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[Markets] CJ Hopkins: The Putin-Nazis Are Coming (Again) CJ Hopkins: The Putin-Nazis Are Coming (Again)

Authored (satirically) by CJ Hopkins vis The Unz Review,

So, it looks like that’s it for America, folks. Putin has gone and done it again. He and his conspiracy of Putin-Nazis have “hacked,” or “influenced,” or “meddled in” our democracy. Unless Admiral Bill McRaven and his special ops cronies can ginny up a last-minute military coup, it’s four more years of the Trumpian Reich, Russian soldiers patrolling the streets, martial law, concentration camps, gigantic banners with the faces of Trump and Putin hanging in the football stadiums, mandatory Sieg-heiling in the public schools, National Vodka-for-Breakfast Day, death’s heads, babushkas, the whole nine yards.

We probably should have seen this coming.

That’s right, as I’m sure you are aware by now, president-in-exile Hillary Clinton has discovered Putin’s diabolical plot to steal the presidency from Elizabeth Warren, or Biden, or whichever establishment puppet makes it out of the Democratic primaries. Speaking to former Obama adviser and erstwhile partner at AKPD Message and Media David Plouffe, Clinton revealed how the godless Rooskies intend to subvert democracy this time:

“I’m not making any predictions, but I think they’ve got their eye on somebody who is currently in the Democratic primary and are grooming her to be the third-party candidate.”

She was referring, of course, to Tulsi Gabbard, sitting Democratic Member of Congress, decorated Major in the Army National Guard, and long shot 2020 presidential candidate. Apparently, Gabbard (who reliable anonymous sources in the Intelligence Community have confirmed is a member of some kind of treasonous, Samoan-Hindu, Assad-worshipping cult that wants to force everyone to practice yoga) has been undergoing Russian “grooming” at a compound in an undisclosed location that is probably in the basement of Mar-a-Lago, or on Sublevel 168 of Trump Tower.

In any event, wherever Gabbard is being surreptitiously “groomed” (presumably by someone resembling Lotte Lenya in From Russia With Love), the plan (i.e., Putin’s plan) is to have her lose in the Democratic primaries, then run as a third-party “spoiler” candidate, stealing votes from Warren or Biden, exactly as Jill Stein (who, according to Clinton, is also “totally a Russian asset”) stole them from Clinton back in 2016, allowing Putin to install Donald Trump (who, according to Clinton, is still being blackmailed by the FSB with that “kompromat” pee-tape) in the White House, where she so clearly belongs.

Clinton’s comments came on the heels of a preparatory smear-piece in The New York Times, What, Exactly, Is Tulsi Gabbard Up To?, which reported at length on how Gabbard has been “injecting chaos” into the Democratic primaries. Professional “disinformation experts” supplied The Times with convincing evidence (i.e., unfounded hearsay and innuendo) of “suspicious activity” surrounding Gabbard’s campaign. Former Clinton-aide Laura Rosenberger (who also just happens to be the Director of the Alliance for Securing Democracy, “a bipartisan transatlantic national security advocacy group” comprised of former Intelligence Community and U.S. State Department officials, and publisher of the Hamilton 68 dashboard) “sees Gabbard as a potentially useful vector for Russian efforts to sow division.”

The Times piece goes on to list an assortment of unsavory, extremist, white supremacist, horrible, neo-Nazi-type persons that Tulsi Gabbard has nothing to do with, but which Hillary Clinton, the Intelligence Community, The Times, and the rest of the corporate media would like you to mentally associate her with.

Richard Spencer, David Duke, Steve Bannon, Mike Cernovich, Tucker Carlson, and so on. Neo-Nazi sites like the Daily Stormer. 4chan, where, according to The New York Times, neo-Nazis like to “call her Mommy.”

In keeping with professional journalistic ethics, The Times also reached out to experts on fascism, fascist terrorism, terrorist fascism, fascist-adjacent Assad-apologism, Hitlerism, horrorism, Russia, and so on, to confirm Gabbard’s guilt-by-association with the people The Times had just associated her with. Brian Levin, Director of the CSU Center for the Study of Hate and Extremism, confirmed that Gabbard has “the seal of approval” within goose-stepping, Hitler-loving, neo-Nazi circles. The Alliance for Securing Democracy (yes, the one from the previous paragraph) conducted an “independent analysis” which confirmed that RT (“the Kremlin-backed news agency”) had mentioned Gabbard far more often than the Western corporate media (which isn’t backed by anyone, and is totally unbiased and independent, despite the fact that most of it is owned by a handful of powerful global corporations, and at least one CIA-affiliated oligarch). Oh, and Hawaii State Senator Kai Kahele, who is challenging Gabbard for her seat in Congress, agreed with The Times that Gabbard’s support from Jew-hating, racist Putin-Nazis might be a potential liability.

“Clearly there’s something about her and her policies that attracts and appeals to these type of people who are white nationalists, anti-Semites, and Holocaust deniers.”

But it’s not just The New York Times, of course. No sooner had Clinton finished cackling than the corporate media launched into their familiar Goebbelsian piano routine, banging out story after television segment repeating the words “Gabbard” and “Russian asset.” I’ve singled out The Times because the smear piece in question was clearly a warm-up for Hillary Clinton’s calculated smear job on Friday night. No, the old gal hasn’t lost her mind. She knew exactly what she was doing, as did the editors of The New York Times, as did every other establishment news source that breathlessly “reported” her neo-McCarthyite smears.

As I noted in my previous essay, 2020 is for all the marbles, and it’s not just about who wins the election. No, it’s mostly about crushing the “populist” backlash against the hegemony of global capitalism and its happy, smiley-faced, conformist ideology. To do that, the neoliberal establishment has to delegitimize, and lethally stigmatize, not just Trump, but also people like Gabbard, Bernie Sanders, Jeremy Corbyn … and any other popular political figure (left, right, it makes no difference) deviating from that ideology.

  • In Trump’s case, it’s his neo-nationalism.

  • In Sanders and Corbyn’s, it’s socialism (or at least some semblance of social democracy).

  • In Gabbard’s, it’s her opposition to the Corporatocracy’s ongoing efforts to restructure and privatize the Middle East (and the rest of the entire planet), and their using the U.S. military to do it.

Ask yourself, what do Trump, Sanders, Corbyn, and Gabbard have in common? No, it’s not their Putin-Nazism … it’s the challenge they represent to global capitalism. Each, in his or her own way, is a symbol of the growing populist resistance to the privatization and globalization of everything. And thus, they must be delegitimized, stigmatized, and relentlessly smeared as “Russian assets,” “anti-Semites,” “traitors,” “white supremacists,” “fascists,” “communists,” or some other type of “extremists.”

Gabbard, to her credit, understands this, and is focusing attention on the motives and tactics of the neoliberal establishment and their smear machine. As I noted in an essay last year, “the only way to effectively counter a smear campaign (whether large-scale or small-scale) is to resist the temptation to profess your innocence, and, instead, focus as much attention on the tactics and the motives of the smearers as possible.” This will not save her, but it is the best she can do, and I applaud her for having the guts to do it. I hope she continues to give them hell as they finish off her candidacy and drive her out of office.

Oh, and if you’re contemplating sending me an email explaining how these smear campaigns don’t work (or you spent the weekend laughing about how Hillary Clinton lost her mind and made an utter jackass of herself), maybe check in with Julian Assange, who is about to be extradited to America, tried for exposing U.S. war crimes, and then imprisoned for the remainder of his natural life.

If you can’t get through to Julian at Belmarsh, you could ring up Katharine Viner at The Guardian, which has ruthlessly smeared Assange for years, and published outright lies about him, and is apparently doing very well financially.

And, if Katharine is on holiday in Antigua or somewhere, or having tea with Hillary in the rooftop bar of the Hay-Adams Hotel, you could try Luke Harding (who not only writes and publishes propaganda for The Guardian, but who wrote a whole New York Times best-seller based on nothing but lies and smears). Or try Marty Baron, Dean Baquet, Paul Krugman, or even Rachel Maddow, or any of the other editors and journalists who have been covering the Putin-Nazi “Attack on America,” and keeping us apprised of who is and isn’t a Hitler-loving “Russian asset.”

Ask them whether their smear machine is working... if you can get them off the phone with their brokers, or whoever is decorating their summer places in the Hamptons or out on Martha’s Vineyard.

Or ask the millions of well-off liberals who are still, even after Russiagate was exposed as an enormous hoax based on absolutely nothing, parroting this paranoid official narrative and calling people “Russian assets” on Twitter. Or never mind, just pay attention to what happens over the next twelve months. In terms of ridiculous official propaganda, spittle-flecked McCarthyite smears, and full-blown psychotic mass Putin-Nazi hysteria, it’s going to make the last three years look like the Propaganda Special Olympics.

*  *  *

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 Mon, 10/21/2019 - 22:25
Published:10/21/2019 9:38:15 PM
[Markets] Prying Open The Overton Window Prying Open The Overton Window

Authored by Charles Hugh Smith via OfTwoMinds blog,

If you're truly interested in finding solutions to humanity's pressing problems, then start helping us pry open the Overton Window.

The Overton Window describes the spectrum of concepts, policies and approaches that can be publicly discussed without being ridiculed or marginalized as "too radical," "unworkable," "crazy," etc. The narrower the Overton Window, the greater the impoverishment of public dialog and the fewer the solutions available.

Those holding power in a socio-economic-political system that's unraveling devote their remaining energy to closing the Overton Window so that only "approved" narratives and policies that support the status quo are "allowed" into the public sphere.

Everything outside this narrow band of status-quo-supportive narratives is immediately disparaged as "fake news," "Kremlin talking points," or other highly charged accusations designed to close the Overton Window--a process Noam Chomsky and Edward Herman called manufacturing consent: if no "outside" ideas are allowed, people accept the status quo as "all there is and all there can possibly be."

This narrow Overton Window benefits those in power who are "legally looting" the system.

There is another source of a narrow Overton Window: the cultural, social and political elites have no new ideas and so they cling to doing more of what's failed, relying on the past successes of now-failing strategies to cement their power.

Michael Grant described how this failure of imagination and devotion to the past leads inevitably to decline and collapse in his excellent account The Fall of the Roman Empire, a short book I have been recommending since 2009:

There was no room at all, in these ways of thinking, for the novel, apocalyptic situation which had now arisen, a situation which needed solutions as radical as itself. (The Status Quo) attitude is a complacent acceptance of things as they are, without a single new idea.

This acceptance was accompanied by greatly excessive optimism about the present and future. Even when the end was only sixty years away, and the Empire was already crumbling fast, Rutilius continued to address the spirit of Rome with the same supreme assurance.

This blind adherence to the ideas of the past ranks high among the principal causes of the downfall of Rome. If you were sufficiently lulled by these traditional fictions, there was no call to take any practical first-aid measures at all.

That describes the U.S. and indeed the entire global economy to a tee. All the "approved solutions" are retreads from 90 years ago: fiscal stimulus (now called MMT), lowering interest rates via central bank manipulation (now called QE), increasing social welfare (now called Universal Basic Income, UBI)--all "solutions" from the early 1930s, when the global economic system fell into its last Great Crisis.

That these will all fail is already baked in because this is not 1930. The situation is fundamentally different, but like generals who obsess over how best to fight the last war, the system's Overton Window is stuck in 1930.

The most important job of the alternative media is to pry open the Overton Window so new solutions become possible. We have been trained to believe that technology is our savior, and that "new solutions" arise only from technology. But the reality is that technology itself won't solve economic-social-political problems; it can at best enable new solutions.

In other words, there is no teleology in technology that magically causes technology to generate a sustainable economy or distribute political power equitably. We have to set those goals and use technology to serve economic, social and political innovations.

As I often say here, if you don't change the way money is created and distributed, you change nothing because the way money is created and distributed defines everything else in the way the system functions.

For my part, I've proposed a labor-backed currency that is unlike any other system for creating and distributing "money." I describe this system in my book A radically beneficial World, and in an essay The Architecture of a Labor-Backed Cryptocurrency System, the Largent (June 2016)--scroll to the bottom of the page to read it.

In the three years since the publication of the book and essay, I've gained a new appreciation for the potential for privately issued 'paper' money that is "backed" by transactions of goods and services. The advent of private-sector (i.e. non-state) blockchain currencies such as bitcoin has cracked open the Overton Window to a refreshing degree, but blockchain cryptocurrencies are only one of many potential systems of "money" that would better serve humanity that the doomed-to-implode fiat currencies issued by elites-dominated governments and central banks.

Technology is enabling new solutions, but only if we can conceptualize those solutions and pry open the Overton Window to let them into the public sphere.

If you're truly interested in finding solutions to humanity's pressing problems, then start helping us pry open the Overton Window. Those who dogmatically demand we all agree with their 1930s "solutions" and who marginalize any and all new ideas that threaten the status quo power structure are the problem, not the solution.

Prying open the Overton Window is the point of my new book Will You Be Richer or Poorer? Profit, Power and A.I. in a Traumatized World.

*  *  *

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

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).

Tyler Durden Mon, 10/21/2019 - 13:45
Published:10/21/2019 1:06:20 PM
[Markets] Winners & Losers In The Failed American Project For A 'New Middle East' Winners & Losers In The Failed American Project For A 'New Middle East'

Authored by Elijah Magnier, Middle East based chief international war correspondent for Al Rai Media

The United States of America emerged victorious from the Second World War, and came out stronger than any other country in the world. The allies- notably the Soviet Union- won the war but emerged much weaker.

They needed to reconstruct their countries and rebuild their economies, with the US demanding huge retrospective payments for its support. The US became a superpower with nuclear bomb capability and an imposing power of dominance. Industrial countries rebuilt in what the Germans called their Wirtschaftswunder and the French les Trentes Glorieuses, the thirty years of post-war prosperity. Meanwhile the US leveraged its prosperity to spread its hegemony around the world.

US power was enhanced with the beginning of Perestroika and after the fall of the Soviet Union. In the new millennium the US establishment declared the “War on Terror” as justification to occupy Afghanistan and Iraq, while attempting to subdue Hezbollah in Lebanon, changing the régime in Libya and attempting to destroy Syria, all with the goal of reshuffling and forming a “New Middle East.

In the Levant, the US has dramatically failed to reach its objectives, but it has succeeded in waking Russia from its long hibernation, to challenge the US unilateral hegemony of the world and to develop new forms of alliance.

Iran has also challenged the US hegemony incrementally since the 1979 “Islamic Revolution”. Iran has planned meticulously, and patiently built a chain of allies connecting different parts of the Middle East. Now, after 37 years, Iran can boast a necklace of robust allies in Palestine, Lebanon, Syria, Iraq, Yemen and Afghanistan- who are all ready, if necessary, to take up arms to defend Iran.

Iran, in fact, has greatly benefited from US mistakes.  Through its lack of understanding of populations and leaders around the world, it has universally failed to win “hearts and minds” in every Middle Eastern country where it imposed itself as a potential ally. The arrival of President Donald Trump to power helped US allies and the anti-US camp to discover, together, the limits and reach of US sanctions.

Russia and China took the lead in offering a new, softer model of an alliance, which apparently does not aim to impose another kind of hegemony. The offer of an economic alliance and partnership is especially attractive to those who have tasted US hegemony and wish to liberate themselves from it by means of a more balanced alternative.

During this period of Trump’s ruling, the Middle East became a huge warehouse of advanced weapons from varied sources. Every single country (and some non-state actors) has armed drones- and some even have precision and cruise missiles. But superiority in armaments by itself counts for very little, and its very balance is not enough to shift the weight to one side or another. Even the poorest country, Yemen, has done significant damage to oil-rich Saudi Arabia, a country highly equipped, militarily, and with the most modern US hardware in the Middle East.

US President Trump was informed about the evident failure to change the régime in Syria and the equal impossibility of dislodging Iran from the Levant. He most probably aimed to avoid the loss of lives and therefore decided to abandon the country that his forces have occupied for the past few years. Nonetheless, his sudden withdrawal, even if so far it is partial (because he says, a small unit will remain behind at al-Tanf, to no strategic benefit since al-Qaem border crossing is now operational) – came as a shock to his Kurdish and Israeli allies. Trump proved his readiness to abandon his closest friends & enemies overnight.

Based on the 2006 proposed plan to redrawn the borders of the Middle East by retired Army lieutenant colonel Ralph Peters, which he referenced as "blood borders".

Trump’s move offered an unexpected victory to Damascus. The Syrian government is now slowly recovering its most important source of food, agriculture and energy. North-East Syria represents a quarter of the country’s geography. The northern provinces have exceptional wealth in water, electricity dams, oil, gas and food. President Trump has restored it to President Bashar al-Assad. This will also serve Trump’s forthcoming election campaign.

Assad trusts that Russia will succeed in halting the Turkish advance and reduce its consequences, perhaps by asking the Kurds to pull back to a 30 km distance from the Turkish borders to satisfy President Erdogan’s anxiety. That could also fit the Turkish-Syrian 1998 Adana agreement (5 km buffer zone rather than 30 km) and offer tranquillity to all parties involved. Turkey wants to make sure the Kurdish YPG, the PKK Syrian branch, is disarmed and contained. Nothing seems difficult for Russia to manage, particularly when the most difficult objective has already been graciously offered: the US forces’ withdrawal.

President Assad will be delighted to trim the Kurds’ nails. The Kurds offered Afrin to Turkey to prevent the Syrian government forces controlling it. The Kurds, in exchange for the State of their dreams (Rojava), supported US occupation and Syria’s enemy, Israel. Prime Minister Benyamin Netanyahu bombed hundreds of targets in Syria, preferring ISIS to dominate the country and pushing Trump to give him the Syrian-occupied Golan Heights as a gift- although the US has no authority over this Syrian territory.

Hundreds of thousands of Syrians were killed, millions of refugees were driven from their homes and hundreds of billions of dollars were spent on destroying Syria. Nonetheless, the Syrian state and President Assad have prevailed. Notwithstanding the consequences of the war, Arab and Gulf countries are eager to return to Syria and participate in reconstruction. Whoever rules Syria, the attempt to destroy the Syrian state and change the existing régime has failed.

Russia is one of the most successful players here, on numerous fronts, and is now in a position President Putin could only have dreamed about before 2015. Numerous analysts and think tanks predicted Moscow would sink into the Syrian quagmire, and they mocked its arsenal. They were all wrong. Russia learned its lesson from the 1979 invasion of Afghanistan. It offered air and missile coverage and brilliantly cooperated with Iran and its allies as ground forces.

President Putin skillfully managed the Syrian war, striking a balance and creating good ties with Turkey, a NATO ally- even after the downing of his jet by Ankara in 2015. Russia wanted to collaborate with the US but was faced with an administration with persistent “Red-Soviet” phobia. Moscow proceeded without Washington to solve the Syrian war and defeat the jihadists who had flocked to the country with support from the West (via Turkey and Jordan) from all over the world.

Russia showed off its new arsenal and managed to sell a lot of its weapons. It has trained its Air Force using real battle scenarios, fought alongside the Syrian and Iranian armies, and a non-state actor (Hezbollah). It defeated ISIS and al-Qaeda 40 years after its defeat in Afghanistan. President Putin has distinguished himself as a trustworthy partner and ally, unlike Trump- who abandoned the Kurds, and who blackmails even his closest ally (Saudi Arabia).

Russia imposed the Astana process instead of Geneva for peace talks, it offered countries to use their local currencies for commerce rather than the dollar, and it is dealing pragmatically with Iran and Saudi Arabia, and with Assad and Erdogan. The Americans, by their recklessness, showed themselves incapable of diplomacy.

Moscow mediated between the Syrian Kurds and the central government in Damascus even when these had been under US control for years. Putin behaved wisely with Israel even when he accused Tel Aviv of provoking the killing of his officers, and stayed relatively neutral in relation to the Iran-Israel struggle.

On the other hand, Tel Aviv never thought Syria would be reunited. Today Damascus has armed drones, precision and cruise missiles from Iran, supersonic anti-ship Russian missiles- and has survived the destruction of its infrastructure and so many years of war.

