pakistan, and Turkey, where shadowy elites in the military and government ministries have been known to countermand or simply defy democratic directives. Yet it has little relevance to the United States, where governmental power structures are almost entirely transparent, egalitarian, and rule-bound.

The White House is correct to perceive widespread resistance inside the government to many of its endeavors. But the same way the administration’s media problems come not from “fake news” but simply from news, so its bureaucratic problems come not from an insidious, undemocratic “deep state” but simply from the state—the large, complex hive of people and procedures that constitute the U.S. federal government.

Notice how in these comical passages about U.S. government transparency and egalitarianism, Michaels slyly and falsely attributes to Trump the very definition – “unelected bureaucrats” – that in the next paragraph he claims to be the real deep state, which is just the state power structures.

Pseudo-innocence conquers all here as there is no mention of the Democratic party, Russiagate, etc., and all the machinations led by the intelligence services and Democratic forces to oust Trump from the day he was elected.

State power structures just move so quickly, as anyone knows who has studied the speed with which bureaucracies operate. Ask Max Weber.

Drip by drip over the past few years, this “state bureaucracy” meme has been introduced by the mainstream media propagandists as they have gradually revealed that the government deep-staters are just doing their patriotic duty in trying openly to oust an elected president.

Many writers have commented on the recent New York Times article, “Trump’s War on the ‘Deep State’ Turns Against Him” asserting that the Times has finally admitted to the existence of the deep state, which is true as far as it goes, which is not too far. But in this game of deceptive revelations – going shallower to go deeper – what is missing is a focus on the linguistic mind control involved in the changed definition.

Well, I don’t know about you guys, but I’m convinced.

In a recent article by Robert W. Merry, whose intentions I am not questioning – “New York Times Confirms: It’s Trump Versus the Deep State” – originally published at The American Conservative and widely reprinted, the lead-in to the article proper reads:

Even the Gray Lady admits the president is up against a powerful bureaucracy that wants him sunk.”

So the “powerful bureaucracy” redefinition, this immovable force of government bureaucrats, is slipped into public consciousness as what the deep state supposedly is. Gone are CIA conspirators and evil doers. In their place we find career civil servants doing their patriotic duty.

Then there is The New York Times’ columnist James Stewart who, appearing on the Today Show recently, where he was promoting his new book, told Savannah Guthrie that:

Well, you meet these characters in my book, and the fact is, in a sense, he’s [Trump] right. There is a deep state…there is a bureaucracy in our country who has pledged to respect the Constitution, respect the rule of law. They do not work for the President. They work for the American people.

And, as Comey told me in my book, ‘thank goodness for that,’ because they are protecting the Constitution and the people when individuals – we don’t have a monarch, we don’t have a dictator – they restrain them from crossing the boundaries of law.

What Trump calls the deep state in the United States is protecting the American people and protecting the Constitution. It’s a positive thing in this sense.

So again we are told that the deep-state bureaucracy is defending the Constitution and protecting the American people, as James Comey told Stewart, “in my book, ‘thank goodness for that,’” as he put it so eloquently.

These guys talk in books, of course, not person to person, but that is the level not just of English grammar and general stupidity, but of the brazen bullshit these guys are capable of.

This new and shallow deep state definition has buried the old meaning of the deep state as evil conspirators carrying out coup d’états, assassinations, and massive media propaganda campaigns at home and abroad, and who, by implication and direct declaration, never existed in the good old U.S.A. but only in countries such as Egypt, Turkey, and Pakistan where shadowy elites killed and deposed leaders and opponents in an endless series of coup d’états.

No mention in Foreign Affairs, of course, of the American support for the ruthless leaders of these countries who have always been our dear allies when they obey our every order and serve as our servile proxies in murder and mayhem.

Even Edward Snowden, the courageous whistleblower in exile in Russia, in a recent interview with Joe Rogan, repeats this nonsense when he says the deep state is just “career government officials” who want to keep their jobs and who outlast presidents. From his own experience, he should know better. Much better.

Interestingly, he suggests that he does when he tells Rogan that “every president since Kennedy” has been successfully “feared up” by the intelligence agencies so they will do their bidding.