Israel has lost the prospect of a Kurdish state (Rojava) as an ally. This dream has gone now for many decades to come and with it the partition of Syria and Iraq. The “Deal of the Century” makes no sense anymore and the non-aggression deal with the Arab states is a mirage. Everything that Trump’s close advisor, Prime Minister Netanyahu, wanted has lost its meaning, and Israel now has to deal with the Russian presence in the Middle East and bear the consequences of the victory achieved by Assad, the Russians, and the Iranians.

After the Kurds, Israel is the second biggest loser- even if it has suffered no financial damage and no Israeli lives have been lost in combat. Netanyahu’s ambitions can no longer be used in his election scenario. Israel needs to prepare for living next door to Assad, who will certainly want back Syria’s Golan- a priority for Damascus to tackle once domestic reconstruction is on its way. He has been preparing the local resistance for years, for the day when Syria will recover this territory.

Tyler Durden Sun, 10/20/2019 - 22:55
Published:10/20/2019 10:06:23 PM
[Markets] What We've Lost What We've Lost

Authored by Charles Hugh Smith via OfTwoMinds blog,

This is only a partial list of what we've lost to globalism, cheap credit and the Tyranny of Price which generates the Landfill Economy.

A documentary on the decline of small farms and the rural economy in France highlights what we've lost in the decades-long rush to globalize and financialize everything on the planet-- what we call Neoliberalism, the ideology of turning everything into a global market controlled by The Tyranny of Price and cheap credit issued to corporations and banks by central banks.

After Winter, Spring (2012) was made by an American who moved to a small village in the Dordogne region of France to recover something of her childhood on a small Pennsylvania farm.

The farmers--self-described as paysanspeasants in English, (a translation I don't consider entirely accurate, for reasons too complex to go into here)-- describe the financial difficulties of earning enough to survive without outside jobs.

One young farmer who is taking over the family dairy from his aging parents encapsulates the economic reality of small farms: in the 1960s, they had 3 or 4 cows, now they have 100, but their income is the same.

Corporate mega-farms can produce huge quantities of agricultural products of questionable quality because they have the scale, access to cheap credit and expertise to deal with the voluminous bureaucratic paperwork imposed by the EU and the French government. (One slip-up on a form and you're sunk if you're a one- or two-person operation.)

Artisanal producers can't compete, and will never be able to compete in a global marketplace where there is always a cheaper source. (Up to half a small farmer's income comes from EU subsidies, which the EU is trying to cut.)

Financial survival requires one spouse have an outside job, or the farmers must operate farm tours, an onsite auberge (restaurant) or equivalent higher-margin business, all of which increases the capital they must borrow to fund the expansion and the risk of bankruptcy should the venture fail to cover its costs.

The documentary echoes the themes of an earlier French documentary, Profils Paysans, a three-part series of which only the third film Modern Life (2008) has English Subtitles.

The financial uncertainties and endless hard work are running up against generational realities: relatively few young people have the necessary passion for farming and the appetite for risk and hard work. Across the developed world, from Japan to the U.S. to France, there are few (if any) successors in line to take over the small family farms.

The small family farm--and the knowledge of how to grow food and raise animals--is dying away with the passing of our elderly farmers. The average age of farmers in many nations is well above 60. Many of the paysans (male and female) profiled in these documentaries are in their 80s.

The land is sold for residential development (i.e. exurb sprawl, overwhelming infrastructure such as roads, water systems, etc. designed for much small populations) or abandoned.

These documentaries only partially capture the enormous distance between "modern life" and the human-Nature relationship required to make land sustainably productive.

It's important to preserve wilderness, but we don't eat what grows or roams in wilderness. Wildlife can't survive solely on isolated preserves, either; Corporate Big Ag monoculture fields offer little to no habitat for wildlife.

Corporate Big Ag doesn't maintain the polycultures needed to support insects, birds and other wildlife; small farms provide niches and habitats for all sorts of life that doesn't serve a direct financial interest of the owners.

The widening divide between the modern lifestyle--completely ignorant and dismissive of rural productive polyculture--and those who still hold knowledge of artisanal, small-scale, localized production of high quality food--is already unbridgeable.

One elderly farmer described how his non-French neighbor complained about the cowbells on his few cattle. This resident's dogs could bark freely, but the cowbells were an annoyance beyond tolerance?

This is a manifestation of the complete alienation of "modern life" from the production of food. The modern urban/exurb resident doesn't want to smell hay (hay fever!) or manure (oh my, all animal poop should vanish instantly or I can't bear it) or any other exposure to the realities of raising livestock, killing animals so we can eat them or any other reality of food. All of these processes should be done thousands of miles away, and the food shipped by air in nice plastic containers to our supermarkets.

Neoliberal economists insist nothing has been lost; the plastic food in the plastic containers is "market efficiency" (never mind the dependence on cheap credit and cheap jet fuel). As for all the intangible economic, social and cultural capital that's been lost--it has no value in globalized Neoliberal economies.

One almost hopes that Corporate Big Ag disappears due to mono-crop plagues and people start going hungry to the point that they begin to take an interest in relearning all that's been cavalierly tossed away in favor of plastic food in plastic packaging and endless hours slumped on sofas "consuming" videos and "engaging" social media.

We've lost so much in the conquest of localized, small-scale polycultural farming by Neoliberal globalism and the dominance of cheap-credit-fueled Corporate Big Ag, yet we're only dimly aware of what's been lost because it isn't measured or valued in Neoliberal economies.

We've lost the knowledge of even partial self-sufficiency; we've lost a diversified local economy that can feed itself; we've lost "food security," the resilience provided by food grown locally rather than being flown in from thousands of miles away; we've lost the cultural habits of helping neighbors bring in their harvest, of celebrating the shared work around a communal table; we've lost any Nature-based cultural identity; we've lost the cultural and economic capital of interwoven small farms; we've lost the habitats for wildlife that are unique to polyculture farming, and we've lost any meaningful connection to the land and Nature.

It's not just small farms that are being lost--it's the entire rural economy of villages and towns that are supported by farm income and products.

This is only a partial list of what we've lost to globalism, cheap credit and the Tyranny of Price which generates the Landfill Economy: always buy the cheapest corporate product-- price is all that matters, even if the quality is appalling. Just throw the low-quality items and food in the Landfill and buy new stuff on credit.)

These documentaries link directly to a 1,180 page two-volume work by historian Fernand Braudel, his last work:

The Identity of France: Volume One: History and Environment

The Identity of France: Volume Two: People and Production

I realize relatively few other readers would tackle a 1,200 page series with the same relish I have, or feel the same regret that I've finished the books, for my understanding of France, the history of agriculture, modern capitalism and prosperous rural economies is immeasurably richer.

What we've lost is a localized, resilient, diverse rural economy with a wealth of cultural and practical skills and wisdom. We only have a few years to save this immense wealth from complete and irretrievable loss.

What we've lost, whether we measure it or not is the subject my new book, Will You Be Richer or Poorer? Profit, Power and A.I. in a Traumatized World(Read the first section for free (PDF)The book explores all the forms of wealth that we've lost or squandered. This applies not just to rural life and the rural, localized economy, but to our urban life, our society, our culture and our economy.

*  *  *

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). 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 Sun, 10/20/2019 - 11:30
Published:10/20/2019 11:01:11 AM
[Markets] The Late Great State Of California The Late Great State Of California

Authored by Jeffrey Harding via The Mises Institute,

My family moved to California in 1950, part of the post-WWII westward migration. My widowed mother, tired of Boston’s dreary winters, felt the westward pull. My eldest brother, a WWII Navy veteran, had heard good things about San Diego from sailors who had been stationed there during the war. So, California, here we come.

I would like to think those were the golden years, at least for us. California was new, bright, warm, and full of promise. The East was old and cold. And San Diego was thriving. Defense and aerospace jobs were plentiful. Land was cheap, homes were cheap. A building boom met the housing needs for optimistic migrants. You could get things done in California.

It’s not that California anymore. We are overregulated and overtaxed and people aren’t so optimistic. People want to leave.

What Happened to the Golden Years?

A recent poll of the state’s registered voters by Cal’s Institute of Governmental Studies revealed that half have considered leaving the state. The top reason was the high cost of housing (especially by young people); high taxation was second.

The poll also asked if California was one of the best places to live or a just an OK-to-lousy place to live. About half said yes and half went the other way. Interestingly 67% of Democrats said it was one of the best while 77% of Republicans disagreed. Apparently, Democrats like expensive housing, high taxes, and being overregulated.

Are people leaving California? It depends on whom you are talking about. More people are out-migrating to other states than those coming in (–156,000), but much of that was offset by international migrants(+118,000) resulting in a net population loss of only 38,000 (2018).

Perhaps it has something to do with the fact that California is the most regulated state in the nation — by far. The Cato Institute analyzed the laws of each state by measuring the amount of individual legal restrictions in their legal codes. California was at the top, way at the top with 395,503 individual restrictions (laws, prohibitions). We surpassed No. 2, ultraleft New York, by almost 90,000 restrictions. Our politicians in Sacramento keep passing hundreds of new laws every year yet half of Californians are thinking of leaving.

And then there are taxes. California has the highest income tax rate of all states (13.3%). The highest combined federal and California income tax rate is now about 50% of taxable income. If you and your spouse have $200,000 of taxable income, your combined federal and California tax rate is 41.3%. That’s not something you should be applauding since California ranks 42 out of 50 states in fiscal solvency .

Two new pieces of legislation will make things worse, much worse. One is statewide rent control. The other is the reclassification of independent contractors as employees.

The War Against Low-income Renters

A rent-control law, Assembly Bill 1482, was signed by Governor Newsom on October 8, 2019 . It limits apartment rent increases to 5% plus inflation per year (not to exceed 10%). It affects units built at least 15 years ago (on a rolling timeline). Rents can be adjusted to market rates only when a tenant leaves, but tenants can only be evicted for “cause.” Newsom said “These anti-gouging and eviction protections will help families afford to keep a roof over their heads …” But what if it doesn’t? What if it will harm tenants, especially poor ones?

The advocates of rent control seem to have no grasp on the economics of price controls. Perhaps they should consult an economist. In a survey of prominent economists , 81% agreed that rent controls have not had a positive impact where they have been tried.

Why would these cold-hearted economists oppose rent control? Because rent controls don’t work and they do the opposite of what was intended: they hurt poor renters.

Here is what will happen with rent control in our high-demand coastal communities:

  • Owners will raise rents to the maximum every year to protect asset values.

  • Owners will be far more selective in choosing tenants, thus limiting housing for poor, less creditworthy applicants.

  • Tenants will be reluctant to move from rent controlled properties which tends to freeze the rent-controlled rental market leaving fewer apartments available for rent.

  • Rent controlled units will be gentrified as historical evidence shows that higher income tenants will be the most benefited class of renters.

  • Affordable apartment inventory will be further reduced as owners evict tenants, tear down older buildings, and build new, more expensive units which will be exempt from rent control.

  • More apartments will be converted to condos, further reducing affordable inventory.

  • Owners will cut back on expenses to preserve cash flow, thus reducing the quality of rentable units.

Overall, rent control will disincentivize investors from investing in affordable apartments.

These conclusions aren’t guesses or just fuzzy theories — they are based on actual experience from rent controlled areas.

Adios Gig Economy

The new law on classifying independent contractors as employees (AB 5) is a stab in the heart of the gig economy — the economy that provides convenient low-cost services when you want them. Think Uber and Lyft for ride sharing. You will now pay more and get less. That assumes they will stay in California. Uber, as everyone knows loses money (EBITDA earnings for 2018: $2.41 billion). If they can’t make money on their present business model, how can they possibly make money if their driver costs go way up? So, I repeat myself: will they be around in a couple years? Will those drivers who feel they are being treated unfairly be out of work?

This is a classic example of the Canute Effect. If you recall, Canute was the Danish king, who, legend has it, ordered the tide to stop coming in. Canute was obviously either detached from reality or just an arrogant megalomaniac who thought he could command nature.

In our case, our legislators believe they can just pass a law and make things better. It doesn’t work that way. There are controlling economic realities that they ignore or, most likely, aren’t even aware of.

Everybody knows that Uber changed the world for the better. Consumers loved the new service. Drivers signed up to make extra money, setting their own hours. So why do our politicians want to kill Uber and Lyft? We should ask ourselves: who would be better off without Uber and Lyft? Here’s a clue: in the governor’s statement supporting AB 5 he went out of his way to say, “A next step is creating pathways for more workers to form a union, collectively bargain to earn more, and have a stronger voice at work.” It’s an obvious power grab by unions who wish to unionize (i.e., kill) the gig economy. Unions are famous for protecting the status quo and fighting for more power. Taxi companies no doubt had their hand in it too.

Understand that Uber and Lyft are just the tip of the gig economy. We all lose.

The Tipping Point

I just reread Malcolm Gladwell’s wonderful book, The Tipping Point, in which he details the things that push societal change over the edge. My fear is that California is getting to a point where the dynamism that has driven our mighty state’s prosperity will be snuffed out. Are we at the tipping point yet? I don’t really know, but with 395,503 restrictions on the books, I don’t see how it can get better.

Our politicians are quick to say this will never happen. They say we have the most vibrant tech economy in the world. Our farms feed the country. People love California. They believe they are making things better. Yet they continue to pass laws that tamp us down. At some point it will tip over and the impact of their regulations and taxes will overcome the forces that made California great. These new laws are getting us closer.

Tyler Durden Fri, 10/18/2019 - 21:05
Published:10/18/2019 8:19:29 PM
[Markets] "Click To Pray eRosary" - Vatican Launches Smart Device That Tracks Your Prayers "Click To Pray eRosary" - Vatican Launches Smart Device That Tracks Your Prayers

The Vatican is leaping into the 21st century, and that means the Pope wants to track your prayers through a wearable smart device that links to a smartphone, reported Vatican News

The Pope's Worldwide Prayer Network launched the "Click To Pray eRosary" device and a smartphone app at a press conference on Tuesday in the halls of the Vatican. 

The "smart and app-driven wearable device serves as a tool for learning how to pray the Rosary for peace in the world. It can be worn as a bracelet and is activated by making the sign of the cross. It is synchronized with a free app of the same name, which allows access to an audio guide, exclusive images, and personalized content about the praying of the Rosary," stated the press release.

The smart device will retail for approximately $110, will be available on Amazon and the Vatican's e-commerce store in the near term. There was no information about the exact launch date of the device.

The Vatican believes the smart device is affordably priced and can reach many people around the world. 

The secret purpose behind the app, not explained in the press release (of course), is that growth rates in the Christen population across the world are slowing.

So what better way in attracting new members than to target the world's millennials through smartphones and smart devices.

Think what the printing press did for the bible in the mid-1450s, it allowed the teachings of Our Lord and Saviour Jesus Christ to spread through the world, one book at a time.

And with nearly 2 billion smartphone users across the world, the Pope is thinking big and high-tech. There will be a limited distribution of bibles via books in the future; it'll be delivered electronically via a smartphone. 

On top of that, we're not quite sure why the Pope wants to track your every prayer. 


Tyler Durden Thu, 10/17/2019 - 18:05
Published:10/17/2019 5:13:01 PM
[Markets] IRS Admits Targeting The Poor Because It's "Easier And Cheaper" Than Auditing The Wealthy IRS Admits Targeting The Poor Because It's "Easier And Cheaper" Than Auditing The Wealthy

Authored by Jenny Jayne via The Organic Prepper blog,

The IRS has announced that it’s “too expensive” to audit the rich. Affluent taxpayers, the 1%, are too well protected from government intrusion. Their tax returns are complex and take more time and more experienced auditors to review them. The IRS then has to pay these more experienced auditors a higher price to audit those larger accounts. It’s become an expensive hassle for them. They encounter resistance from the teams that the affluent have behind them to defend them from the IRS. So, what is their solution?

Target the poor.

It is easier and cheaper for the IRS to go after the working class.

As if the struggling working class in this country doesn’t have enough to deal with, watch out for Big Brother! Because lower-income families have fewer resources to guard their finances, the IRS finds it a “better use of their resources” to target the poor instead of the wealthy. Because the wealthy have the means to fight back against government intrusion aka well-paid attorneys and accountants, the IRS has decided that any effort to monitor the “haves” is not worth their time. They will instead focus on the “have nots,” or the poor working and middle class.

It’s easier and cheaper to go after the poor and audit them. Those who make less money have fewer defenses to combat the IRS and their returns are simpler. It requires less expense and effort from the IRS to go after a much more fragile portion of our economy – the working poor.

It’s no surprise that the middle class in this country is disappearing at a rapid rate. One contributor is the mountainous debt that many Americans have saddled themselves with, especially when it comes to predatory student loan lenders. Some people are paying exorbitant interest on student loans when they didn’t even achieve a degree. This compounds the problem for the lower-income American that already exists: a country bordering on financial collapse.

What this doesn’t address is a hidden target in the sights of the IRS. Whom this really means the IRS is targeting: The Shadow Economy.

The IRS is targeting people who supplement their income with side hustles.

The Shadow Economy is made up mostly of the poorest in our economy, those struggling to get by even if it’s a two-income household. The industrious working poor who struggle to pay their bills, even on two incomes, turn to the side-hustle to make it.

Over 50% of Americans have a side-hustle. What was once the oddity of the entrepreneur is now mainstream. There are a lot of factors that may have contributed to this, including stagnant income growth nationwide and the rising cost of living. But the fact is, most Americans are now using a side hustle to cover household bills because their day job is just not enough.

The side hustle has exploded in the American economy over the last decade, and the IRS has taken note and put us in their sights. Because apparently hard-working people are “bad” for the economy.

Not all side-hustles are part of the Shadow Economy, but many are. A side-hustle becomes part of The Shadow Economy when it’s paid for in cash under the table. The side-hustle is the growing movement in the United States of the freelance worker and gig economy. Sometimes it’s on the books, but oftentimes, it is not. And here is where the “side hustle” meets “The Shadow Economy” and becomes a means for those who are pinched in our struggling economy to get by.

The government is targeting those who need to keep every penny.

The Wall Street Journal spouts doom and gloom with its definition of The Shadow Economy saying that because those who operate their business under the table with cash-only can potentially hurt the overall economy. But it’s also a larger issue of governmental control.

Think for second who would be driven to this kind of enterprise. If you can’t find a job or you’ve already got one, but it doesn’t pay the bills, what are you going to do? Get a side-hustle.

Anything I do personally, I keep above board. I pay taxes. But people who are desperate are often driven to operate outside of the law. Desperate people who are already working two jobs and still falling behind probably aren’t going to be thinking about Uncle Sam looking over their shoulder.

And the US government, instead of addressing the growing desperation of the American workforce that’s behind the boom of the “side hustle,” has put them in its sights.

The IRS is targeting the most desperate in our failing economy rather than going after “the big guys” and fighting their many well-paid attorneys and CPAs. It’s the equivalent of the police going after a kid selling lemonade on the sidewalk instead of the home break-in down the block.

It’s an easier target with far less resistance.

Does the government want to keep us broke and powerless?

Consider this. It’s in the government’s best interest to keep people from bettering their lives if they don’t want to relinquish control. If citizens are self-sufficient and financially stable, they might have the time and energy to fight back or question motives. But no, if the populous is off balance and hungry they focus on surviving day to day and don’t ask questions.

So, those who want control send the IRS after the poor just struggling to get by. They ignore the elite because they are too time-consuming and expensive to go after.

Instead, the IRS has decided to double down on the most desperate and vulnerable in our society.

I know you might be thinking, what about illegal workers or drug dealers who may be paid under the table?

If that’s the case, that still leaves the IRS going after desperate workers instead of the corrupt employers and drug lords…who would take too much “time” and “money” to go after. Instead, they are really targeting drug addicts and those who are being preyed upon by the demand for cheap labor.

Of course, paying taxes is a law. It’s not a law that I’m going to break. But for some people getting paid under the table is the only way to make ends meet. Consider those on disability. If they “make too much” they will lose their check. But many times, those on disability can only work sporadically and on bad months they cannot work. Without their check they can’t make ends meet. They aren’t allowed to work, but they don’t want to starve either, so they work, but don’t declare their income so they can keep their disability checks.

Of course, we should follow the law. Of course, we should pay taxes. But with this kind of discrimination by the IRS against the poor, where is “all men are created equal?” And who among us should be considered above the law?

Tyler Durden Wed, 10/16/2019 - 14:55
Published:10/16/2019 2:10:08 PM
[Markets] The Biggest Problem For The Aramco IPO The Biggest Problem For The Aramco IPO

Authored by Simon Watkins via,

From almost the very moment in 2016 when Saudi Arabia first announced that it was to float its state-owned oil and gas behemoth, Saudi Aramco, in a dual domestic and international listing, the pool of possibilities for the foreign side of the initial public offering (IPO) has steadily reduced. This has been a result of a simple equation: the more that would-be investors know about Saudi Arabia and Aramco the less appealing the prospect of having anything to do with them becomes. However, because Crown Prince Mohammed bin Salman (Mbs) has staked his personal reputation – and his political future – on the Aramco IPO going ahead in some form, he and his bankers are currently rooting around for at least one international bourse upon which to execute the foreign listing part of the omni-toxic Aramco.

The New York Stock Exchange (NYSE) was one of the original top-two favored candidates, alongside the London Stock Exchange (LSE), as these two bourses are rightly seen as the most liquid, most traded, and most prestigious stock exchanges in the world. Early on, though, a number of major problems began to bubble up for a listing of any Saudi company and particularly Aramco in the U.S. Aside from the usual farrago of lies from Saudi about oil reserves, spare capacity, tax rates, concessions, non-hydrocarbons activities and so on with which investors have now become familiar, a key early sticking point was Saudi Arabia’s perceived links with the ‘9/11’ terrorist attacks.

Of the 19 terrorists who hijacked planes on ‘9/11’, no less than 15 were Saudi nationals. Following the overriding by the U.S. Congress of former President Barack Obama’s veto of the ‘Justice Against Sponsors of Terrorism Act’, making it possible for victims’ families to sue the government of Saudi Arabia, at least seven major lawsuits alleging Saudi government support and funding for the ‘9/11’ terrorist attack have so far landed in federal courts. As one New York-based chief executive officer of a major commodities hedge fund told

“If I invested in anything Saudi, my investors would hang me from the nearest streetlight.”

This was the pervasive view even before Saudi continued the indiscriminate bombing of Yemen, led the way in the international ostracising of Qatar, kidnapped Lebanon’s then-President Saad Hariri and forced his resignation (allegedly), and murdered the journalist Jamal Khashoggi (allegedly, although the evidential pointers appear incontrovertible), which would never have been done without MbS’s personal go-ahead.

Making matters even worse was Saudi’s decision to threaten the U.S. shale industry if Washington passed into law the ‘No Oil Producing and Exporting Cartels Act’ (NOPEC). This bill was founded upon the supposition – which still hangs in the air like a Damoclean Sword above the Saudis’ heads – that OPEC is a cartel and that, as such, Aramco – as the principal vehicle of the leading member of OPEC, Saudi Arabia – violates the U.S. (and U.K.’s) stringent anti-trust laws. Given that OPEC’s members account for around 40% of the world’s crude oil output, about 60% of the total petroleum traded internationally, and over 80% of the world’s proven oil reserves – and controls geographical sales policies and pricing – this would appear to be an entirely sensible conclusion.

That Saudi actually threatened to destroy the U.S.’s shale oil industry – yet again – was greeted with actual laughter by a number of senior oil figures spoken to by at the time.

“OPEC and Saudi tried to do exactly the same thing [destroy the US shale oil industry] in 2014 and 2015 in exactly the same way [push oil prices down by producing all-out] and that did not end well for OPEC’s oil producers in general and Saudi Arabia in particular,” Norbert Ruecker, head of economics and next generation research for Bank Julius Baer, in Zurich, told

More specifically, in the two years before the Saudis in 2016 completely reversed its ‘U.S. shale oil destruction strategy’, OPEC member states lost a collective US$450 billion in oil revenues from the lower price environment, according to the IEA. Saudi Arabia itself moved from a budget surplus to a then-record high deficit in 2015 of US$98 billion, being forced to spend over the period around US$250 billion of its foreign exchange reserves that even senior Saudis have said are lost forever.

Given this, Saudi for a time looked at the U.K.’s LSE as an option, following a trip to Saudi Arabia some time ago by LSE chief executive officer, Xavier Rolet, and then-UK Prime Minister, Theresa May, and indeed, according to various sources spoken to by OilPrice last week, this remains an option for MbS. The problem with this from the U.K.’s side - which was conveyed to the Aramco IPO banking team – centres on the creation of a new category of listings for large international companies, in order to accommodate Aramco and its lack of information transparency. More specifically, historically, companies looking to list on the LSE could opt for either a ‘premium’ (formerly ‘primary’) or ‘standard’ (formerly ‘secondary’) listing.

According to the rules, a premium listing that would be included in the benchmark FTSE 100 index would mean that Aramco would need to allow potential investors full access to the company’s books, let minority investors vote on an independent board of directors, and also allow them to approve transactions between the company and its controlling shareholder, the Saudi government, none of which are likely to occur. However, a standard listing would mean Aramco would not be in included in the FTSE100, being relegated instead to the second-tier of companies, alongside mid-cap UK firms groups and family-controlled foreign firms.

The compromise solution - which followed the Rolet-May trip was to create this new category of listings for large international companies that may fail to meet the premium listing standards but is theoretically more prestigious and more appealing to investors than the ‘standard’ category. Clearly, as Jeremy Stretch, senior markets analyst for CIBC, in London told, simply changing the name of a listing type does not alter the fact that it does not in reality meet the standards expected from FTSE-listed companies in terms of rigorous reporting, operational opacity, and accountability to shareholders, even minority ones. Indeed, a number of major pension and insurance funds have commented to that there are still ‘very big governance issues’ around how much independently verified data pertaining to the company’s oil reserves would be given, its board structure and the small portion of the company being listed.

At that point, MbS toyed with the idea of doing a private placement of the whole amount – as then, 5 percent to be floated – with China. This would have been extremely advantageous to him for two key reasons.

Firstly, it would have required absolutely no divulging of any information whatsoever on Aramco’s - or Saudi’s – dealings, except to the Chinese who, as one senior oil trader put it to OilPrice: “Don’t care, all it wants is to get control over a favourite toy in the U.S.’s Middle East toy box.”

The second reason why MbS was very keen on the idea is that the price for the 5 percent private placement would never had been made public to anyone, even many senior Saudis, so he could not be accused of having not attained the US$100 billion for the 5 per cent that meant an overall valuation for Aramco of US$2 trillion (which he had already – equally unwisely – committed to). This option also remains on the table but – principally because the bankers working on the IPO would lose too much money if the IPO did not go ahead, MbS is not being encouraged to pursue this line.

All of which rather narrows the options available right now for MbS. Canada’s Toronto Stock Exchange (TSE) made a spirited pitch a while back. MbS, though, was dissuaded from this because of its small size relative to the bigger exchanges and the fact that its value is already dominated by oil companies. This latter point meant that the effect of a drop in the oil price on Aramco’s TSE valuation would be much more pronounced than if it were a reflection of the company’s other assets’ worth, at least as far as the Saudi’s see it. Hong Kong, meanwhile, was for a time a front-runner, given its close links to Chinese money and Chinese oil and gas buyers, but the burgeoning protest movement against Chinese rule by Hong Kong has subsequently marginalized its appeal.

So, as it stands, MbS has trimmed everything back to try to limit the negative personal and political fallout for himself. According to trading and fund manager sources in London, Abu Dhabi, and Tokyo, the sovereign wealth funds of Saudi’s allies in the region have been ‘vigorously encouraged to bid high for big lots’, augmenting the sort of hearty bids from wealthy Saudis that might be expected from people who remember what being locked up in 2017 – albeit at the Riyadh Ritz-Carlton – was like. Tokyo has been pitching aggressively in the last few weeks as the Asia alternative to Hong Kong, and has sought to leverage the involvement of many of its financial institutions in various of MbS’s ‘Vision 2030’ projects to bolster its pitch. Underlying all of these bids will be the bookrunners, of course, who will take up any slack from the huge amounts of money that they stand to make not just from the IPO but also from all related work for Saudi. These include future IPOs, bond offerings, syndicated loans (known for their unerring ability to provide summer houses and matching yachts in the Hamptons for U.S. senior bankers), and other long-term rolling financing facilities.

Tyler Durden Tue, 10/15/2019 - 03:30
Published:10/15/2019 2:56:39 AM
[Markets] "We Came From Fire": A Brief History Of The Syrian Kurds "We Came From Fire": A Brief History Of The Syrian Kurds

"You can say the war is like a giant game of chess..." the Syrian Kurdish 'fixer' and driver told photographer and author Joey Lawrence as they traveled across the Kurdish northern Syrian heartland locally dubbed Rojava.

As perhaps confusing and chess-like the now eight-year long war might be even for the players on the ground, many in the West woke up Monday morning to a new seeming contradictory reality: US-backed Syrian Kurdish forces (SDF) have struck a deal with the Syrian government, and the national flag of President Bashar al-Assad is now flying alongside that of the Kurdish resistance movement, which had been for years backed by American forces. Currently, US special forces are in retreat from the Turkish border upon White House orders, and simultaneously the Syrian Army is moving in. 

How did such a reunion occur seemingly overnight between the two "enemies"? Hours before the deal was struck, the Kurdish-led Syrian Democratic Force's top commander, Mazloum Abdi, wrote a Foreign Policy op-ed in which he explained to the world"We know we would have to make painful compromises with Moscow and Assad if we go down that road. But if we have to choose between compromises and the genocide of our people, we will surely choose life."

Ji^n, a YPJ fighter, with rocket-propelled grenade launcher. Credit: Joey L. Photography. All images used with permission.

To understand this, as well as why the invading Turkish Army and its 'rebel' proxies now face a nightmarish resistance and insurgency, it is crucial to revisit the little-discussed role of Syria's main Kurdish militias from the start of the war, how they've survived as the region's fiercest and most experienced ground force, and further how their secular identity and pragmatism has ensured not just survival but flourishing even as they've faced extinction by ISIS and the invading Turkish state, and after enduring multiple historic betrayals.  

Extracts in the below essay are taken from the book We Came From Fire, by Joey L. published by Powerhouse Books (2019), and are used with permission.

* * *

"For Kurds, fire is extremely important. We came from fire, and we will return to fire — it's an ancient saying," one Syrian Kurdish fighter explained to Joey Lawrence.

"The recent war in Iraq and Syria had become a globalized conflict, except rather than a world war fought with state armies, it was fought by proxy, with the blood of the local people. The world had become entwined in the conflict in ways never before imaginable, and events were both amplified and distorted by propaganda from all sides..."

Image via Joey L.

"After the collapse of the Ottoman Empire at the end of World War I, the great European powers divided up the former Ottoman territory. The ensuing treaty — the Treaty of Sevres — promised the Kurds their own continguous and sovereign entity for the first time in modern history. However, three years later, after a series of military victories by the former Ottoman Brigadier General Kemal Pasha (now known as Ataturk), the great powers had to relent to Turkish pressure and replace Sevres with the Treaty of Lausanne. This new treaty established the new Republic of Turkey and squashed Kurdish hopes for a state of their own. The land of the Kurds would be divided between four different countries, splitting tribal lines, villages, and even families...

As the latest conflict in Iraq and Syria, starting in 2011, spiraled out of control, state powers that once kept the Kurdish ethnic minority down found themselves spread thin, fighting against both rebellions and jihadist insurgencies; they were forced to retreat from Kurdish areas and dedicate resources to government heartlands. However grim, the crisis and dismantling of perceived nation-state borders presented Kurds with a golden opportunity. The once-persecuted rose to secure power in the vacuum."

Image via Joey L.

"Seeing an opportunity to crush the Assad government — an old rival often at odds with the Western and Gulf sphere of influence — Qatar, Saudi Arabia, Turkey, the United States, Israel, the United Kingdom, and other NATO-aligned European powers all acted in their own way against the crumbling Syrian state. Intelligence services sent vast amounts of weapons, money, and other materials to the rebels. Western and Gulf states chose their own champions in the war...

Turkey purposely left its border wide open... It became a gateway for tens of thousands of international jihadists to openly enter Syria and fight alongside the FSA against the Syrian government. These foreign fighters filled the ranks of al-Qaeda's Syrian franchise, the al-Nusra Front, the Salafist group Ahrar al-Sham, and later, the Islamic State of Iraq and Syria (ISIS). A Syrian jihad was born."

Image via Joey L.

"As the largest ethnic minority in Syria — some 10 to 15 percent of the population — the Kurds are treated by the government with both deep suspicion and discrimination. While smaller minorities were given status, the Syrian Ba'ath regime viewed the Kurdish population as too large to risk empowering with representation in politics, yet small enough to keep down. The regime outlawed speaking the Kurdish language in public, as well as all related cultural activities. In the 1970s, the Syrian Ba'ath regime had enacted a forced resettlement program that changed the ethnographic makeup of predominantly Kurdish regions...

In April 2011, the Assad government, losing control of the population following the large-scale demonstrations and riots sweeping the country, reversed some of these policies. The Syrian government vowed to issue identity cards back to a small portion of the stateless Kurds, but could never fully reconcile given the growing dissent within the population. The country was in crisis; it was too little too late."

Image via Joey L.

"In July 2012, the Syrian Arab Army abandoned Kurdish enclaves of Syria to dedicate their dwindling resources to other areas of the country at war. Kurds were now free of the repressive nature of the Assad regime, but at the same time, they were left on their own to defend themselves from the al-Qaeda-linked rebel groups ravaging the land. Even though the Syrian Kurds were predominantly of Sunni faith, the secular nature of the community in general was perceived as heretical by Sunni fundamentalists groups like ISIS, and were therefore targeted for conversion or extermination...

Thus, the People's Protection Units (YPG) and their all-female wing, the Women's Protection Units (YPJ), were born. Other spectrums of Kurdish political voices either abandoned the region and fled across the border, or were forced out by the domination of the new power structure." 

Image via Joey L.

"At the same time, the Syrian Arab Army's retreat was self-serving. As foreign fighters were flooding into Syria from Turkey, the regime left the Kurds — Turkey's insurgent enemy — to fight jihadist groups along the border. Clashes between the YPG/J and the Syrian Arab Army happened on many occasions, but a pragmatic neutrality would always be restored. Both sides knew that opening fronts against one another would weaken themselves, and both feared the future country falling in the hands of jihadists. It seemed neither the Syrian government nor the Turkish-backed rebels could guarantee minority rights for the Kurds, and the YPG/J chose a delicate third path in the war.

For the first time the term Rojava could be uttered in public. (Rojava, which means "the west" in the Kurdish language, refers to the part of the northeast syria that makes up west Kurdistan, and also is sued to describe the setting sun.) The newly empowered Rojava Kurds immediately began establishing popular governance, from neighborhood communes and academies to citywide councils to a regional administration spread across three different cantons: Afrin, Kobane, and Jazira. In January 2014, the three self-governing cantons declared themselves as autonomous zones."

Image via Joey L.

"The YPG/J would prove themselves to be one of the first forces capable of stopping the ISIS advance in Syria... Most of these battles were unreported in the Western press, and the war between the Syrian Kurds and the radical Islamists was generally viewed as a sideshow to the greater war between Assad and the rebellion...

ISIS — seemingly the world's most terrifying boogeyman — was collapsing under every offensive. It was purely a military alliance [the US and YPG/J/SDF forces], and the Americans rejected recognizing any political project of Kurdish autonomy in Syria. The US-led coalition support was extremely limited to the occasional delivery of light weapons and airstrikes, which were called in covertly by a small number of special operations forces embedded among the fighters. The US was wary to give the YPG/J heavy weapons such as the anti-tank TOW missile, perhaps fearing that one day they could fall into the hands of the PKK against their NATO partner, Turkey."

PKK sniper in Makhmour, Iraq. Image via Joey L.

"After the fall of Idlib Governate and its provincial capital to a controversial coalition of al-Qaeda-affiliated armed groups and CIA-backed FSA rebels, the Syrian conflict took a dramatic turn. Russia entered the war... Although the YPG/J had openly fought Assad's forces in the beginning of the war, the fragile neutrality that later formed was only seldom broken by odd skirmishes over checkpoints and access to roads. While they were opposed to everything the Assad regime represented, the YPG/J's reluctance to join the rebels in the beginning of the war had benefited them greatly."

Image via Joey L.

"They were not yet targets of Russian airpower. After all, the Syrian Arab Army was severely lacking in manpower, and the YPG/J mostly had the same enemies. They say it's wise to fight your enemy's enemy last."

Via The New York Times/Conflict Monitor/IHS Markit

* * *

See Joey L.'s full account and photos in We Came From Fire: Photographs of Kurdistan's Armed Struggle Against ISIS.

Tyler Durden Tue, 10/15/2019 - 02:45
Published:10/15/2019 1:59:43 AM
[Entertainment] Richard Jackson, publisher of Judy Blume, dead at 84 Richard Jackson, publisher of acclaimed children’s books by Judy Blume, Paula Fox and others, has died at age 84 Published:10/14/2019 1:23:27 PM
[Markets] The Ultimate Heresy: Technology Can't Fix What's Broken The Ultimate Heresy: Technology Can't Fix What's Broken

Authored by Charles Hugh Smith via OfTwoMinds blog,

Technology can't fix what's broken, because what's broken is our entire system..

The ultimate heresy in today's world isn't religious or political: it's refusing to believe that technology can not only solve all our problems, it will do so painlessly and without any sacrifice. Anyone who dares to question this orthodoxy is instantly declared an anti-progress (gasp!) Luddite, i.e. a heretic in league with the Devil.

Even worse, if that's possible, is declaring that technology is making our lives worse rather than better. There's an entire industry devoted to cherry-picking data to support the One True Faith of Technology: a new miracle drug (never mind the side-effects or the fact that the drug only works on a relative handful of patients), a new energy source that will generate nearly free energy in near-infinite quantities (thorium reactors, though there is not yet a single one that's operational), and the marketing of convenience: this new marketing gimmick will change your life--you can try on clothing in virtual reality, no need to go to the mall! Wow! Borrow more, buy more, throw more into the landfill--isn't technology wonderful?

Meanwhile, back in reality, the previous "miracle drug," statins, turn out to be useless in reducing heart disease and actively reduce health via a vast array of negative side effects: Do statins really work? Who benefits? Who has the power to cover up the side effects? (

Heavily promoted "miracle drugs" make billions of dollars for the corporate owners, whether they actually improve health in the long-term or not. But the tech-will-fix-everything cheerleaders never get around to examining the spectacular failures of Big Pharma, or the catastrophic consequences of smartphone addiction (see chart below), or the impossibility of scaling technology without consuming vast amounts of resources which are already scarce.

This excerpt from my new book explains the absurdity of the tech faithful's belief system: (The book is Will You Be Richer or Poorer? Profit, Power and A.I. in a Traumatized World.)

The belief in the ultimate goodness and inevitability of technological advances is often presented as a binary choice: one either believes that technology will eventually solve every human problem, or one is anti-technology and anti-progress.

Suggesting there are limits on technology is thus heretical: for believers, there are no limits.

Let's set aside the false binary choice and ask: are there intrinsic limits to technology, and if so, are we approaching any of these limits?

Technology cannot change the priorities and incentives of those who own it. Technology is only a tool, and people will use the tool to maximize their gain and optimize whatever incentives are embedded in the system. If chopping down irreplaceable tropical hardwood forests is optimized by the incentives to maximize profits, then that's how technology will be applied.

Technology cannot repeal the laws of thermodynamics. Taking a pencil and extending the declining cost of solar panels to zero doesn't negate the physical costs of mining and smelting the ore, shipping the metal to a factory, fabricating the photovoltaic cells, assembling and testing the panels, transporting them to the installation site on vehicles that are expensive to manufacture and maintain, installing the panels, wiring them to inverters and other equipment, testing the system onsite, and returning to perform maintenance and possibly repairs. Since the expected life of the installed panels is 20 to 25 years, the entire expense must be repeated, plus the additional expense of removing and recycling the worn out panels.