He doesn’t need to add that JFK, for fearlessly refusing the bait, was shot in the head in broad daylight to send a message to those who would follow.

Linguistic mind-control is insidious like the slow drip of a water faucet. After a while you don’t hear it and just go about your business, even as your mind, like a rotting rubber washer, keeps disintegrating under propaganda’s endless reiterations.

To think that the deep state is government employees just doing their patriotic duty is plain idiocy and plainer propaganda.

It is a trick, not the treat it is made to seem.

Tyler Durden Sun, 11/03/2019 - 21:20
Published:11/3/2019 8:25:50 PM
[Markets] Six Charts Showing Just How Much The Government Has Grown Six Charts Showing Just How Much The Government Has Grown

Authored by Ryan McMaken via The Mises Institute,

Federal spending and federal taxation in the United States set new records in 2019. And the federal budget deficit swelled to more than a trillion dollars. Europe is in the middle of an enormous spending binge. But apparently hard-core laissez-faire libertarian purists have taken over the world's governments.

At least, that's the case in the minds of many leftists and conservatives who have convinced themselves that "market fundamentalists" have conquered the world's institutions, and have enacted a global regime of near-zero taxation, free trade, and almost totally unregulated markets.

We hear this over an over again when everyone from The Pope to Bernie Sanders claims "neoliberalism" — a term used to "denote... a radical, far-reaching application of free-market economics unprecedented in speed, scope, or ambition" — has forged the world into a paradise for radical libertarians.

As one writer at The Guardian assures us, the UK must end the nation's "generation-long experiment in market fundamentalism." Meanwhile, Tucker Carlson insists that American policymakers "worship" markets and have a near-religious devotion to capitalism.

The neoliberal takeover is so complete, in fact, that we're told neoliberals are the ones really running the Labour Party. Meanwhile, sociologist Lawrence Busch informs us of a "neoliberal takeover" of higher education. "Free-market fundamentalists," Busch contends, have transformed America's colleges and universities into swamps of capitalist obeisance.

By What Metric?

But whenever I hear about how government intervention in the marketplace is withering away — to be replaced by untrammeled markets — I am forced to wonder what metric these people are using.

By what measure are governments getting smaller, weaker, and less involved in the daily lives of human beings?

In this country, at least, this case certainly can't be made by consulting the data on government taxation and spending.

From 1960 to 2018, federal tax receipts per capita increased from $3,523 to $5,973, an increase of 70 percent.

Combining state and local taxation with federal taxes, the increase is even larger. Taxation per capita at all levels combined grew 118 percent from $5,247 in 1960 to $11,461 in 2018.

The size and scope of government isn't just growing to reflect population changes. After all, the US population only grew 81 percent from 1960 to 2018. And the federal government, embroiled in a global cold war amidst a rising tide of social programs, wasn't exactly vanishingly small in 1960.

In all these per capita graphs, I've factored in population growth because many defenders of government growth claim that governments must get larger as populations increase. Even if that were true, we can see that total spending and taxation is outpacing population growth considerably.1 But it should not simply be accepted that population growth ought to bring increases in government spending and taxation. Military defense of the United States doesn't become more expensive simply because the population grew. Moreover, innovation and productivity gains make products and services less expensive in a functioning private economy. This is often masked by relentless money supply inflation in the name of price "stability." But the natural progression of an economy is toward falling prices. Only with government procurements have we come to expect everything getting more expensive every year.

Fueled by huge deficits, federal spending has outpaced tax collections. Per capita federal spending increased by 191 percent from 1960 to 2018, climbing from $4,300 to $12,545.

The deficit topped a trillion dollars during the 2019 fiscal year, a new high for a so-called "boom period" during which deficits are supposed to shrink.

Ultimately, of course, huge deficits will put an additional burden on the taxpayers beyond the hundreds of billions of dollars per year necessary to simply pay interest on the debt. The huge debt levels put upward pressure on interest rates, and require more central-bank interventions designed to prop up demand for government debt. These interventions both crowd out demand for private debt, and have led to asset-price inflation as a result of money-supply inflation. This benefits the wealthy, but harms first time home buyers and ordinary savers.

The government spending itself is a problem as well. Governments try to play off government spending as if it were all a free gift to the taxpayers as some sort of "return" on the "investment" of taxes paid.

As Murray Rothbard has noted, however, government spending is just as damaging as the taxation that came before it. Government procurements bid up the prices of goods and services that could have been available at lower prices in the private sector were it not for the government spending. Steel and other materials would be less expensive for entrepreneurs. High tech workers could be employed innovating and making things for ordinary taxpayers instead of for government agencies and bureaucrats. Small business owners and ordinary consumers all are worse off as a result.

So, given that spending and taxation are at or are near all-time highs right now, where exactly is this takeover by laissez-faire libertarians we keep hearing about?

It's certainly not in the regulatory side of the government.

The number of pages published in the Code of Federal Regulations increased 710 percent from 1960 to 2018, and 37 percent over the past twenty years. Every additional page represents new regulations, new rules, new punishments, and new fees. These are costs employers must contend with, and consumers must ultimately pay for. Protectionists who think that manufacturers would flock to the United States were it not not low tariffs might consider the regulatory burden placed on employers by our own domestic policies.

Both staffing and budgets for federal regulatory agencies continue to balloon. The combined budgets for federal regulatory agencies have more than tripled over the past 40 years, rising from under 20 billion in 1978 to 65 billion today.

Part of this has been to pay salaries for the ever growing army of federal employees. Employees at regulatory agencies doubled over the past forty years, rising from 140,000 full-time equivalent positions in 1978 to 280,000 today.

The US population increased by 47 percent during that time.

When the federal government isn't spending more, it's taking on more risk, committing the taxpayers to more bailouts, and flooding the market with government insured debt. As The Washington Post reported earlier this month, "In 2019, there is more government-backed housing debt than at any other point in U.S. history." And these government guarantees are up considerably since the 2009 housing crash. The Post continues: "Now, Fannie Mae, Freddie Mac and the Federal Housing Administration guarantee almost $7 trillion in mortgage-related debt, 33% more than before the housing crisis ... Because these entities are run or backstopped by the U.S. government, a large increase in loan defaults could cost taxpayers hundreds of billions of dollars."

Yet, in spite of all this, we'll no doubt continue to be told that government is withering away, government institutions are "underfunded," and extreme anti-government libertarians have taken over. Of course, it's entirely possible that the success of certain free-market ideas — however limited that success may be — has helped to restrain the growth of government taxation and spending. Without this so-called "victory" of the libertarians, we might be looking at a per capita tax burden that grew 200 or 300 percent in recent decades, rather than a "mere" 118 percent. 

But given the ongoing growth of government taxation, spending, and regulation, it should be abundantly clear that we are hardly living in an age of "market fundamentalism," laissez-faire libertarianism, or policymakers who "worship" the market. If anything, trends appear to be moving in exactly the opposite direction. 

Tyler Durden Sun, 11/03/2019 - 12:30
Published:11/3/2019 11:52:58 AM
[Markets] Is China Playing Trump & His Trade Team For Chumps? Is China Playing Trump & His Trade Team For Chumps?

Authored by Charles Hugh Smith via OfTwoMinds blog,

If we put ourselves in the shoes of the Chinese negotiators, we realize there's no need to sign a deal at all.

The world's worst negotiating strategy is to give the other side everything they want in exchange for worthless empty promises, yet this is exactly what Trump and his trade team are doing. All the Chinese trade team has to do to get rid of tariffs and other U.S. bargaining chips is mutter some empty phrase about "agreeing in principle" and the U.S. surrenders all its bargaining chips.

If the other side are such naive chumps that they give you everything you want without actually committing to anything remotely consequential, why bother with a formal agreement? Just play the other side for the chumps they are: if they threaten to reinstate tariffs, just issue another worthless press release about "progress has been made."

The other guaranteed losing strategy in negotiation is advertise your own fatal weakness, which in Trump's case is his obsession with pushing the U.S. stock market to new highs. There is no greater gift he could hand the Chinese trade team than this monumental weakness, for all they have to do is talk tough and the U.S. stock market promptly tanks, sending the Trump Team into a panic of appeasement and empty claims of "progress."