The cost of manufacturing, installing, maintaining, repairing and replacing the panels will never be close to zero due to the intrinsic costs in mining, smelting, refining, milling, transporting, assembling, testing, installing, maintaining and repairing the panels--not to mention getting rid of the toxic components when the panels must be replaced.

Even if robots perform all the work, robots are themselves resource- and energy-intensive. Robots are less like a computer chip (with declining marginal costs), and more like a car, an immensely complex and costly assembly of intrinsically resource-intensive components, electronics, computer chips and millions of lines of software coding.

Autos cost more than they did a generation ago for all these reasons. As cheap-to-access resources such as metals and minerals are depleted, the remaining ores are more costly to extract; regulations require additional safety features, and extremely complex software is increasingly prone to unanticipated errors.

All of these realities apply to autos, robots and every other complex, resource-intensive machinery.

To become more capable, machines become more complex and therefore more expensive to manufacture, test, maintain and repair. In a very telling edit of reality, those extolling the idea that robots will perform all of humanity's work in the near future overlook these intrinsic costs, and overlook the expensive realities of fixing even simple machines when they fail or break down.

Consider the following example: a clothes dryer.

A clothes dryer is basically a metal box containing a heating element and a drum that spins. An electronic board with a digital display operates the machine''s cycles and controls. A dryer is thus far less complex than a robot, especially a robot that is capable of navigating the real world.

The dryer control board is relatively simple: a handful of low-cost commodity computer chips and a few circuit boards. Despite the relative simplicity, these boards fail with alarming regularity. This is also true of the electronics in ranges, washing machines and other appliances. The replacement board for the dryer is one-third the cost of a new dryer. Labor adds another third, so replacing the board is two-thirds the cost of a new dryer.

This reliance on cheap commodity electronic components results in the lifespan of modern appliances being measured in years rather than the decades of use formerly expected of purely mechanical appliances.

The ultimate cost of adding features (the functional value of which is often very much in question) is far higher than the sticker price of the new dryer. In the real world, technology has increased costs and consumed more resources for extremely marginal improvements (for example, ten choices of drying cycles rather than five).

Since advocates of robots claim robots will soon do all the work of humanity, consider the vast difference in cost between a robot that operates on a flat factory floor, repetitively attaching one part on a dryer assembly line, versus a robot that arrives onsite in the messy real world and is able to diagnose and repair a broken dryer.

The factory model operates on a flat floor; the repair robot has to navigate an irregular driveway and multiple changes in floor level. It also has to be powerful enough to lift the dryer off the washer (in a stacked configuration), move it to open ground, remove the top, perform the diagnostics, remove the defective board, retrieve the new board, install it correctly, re-assemble the case, test the repaired machine, then lift it back onto the washer.

To repair a dryer onsite, the robot will have to have the strength of a small forklift and a very high level of dexterity and precision motor control. The cost of adding each of these capabilities to a robot is extremely non-trivial, and it won't ever drop to near-zero. Rather, it will only increase in cost even if commodity sensors and chips decline in price. The points of potential failure will proliferate with each new capability and each new level of complexity.

Finally, note that the robot itself is prone to the same kinds of failures that it is designed to repair, but due to its much greater complexity, repairing the repair robot could cost an order of magnitude more than just having a knowledgeable human repair the dryer.

I've performed this exact repair on my own dryer (only a few years old), and other similar repairs on other appliances: a name-brand range that turned on the oven at random times due to a failed low-cost commodity electronic sensor (less than two years old), and an expensive name-brand heavy-duty washing machine, less than a year old, that also failed due to a low-cost electronic sensor.

Complex devices are only as reliable and durable as their lowest-quality component. This is as true of robots as it is for any other device.

Yet even with me performing the labor, the parts for all these appliance repairs were expensive. Many less-handy people would have paid multiples of this already-high cost just for labor, while others would have bought a new appliance and had the (still-functional other than the one failed component) appliance hauled to the landfill--a perfect example of our wasteful and expensive Landfill Economy.

Consider the hundreds of components in a so-called smart home designed to save energy and offer more convenience by networking sensors, cameras, appliances, locksets, servers, controllers, Wi-Fi chips and software.

The projected advances in security and convenience, many of which are questionable (e.g. just how much value is really added by a refrigerator that can order a quart of milk delivered once it detects a low level in the carton?) come at a very high cost in components, installation, service and repairs, because each of the hundreds of sensors, controllers, Wi-Fi chips are points of potential failure--not to mention the risk of unauthorized remote access.

How long will these components last? How long before they must be replaced to function with a new software system? How functional will the system be if even one controller fails?

Given the extraordinary expense of installing and maintain this complex system and the marginal returns in convenience and security, how is this not another system destined for the landfill?

I have yet to find a true believer in robots will do all the work of humanity who has ever performed even a single repair of a complex system or device caused by a failed board, chip, sensor or software bug - and done so not on a clean factory floor but in the unpredictable real world.

I've also never yet met an avid believer in robots will do all the work of humanity who has designed, prototyped, tested, manufactured, sold, maintained and repaired robots capable of climbing (or landing) on a roof, diagnosing the cause of a failed solar array, replacing the failed part and cleaning the panels, all for a total system cost that's less than the relatively modest cost of a human repair person.

Technology can't fix what's broken, because what's broken is our entire system. For more on this heresy, please check out the first section of my new book (free PDF)

If you have an appetite for more heresy: read at your own risk....

Vaclav Smil: 'Growth must end. Our economist friends don't seem to realise that': "The economists will tell you we can decouple growth from material consumption, but that is total nonsense. The options are quite clear from the historical evidence. If you don't manage decline, then you succumb to it and you are gone."

Ronald Wright: Can We Still Dodge the Progress Trap?: Societies that failed were seduced and undone by what I called a progress trap: a chain of successes which, upon reaching a certain scale, leads to disaster. The dangers are seldom seen before it's too late. The jaws of a trap open slowly and invitingly, then snap closed fast.

Technocracy, Luddism, and the Environmental Crisis: The green movement needs to think about social power just as much as about technology.I believe the roots of the environmental crisis lie as much in the technocratic attitude towards nature expressed in Western cultures and technologies as in the capitalist drive for profit, growth, and accumulation. The power of industrial-capitalism is that its technological, social, and economic values mutually reinforce one another.

The Net Energy Pincer: Prior investment and psychological attachment prevent us from starting again from scratch. Instead, we employ ever more complex (and expensive) work-arounds in an attempt to make systems, institutions and infrastructure achieve things that they were not designed to do (such as keeping people alive into their 90s or providing 24/7 electricity using solar panels).

Climate Change and Technology (via LaserLefty): The question that isn't being asked: what will the adverse consequences of these (alternative energy) technologies be? Climate change and mass extinction weren't even imagined as consequences of the technologies that produced them. And again, a central drawback of the technologies being developed to address climate change is that they will adversely impact species loss and mass extinction. If the 'solution' to climate change means a catastrophic loss of biodiversity, what is to be gained by implementing it?

To decarbonize we must decomputerize: why we need a Luddite revolution: Big tech claims AI and digitization will bring a better future. But putting computers everywhere is bad for people and the planet. We are often sold a similar bill of goods: big tech companies talk incessantly about how AI and digitization will bring a better future. In the present tense, however, putting computers everywhere is bad for most people. It enables advertisers, employers and cops to exercise more control over us – in addition to helping heat the planet.

*  *  *

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). 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, 10/14/2019 - 08:36
Published:10/14/2019 7:52:23 AM
[Markets] France: More Death To Free Speech France: More Death To Free Speech

Authored by Guy Milliere via The Gatestone Institute,

On September 28, a "Convention of the Right" took place in Paris, organized by Marion Marechal, a former member of French parliament and now director of France's Institute of Social, Economic and Political Sciences. The purpose of the convention was to unite France's right-wing political factions. In a keynote speech, the journalist Éric Zemmour harshly criticized Islam and the Islamization of France. He described the country's "no-go zones" (Zones Urbaines Sensibles; Sensitive Urban Zones) as "foreign enclaves" in French territory and depicted, as a process of "colonization", the growing presence in France of Muslims who do not integrate.

Zemmour quoted the Algerian writer Boualem Sansal, who said that the no-go zones are "small Islamic Republics in the making". Zemmour said that a few decades ago, the French could talk freely about Islam but that today it is impossible, and he denounced the use of the "hazy concept of Islamophobia to make it impossible to criticize Islam, to reestablish the notion of blasphemy to the benefit of the Muslim religion alone..."

"All our problems are worsened by Islam. It is a double jeopardy.... Will young French people be willing to live as a minority on the land of their ancestors? If so, they deserve to be colonized. If not, they will have to fight ... [T]he old words of the Republic, secularism, integration, republican order, no longer mean anything ... Everything has been overturned, perverted, emptied of meaning."

Zemmour's speech was broadcast live on LCI television. Journalists on other channels immediately accused LCI of contributing to "hate propaganda". Some said that LCI should lose its broadcasting license. One journalist, Memona Hinterman-Affegee, a former member of France's High Council of Audiovisual Media (Conseil supérieur de l'audiovisuel), the body that regulates electronic media in France, wrote in the newspaper Le Monde:

"LCI uses a frequency which is part of the public domain and thus belongs to the entire nation ... LCI has failed in its mission and lost control of its program, and must be sanctioned in an exemplary manner".

The journalists of Le Figaro, the newspaper employing Zemmour, wrote a press release demanding his immediate dismissal. Calls heard on most radio and television stations for a total boycott of Zemmour stressed that he had been condemned several times for "Islamophobic racism".

Alexis Brézet, the managing editor of Le Figarosaid that he expressed his "disapproval" to Zemmour and reminded him of the need for "strict compliance with the law", but did not fire him. SOS Racisme, a left-wing movement created in 1984 to fight racism, launched a campaign to boycott companies publishing advertisements in Le Figaro and said that its aim was to coerce the management of the newspaper to fire Zemmour. The mainstream RTL radio station that employed Zemmour decided to terminate him immediately, saying that his presence on the air was "incompatible" with the spirit of living together "that characterizes the station".

A journalist working for RTL and LCI, Jean-Michel Aphatie, said that Zemmour was a "repeat offender" who should not be able to speak anywhere and compared him to the anti-Semitic Holocaust denier Dieudonné Mbala Mbala:

"Dieudonné is not allowed to speak in France. He must hide. That is fine, since he wants to spread hatred. Éric Zemmour should be treated the same way."

Caricatures were published depicting Zemmour in a Waffen SS uniform. Another journalist, Dominique Jamet, apparently not seeing any problem comparing a Jew to a Nazi, said that Zemmour reminded him of Hitler's Minister of Propaganda, Joseph Goebbels. On the internet, death threats against Zemmour multiplied. Some posted the times Zemmour takes the subway, what stations, and suggested that someone push him under a train.

The French government officially filed a complaint against Zemmour for "public insults" and "public provocation to discrimination, hatred or violence". The investigation was handed over to the police. Someone in France accused of "public provocation to discrimination, hatred or violence" can face a sentence of one year in prison and a fine of 45,000 euros ($50,000).

Whoever reads the text of Zemmour's speech on September 28 can see that the speech does not incite discrimination, hatred or violence, and does not make a single racist statement: Islam is not a race, it is a religion.

Zemmour's speech describes a situation already discussed by various writers. Zemmour is not the first to say that the no-go zones are dangerous areas the police can no longer enter, or that they are under the control of radical imams and Muslim gangs who assault and drive out non-Muslims. Zemmour is not the only writer to describe the consequences of the mass-immigration of Muslims who do not integrate into French society. The pollster Jerome Fourquet, in his recent bookThe French Archipelago, points out that France today is a country where Muslims and non-Muslims live in separate societies "hostile to each other". Fourquet also emphasizes that a growing number of Muslims living in France say they want to live according sharia law and place sharia law above French law. Fourquet notes that 26% of French Muslims born in France want to obey only Sharia; for French Muslims born abroad, the figure rises to 46%. Zemmour merely added that what was happening is a "colonization".

Zemmour had been hauled into court many times in the recent past and has had to pay heavy fines. On September 19, he was fined 3,000 euros ($3,300) for "incitement to racial hatred" and "incitement to discrimination", for having said in 2015 that "in countless French suburbs where many young girls are veiled, a struggle to Islamize territories is taking place".

In a society where freedom of speech exists, it would be possible to discuss the use of these statements, but in France today, freedom of speech has been almost completely destroyed.

Writers other than Zemmour have been hauled into court and totally excluded from all media, simply for describing reality. In 2017, the great historian Georges Bensoussan published a bookA Submissive France, as alarming as what Zemmour said a few days ago. Bensoussan, in an interview, quoted an Algerian sociologist, Smaïn Laacher, who had said that "in Arab families, children suckle anti-Semitism with their mother's milk". Laacher was never indicted. Bensoussan, however, had to go to criminal court. Although he was acquitted, he was fired by the Paris Holocaust Memorial, which until then had employed him.

In 2011, another author, Renaud Camus, published a bookThe Great Replacement. In it, he talked about the decline of Western culture in France and its gradual replacement by Islamic culture. He also noted the growing presence in France of a Muslim population that refuses to integrate, and added that demographic studies show a birth rate higher in Muslim families than in non-Muslim ones.

Immediately, commentators in the media accused Camus of "anti-Muslim racism" and called him a "conspiracy theorist". His demographic studies were omitted. He had never mentioned either race or ethnicity, yet was nonetheless described as a defender of "white supremacism" and instantly excluded from radio and television. He can no longer publish anything in a French newspaper or magazine. In fact, he has no publisher at all anymore; he has to self-publish. In debates in France, he is referred to as a "racist extremist," and credited with saying things he never said. He is then denied the possibility of answering.

The difference between Eric Zemmour and Georges Bensoussan or Renaud Camus is that Zemmour had published books that became best sellers before he talked explicitly about the Islamization of France.

Those who have destroyed the careers of other writers for stating unfashionable facts have been doing their best to condemn Zemmour to the same fate. So far, they have not succeeded, so they have now decided to launch a major offensive against him. What they clearly want his personal destruction.

Zemmour is not only risking a professional ban; like many other writers being silenced by an intolerant "lynch mob", he is risking his life.

Almost no one shows any interest in defending him, just as no one defended Georges Bensoussan or Renaud Camus. Defending someone accused of being a "racist" implies the risk of being accused of being a "racist" too. Intellectual terror now reigns in France.

A few days ago, the writer and philosopher Alain Finkielkraut said that suggesting that "Islamophobia is the equivalent of yesterday's anti-Semitism" is scandalous. He said that "Muslims do not risk extermination" and that no one should "deny that today's anti-Semitism is Arab Muslim anti-Semitism." He added that France is moving from a "muzzled press to a muzzling press that destroys free speech".

France, wrote Ghislain Benhessa, a professor at the University of Strasbourg, is no longer a democratic country and gradually become something very different:

"Our democratic model which was based on the free expression of opinions and the confrontation of ideas is giving way to something else ... Relentless moral condemnations infect the debates and dissenting opinions are constantly deemed 'nauseating', 'dangerous', 'deviant' or 'retrograde', and therefore the elements of language repeated ad nauseam by official communicators will soon be the last words deemed acceptable. Lawsuits, charges of indignity and proclamations of openness are about to give birth to the evil twin of openness: a closed society."

On October 3, five days after Zemmour's speech, four police employees were murdered in Paris police headquarters by a man who had converted to Islam. The murderer, Mickaël Harpon, had gone every week to a mosque where an imam, who lives in a no-go zone ten miles north of Paris, made radical remarks. Harpon had been working at police headquarters for 16 years. He had recently shared on social networks a video showing an imam calling for jihad, and saying that "the most important thing for a Muslim is to die as a Muslim".

Harpon's colleagues said that he had been delighted by the 2015 jihadist attacks in France in 2015, and said they had reported "signs of radicalization" to no avail. The government's first reaction had been to say that the murderer was "mentally disturbed" and that the attack had no connection with Islam. French Minister of the Interior Christophe Castaner simply stated that there had been "administrative dysfunctions," and acknowledged that the killer had access to files classified "secret".

A month before that, on September 2, an Afghan man who had the status in France of a political refugee, slit the throat of a young man and injured several other people in a street in Villeurbanne, a suburb of Lyon. He announced that the fault of those he killed or injured was that they did "not read the Koran". The police immediately stated that he was mentally ill and that his attack had nothing to do with Islam.

Soon in France, no one will dare to say that any attack openly inspired by Islam has any connection with Islam.

Today, there are more than 600 no-go zones in France. Every year, hundreds of thousands immigrants coming mainly from Muslim countries, settle in France and add to the country's Muslim population. Most of those who preceded them have not integrated.

Since January 2012, more than 260 people in France have been murdered in terrorist attacks, and more than a thousand wounded. The numbers may increase in the coming months. The authorities will still call the attackers "mentally ill".

Tyler Durden Mon, 10/14/2019 - 02:00
Published:10/14/2019 1:24:05 AM
[Markets] SunTrust: The One That Got Away With It SunTrust: The One That Got Away With It

Submitted by SB MH Research

The mortgage crash seems like a lifetime ago with house prices and homeowner equity at record highs by a long shot and banks that have paid billions upon billions as restitution, some willingly and deservedly, some not.

Most all the events are well known and documented. But few if any know the sordid story of one of the largest whole loan origination “malpractice schemes” to occur in the Housing Bubble era.

The “SunTrust Agency Shortcut” loan program – and what is essentially a “hack” of the Fannie Mae automated underwriting system (AUS) -- was a massive, egregious whole loan origination scheme estimated at over 175k individual transactions nationwide for over $30 BILLION.  In fact, the dollar volume of questionable conforming loans originated by SunTrust Mortgage and sold to Fannie Mae exclusively is larger than SunTrust Bank’s market cap today.

The following is my research, evidence and summary material on the “SunTrust Shortcut” mortgage scheme. The name “Shortcut” speaks volumes by itself. But this scheme was unlike others from Countrywide for example.

I am releasing this information widely for public good and posterity, so this specific negligence is documented in hopes it never happens again.

SunTrust “Agency Shortcut”: Backgrounder

I spent the entirety of the mortgage and housing bubble on the front lines of the mortgage industry. I saw all the excesses, outright fraud and cognitive dissonance first-hand. I knew where all the bodies were buried when it all came apart despite banks, mortgage companies, investors, Wall St banks, David Lereah (blast from the past!) Ace Greenberg and the Fed all day, wall-to-wall in the financial media, telling everybody there is ‘nothing to see here’.

During the crash and recovery period, I operated as a professional financial analyst, researcher and advisor to the financial services and public sectors. From early 2006, when I first became fully convinced that all hell would break loose in mortgage and housing, I made a list of 48 mortgage and related publicly traded names that I thought were the worst or hidden offenders and have the potential to zero-out. I maintain research files on these companies tracking everything they did, would do and their outcomes to this day.

Most of the worst mortgage offenders either failed, were absorbed (willingly or forcibly), or paid heavy penalties to the Obama DOJ, some several times over. Most of the legal matters and settlements were for common, cookie-cutter things like FHA origination/sale fraud, servicing misconduct, foreclosure & mortgage modification dereliction, and securitization fraud.

However, a few companies skated for some reason or another. SunTrust Mortgage, a subsidiary of SunTrust Bank at the time, is one. Its residential mortgage “misconduct” was among the worst of the housing Bubble. Few know about this history of SunTrust and their particular legacy mortgage origination ‘indiscretions”, so egregious, they would make Angelo Mozillo blush, and which residually live on to this day.

SunTrust’s $30+ Billion Unknown Legacy Mortgage Malpractice: Introduction

SunTrust Mortgage enacted one of the largest whole loan origination malpractice schemes in the ‘Bubble Years’. To date, this egregious misconduct has never been discovered, unpacked, prosecuted, or settled by regulators or a class. 

[It’s important to note that the actual “SunTrust Shortcut” scheme was not covered when SunTrust essentially “bought-out” their Fannie and Freddie rep and warranty liability in Oct 2013 (however, the Shortcut loan significantly increased Fannie defaults and repurchases and if Fannie would have known the fine details the settlement may have been larger). Nor, was the SunTrust Shortcut scheme the basis for the July 2014 $320 Million HAMP or $968 Million (largely FHA related) settlements.]

In summary, SunTrust’s commissioned-based loan officer and underwriter employees essentially learned to ‘hack’ Fannie Mae’s AUS to achieve a “special feature code” on certain popular “fully documented, prime” loan programs they offered. This code was unique to the SunTrust “Agency Shortcut” loan. The name “Shortcut” speaks loudly. This code enabled them to originate, fund and sell these loans missing critical supporting documentation that made them “fully documented”, prime loans in the first place. The resulting loans sold to Fannie Mae exclusively were far worse in quality than program guidelines called for or Fannie knew it was buying.

These low-quality (closer to “Alt-A” than Prime) loans were sold as high-quality, fully documented prime loans and ultimately peppered throughout Fannie MBS. Once the hack was used successfully and refined during the first year it led to a significant increase in loan volume for the Bank at a time when other lender’s and Fannie’s volume was flagging, which was a red flag itself.

From then, it spread like wildfire throughout the company and all lending channels and departments. Before too long, the SunTrust Wholesale division (TPO; Third-Party Originators; Mortgage Brokers) was training mortgage brokers nationwide how to hack the SunTrust Fannie Mae Automated Underwriting System.

Through power of “TPO”, SunTrust was able to act and take on risk like a bank several times its size. After a while, the misconduct was so pervasive and a part of every-day business that a cognitive dissonance set in companywide that what they were doing was not prudent, which perpetuated the mortgage misconduct.

All told, SunTrust originated up to 175,000 “Agency Shortcut” loans nationwide for over $30 Billion over about two years from thousands of SunTrust employee and Third-Party Originator (TPO) conspirator-partners nationally making it one of the largest, longest running and widest spread whole loan origination malpractice schemes of the credit/housing bubble.   

This elegant, intentional, Fannie Mae Automated Underwriting System driven and enabled scheme was differentiated from any other of the period, as thousands of SunTrust commissioned production employees, production support personnel and TPO partners all had hands-on, specialized roles carrying out the misconduct and all benefitted from it.

SunTrust’s mortgage misconduct was highly differentiated and grand in scale. To an analyst, investor or regulator less acquainted with the fine nuances of the mortgage credit and capital markets their misconduct might appear to fit in the mold of the numerous, more ‘vanilla’ mortgage indiscretions that were discovered, investigated and prosecuted or settled over the past decade. But SunTrust’s mortgage misconduct was one-of-a-kind.

In the fullest interest of transparency in markets the general public need to know that these indiscretions did in fact occur and fully examine what occurred. Tens of thousands of homeowners, investors and municipalities were financially injured. While a high relative percentage of these bad loans resulted in default, foreclosure or modification thousands of them, largely 30-year fixed rate in nature, still exist in SunTrust’s and other lender’s servicing portfolios and are identifiable. 

The following is a summary of the SunTrust “Agency Shortcut” scheme.

SunTrust “Agency Shortcut” Scheme Overview

During the credit bubble SunTrust Mortgage was an influential retail, wholesale and correspondent lender, the latter two channels pertaining to the riskiest origination funnel, TPO (Third-Party Originations).  TPO – co-opting thousands of local mortgage brokers and bankers in the best lending markets in the nation -- allowed SunTrust, a relatively small bank and mortgage company, to lend at scale virtually nationwide despite not having a network of traditional brick and mortar bank branches in most states. Instead, it established about a dozen strategically located mortgage sales, processing, underwriting and funding operations centers in large, major metropolitan areas that were exclusive to mortgage and capable of extracting a high volume of business from states outside their bank footprint. 

Through the power of TPO SunTrust was able to compete with massive financial institutions like BofA, Chase and Wells Fargo as equals in loan program variety, origination and secondary market activity but without all the fixed overhead. This was great when the credit markets were compliant as the credit bubble grew. But, when the tide turned it left smaller, TPO-heavy lenders -- that had been pretending to be mega-national banks for the purposes of mortgage lending -- without the balance sheet wherewithal to be able to manage through it. Furthermore, TPO loan volume was so large -- absolutely and as a percentage of their total volume -- and concentrated in the riskiest, high-flying regions it left banks such as SunTrust with massive representation and warranty exposure that dwarfed their loan and legal reserves for years afterward. This forced management into numerical and verbal gymnastics in quarterly financial statements and investor calls for years about such exposure either not existing or being mitigated years sooner than it ever could be.

During the years of 2006 to 2008 – interestingly, these years that encompass the beginning and official start of the credit and housing market collapse, a time other lenders were cutting off exotic loan programs and even shutting down the ability to draw on existing HELOCs -- SunTrust Mortgage originated for sale to Fannie Mae between $19 Billion and $38 Billion in “Shortcut” loans. The name “Shortcut” defines this misconduct well and is reminiscent of names given to other poor-quality exotic loans by lenders such as the Countrywide “Fast & Easy” and “Hustle”. 

The “Shortcut” was SunTrust’s entrant into the high-volume, low-quality, originate-for-immediate-sale game. In fact, based on the timing, it’s obvious that SunTrust took advantage of other lenders leaving the exotic mortgage field or going out of business in order to capture loan volume and revenue through this misconduct.

Shortcut loans were labelled and sold as “fully documented prime” loans but in fact were all missing all of the exact income and asset documentation that makes a mortgage loan “fully documented” in the guidelines of Fannie Mae and investors in its mortgage backed securities. SunTrust quietly discontinued the loan program after two years in 2008 amidst a rush of failing lenders and significant scrutiny by Wall Street, the media and regulators.

Sure, some lenders and capital markets players originated and sold more than $30 billion in GSE residential loans or securities. But SunTrust was the only lender that had a national loan origination manufacturing production line built on malpractice and co-opted/taught thousands of their own bank-employee loan officers and underwriters and well as mortgage brokers and bankers to commit this highly specific mortgage misconduct from their own private PC’s on nearly 200,000 loans through a learned “hack” of Fannie Mae’s Automated Underwriting System.

SunTrust “Agency Shortcut” Scheme Details

Primarily: In their various earnings reports and filings, from 2006 on, SunTrust Bank (“STI”) and its wholly-owned subsidiary SunTrust Mortgage (“STM”) repeatedly misrepresented and omitted disclosing the risks associated with an “Alt-A” Stated Income/Stated Asset (“SISA”) loan program they co-developed for sale to FNMA, named “The Agency Shortcut Mortgage” (“Shortcut”), which was offered from mid-2006 to April 2008.

Also: STM originated and sold to Fannie Mae over $30 Billion of questionable loans that were much closer to “Alt-A” or “subprime” than prime. Shortcut’s atypically lax qualification guidelines (compared to industry standards) and its “same-as-full-doc” pricing meant STM would originate a large volume of these loans. As STM failed to institute meaningful internal controls that could have prevented commissioned sales personnel from submitting non-conforming, questionable and fraudulent loan applications, and as management turned a willful blind eye to problems (such as increasing Early Payment Default rates) when they came to light, the huge volume of Shortcut loans was even lower in quality than most Alt-As/SISAs.

Finally: As misconduct begets more misconduct, STM co-acted with the various Private Mortgage Insurance Companies (“MI Companies”) to cover-up the “reduced doc” nature of the Shortcut Loan Program by implementing special codes - or by ignoring the reduced doc feature altogether - on the MI applications, thereby falsely representing to the MI Companies’ regulators and investors that the Shortcut was a prime/full-doc loan.

Direct victims of the SunTrust Shortcut scheme include past and present STI equity and debt investors and FNMA Mortgage Backed Securities investors. Also, US taxpayers (as a result of the FHFA’s taking over FNMA and Freddie Mac), and unwitting Borrowers (who were unable to make timely payments on oversized loans they could not afford, ultimately resulting in foreclosure) suffered damages as well.

Individual States, municipalities and their citizens were also injured as SunTrust entered these markets far away from their traditional banking footprint, popped-up TPO mortgage origination and operation centers and originated billions of bad loans. Then, when the going got tough, they closed down their operations centers and retreated back to their footprint in the Southern United States leaving far away States and their residents to clean up the mess themselves.

Furthermore, as a result of the Shortcut scheme, substantial ill-gotten gains in the form of commissions, bonuses and other income flowed to STM’s salespersons, managers, directors, TPO originators, Realtors and anybody else involved in the origination and sale process of a Shortcut loan.

(Note: Institutions such as JPM Chase/WaMu, BofA/Countrywide, and others have been found liable (or have settled claims) for victimizing Fannie and Freddie by selling low-quality mortgages that failed to meet the representations and warranties promised. Among those damaged by their frauds were the investors in the GSE’s MBSs. Regardless of the extent Fannie knew or should have known that Shortcut loans were high-risk SISAs and not prime, STI itself knew these sub-standard loans would eventually end up in Fannie MBSs, and therefore that the undisclosed risk would -at the very least - be borne by those investors.)


Summary of Evidence:

A) When developing and Deploying the Agency Shortcut Program, SunTrust knew or should have known:

  1. It was a Stated Income/Stated Asset loan program (“SISA”) and - by virtue of its “reduced documentation” - therefore fit the bank’s own, in-house definition of “Alt-A.”

(Note: on SISA loans, the Borrower merely attests to his/her income and assets on the loan application and does not provide the pay stubs, tax returns, bank statements and like-documentation to support those figures.)

  1. SISAs - ubiquitously called “Liars’ Loans” - were known to be susceptible to fraudulently overstated income and asset figures and carried an outsized risk of serious delinquency and default.
  2. The Shortcut program served to implement the dual strategies STM disclosed at the 2006 Mortgage Bankers Association convention to: a) reduce loan processing times from 61-110 days down to 6 days; and b) “selectively transfer credit risk to other investors” (in this case, FNMA and, ultimately, Fannie’s MBS investors).
  3. By offering Shortcuts at the same price as full doc - which was more than 2 points (or over .50% in rate) cheaper to the Borrower - they would capture a higher market share and originate substantially more volume than they otherwise would have, so not only would the Company’s short-term Gross/Net Income increase, but also commission, bonus and other income for certain personnel.
  4. The mortgages would eventually be placed into FNMA MBSs, but not properly identified as Alt-As/SISAs.  Therefore, the MBSs investors would not be able to properly assess the riskiness of those pools…and the losses would be eventually be borne by those investors (via less-than-anticipated ROI/opportunity costs) and by Fannie (via their guarantees).
  5. As soon as STM actively marketed the availability of the program, it transformed the program from an ostensibly “Lender-Selected SISA” into a “Borrower-Selected SISA” and DQ/Default percentages would thereby skyrocket.

(Note: “Lender-Selected SISAs” are those wherein the Lender decides unilaterally not to review income or asset documentation because the overall risk of the loans(based on dubious criteria) are deemed sufficiently low and thereby presents an opportunity for the lender to reduce its own processing costs - and usually are offered to the borrower at the same rate and price as full-doc loans; “Borrower-Selected SISAs” are those wherein the Borrower specifically requests not to provide income and asset documentation to the lender and - usually - pays an increased rate and/or price for that feature. It’s been reported that “Lender-Selected SISAs” default at 1.4 times Full Doc loans; Per FNMA Filings, Borrower-Selected SISAs default at more than 5 times the rate of Full Doc loans - and that number actually is lower than the true rate due to FNMA’s definitions and methodologies.)

  1. By not requiring a Borrower-signed IRS form 4506 as part of the loan application - and by advertising such in their promotional materials - STM overtly invited Borrowers and Brokers to submit fraudulent loan applications.

(Note: A signed IRS Form 4506-T allows a lender to obtain a Borrower’s tax transcripts from the IRS to confirm income stated on the loan application is reasonably accurate, and - even when not exercised by the lender - serves as a deterrent to fraudulently overstated income on mortgage applications.)

  1. By failing to place adequate controls on brokers and commissioned salespersons in processing of the Shortcut loans - and by instructing them that the income stated on the application need merely be “reasonable” (as opposed to “accurate”) - STM subverted any meaningful risk assessment of the individual loans by their own underwriters.

(Note: examples of inadequate controls included allowing commissioned salespersons and their assistants to run the Automated Underwriting System (“Desktop Underwriter” or “DU”), allowing them to run DU an unlimited number of times, and instructing them they could evade underwriter scrutiny by inputting “reasonable”- not “accurate” - income and asset figures. These lax processes allowed the commissioned salespersons, etc. to modify the various inputs in DU until they reached an optimal configuration that resulted in a Shortcut approval.)

  1. The riskiness of SISA programs without 4506s - characteristics which carried at least a 2.125% (price) premium from their peers and competitors - far outweighed the benefits, if any, of requiring a (rather modest) 680-plus FICO score;
  2. By allowing monthly debt-to-income (“DTI”) ratios as high as 64.99% - far higher than the standard for prime loans, Shortcuts would devolve into something even closer to subprime.

(Note: industry standards for maximum DTI on SISA products were more commonly 45% - 50%, depending on the lender and/or other loan characteristics, such as LTV/CLTV and/or FICO score.)

  1. By advertising “No Payment Shock” publicly and to mortgage brokers as a feature in marketing materials STM obviated yet another risk assessment.

(Note: “Payment Shock” is a term that describes a significant increase in a borrower’s housing payment as a result of the new loan. If DTI ratios are fairly elevated, underwriters traditionally look to the borrower’s “ability to save” as indicated by their liquid assets as an offsetting factor to determine whether the borrower can handle the increased debt load.)

  1. Inconsistencies of Shortcut’s SISA characteristics versus its ersatz “Full doc” labeling had to be reconciled with the MI companies, such that “special negotiations” were required to resolve those inconsistencies.

(Note: Shortcut loans submitted to a majority of the MI companies required “special coding” and - to the extent that the MI companies may have failed to properly disclose to their own regulators and investors the full extent of reduced-document loans on their books - they may have been complicit in a related fraud.)

  1. The difficulties in placing a “Combo 2nd NIV” - (“NIV” = “No Income Verification”) - loan behind a Shortcut First mortgage created special difficulties, because including any income or asset documentation in a loan file - regardless whether it supported or contradicted other data in the file - disqualified it from Shortcut. Initially, STM required that underwriters use a cumbersome form (“The Agency Shortcut Mortgage Eligible Secondary Financing Checklist”) to reconcile the asset documentation requirements otherwise required on the Combo 2nd NIVs with the inability to include those same documents on the Shortcut.

(Note: “NIV” loans - which were offered by numerous lenders - are incrementally less risky than SISAs, as the Borrower’s Liquid Assets are reviewed and are generally required to be at least a given multiple of the Borrower’s stated monthly income. Also: Due to difficulties in requiring its employees to walk such a thin line re asset verifications - and following too many improperly completed “Checklist” forms - eventually STB reconfigured the Combo 2nd NIV program and abandoned the asset-verification requirement altogether, pricing the program slightly higher to include a “Shortcut Documentation Feature,” effectively turning the Combo 2nd into a SISA.)

B) During the SunTrust Agency Shortcut program’s lifespan, SunTrust knew or should have known:

  1. Early Payment Defaults (“EPDs” - deemed industry-wide to be a strong indicator of fraud) were rising significantly by summer 2007, yet - other than tepidly advising underwriters “to be on the lookout for fraud” - few significant steps were taken to reduce EPDs.
  2. The number of submissions to Fannie Mae DU on Shortcut loans was positively correlated to delinquencies and defaults, but it wasn’t until a couple of months prior to the termination of the Shortcut program - and then only at FNMA’s insistence - that a limit of 15 runs (still high) was imposed.
  3. SunTrust employee Account Executives (and their assistants and processors) “manufactured” Shortcut approvals in DU by “laddering” income and/or otherwise tweaking their inputs, not infrequently submitting loans to DU more than a dozen times.
  4. Wholesale area managers encouraged the AEs (and/or their support personnel) to run DU for their third-party client brokers - ostensibly as a “value-added” service, but actually because it increased the likelihood that STM employees (with more experience and understanding of the nuances of DU’s algorithms that generated Shortcut approvals) would input figures that would produce the desired outcome.
  5. Various “enhancements” to the program which were added periodically through most of 2007 served to make the Shortcut underwriting guidelines even “looser.” By December 20, 2007 - and only in the face of indisputably poor loan performance of the Shortcut - some of the program’s loosest guidelines were finally tightened, but even then, they still remained far looser than more traditional underwriting guidelines.

(Note: some of the “tightening” that occurred in December, 2007 (not “mid-2006” as stated in numerous SEC filings) included no longer allowing “outstanding mortgage delinquencies at time of application” or Property Inspection (Appraisal) Waivers - low-level qualification guidelines which really should have been implemented from Shortcut’s outset.)

  1. Area managers - taking their cues from an “anything goes (so long as its ‘sellable’)” mentality that characterized STM’s mortgage operations and from upper management’s mandate to reduce loan processing times - cut corners for risk assessment in not only the Agency Shortcut Program, but other loan programs as well.

(Note: For example, underwriters who questioned the validity of various file components were routinely told by managers to “just go with what you have” and approve the loan. At least one STM region’s policy included moving income, asset, and other critical verifications on Full-Doc loans from “prior to (loan) doc” conditions to “prior to funding” conditions - which served further to pressure underwriters from making adverse decisions. It was no surprise, then, when a complaint issued by the NY Atty. General in October 2012 against JPM Chase/Bear Stearns on shoddy mortgages singled out SunTrust for its eye-popping 86% defect rate on the originations they sold to Bear Stearns.)

  1. Despite guidelines ostensibly requiring “reasonable” income be stated on loan applications, a significant number of Shortcut loans did not meet even to that low standard. Management routinely gave “override” approvals on files the underwriters deemed to have suspect income and/or other shortcomings, and - to the WB’s knowledge - not once did management recommend a loan be declined when the underwriter thought it should be approved.

(Note: it was not until late-summer or fall of 2007 that underwriters were provided with even minimally adequate tools with which to assess reasonableness of salaried income borrowers. Regardless, managers still overrode the guidance offered by such tools, and routinely allowed “higher-than-reasonable” income to be used nonetheless.)

  1. HMDA data showed STM’s loan declinations overall - and specifically declines due to insufficient income - were substantially lower than their banking peers and competitors during the Agency Shortcut’s lifespan.

(Note: In 2007, SunTrust declined 4.4% of its applications and only 1.2% due to income; By way of example, Wells Fargo’s numbers were 18.6% (applications) and 3.6% (income) and BofA’s were 17.0% (applications) and 8.6% (income).)

  1. “Fallout ratios” (i.e. loan applications submitted but not funded) increased substantially after termination of the Shortcut Program, doubling or tripling for some commissioned salespersons.

(Note: This suggests, of course, that significantly fewer loan approvals could be manufactured without the “crutch” of allowing commissioned personnel to input falsified income and asset data into DU and generating Shortcut approvals.)



Tyler Durden Sun, 10/13/2019 - 20:10
Published:10/13/2019 7:21:46 PM
[Markets] Hedge Fund Trader Who Called 2008 Crash Lists 3 Biggest Threats To US Stocks Hedge Fund Trader Who Called 2008 Crash Lists 3 Biggest Threats To US Stocks

Goldman Sachs alum and former hedge fund manager Raoul Pal is one of a handful of traders/fund managers/analysts who achieved fame and notoriety in the financial press after "predicting" the financial crisis of 2008.

And during a brief phone interview with MarketWatch on Thursday, it appears Pal, the author of the Global Macro Investor newsletter -  a newsletter that is purportedly closely followed by macro traders (at least those remaining macro traders who still have a pulse and are composed mostly of flesh and blood) - has a few thoughts about what will bring about the next sustained downturn in global markets.

As Pal sees it, there are three major risk factors facing US markets in particular that could trigger a selloff the magnitude of which we haven't seen since the crisis (thanks, in large part, to the Federal Reserve and PPT). And the increasingly fraught trade talks were not among them.

Raoul Pal

The first is a perennial source of concern among sell-side analysts across Wall Street (warnings we have echoed in the past): The blackout period for corporate share buybacks, which hits around the release of quarterly earnings.

Even Pal's former employer has warned about what might happen to the broader market if Democrats succeed in banning corporate share buybacks, or pass new restrictions to restrict them.