The Chinese team has gotten their way for a year by playing Trump's team as chumps and patsies, so why stop now? The Chinese know they can get way without giving anything away by continuing to play the American patsies and using the president's obsession with keeping U.S. stocks lofting higher to their advantage: declare the talks stalled, U.S. stocks crater, the American team panics and rushes to remove anything that might have enforcement teeth, reducing any "trade deal" to nothing but empty promises.

Given their success at playing America's team, why do a deal at all? Just play the chumps for another year, and maybe Trump will be gone and a new set of even more naive patsies enter the White House.

If we put ourselves in the shoes of the Chinese negotiators, we realize there's no need to sign a deal at all: the Trump team has gone out of its way to make it needless for China to agree to anything remotely enforceable. All the Chinese have to do is issue some stern talk that crushes U.S. stocks and the Trump Team scurries back, desperate to appease so another rumor of a "trade deal" can be issued to send U.S. stocks higher.

It would be pathetic if it wasn't so foolish and consequential.

*  *  *

My recent books:

Will You Be Richer or Poorer? Profit, Power and A.I. in a Traumatized World (Kindle $6.95, print $11.95) Read the first section for free (PDF).

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($6.95 (Kindle), $12 (print), $13.08 ( audiobook): Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 (Kindle), $8.95 (print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).

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Tyler Durden Sun, 11/03/2019 - 11:30
Published:11/3/2019 10:55:30 AM
[Markets] Foreign Aid Makes Corrupt Countries More Corrupt Foreign Aid Makes Corrupt Countries More Corrupt

Authored by James Bovard at,

Any time a government hands out money, not just foreign aid, it breeds corruption... And there are few better examples than Ukraine - just don’t tell the House impeachment hearings.

Barricade with the protesters at Hrushevskogo street on January 26, 2014 in Kiev, Ukraine.Sasha Maksymenko / cc

Counting on foreign aid to reduce corruption is like expecting whiskey to cure alcoholism. After closed House of Representatives impeachment hearings heard testimony on President Trump’s role in delaying U.S. aid to Ukraine, Senate Majority Leader Chuck Schumer declared:

Numbers don’t lie. It’s even more clear now that President Trump is not the anti-corruption crusader he claims to be.”

Most of the press coverage has tacitly assumed that American assistance is vital to fighting corruption in Ukraine. But that ignores foreign aid’s toxic record and Ukraine’s post-Soviet history.

2002 American Economic Review analysis concluded that “increases in [foreign] aid are associated with contemporaneous increases in corruption,” and that “corruption is positively correlated with aid received from the United States.”

That was the year President George W. Bush launched a new foreign aid program, the Millennium Challenge Account (MCA). Bush declared, “I think it makes no sense to give aid, money, to countries that are corrupt.” But the Bush administration continued delivering billions of dollars in handouts to many of the world’s most corrupt regimes. By 2004, the State Department had codified what amounted to backtracking: “The MCA is an incentive-based supplement to other U.S. aid programs.” The Bush team found excuses to give MCA aid to some of the world’s most corrupt governments as well, including Georgia.

In 2010, President Barack Obama proclaimed at the United Nations that America was “leading a global effort to combat corruption.” Obama’s “aides said the United States in the past has often seemed to just throw money at problems,” the Los Angeles Times reported. But the reform charade was exposed the following year when the Obama administration fiercely resisted congressional efforts to curb wasteful aid. Secretary of State Hillary Clinton warned that restricting handouts to nations that fail anti-corruption tests “has the potential to affect a staggering number of needy aid recipients.”

The Obama administration continued pouring tens of billions of American tax dollars into sinkholes such as Afghanistan, which even its president, Ashraf Ghani, admitted in 2016 was “one of the most corrupt countries on earth.” And the deluge of aid the Afghan government received only worsened the corruption. As John Sopko, the heroic Special Inspector General for Afghan Reconstruction (SIGAR), observed, “We need to understand how US policies and practices unintentionally aided and abetted corruption. We must recognize the danger of dealing with characters or networks of unsavory repute, tolerating contracting abuses, accepting shoddy performance and delivering unsustainable projects.”

The closed House impeachment hearings last week heard from acting U.S. ambassador to the Ukraine William B. Taylor Jr., who testified that he “had authority over the bulk of the U.S. effort to support Ukraine against the Russian invasion and to help it defeat corruption.” The Washington Post lauded Taylor as someone who “spent much of the 1990s telling Ukrainian politicians that nothing was more critical to their long-term prosperity than rooting out corruption and bolstering the rule of law, in his role as the head of U.S. development assistance for post-Soviet countries.”

Transparency International, which publishes an annual Corruption Perceptions Index, shows that corruption surged in Ukraine during the late 1990s and remains at obscene levels (though recent years have shown slight improvements). Taylor was ambassador to Ukraine from 2006 to 2009, when corruption sharply worsened despite hundreds of millions of dollars in U.S. aid. Ukraine is now ranked as the 120th least corrupt nation in the world—lower than Egypt and Pakistan, two other major U.S. aid recipients. What Washington Redskins owner Dan Snyder is to the NFL, Taylor appears to be to the anti-corruption cause.

Bribing foreign politicians to encourage honest government makes as much sense as distributing free condoms to encourage abstinence. Rather than encouraging good governance practices, foreign aid is more likely to produce kleptocracies, or governments of thieves. As a Brookings Institution analysis observed, “The history of U.S. assistance is littered with tales of corrupt foreign officials using aid to line their own pockets, support military buildups, and pursue vanity projects.” And both American politicians and bureaucrats are want to continue the aid gravy train, regardless of how foreign regimes waste the money or use it to repress their own citizens.

If U.S. aid was effective, Ukraine would have become a rule of law paradise long ago. The country’s new president, Volodymyr Zelensky, may be sincere in his efforts to root out corruption. But it is an insult to both him and his nation to pretend that Ukraine cannot clean up its act without help from Donald Trump. The surest way to reduce foreign corruption is to end foreign aid.

Tyler Durden Sun, 11/03/2019 - 07:00
Published:11/3/2019 6:22:05 AM
[Education] Sexually Explicit Books Were Put in These Virginia Classrooms. Parents Want Answers.

Parents in Loudoun County, Virginia, are outraged after discovering that thousands of books were placed in classrooms across the school district this year as part... Read More

The post Sexually Explicit Books Were Put in These Virginia Classrooms. Parents Want Answers. appeared first on The Daily Signal.

Published:11/2/2019 2:18:12 PM
[Markets] Peter Schiff: When Is The Market Going To Wake Up To This Con? Peter Schiff: When Is The Market Going To Wake Up To This Con?


As expected, the Federal Reserve cut interest rates another 25 basis points on Wednesday.

The mainstream read the post FOMC meeting comments to be relatively hawkish, saying Powell and Company seemed to indicate that future rate cutting is on pause.

Peter Schiff opened up his podcast reminding us that just one year ago, the Fed was raising rates and telling us it would continue to do so through 2019. It also claimed that quantitative tightening was on “autopilot.”

And they said this with a straight face. And everybody believed them.”

At the time, Peter was saying it wasn’t going to happen. He said the central bank would start cutting rates and relaunch QE. And here we are.

The central bank removed the phrase saying it was committed to “act as appropriate to sustain the expansion” from its forward guidance. This was widely viewed as a more hawkish stance. The Fed replaced that language, instead saying, “The Committee will continue to monitor the implications of incoming information for the economic outlook as it assesses the appropriate path of the target range for the federal funds rate.” Powell was more emphatic during his press conference, saying bank officials “see the current stance of monetary policy as likely to remain appropriate.”

Of course, Powell again claimed that the Fed is not engaged in quantitative easing despite the repo operations and bond-buying program. He tried to draw a distinction between QE and today’s operations by pointing out that the central bank is buying short-term bonds today while it bought longer-term debt during QE.

This is really a distinction without a difference. I mean, who cares what the maturity of the bonds are?”

If the Fed was going to simply let the bonds fall off the books once they matured, the length of the term might be relevant. But Peter said that’s not what’s going to happen.

They’re just going to keep rolling these bonds over … This is another source of financing, of the Fed financing government debt. That’s quantitative easing. I mean, why did the Federal Reserve do QE in the first place? To keep interest rates lower than they would have been had they not done quantitative easing. And, by extension, to prop up asset prices.”

And why is the Fed doing what it’s doing today?