After all, corporations are, and have long been, the largest source of equity demand.

"We’re coming into a period of illiquidity for equities," Pal told MarketWatch.

Secondly, Pal brought up an issue that has captivated investors over the past month: The complications in the repo market. Now, Jerome Powell appeared to announce 'Not-QE-4'  the other day to try and reassure investors that institutions in need of some quick cash for collateral will be able to access those dollars without being forced to pay exorbitant interest rates.

But according to Pal, dealers' unwillingness to take more collateral onto their books in exchange for providing an essential source of liquidity for markets is certainly concerning.

Finally, Pal said the third biggest issue facing stocks is Baby Boomers cashing in their chips as they prepare for retirement. According to Pal, many seniors who are tapping their retirement accounts have been advised to liquidate about 5% of their individual retirement accounts (which have been loaded up with equities) every year after they turn 70.

"The problem is the gap between this year and last year is huge. It’s like 50% increase in the amount of selling that has to be done," Pal said. "They have to start selling by year-end. If you take out the Christmas week and you’re a financial adviser, and you want to get this done early, you will start in October."

Tyler Durden Sun, 10/13/2019 - 19:45
Published:10/13/2019 6:49:48 PM
[Middle Column] ‘You’ll Be Amazed,’ Says Book Review In Japan’s On Marc Morano’s ‘Politically Incorrect Guide to Climate Change’

Sankei Shimbun: "We recommend you take this book because it is easy to read. You’ll be amazed at each chapter. It is full of scientific controversies and scandals over global warming that are not well understood in Japan.”

No consensus: The Sankei Shimbun concludes that Mr. Morano’s book provides “an overall picture of the global warming issue” and that it is an issue which “can be viewed from multiple perspectives.”

Recently Morano’s book has climbed near the top of the charts for books under Environment.

[Note: Reports from Japan reveal: "The Amazon Japan rank of the translation shooted
instantly to within 100, among about two million books."]

View image on Twitter

Published:10/13/2019 6:19:18 PM
[Markets] Trade Deal Done? Is 3300 The Next Stop For The Market? Trade Deal Done? Is 3300 The Next Stop For The Market?

Authored by Lance Roberts via,

Trade Deal Done

On Thursday and Friday, the market surged on hopes that a “trade deal” was coming to fruition. This was not a surprise to us, as we detailed this outcome two weeks ago:

‘For Trump, he can spin a limited deal as a ‘win’ saying ‘China is caving to his tariffs’ and that he ‘will continue working to get the rest of the deal done.’ He will then quietly move on to another fight, which is the upcoming election, and never mention China again. His base will quickly forget the ‘trade war’ ever existed.

Kind of like that ‘Denuclearization deal’ with North Korea.'”

As we discussed in that missive, a limited “trade deal” would potentially set the markets up for a run to 3300. To wit:

Assuming we are correct, and Trump does indeed ‘cave’ into China in mid-October to get a ‘small deal’ done, what does this mean for the market. 

The most obvious impact, assuming all ‘tariffs’ are removed, would be a psychological ‘pop’ to the markets which, given that markets are already hovering near all-time highs, would suggest a rally into the end of the year.”

This is not the first time we presented our analysis for a “bull run” to 3300.

Every week, we review the major markets, sectors, portfolio positions specifically for our RIA PRO subscribers (You can check it out FREE for 30-days)Here was our note for the S&P 500 previously.

  • We are still maintaining our core S&P 500 position as the market has not technically violated any support levels as of yet. However, it hasn’t been able to advance to new highs either.

  • There is likely a tradeable opportunity approaching for a reflexive bounce given the depth of selling over the last couple of weeks.

This is the outcome we expected.

  • There is no “actual” deal.

  • The “excuse” will be this deal lays the groundwork for a future deal.

  • No one will discuss a trade deal ever again.

It is almost as if Bloomberg read our work:

“The U.S. and China reached a partial agreement Friday that would broker a truce in the trade war and lay the groundwork for a broader deal that Presidents Donald Trump and Xi Jinping could sign later this year.

As part of the deal, China would agree to some agricultural concessions and the U.S. would provide some tariff relief. The deal under discussion, which is subject to Trump’s approval, would suspend a planned tariff increase for Oct. 15. It also may delay — or call off — levies scheduled to take effect in mid-December.”

So, who won?


  • China gets to buy agricultural and pork products they badly need.

  • The U.S. gets to suspend tariffs.

Who will like the deal?

  • The markets:  the deal removes a potential escalation in tariffs.

  • Trump supporters: Fox News will “spin” the “no deal” into a Trump “win” for the 2020 election. 

  • The Fed: It removes one of their concerns potentially impacting the economy.

By getting the “trade deal” out of the headlines, this clears the way for the market to rally potentially into the end of the year. Importantly, it isn’t just the trade deal providing support for higher asset prices short term:

  • There now seems to be a pathway forward for “Brexit”

  • The Fed is injecting $60 billion a month in liquidity into 2020 (More on this below)

  • The Fed has cut rates and is expected to cut again by year end.

  • ECB back into easing mode and running negative rates

  • Fed and ECB loosening capital requirements for banks (Because they are so healthy after all.)

This is also a MAJOR point of concern.

Despite all of this liquidity and support, the market remains currently confined to a downtrend from the September highs. The good news is there is a series of rising lows from June. With a “risk-on” signal approaching and the market not back to egregiously overbought, there is room for the market to rally from here.

Let me repeat what we wrote back in July:

“As we face down the last half of 2019, we can once again run some projections on the bull and bear case going into 2021, as shown in the chart below:”

The Bull Case For 3300

  • Momentum

  • Stock Buybacks

  • Fed Rate Cuts

  • Stoppage of QT

  • Trade Deal

However, while the case for a push higher is likely, the risk/reward still isn’t great for investors over the intermediate term. A failure of the market to make new highs, given the amount of monetary support, will be a very bearish signal.

The Fed’s “Not QE”, “QE”

Sure thing, Brian.

As I noted previously:

“Then there are the tail-risks of a credit-related event caused by a dollar funding shortage, a banking crisis (Deutsche Bank), or a geopolitical event, or a surge in defaults on “leveraged loans” which are twice the size of the “sub-prime” bonds linked to the “financial crisis.”  (Read more here)

Just remember, bull-runs are a one-way trip. 

Most likely, this is the final run-up before the next bear market sets in. However, where the “top” is eventually found is the big unknown question. We can only make calculated guesses.”

Think about this logically for a moment.

  1. The yield curve inverts which puts pressure on bank loans and funding.

  2. The Fed cuts rates, which puts pressure on banks net interest margins.

  3. The banks are chock full of leverage loans, risky energy-related debt, subprime auto loans, etc. 

  4. The Fed begins reducing excess reserves.

  5. All of a sudden, banks have a problem with overnight funding.

  6. Fed reduces liquidity regulations (put in place after Lehman to protect the financial system)

  7. Fed now has to commit to $60 billion in funding through January 2020 to increase reserves.

The last point was detailed in a recent FOMC release:

“In light of recent and expected increases in the Federal Reserve’s non-reserve liabilities, the Federal Open Market Committee (FOMC) directed the Desk, effective October 15, 2019, to purchase Treasury bills at least into the second quarter of next year to maintain over time ample reserve balances at or above the level that prevailed in early September 2019. The Committee also directed the Desk to conduct term and overnight repurchase agreement operations (repos) at least through January of next year to ensure that the supply of reserves remains ample even during periods of sharp increases in non-reserve liabilities, and to mitigate the risk of money market pressures that could adversely affect policy implementation.

In accordance with this directive, the Desk plans to purchase Treasury bills at an initial pace of approximately $60 billion per month, starting with the period from mid-October to mid-November.”

NOTE: If you don’t understand what has been happening with overnight lending between banks – READ THIS.

The Fed is in QE mode because there is a problem with liquidity in the system. Given the Fed was caught “flat-footed” with the Lehman bankruptcy in 2008, they are trying to make sure they are in front of the next crisis.

The reality is the financial system is NOT healthy. 

If it was, then we would:

  1. Not still be using “emergency measures” to support banks for the last decade. (QE, LTRO, Etc.)

  2. Not be pushing $17 trillion in negative interest rates on a global basis.

  3. Have reinstated FASB Rule 157 in 2012-2013 requiring banks to mark-to-market the assets on their books. (A defaulted asset can be marked at 100% of value which makes the bank look healthy.)

  4. Not be needing to reduce liquidity requirements.

  5. Not be needing $60 billion a month in QE.

Oh, but that’s right, Jerome Powell denies this is “QE.”

“I want to emphasize that growth of our balance sheet for reserve management purposes should in no way be confused with the large-scale asset purchase programs that we deployed after the financial crisis. Neither the recent technical issues nor the purchases of Treasury bills we are contemplating to resolve them should materially affect the stance of monetary policy. In no sense, is this QE,” – Jerome Powell

It’s QE.

Just so you can understand the magnitude of the balance sheet increase over the last couple of weeks, the largest single week increase from 2009 to September 20th, 2019 was $39.97 billion.

The last two weeks were $58.2 and $83.87 billion respectively. 

But, it’s not Q.E.

So, what was it then?

This was not about covering unexpected cash draws to pay quarterly taxes, which was one of the initial excuses for the funding shortfalls.


This was bailing out a bank that is in serious financial trouble. It started with the ECB a month ago loosening requirements on banks, then proceeded to the Fed reducing capital reserve requirements and flooding the system with reserves. 

Who was the biggest beneficiary of all of these actions? Deutsche Bank.

Which is about 4x as large as Lehman was in 2008 and is currently following the same price path as well. Let me repeat, the Fed is terrified of another “Lehman Crisis” as they do not have the tools to deal with it this time.

(Courtesy of ZeroHedge)

The problem for the Fed, is that while they insist recent rate cuts are “mid-cycle” adjustments, as was seen in 1995 to counter the risk of the Orange County bankruptcy, the reality is the “mid-cycle” has long been past us.

With the Fed cutting rates, injecting weekly records of liquidity into the system, at a time where economic data has clearly taken a turn for the worse, the situation may “not be in as good of a place” as we have been told. 

Being a little more cautious, taking in some profits, and rebalancing risks continues to be our recipe for navigating the markets currently.

Tyler Durden Sun, 10/13/2019 - 11:30
Published:10/13/2019 10:47:12 AM
[Culture] Review: Matt Stoller’s ‘Goliath’

Thanks to the ascent of tech giants such as Google, Facebook, and Amazon, legislators, policy analysts, and pundits are taking a fresh look at antitrust law. The time is ripe for books laying out both sides of this issue: the populist case that we need to smack down companies that get too big and powerful, and the libertarian case that the government should keep its clumsy hands off our most successful businesses.

The post Review: Matt Stoller’s ‘Goliath’ appeared first on Washington Free Beacon.

Published:10/13/2019 4:15:52 AM
[Markets] Locked Up: How The Modern Prison-Industrial Complex Puts So Many Americans In Jail Locked Up: How The Modern Prison-Industrial Complex Puts So Many Americans In Jail


"Where you find the laws most numerous, there you will find also the greatest injustice."

- Arcesilaus, Greek philosopher and student of Plato on power and personal sovereignty

There’s no two ways about it: The United States of America and its 50 state governments love putting people in prison.

The U.S. has both the highest number of prisoners and the highest per capita incarceration rate in the modern world at 655 adults per 100,000. (It’s worth noting that China’s incarceration statistics are dubious, and they execute far more people than the United States. Indeed, the so-called People’s Republic executes more people annually than the rest of the world combined.)  Still, that’s more than 2.2 million Americans in state and federal prisons as well as county jails.

On top of those currently serving time, 4.7 million Americans were on parole in 2016, or about one in 56. These numbers do not include people on probation, which raises the number to one in 35. Nor does it include all of the Americans who have been arrested at one time or another, which is over 70 million – more than the population of France.

For firearm owners in particular, the growth in this “prison-industrial complex” is troubling because felons are forbidden from owning firearms and ammunition under the 1968 Gun Control Act. As the number of laws has grown and the cultural shift for police has gone from a focus on keeping the peace to enforcing the law, more and more Americans are being stripped of their 2nd Amendment rights (not to mention other civil rights like voting – as of 2017, 6.1 million Americans cannot vote because of their criminal records). All told, eight percent of all Americans cannot own firearms because of a felony conviction.

For American society as a whole, the prison-industrial complex has created a perverse incentive structure. Bad laws drive out respect for good laws because there are just so many laws (not to mention rules, regulations, and other prohibitions used by federal prosecutors to pin crimes on just about anyone). How did we get here?

History of Incarceration in the U.S.

United States law is, of course, based on English common law. Thus, no history of incarceration in the United States can start without first discussing the history of incarceration in the Kingdom of England and later the United Kingdom of Great Britain.

The prevailing notion of where crime came from in the old country and the colonies was idleness. Punishments often involved sending criminals to workhouses, which were quite distinct from the prisons we know today. Rehabilitation and reform weren’t strong currents in the English and later British penal system until the 1700s. Reformers sought to improve the criminal and to make him not want to offend.

Another historical fact worth noting is that incarceration is a relatively recent innovation in punishment. Historically, criminals were punished by shaming, corporal punishment, mutilation, exile and death. The purpose was generally not to make the criminal better, but to deter him from offending again while simultaneously providing the community with some awareness of his crimes for the purpose of allowing them to take measures to protect themselves (for example, branding a “B” on the forehead of a burglar). Where criminals were incarcerated, it was generally a temporary measure prior to trial or post-trial punishment, not a punishment in and of itself.

Remember, a significant portion of early American settlers were convict laborers. This convict labor was not incarcerated, but rather freely mingled with the general population. For the safety of the non-criminal elements, they had to be quickly and easily identified. However, the early American colonies were in no position to expend resources to house, feed and clothe criminals who were not providing productive labor – which is why incarceration made about as much sense as cutting off a criminal’s hand. Only four types of criminals were prohibited from being shipped across the ocean from England: murderers, rapists, burglars, and witches.

Prison became the primary means of punishment for felonies in the years leading up to the American Revolution. Two systems emerged: One where prisoners were incarcerated alone and another where they were incarcerated in groups. For what it’s worth, most prisons were in the North. Throughout the South, crime was largely viewed as a northern problem. Rather than prison, the Antebellum South relied heavily on extra-judicial violence and honor culture to keep their crime rates low.

Prison labor has been a feature of prisons going back to days of English and British colonial rule. However, the convict lease system changed this qualitatively in the late 1880s. This is when prisons began to be paid for the labor of their convicts. Many times, convicts were put to work on plantations. Building railroads and coal mining were other common uses of convict labor during this period. Death rates were high. In Alabama, a full 40 percent of convicts used for leased labor died in 1870.

The convict lease system gradually died out. However, it was replaced with systems not terribly distinct from convict labor. The chain gangs and prison farms closely identified with southern punishment throughout the 20th Century are examples of what began to replace the convict lease system. While there were rumblings about bringing back the chain gang system in the 1990s, it never amounted to much.

Overcriminalization = Less Civil Liberties

One of the fundamental principles underpinning our Constitutional republic is that the citizenry should not accept “trust me” as an answer from the federal government. Yet in one of our most Orwellian of federal departments – the Department of Homeland Security – a surveillance state is growing as our private information “trusted” to the government is used against us.

This surveillance state is made possible by Fusion Centers, police intelligence agencies that allow different police agencies to share intelligence with one another. It is, in effect, the intelligence-gathering method of the burgeoning police state. And the information gathered, received, analyzed and disseminated by local and state police agencies is then shared with the federal government.

Fusion Centers aren't the only way police surveil citizens. Cell-site simulator devices – known as Stingrays – mimic wireless carrier cell towers to connect to nearby mobile phones and cell data devices. These controversial devices can extract data, intercept communications, conduct denial-of-serice attacks, find encryption keys, and more. It's a serious threat to Americans' privacy and civil liberties, first conceived during the War on Terror and now trickled down to local police departments and their militarized approach to enforcing the law.

Of course, while we’re assured that protections are being made for privacy and civil liberties, there is very little reason to trust the federal government – including the growing number of vague laws.

It’s easy to blame the War on Some Drugs as the reason for the explosion in the prison population, however this is simply not an adequate explanation. The real reason is a broad expansion in the total number of laws on the book and the vague manner in which they are written. What’s more, the concept of intent has largely disappeared from our national legal lexicon, meaning that simple mistakes are often enough to land a person in prison.

66-year-old George Norris provides a case study. He was greeted by three pickup trucks filled with six officers outfitted in flak jackets. He was held for four hours while the police searched his house, eventually seizing 37 boxes of his things with neither warrant nor explanation. He was indicted for orchid smuggling under the Convention on International Trade in Endangered Species and for (what else) making false statements to an officer for a simple paperwork error. While being held for trial, he shared a cell with an accused murderer. He was facing five years for the original charge and five years for conspiracy. Because he couldn’t afford his legal bills, he plead guilty and was sentenced to 17 months in prison.

Another broad example is civil-contempt imprisonment. This is where people are put in jail or prison for failure to, for example, respond to a bench warrant for an unpaid parking ticket. This is what Anthony W. Florence was arrested for while riding as a passenger in his family’s car with proof that he had paid the tickets. He spent seven days in jail where he was strip searched twice. Guards also watched him shower and subjected him to a delousing. People have also been imprisoned for failing to pay debts in accordance with court-ordered settlements, which carries the specter of the return of debtors’ prisons with it.

The Principle of Minimum Necessary Force

Minimum necessary force is a concept dating back to Plato, but has recently found expression in Dr. Jordan Peterson’s book 12 Rules for LifeBasically, the idea is that when someone wrongs another person, the correct course of action is always the one requiring the least force. This is why, for example, we can say that the Islamic practice of removing a thief’s hand is somehow objectively unethical – it is a punishment grossly out of proportion to the crime committed.

The secondary aspect to the principle of minimum necessary force is the notion that the best way to go about laws is to have as few as are necessary. While not strictly speaking “libertarian,” it’s sort of “libertarian adjacent.” Laws are, ultimately, a type of force. The more of them we have, the more force we have in society.

The present state of criminal justice in the United States violates both principles. Not only do we have far more laws than we need (criminal asset forfeiture, for example), but the punishments are frequently far out of sync with the crime committed. Is prison time really an appropriate response to someone smuggling orchids into the United States?

The Rise of Private Prisons

You cannot have a discussion on the prison-industrial complex without discussing private prisons. As of 2018, private prisons housed 8.41 percent of incarcerated persons in the United States. While private prisons date back to the colonial days, the modern privatized prisons as we think of them only date back to the 1980s. This was initially due to the explosion of prison population and resulting prison overcrowding that some have tied to the War on Some Drugs.

This spike in incarceration, however, is far more closely tied with the rise of private prisons. Between the years 1925 and 1980, the prison population in the United States remained constant as a proportion of the overall population. In 1983, however, two things happened: First, the first private prisons came into operation. Second, the prison population as a proportion of the overall population began to explode.

The first modern private incarceration company was Corrections Corporation of America (CCA), founded in 1983, and is currently known as CoreCivic. Their first contract was for a facility in Shelby County, Tennessee. This was the first time in American history when a government-run jail was contracted out to a private third party. The company made quick headlines when it offered to take over the entire prison system for the state for the sum of $200 million. The state, for its part, was quite ready to make a deal, but the backlash among the public, the prison guards union, and the state legislature ultimately squashed the deal.

This was hardly the end of the for-profit prison system. Fully 19 percent of all federal inmates are housed in privately owned and operated prisons. A comparatively lower 6.8 percent of all state inmates are housed in private prisons.

Since its founding, CoreCivic has seen a 200-percent increase in its profits. So it’s no surprise that the marketplace for private prison companies has become a bit crowded. Companies like the GEO Group, Inc. (formerly known as Wackenhut Securities), Management and Training Corporation (MTC), and Community Education Centers compete in a marketplace that took in $500 billion in 2011 alone according to Matt Taibbi’s book The Divide: American Injustice in the Age of the Wealth Gap.

The book further points out that major Wall Street money has flowed into this industry. Wells Fargo alone has $100 million invested in GEO Group and another $6 million in CCA. Fidelity Investments, The Vanguard Group, General Electric and Bank of America are likewise heavily invested in private prisons.