For the exact same reason. To keep interest rates artificially low, to suppress the cost of borrowing, to help out all debtors so they can make payments on their debt and to keep the stock market elevated, to keep real estate prices elevated.”

We also got the GDP numbers on Wednesday. Growth came in at 1.9%. That was better than expected. But a big chunk of that growth was consumer spending and a revived housing market. This was a function of Fed policy.

The Federal Reserve is basically doing now what it was doing then, for the same reason it was doing it then, except it doesn’t want to admit. Powell doesn’t want to say that the Fed is doing quantitative easing. The main reason is he doesn’t want to admit the economy needs it.

In fact, Powell keeps saying the economy is good.

Well, if everything is good, why do we need the emergency monetary policy when everything wasn’t good? When we were trying to get the economy out of a bad place, we did QE. And if it’s now in a good place, why are we doing it again? So, that’s why he wants to deny he’s doing it.”

When asked, Powell did admit that the current monetary policy is “accommodative.” Peter said it may even be more accommodative than it was when rates were at zero because inflation is higher. In fact. Powell admitted core CPI is finally above 2%. So, if inflation, even as the government measure it is above 2% and the Fed just dropped rates to 1.5%, we’re talking about negative real interest rates.

That is highly accommodative. I mean, why would the Fed be accommodating the strongest economy in the history of our country? Clearly, the reason Powell thinks we need so much support from the Fed is because he knows the economy is weak, that without the Fed’s help, it would implode. A strong economy doesn’t need the help of the Fed.”

Peter also talked about the fact that the Fed basically admitted that inflation is going to go a whole lot higher. Powell said the Fed would need to see a “really significant” and persistent move up in inflation before considering rate hikes. Basically, Powell conceded that the Fed wasn’t going to be vigilant about inflation. It is willing to let the genie out of the bottle. The question then becomes, how will it ever get the inflation genie back in the bottle? In short, it won’t. Think about what it took for Paul Volker to put the inflation genie back in the bottle in the 1980s. We saw 20% interest rates. Can you imagine that in this debt-riddled, overleveraged economy?

The only key is when is the market going to wake up to this game, this con. When are they going to realize the box the Fed has put itself in? That it is completely impotent when it comes to inflation-fighting? That it is all bark and no bite, and it basically, it’s not even barking yet? It’s only talking about the prospect of barking in the future, but it will never bite. And when the markets figure this out, the bottom is going to drop out of the dollar. Gold is going to absolutely go through the roof.”

Tyler Durden Fri, 11/01/2019 - 16:25
Published:11/1/2019 3:42:19 PM
[Entertainment] There’s now an e-reader just for kids, and it misses what children love about books Kids don’t feel burdened by carrying physical books; they feel girded with the tools of their own entertainment. Published:11/1/2019 6:10:50 AM
[Markets] Has California Lost 'The Mandate Of Heaven'? Has California Lost 'The Mandate Of Heaven'?

Authored by Charles Hugh Smith via OfTwoMinds blog,

At that point, it's too late: there's no bid for overpriced decaying bungalows, overpriced tech stocks, etc.

In Chinese history, natural disasters were viewed as portents that the The Mandate of Heaven (tianming or "Heaven's will") had been withdrawn from the ruling dynasty. Broadening this concept a bit to regional dominance and power, we might ask: has California lost the Mandate of Heaven?

How many conflagrations does it take for it to sink in that the Golden State has lost its lustre in some profoundly karmic fashion?

How many messes of human excrement on our doorstep does it take to realize the situation will never get better, it can only get worse--much worse?

How many power blackouts, traffic gridlocks and mandatory evacuations does it take for those in denial to accept that the Mandate of Heaven has been withdrawn?

Young residents of the state have never experienced the velocity and depth of California's famous busts. The last real spot of bother in California's economy occurred almost 30 years ago in the early 1990s. Since then, it's been one boom after another.

California's cycles of enormous booms followed by equally gargantuan busts date back to the first Gold Rush. The eventual collapse of mining shares and overpriced real estate in San Francisco was epic, and Mark Twain's account of his chest full of mining shares going from a tidy fortune to zip-zero-nada is a rueful reminder of how quickly fortunes can turn in the land of boom and bust.