Some other numbers give a bit of shape to the scale of private prisons: CoreCivic has 80,000 beds in 65 different facilities. The GEO Group has 49,000 beds spread out over 57 correctional facilities. Most private facilities are in the West and the Southwest, where state and federal prisons freely mingle with one another.

Private Prisons Are Not Safe

Private prisons are, by virtually every metric, a worse place to hang your hat than government prisons. United States Department of Justice report in 2016 found that private prisons were less secure, less safe, and more punitive than government-run prisons. The DOJ stated that it would cease the use of private prisons. However, soon thereafter, the Department of Homeland Security announced that it would renew its contract with CCA operation of the South Texas Family Residential Center, an immigration detention facility. Stock prices for private incarceration firms spiked upon the election of Donald Trump. President Trump’s Attorney General Jeff Sessions overturned the previous ban on private prisons.

The lax culture of safety and security in private prisons is not just a problem for the inmates. It’s also a problem for the people in the communities where the prisons are located. For example, three murderers escaped from a minimum/medium security prison – Kingman Arizona State Prison – in Mojave, Arizona. This resulted in a murder, robbery and carjacking before the men were captured. The state Attorney General, Terry Goddard, laid the blame at the feet of the private prison system, which he said was not adequate for the task of incarcerating these kinds of hardened criminals.

The state did an extensive report on this prison after the jailbreak, which found a number of problems with the privately-run prison:

  • The prison’s alarm system sent off so many false alarms that prison guards simply began ignoring them.

  • Eight of the floodlights used on the prison yard were burnt out.

  • Prison guards weren’t properly armed, nor were they properly trained with firearms.

  • 75 percent of all inmates in the facility did not have the appropriate identification.

While it’s certainly true that government-run prisons are far from perfect, and often have budgetary issues, it’s hard to ignore the potential corner-cutting that may have led to this escape and the subsequent deaths.

Then, of course, there was the “kids for cash” scandal. The short version of the story is that two judges in Pennsylvania were receiving kickbacks for sending children to private prison facilities. Millions of dollars were processed to the two judges for giving out prison time for such offenses as mocking an assistant principal on MySpace and trespassing in an abandoned building. The two judges were sentenced to a combined 45.5 years in prison. Every juvenile offender who appeared before the judges had their convictions overturned, and a class action lawsuit is currently pending.

Unsurprisingly, cost-benefit analysis of private prisons tend to have a “both sides” feel about them. Studies funded by the industry frequently tout the cost benefits of private operation. Studies funded by state-funded institutions, such as universities, tend to paint private prisons as bloated and inefficient.

Prison Guard Unions and Private Prisons Lobbying Elected Officials

Anywhere government money is being spent or the state is picking winners and losers, there you will find lobbying. Like the military-industrial complex, private prisons are no exception to this rule. The two largest private prison corporations have put more than $10 million into electing favorable candidates since 1989, and more than $25 million into lobbying.

Marco Rubio is an excellent example of the power of the private prison lobby. He has very close ties to the GEO Group, the second-largest for-profit prison company in the United States. GEO was the recipient of a state contract for a $110 million prison during Rubio’s tenure as the Speaker of the House in Florida. This right after Rubio hired an economic consultant with close ties to the company, which has donated nearly $40,000 to his various political campaigns as of 2015. This makes him the politician with the closest financial relationship to the private prisons industry.

The private incarceration industry has stepped up their lobbying game during the Trump Administration, with the GEO Group spending $1.3 million on lobbying between January and September 2017. That topped the total from the previous year, which was $1 million.

The timing of the increase in lobbying funds is worth considering. Immigration and Customs Enforcement (ICE) was looking to build five new detention centers at the time. Unsurprisingly, companies started lobbying hard to be the ones to build and operate these new facilities. That’s over 54,000 beds. What’s more, ICE is the number-one customer for the GEO Group, which is based in Florida.

Rubio is hardly the only politician to receive funding from private prison companies – which claim to never attempt to influence policy in any way other than trying to get contracts for private prison operation. Chuck Schumer has received over $100,000 in donations from both the GEO Group and CCA.

While private prison operations companies claim they do not attempt to influence public policy beyond trying to get those lucrative contracts, the same cannot be said for prison guard unions. The California prison guards union spent $100,000 in 1994 trying to get the three strikes law passed. This was the first of its kind, but quickly became the gold standard across the nation. 28 states have such laws as of 2018. The same union spent over $1 million to defeat Prop 5, which, if passed, would have reduced sentences for nonviolent crimes and created more drug addiction treatment resources in the state. Another $1 million was spent to defeat Prop 66, a measure designed to reduce the number of crimes carrying mandatory life sentences.

Modern Prison Labor

Because compulsory, unpaid prison labor is not prohibited by the United States Constitution, some have argued that prison labor is a continuation of chattel slavery.

However, prisoners are not owned by the state. What’s more, they are generally paid – albeit between $0.12 and $0.40 per hour. Prisoners, when taken as a whole, represent the third largest labor pool in the world. And while they engage in all kinds of labor, it tends to be manually intensive, low-skilled, deeply unpleasant and highly profitable for the corporations who are able to take advantage of it.

The days of prisoners making license plates and breaking rocks are long gone. Employers now receive a substantial tax credit ($2,400) for work-release labor. There’s even a euphemism for private companies who take advantage of prison labor – “Prison insourcing” – and it’s becoming increasingly popular with large firms. The list of organizations with significant prison labor include popular brands like Whole Foods, Target, Starbucks, Victoria's Secret, McDonald's, IBM, Honda, Texas Instruments, Boeing, Nordstrom, Intel, Aramark, AT&T, BP, Microsoft, Nike, Macy's, Wal-Mart and Sprint.

Prison labor is not without its benefits for the prisoners or for society at large. It can be a valuable outlet for prisoners, keeping them from getting into trouble and teaching them new skills. What’s more, many inmates have never had a legal job before. This means they have to learn the most basic aspects of holding down a job – like showing up on time, working with others as a team, and listening to instructions from a supervisor. Many studies show that prison employment leads to reduced recidivism rates.

While companies profit from prison labor, they’re also cleaning up in other ways. JPay, which began as a way to wire money to people on the inside, has seen rapid success with a monopoly on how prisoners’ friends and family can communicate with them inside some state prison systems. All told, JPay had contracts with 21 state correctional facility systems and a number of private facilities as of August 2018. With no paper mail allowed, JPay charges per electronic message – making the company millions, and making prisoners the ultimate captive audience.

The First Step Act: President Trump’s Prison Reform Bill

Few would have expected a Republican president to spearhead prison reform. Then again, President Trump isn’t just any Republican.

Overwhelmingly passed by the Senate – 87 to 12 – in December 2018, the First Step Act is the Trump Administration’s bipartisan victory to save money by reducing prison sentences. While some Republicans feared this vote would reflect as being soft on crime, Senate Judiciary Committee Chairman Sen. Charles E. Grassley stressed that Trump “wants to be tough on crime, but fair on crime.” Shortly after the vote, Trump tweeted that his “job is to fight for ALL citizens, even those who have made mistakes” and that this bill will “provide hope and a second chance, to those who earn it.”

The reform in this criminal justice bill is pretty significant. It reduces mandatory sentences, cutting a collective 53,000 years off existing sentences over the next 10 years. It creates sentencing disparity between powder and crack cocaine, and reduces recidivism rates. And it decreases the “three strikes” penalty for drug felonies from life to 25 years.

But not everyone thinks this reform bill is a "first step" in the right direction. Since it doesn’t apply to local jails or state prisons, those skeptical of this new legislation have pointed out that it only affects about 10 percent of the country’s incarcerated population – hardly a dent. Many also disagree with the fact that this bill will release high-risk inmates and offenders.

Libertarian magazine Reason is in favor of more reform. A 2016 article asked the question “Should Felons Get Their Gun Rights Back?” The argument is roughly the same as that of restoring voting rights to felons: Once people have served their time and been released, society assumes that the ledger has been balanced. If someone cannot be trusted to own firearms once they have been released from prison (presumably because they are dangerous), why are they out on the street and not in a cell?

For those interested in Second Amendment freedom, all of this is important. In a sense, the gun grabbers are getting through our prison-industrial complex what they cannot get through either the legislature or the courts – a disarmed populace.

Tyler Durden Sat, 10/12/2019 - 18:50
Published:10/12/2019 6:14:15 PM
[] Saturday Afternoon Chess Thread 10-12-2019 IM Jovanka Houska (GBR) In addition to her OTB achievements (WGM and IM titles), Ms. Houska has written a number of specialized opening theory books, including Play the Caro-Kann: A Complete Chess Opening Repertoire Against 1E4, Starting Out: The Scandinavian,... Published:10/12/2019 4:42:15 PM
[Markets] The Joke's On You! The Joke's On You!

Authored by Doug “Uncola” Lynn via,

This know also, that in the last days perilous times shall come. For men shall be lovers of their own selves, covetous, boasters, proud, blasphemers, disobedient to parents, unthankful, unholy, without natural affection, trucebreakers, false accusers, incontinent, fierce, despisers of those that are good, traitors, heady, highminded, lovers of pleasures more than lovers of God…

– 2 Timothy 3:1-4

As an internet writer seeking common ground, or, rather, a mutual base frame of reference with the readers, I’ll often use widely disseminated resources in order to inspire contemplation and conversation. Obviously, these sources would include movies and books.  So, with that in mind, I recently took advantage of $5 Tuesdays at a theater near me and saw “Joker”.   The antagonist of the film, of course, is Batman’s old arch nemesis, “The Joker”.

The movie was epic comic book fare – but also realistically familiar at the same time.  And this is understandable given the renowned infamy of the DC Comics super-villain.  But there were also more current, and grounded, correlations too.

The actor Joaquin Phoenix’s portrayal of the Joker’s descent from mental illness to evil was sublime, and he’ll very likely be nominated for an Oscar.  I, personally, found the socially awkward scenes to be more cringe-worthy than the blood and guts; and both, seemingly, have appeared right on schedule for the congressional debate on red flag legislation.

In any event, Joker was a disturbing film. And I was riveted.


As stated heretofore, there were many parallels in “Joker” corresponding to our current times. In fact, other than the time-stamped set design and props, the chaos in the streets of Gotham City looked like they could have been filmed in the aftermath of the 2020 election.

Phoenix’s artistic rendering of the Joker agonizingly revealed the suffering of someone mentally ill and lost to the system.  What was actually lost, however, was the main character’s normal view of reality.  Due to a disturbed mind and horrifically abusive experiences, the Joker’s worldview was warped to the extent that his sense of humor was not considered funny by those in the mainstream.  It was an unusual film because the main character was, simultaneously, both the protagonist and antagonist in the story.  Ironically, in other ways, the film also divides the audience in two as well – except with one side seeing light refraction causing scenes to flip upside down; and with both sides listening to separate laugh tracks.

Woe unto them that call evil good, and good evil; that put darkness for light, and light for darkness; that put bitter for sweet, and sweet for bitter!

– Isaiah 5:20

And isn’t that what’s happening in America today?

There are those who laugh at Trump’s tweets while others, like Antifa, riot in the streets.  

In the film, Joker appears as an anti-hero of sorts, standing in contrast to a cold-hearted billionaire campaigning to be the Mayor of Gotham and one who believes he can save the city by bringing jobs back.

Accordingly, there are some who might see the billionaire as Donald Trump trying to restore order and making the city great again, while others may see Trump as the Joker tearing down the established order. 

Depending upon which movie is being seen, it means Joker’s mindless followers in the story will be viewed by some as disaffected deplorables dancing while Rome burns and others as collectivist clowns wearing masks and spreading anarchy.

What is interesting, however, is that both groups would oppose what they each perceive as the establishment; and both camps seemingly lament the worldview breach between the dispossessed and the wealthy elite.

Either way, as anarchist art or comic book fodder, the Joker film illustrates death to establishment via the ideology of Destructionism:

Destructionism is stage two of any unachievable vision of what society should be like against a reality that refuses to conform. Destructionism also proves to be strangely compelling to populist movements that are anxious to externalize their enemies and smite the forces that stand in the way of their reassertion of power. Finally they discover satisfaction in destruction – as an end in itself – because it makes them feel alive and gives their life meaning.

But who are actually the disaffected and who is, in reality, the establishment?

That is the question, isn’t it?

Like so much of entertainment and politics today – the movie Joker is being seen by two separate audiences. And the reaction to the movie has been similar to comedian Dave Chappelle’s recently-released Netflix comedy special entitled “Sticks and Stones”.

Just as Chappelle’s show was panned by critics but enjoyed by audiences, so, too, is Joker.  Just as those on the left and in the mainstream media consider Chappelle’s “Sticks and Stones” as no laughing matter, we are now seeing the same treatment for Joker by those so suddenly serious :

– From

Why?  Because, to the Political Left, optics are everything.  And this means if the illusion does not fit, then it must be sh*t.

Notice how some of the headlines have reported on Joker as being “boring” or as “numbing emptiness”.  This is because, just like Chappelle’s show, art has mocked life and the leftist gestapo has been revealed as the allegorical emperor standing naked.  They have no defense against truth; and common sense is truth.

Anything debated, created, manufactured or produced, is derived from a certain tension of thought. It is sewn from threads of chaos and formulated with, and for, a purpose. In Dave Chappelle’s “Sticks and Stones” hour-long routine on Netflix, he is very, very careful – almost akin to a surgeon methodically suppurating a wound. Or a serial killer teasing and torturing victims.

Like a Joker.

Chappelle opened his routine by playfully excoriating singer Michael Jackson’s alleged pedophilia. Then the comedian boldly proclaimed that Jackson didn’t do it. So the pedophilia is addressed in a way that Michael Jackson fans can’t hold against Chappelle. The viewers are disturbed and disgusted and laughing, but nothing can be stuck on the messenger.

Chappelle did the same thing when he ridiculed the LGBTQ crowd as the “alphabet people” – the problem isn’t that they’re gay, it’s that they’re so seriously, and stupidly, self-concerned.

On the topic of abortion, Chappelle said he supported a woman’s right to choose. This, of course, would endear the comedian to those supporting “my body, my choice”. But then Chappelle added a new angle: He argued if the woman decided to have her baby, then men shouldn’t be forced to be involved. Because if the mother has a right to kill her baby then the father should have the right to abandon it. Said he: “My money, my choice”.

And regarding guns, Chappelle said he really, really hates them…. but… that he owns several; and followed by an entire humorous bit as to why he owns them.

One wonders if the same sort of subterfuge was incorporated into the movie Joker by its director, Todd Phillips, who also co-wrote the screenplay.  Because there is a scene in the film where Joker’s alter-ego, Arthur Fleck, legitimately used a hand-gun in self-defense against three bad guys on a subway train.  Later, a common office (and school) supply item was used to massacre someone, but you’ll never hear the Political Left demanding Red-Flag legislation for the particular item in question. Why? Because it would not represent a threat to the collectivists should they regain power in the U.S. 2020 elections.

Therefore, if the narrative doesn’t fit, it must be sh*t.

Just as Trump supporters don’t find late-night comedy shows like Saturday Night Live or Jimmy Kimmel funny anymore, liberals have also stopped laughing.

It’s because things are getting serious.

In the movie Joker, Gotham also resembles Democrat run New York City in the 1970s as well as many other Democrat Party run sh*t-holes all over America today. Yet the sad-eyed clowns performing as the Democrat Presidential Candidates are all out on the campaign trail promising utopia while endorsing lies, and promoting lawlessness and tumult – and all wanting to mow down a billionaire making Gotham great again; as other mask-wearing clowns riot in the street and raise hell under the guise of “resistance”.

Before anarchy and chaos takes to the streets, a desire to turn society upside down must first take hold.  Before that, however, those creating the bedlam must be driven into a rage; or, rather, an insane rage.

In an article I once wrote about Ken Kesey’s novel “One Flew Over The Cuckoo’s Nest”, I claimed it could be viewed as more than a fictional story and more than an allegory because it had been proven prophetic. Towards that end, I wrote the following:

It is the story of the Divided States of America; an asylum imprisoning subjects suffering under the final stages of Cultural Marxist Dementia and secured by a police state enforcing a twisted type of morality designed to make the inmates progressively and increasingly loony.  In a deranged world turned inside-out, the sane ones are labeled insane.

Indeed. Life has imitated art.

In the same article I mentioned how Kesey’s novel delineated “the epic contest between individual autonomy versus the Feminine Authoritarianism of Matriarchal Tyranny”.

And isn’t that way of the collectivists currently? Because we never see any negative headlines telling people not to watch shows like Netflix’s recent “In the Shadow of the Moon” where fictional time-travelers retroactively murder American patriots in order to advance the cause of globalism.

Why isn’t that considered boring?

Indeed, the hypocrisy resembles a feminist-type double-standard whereby what is good for the goose is not for the gander – in the same way many modern women condescendingly, and even snottily, lecture men on the perils of “Mansplaining”.

Honestly, who do these people think they are for telling me what shows I should watch? And why is it they can hate Trump, but I’m not allowed to laugh at his tweets?

It was also interesting to watch Joaquin Phoenix’s portrayal of the Joker showing the character transition from hapless schmuck, to imagined virility, to actual evil that manifested in sort of a twisted femininity; pure narcissism demonstrated onscreen to the tune of graceful little dances in the wake of brutal acts.

It is no surprise, therefore, that many have tied Joker to what has become known as “Inceldom”, or “the online subculture of men (mostly young, white, and heterosexual)” who have become violent as a result of being involuntarily celibate.  Many past mass-shooters have been identified as Incels (i.e. the portmanteau of “involuntary celibates”) including Elliot Rodger who killed six people in 2014 at the University of California Santa Barbara and Nikolas Cruz who killed seventeen at Stoneman Douglas High School in Parkland Florida on Valentine’s Day 2018.

In fact, the U.S. Army has warned of possible shootings  at Joker film screenings because of the tendency of violent Incels to imitate each other – or, actually, very similar to what happens in the narrative of the Joker film.

People are also on edge because of the December 2012 mass-shooting in Aurora, Colorado where the killer, James Holmes, killed twelve people in a movie theater at a Batman screening.  What was especially strange is that the killer, Holmes, even looked like the Joker.

But it was while reading Santa Barbara killer Elliot Rodger’s online manifesto, two years after the Batman massacre, that marked my first exploration into Inceldom – although I didn’t become aware of the term Incel until several years later. Rodger, like the Joker, over time developed a desire for revenge upon those whom he perceived had treated him unjustly – a classic example of resentment magnified into full-blown rage.

In this embedded link  there is a six-minute video of Elliot Rodger discussing his forthcoming “day of retribution” where he absolutely comes across as a comic book villain, complete with an unsettling evil chuckle.

To be sure, life does, indeed, imitate art.

Rodger’s disturbing manifesto made it very clear his pre-teen psyche was formulated by television, video games and porn. Perhaps all of these modern-day manifestations have led to a sort of neo-Gnosticism in modern youth; or, rather, the intellect seeking salvation while divorced from reality.  Comic books, movies, gaming, and porn all provide immediate gratification but without any of the fleshly aggravations like body-fluids, bad breath, sweat, and stench.  Is it any wonder, then, why self-concerned spoiled Incels believe they are programmed for pleasure without travail and, then, become hostile when the world operates beyond the range of their remote controls?

Another component of Incel rage is suppressed hostility against masculinity.  Because, after all, it is the more attractive real boys and men who get the girls, thus robbing Incels of their fair share.  In Rodger’s YouTube videos and manifesto, his rage and envy was obvious:  He despised the knuckle-dragging Neanderthals who the girls had chosen over him – the true gentleman.

Accordingly, an ex-girlfriend of the Aurora Batman shooter, James Holmes, ended a two-month relationship with him “following an encounter between Holmes and another man who talked to her during a date on Saint Patrick’s Day”.

In the Joker movie, the old-school masculinity of the future Batman’s father, Thomas Wayne, is displayed in stark contrast to Joker’s pathetic, even effeminate, frailty. Surely any Incel or Antifa snowflake seeing Joker would judge Thomas Wayne as a knuckle-dragging rich prick in the same vein as… say…  Donald J. Trump; and, later in life, perhaps even the crime-fighting Batman himself.