It's deceptively easy to take a pencil and ruler and extend a boom into infinity: the number of iPhones sold (always up), Apple's quarterly earnings (always up), property tax revenues (always up) stocks' multiple expansion ((always up) and so on.

California's vast chattering class has ridden the IPO/VC/tech-monopoly/ stock buyback bubble for so long that it can't believe the bubble could ever burst. This class lives in enclaves protected from human excrement, the addicted and the deranged, and in an information enclave of me-too tech/entertainment boosterism.

But as Benoit Mandelbrot showed in his book The (Mis)behavior of Markets, markets and human behavior are inherently fractal, i.e. chaotic, which means there are limits on the predictability of markets and economic trends.

Thus the chattering class has no inkling that the masses can cancel their Netflix, Disney and Apple subscriptions as easily as they signed on. Once jobs, tips, bonuses and gigs dry up, the tech-entertainment giants will find expenses are still rising while revenues are cratering. Once revenues and profits crater, it's harder for management to justify borrowing billions more to fund more stock buybacks.

Extending booms into infinity doesn't track reality. The last real recession circa 1990-1991 blew a $20 billion hole in the California state budget, and accounting for inflation and growth since then, we can expect a $35 - $40 billion hole being blown in the budget once the IPO / tech bubble collapses, as the state is heavily dependent on capital gains taxes for much of its income tax revenues. (There is no long-term capital gains rate in California; all capital gains are taxed as ordinary income, a rate that quickly hits 13.3%.)

Once capital gains dry up, the state is in a fiscal crisis with no solution.

And if the state can't solve the homeless crisis with current spending in the hundreds of millions, then what will happen when the revenues dry up? What will happen if the homeless population doubles or triples? Look at the social havoc generated by the homeless population in San Francisco, which is roughly 1% of the total populace (around 9,000 homeless and a total population of 860,000.)

Phase transitions are intrinsic to systems displaying self-organized criticality such as markets and human behavior. Everything seems fine on the surface, and there's no pressing need to sell the house and move away; there seems to be plenty of time until the phase transition kicks in and suddenly everything has changed for the worse, and so much faster than anyone expected.

At that point, it's too late: there's no bid for overpriced decaying bungalows, overpriced tech stocks, etc. Just like Mark Twain's chest of mining stocks, the transition from being worth a fortune to no-bid near-worthlessness can be sudden indeed once California loses the Mandate of Heaven.

Beneath the surface, pressures are building and resilience is eroding, and when the tipping point is reached the transition will not be gradual and controllable, it will be non-linear and uncontrollable.

*  *  *

My recent books:

Will You Be Richer or Poorer? Profit, Power and A.I. in a Traumatized World (15% discount in October, Kindle $5.95, print $10.95) Read the first section for free (PDF).

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($6.95 (Kindle), $12 (print), $13.08 ( audiobook): Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 (Kindle), $8.95 (print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).

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Tyler Durden Tue, 10/29/2019 - 18:05
Published:10/29/2019 5:24:40 PM
[Politics] Daily Presidential Tracking Poll

The Rasmussen Reports daily Presidential Tracking Poll brought to you by Bill O'Reilly's: The United States of Trump for Tuesday shows that 46% of Likely U.S. Voters approve of President Trump’s job performance. Fifty-three percent (53%) disapprove.

The latest figures include 31% who Strongly Approve of the job Trump is doing and 42% who Strongly Disapprove. This gives him a Presidential Approval Index rating of -11. (see trends).

Regular updates are posted Monday through Friday at 9:30 a.m. Eastern (sign up for free daily email update).

Now that Gallup has quit the field, Rasmussen Reports is the only nationally recognized public opinion firm that still tracks President Trump's job approval ratings on a daily basis. If your organization is interested in a weekly or longer sponsorship of Rasmussen Reports' Daily Presidential Tracking Poll, please send e-mail to

Published:10/29/2019 8:52:36 AM
[Markets] 4 Risks To The Bullish View 4 Risks To The Bullish View

Authored by Lance Roberts via,

When I was growing up, my father, probably much like yours, had pearls of wisdom that he would drop along the way. It wasn’t until much later in life that I learned that such knowledge did not come from books but through experience. One of my favorite pieces of “wisdom” was:

“A sure-fire ‘no lose’ proposition is doing exactly the opposite of whatever ‘no lose’ proposition is being proposed.”

Of course, back then, he was mostly giving me “life advice” about not following along with my stupid-ass friends who were always up elbows deep in mischief.

However, that advice also holds true with the financial markets currently. As I have noted over the last couple of weeks (read this and this) the “bulls” certainly seem to regained control of the markets as new highs were reached on Monday. As I stated, between the Fed cutting rates, reigniting “not-QE,” and the President following our script of putting the “trade war” to rest, “what is there NOT to love if you are a bull.”

While we have begun to opportunistically increase our the equity exposures in our portfolios, we are cognizant there are currently several warning signs investors should consider before buying into the “bullish view.”

Here are four to consider.

Warning 1: Conflicting Confidence

There are several different surveys of confidence, which all currently show the same thing. Individuals are extremely optimistic on just about everything. Recently, I discussed our composite confidence indicator:

“The latest release of the University of Michigan’s consumer sentiment survey rose to a three-month high of 96, beat consensus expectations, and remains near record levels. The chart below shows our composite confidence index, which combines both the University of Michigan and Conference Board measures. The chart compares the composite index to the S&P 500 index with the shaded areas representing when the composite index was above a reading of 100.”

“On the surface, this is bullish for investors. High levels of consumer confidence (above 100) have correlated with positive returns from the S&P 500.”

As I have discussed many times previously, the stock market rise has NOT lifted all boats equallyMore importantly, the surge in confidence is a coincident indicator and more suggestive, historically, of market peaks as opposed to further advances.

As David Rosenberg, the chief economist at Gluskin Sheff previously wrote:

‘For an investment community that typically lives in the moment and extrapolates the most recent experience into the future, it would only fall on deaf ears to suggest that peak confidence like this and peak market pricing tend to coincide with each other.”

However, that confidence may be short-lived as “CEO Confidence” is near historic lows. As we covered in our previous analysis, this divergence should not be dismissed. A quick look at history shows this historical relationship between these two measures of confidence. The divergence is seen every time prior to the onset of a recession.

Notice that CEO confidence leads consumer confidence by a wide margin. This lures bullish investors, and the media, into believing that CEO’s really don’t know what they are doing. Unfortunately, consumer confidence tends to crash as it catches up with what CEO’s were already telling them.

What were CEO’s telling consumers that crushed their confidence?

“I’m sorry, we think you are really great, but I have to let you go.”

Warning 2 – All Hat, No Cattle

For those of you unfamiliar with Texas sayings, “all hat, no cattle” means that someone is acting the part without having the “stuff” to back it up. Just wearing a “cowboy hat,” doesn’t make you a “cowboy.”

One of the problems for the “bulls” currently  is that while asset prices are hitting record highs, profit margins aren’t.

In other words, investors, in their rush to “be long the market,” are paying ever-higher prices for each dollar of profit being produced. The problem, of course, is falling profit margins, not surprisingly, have preceded recessions and bear markets.

We will discuss valuations more in a moment, but the important point here is that investors are increasingly taking on “risk,” without consideration for the consequences. As shown, below speculators are now extremely “short volatility” which suggests there is no fear of a correction. Unfortunately, for the bulls, this has typically been a pretty reliable contrarian indicator.

Much of the existing “complacency” stems from the belief the Fed will continue to lower interest rates and provide ongoing support for asset prices. After all, this is what happened as the Federal Reserve kept interest rates suppressed after the financial crisis. However, the difference between now and then is that individuals are currently fully invested in the financial markets.

“Cash is low, meaning households are fairly fully invested.” – Ned Davis

In other words, the “pent up” demand for equities is no longer available to the magnitude that existed following the financial crisis which supported the 300% rise in asset prices.

While investors may want to believe asset prices can only go higher, this is the very basis of the “Greater Fool Theory.” At some point, someone, is going to be left holding the bag.

Warning 3 – Valuations

With the global levels of over-valuation of stocks and bonds, combined with excessive optimism, and leverage as noted above, such has set the stage for exceedingly low returns over the next decade, or longer. As our friends over at Crescat Capital recently noted, valuations are anything but “cheap.”