Remember when kids idolized the heroes over the villains? Times have changed.

Certainly, Joker offers legendary comic book plotlines and rising action, but also with a “Taxi Driver” patina of reality at the same time.  Adding to the angst,  the soundtrack’s stringed instruments correspond to the main character’s nervous tension , which remains ever-present throughout the film – even as the Joker deftly dances down the stairs toward hell to the drumbeat and instrumentation of convicted pedophile Gary Glitter’s  1972 “Rock and Roll Part 2”.

And if there’s any question in anyone’s mind whether Joker’s controversy is the result of a middle-finger-flip to Woke Culture, just know Todd Phillips, who also directed the Hangover series and other comedies, has unequivocally answered that question.  In an interview with Vanity Fair magazine, Phillips stated the following:

"Go try to be funny nowadays with this woke culture,” he [Phillips] says.

“There were articles written about why comedies don’t work anymore - I’ll tell you why, because all the f*cking funny guys are like, ‘F*ck this sh*t, because I don’t want to offend you.’ It’s hard to argue with 30 million people on Twitter. You just can’t do it, right? So you just go, ‘I’m out.’ I’m out, and you know what? With all my comedies - I think that what comedies in general all have in common - is they’re irreverent. So I go, ‘How do I do something irreverent, but f*ck comedy? Oh I know, let’s take the comic book movie universe and turn it on its head with this.’ And so that’s really where that came from.”

Yes, liberals, it does appear the joke is on you.  Again. This time.  And that’s why some in the media have claimed comedian Dave Chappelle and director Todd Phillips have lashed out at Cancel Culture, which the urban dictionary defines as follows:

A modern internet phenomenon where a person is ejected from influence or fame by questionable actions. It is caused by a critical mass of people who are quick to judge and slow to question. It is commonly caused by an accusation, whether that accusation has merit or not. It is a direct result of the ignorance of people caused communication technologies outpacing the growth in available knowledge of a person.

And is that not the modus operandi of the mob?

Surely, if the collectivists had their way, they would cancel Joker in the same way the Democrats in congress now wish to cancel Donald Trump. Because both the movie and the president have revealed the mob as being mad like the Joker; and with the same lack of identity and accountability.

Hence, the grand confrontation of our time:  How do crime fighters battle against those not moored to civilized society and who don’t believe in anything except their own will to power?

That was the question I was contemplating as I left the theater.  On the way out, I noticed two police officers in full uniform in the lobby. They were different than the other two I saw while entering, before the movie started.  Did they have a shift change during the movie? Or were there now more cops on location?

As I walked by the armed officers, who were dutifully standing guard against any potentially devastating Incel violence, I looked around at the others leaving the theater and noticed something else.  No one was laughing.

Tyler Durden Sat, 10/12/2019 - 15:50
Published:10/12/2019 3:12:58 PM
[Markets] "Sea Of Green" As Trade Deal, Brexit Optimism Send Futures, World Markets Soaring "Sea Of Green" As Trade Deal, Brexit Optimism Send Futures, World Markets Soaring

So far, Friday has been a rerun of the Thursday session, where early "trade war" gloom turned to euphoria with the market convinced a mini trade deal between the US and China will be announced momentarily, just as soon as Trump and Liu He are scheduled to meet at 2:45pm in the White House. Throw in some Brexit optimism and there's your reason why US equity futures jumped over 30 points overnight...

... and why global stock markets were a sea of green.

The MSCI world index jumped 0.8% to head toward its first weekly gain in four weeks. The broader Euro STOXX 600 surged 2.5%, led by a 3.4% surge in the German DAX. Tech shares led European gains, with the Stoxx 600 Technology Index surging 3.2%, most since April 24, led higher by SAP. Banks also rose, with the index rising 2.4%, most in a month, while S&P 500 futures jumped 0.9% Asian shares had rallied earlier, with an index of Asia-Pacific shares outside Japan climbing 1.3%.

The improvement in appetite for riskier bets came after U.S. President Donald Trump on Thursday called the first day of trade talks with China in over two months “very, very good.” Trade optimism was bolstered overnight after a Chinese state newspaper said on Friday that a “partial” trade deal would benefit China and the United States, and Washington should take the offer on the table, reflecting Beijing’s aim of cooling the row before more U.S. tariffs kick in.

China’s top trade negotiator, Vice Premier Liu He, said on Thursday that China is willing to reach agreement with the United States on matters that both sides care about so as to prevent friction from leading to any further escalation. He stressed that “the Chinese side came with great sincerity”.

Adding to that, the official China Daily newspaper said in an editorial in English: “A partial deal is a more feasible objective” adding that “Not only would it be of tangible benefit by breaking the impasse, but it would also create badly needed breathing space for both sides to reflect on the bigger picture."

Additionally, and not coincidentally, hours ahead of an expected meeting between China’s Liu and U.S. President Donald Trump at the White House, China’s securities regulator unveiled a firm timetable for scrapping foreign ownership limits in futures, securities and mutual fund companies for the first time, suggesting that professional US gamblers will be welcome to invest, and lose, other people's money in Chinese fraudcaps. China previously said it would further open up its financial sector on its own terms and at its own pace, but the timing of Friday’s announcement suggests Beijing is keen to show progress in its plan to increase foreigners’ access to the sector, which is among a host of demands from Washington in the trade talks.

Chinese officials are offering to increase annual purchases of U.S. agricultural products as the two countries seek to resolve their trade dispute, the Financial Times reported on Wednesday, citing unidentified sources. The U.S. Department of Agriculture (USDA) on Thursday confirmed net sales of 142,172 tonnes of U.S. pork to China in the week ended Oct. 3, the largest weekly sale to the world’s top pork market on record.

A (very unlikely) U.S.-China currency agreement is also being floated as a symbol of progress in talks between the world’s two largest economies, although that would largely repeat past pledges by China, currency experts say, and will not change the dollar-yuan relationship that has been a thorn in the side of Trump.

There were also overnight reports that the White House is reportedly mulling Public Company Accounting Oversight Board (PCAOB) dispute over access to China audits, according to reports. Officials are fixating on why Chinese companies can sell shares in the US when American regulators are prohibited from inspecting their books.

Analysts have noted China sent a larger-than-normal delegation of senior Chinese officials to Washington, with commerce minister Zhong Shan and deputy ministers on agriculture and technology also present. Separately, the SCMP reported that China's Vice Premier Liu has a letter from President Xi, which may or may not be given to US President Trump in their meeting today.

The sudden optimism about a potential de-escalation is in stark contrast to much more gloomy predictions in business circles just days ago on the heels of a series of threatened crackdowns on China by the Trump administration. On Tuesday, the U.S. government widened its trade blacklist to include Chinese public security bureaus and some of China’s top artificial intelligence startups, punishing Beijing for its treatment of Muslim minorities. Surprised by the move, Chinese government officials told Reuters on the eve of talks that they had lowered expectations for significant progress.

Friday’s China Daily editorial also warned that “pessimism is still justified”, noting that the talks would finish just three days before Washington is due to raise tariffs on $250 billion worth of Chinese imports. The negotiations were the “only window” to end deteriorating relations, it added.

Investors cautioned that markets were hoping for, at best, a deal limited in scope, and they noted that sunny rhetoric had in the past failed to translate into more meaningful moves. “I would caution that we have been here before, where we have seen positive talk,” said Mike Bell, global market strategist at J.P. Morgan Asset Management. “It’s possible they will be able to do a smaller deal around tariffs, where there is some room for movement.”

Elsewhere, Brexit optimism was also rampant and the pound soared higher on Friday - its largest daily percentage gain in seven months and biggest 2-day jump since June 2016 - after Donald Tusk, EU council president, said he had seen “promising signals” about the chance of a fresh Brexit agreement between the UK and the EU, even if the country hasn’t come forward with a workable, realistic plan.  Optimism that a deal could be reached has been increasing following a meeting between Boris Johnson, UK prime minister, and Leo Varadkar, Irish taoiseach, on Thursday, after which the two said they could see a “pathway” to a possible Brexit deal.

After meeting British Prime Minister Boris Johnson for talks, Irish Prime Minister Leo Varadkar said on Thursday that a deal to let Britain leave the European Union in an orderly fashion could be sealed by the end of the month. Varadkar called the talks “constructive,” while the two leaders said in a joint statement that they could “see a pathway to a possible deal”. But it remained unclear what the pair agreed on.

But with Britain due to leave the world’s biggest trading bloc on Oct. 31, the fate of Brexit is still in the balance. Market players said investors remained skittish. Moves in sterling reflected a tendency to jump on any signs of progress.

“We are moving to a glimmer of hope, rather than strong expectation that things will get done,” Tim Drayson, head of  economics at Legal & General Investment Management. Yet Drayson said that any deal struck between Dublin and London would then face the hurdle of the British parliament, even after securing agreement from the European Union. “I think the odds are that we don’t reach an agreement, but I’m not expecting a crash out on October 31.”

“We still think that markets are probably underpricing the likelihood of a hard Brexit scenario,” said Salman Baig, a cross-asset investment manager at Unigestion whose pound short appears to have been steamrolled by a backbreaking short squeeze.

In geopolitics, US House Republicans said they will introduce sanctions against Turkey in response to its offensive against Kurds in Northern Syrian, according to newswires. Subsequent reports indicate European response could be debated as early as next week

In commodities, oil prices jumped by 2% after Iranian news agencies said a state-owned oil tanker was struck by two missiles in the Red Sea near Saudi Arabia, raising the prospect of supply disruptions from a crucial producing region. Brent crude was up around 2.1% at $60.36 per barrel.

Expected data include the University of Michigan Consumer Sentiment Index. Fastenal is reporting earnings

Market Snapshot

  • S&P 500 futures up 0.7% to 2,962.75
  • STOXX Europe 600 up 1% to 386.50
  • MXAP up 1.2% to 157.15
  • MXAPJ up 1.4% to 504.43
  • Nikkei up 1.2% to 21,798.87
  • Topix up 0.9% to 1,595.27
  • Hang Seng Index up 2.3% to 26,308.44
  • Shanghai Composite up 0.9% to 2,973.66
  • Sensex up 0.9% to 38,227.49
  • Australia S&P/ASX 200 up 0.9% to 6,606.81
  • Kospi up 0.8% to 2,044.61
  • German 10Y yield fell 1.4 bps to -0.483%
  • Euro up 0.05% to $1.1010
  • Italian 10Y yield rose 8.7 bps to 0.616%
  • Spanish 10Y yield fell 3.3 bps to 0.194%
  • Brent futures up 1.5% to $59.96/bbl
  • Gold spot up 0.4% to $1,499.17
  • U.S. Dollar Index down 0.2% to 98.52

Top Overnight News from Bloomberg

  • Trump said the first day of high-level trade negotiations between the U.S. and China on Thursday went “very well” and that he plans to meet with the top Chinese negotiator Friday
  • The U.K. and the European Union took a step closer to agreeing the terms of Brexit after a positive meeting between the British and Irish leaders identified a “pathway” to a potential deal. The pound jumped by the most in seven months. No-Deal Brexit to cost Ireland 73,000 jobs, central bank Says
  • The “jury is out” on whether the current slowdown in the U.S. economy will turn more severe amid weaker global growth and uncertainty over trade policy that’s chilling investment, according to Federal Reserve Bank of Dallas President Robert Kaplan. Federal Reserve Bank of Cleveland President Loretta Mester says U.S. central bankers should wait for fresh economic information before deciding their next policy move
  • The Bank of Japan’s promise to keep pumping extra money into the economy will eventually clash with its efforts to control interest rates, according to Hiromi Yamaoka, the former head of the central bank’s financial markets department. Yamaoka said the pledge to expand the monetary base until inflation is above 2% should be changed to make it easier for the BOJ to keep yields where it wants them

Asian equities took their cue from the rally on Wall Street which saw the DJIA close just below 26,500 as US President Trump said he will meet with Chinese Vice Premier Liu He. ASX 200 (+0.9%) was supported by energy and mining names, whilst Nikkei 225 (+1.2%) felt tailwind for a weaker Yen. Elsewhere, Hang Seng (+2.4%) outperformed as heavyweight financials and oil-related stocks bolstered the index amid a high-yield and firmer oil price environment. Meanwhile, Shanghai Comp. (+0.9%) swung between gains and losses with the mainland remains on-guard as sticking points remain between the two largest economies. Hong Kong Protesters reportedly are mulling whether to scale back on vandalism and violence as it risks alienating more moderate supported, according to reports. Japanese Typhoon Hagibis is forecast to be the most powerful typhoon to hit Tokyo since 1958, according to the meteorological agency.

Top Asian News

  • Malaysia Widens Budget Deficit Target to Weather Trade War
  • Tencent Gets ‘Wakeup Call’ From China’s Assertions of Patriotism
  • Violent Typhoon Heads for Japan, Canceling Over 1,000 Flights

Major European bourses are firmer thus far this morning as US-China newsflow remains light ahead of Trump and Liu He’s meeting at 19:45BST today; and following a positive Asia-Pac session where sentiment remained buoyed going into day two of talks. Sectors clearly illustrate the mornings heavy newsflow. With IT the notable outperformer following SAP (+7.6%) reporting earnings which were above Prev. and news that the CEO is to step down with immediate effect being well received. Also, firmer this morning are energy names following an Iranian tanker incident this morning, which is outlined in the Commodity section below. However, consumer discretionary names are suffering on the back of Hugo Boss (-13.3%) cutting their FY19 EBIT target citing persistent macroeconomic uncertainties; alongside, a number of downgrades at brokerages. Elsewhere, the FTSE 100 is this morning’s clear laggard given the recent upside in Sterling on positive Irish/UK PM comments regarding Brexit. However, in-spite of the index’s weakness the upbeat Brexit commentary has lent support to politically sensitive Co’s such as housebuilders and banks; although most recent comments from EU Council President Tusk have brought yet more urgency into the talks stating if there are no sufficient proposals today then he will have to announce there is no chance for a deal at next week’s summit. International Air Safety Panel have faulted the FAA for their certification of the Boeing (BA) 737 Max; FAA failed to sufficiently assess the MCAS system, did not sufficiently consider now design features of the craft, some regulations are out of date.

Top European News

  • Equinor Green-Lights $550 Million Subsidized Floating Wind
  • European Equities To Fall 8% in No-Deal Brexit Scenario: BofAML
  • Two Out of Three Options Trades Now Look for a Stronger Sterling
  • EU Will Discuss Sanctions Against Turkey Next Week: Syria Update

In FX, Aud/Usd has extended gains beyond 0.6750 and through the 50 DMA (0.6778) to within a whisker of 0.6800 on a wave of US-China trade optimism after day one of talks in Washington and generally positive updates from both sides on the status of trade negotiations thus far.

  • GBP - Yet another white knuckle ride for Sterling after a more pronounced short squeeze on Irish backstop breakthrough hype inspired by Thursday’s meeting between UK PM Johnson and Ireland’s Varadkar, and the latest catalyst came via EU’s Tusk rather Britain’s Brexit Minister Barclay or EU kingpin Barnier that have now completed their rendezvous to discuss the situation. In short, Tusk said the deadline for alternative border/customs proposals is today and as yet they have not been submitted, prompting an abrupt/sharp Pound plunge, but then revived bullish momentum by noting that promising signs from the Irish PM mean a deal can still be done. In terms of market moves, Cable collapsed to almost 1.2400 before regrouping and flying back up to 1.2500+ awaiting the debriefing from Barnier to EU states and fading just short of 1.2550, while Eur/Gbp has whipsawed between 0.8867-0.8789 and is poised just above 0.8800, but below the 200 DMA (0.8830).
  • NZD/EUR/CAD - All firmer vs a flagging Greenback (DXY only just holding above 98.500), with the Kiwi piggy-backing its Antipodean counterpart and climbing towards 0.6350, Euro consolidating above 1.1000 and Loonie maintaining a bid over 1.3300 ahead of Canadian jobs data and as oil prices rally in wake of an Iranian tanker missile attack . Back to Eur/Usd, decent option expiries at the 1.1000 strike may figure (1.4 bn), while tech levels could also influence trade/direction given Fibs at 1.1021 and 1.1055 and DMAs at 1.1054 and 1.0987 (55 and 21 respectively).
  • CHF/JPY - More safe-haven unwinding has nudged the Franc a bit nearer parity vs the Dollar and a test of 1.1000 against the single currency, while the Yen has slipped under 108.00 to expose September’s peak a fraction below 108.50.
  • EM - The Cnh is also anticipating good news from the President Trump-VP Lui He date at the White House that will officially close the latest round of talks, with the offshore Yuan hovering around 7.0900, but the Try has retreated in wake of US sanctions over Turkey’s military actions in Syria awaiting the EU’s response at next week’s summit – Lira back down towards 5.8750.

In commodities, Brent and WTI have been lifted this morning to gains of over USD 1/bbl at best on the back of early geopolitical newsflow that a Iranian tanker was on fire after a explosion near Saudi’s Jeddah port which led to heavy tanker damage and reports that oil was leaking into the Red Sea. TankerTrackers believe this tanker could be the SINOPA tanker which was on route to Syria and had a cargo of 1mln barrels on board. Subsequently, newsflow noted that the explosion was due to missiles and there were some reports that this originated from Saudi Arabia; however, Iran’s National Tanker Co. have denied reports that they said the missiles originated from Saudi Arabia though the Foreign Ministry confirm two hits on the tanker. The updates evidently led to a crude bid on further geopolitical tensions, particularly as reports note this is the 3rd Iranian tanker to be hit in around 6-months in this area; focus now turns to clarity on where the missiles originated from. Separately, today’s IEA report marked the end of the monthly trio where they cut their demand forecast form 2019 in stead with the other two reports. In terms of metals, spot gold was lifted above the USD 1500/oz mark on the middle-east geopolitical premium with the upcoming US-China trade talks also in focus; although it has since dropped back below.

US Event Calendar

  • 8:30am: Import Price Index MoM, est. 0.0%, prior -0.5%; Import Price Index YoY, est. -2.1%, prior -2.0%
  • 8:30am: Export Price Index MoM, est. -0.05%, prior -0.6%; Export Price Index YoY, prior -1.4%
  • 10am: U. of Mich. Sentiment, est. 92, prior 93.2; Current Conditions, est. 109, prior 108.5; Expectations, est. 82.5, prior 83.4; 1 Yr Inflation, prior 2.8%; 5-10 Yr Inflation, prior 2.4%
  • 11:45am: Bloomberg Oct. United States Economic Survey

DB's Jim Reid concludes the overnight wrap

What does or doesn’t happen over the next few days could have major ramifications for global politics for years to come. At the start of the week things looked bleak on prospects of any kind of US/China trade deal and even bleaker on the prospect on a Brexit deal. However we close out the week with renewed hopes on both of these with the latter being the more surprising of the two.

Indeed the Irish and U.K. PM’s joint statement “agreed that they could see a pathway to a possible deal.” The Irish Times suggested that there had been “significant movement” from the UK on the customs issue. If there has been a concession on NI customs this could very easily alienate the DUP and they’ve suggested they won’t back it. However where this would become clever is if Mr Johnson agreed to back down on this and agree a deal only on the basis that the EU refuse to back an extension if U.K. MPs vote this deal down. In this scenario ironically the very people who forced the government into the Benn Act (that takes no deal off the table) would be the ones responsible for a no deal if they voted the deal down. This calculation does rely on the ERG group staying with PM Johnson and not going back to rebelling but their bar to rebel seems to be higher under Johnson than May. So far we’ve got no details from the U.K. side and only cautious positive soundbites from the Irish (a big improvement relative to where we’ve been though). However no leaked news is probably good news for now and it’s remarkable that I’ve woken up this morning with nothing on the wires to flesh out the progress. Sterling rallied +1.97% against the dollar yesterday - the most in 7 months. In terms of next steps, the UK’s Brexit Secretary Stephen Barclay will be meeting the EU’s chief negotiator Michel Barnier today as the two sides look to move closer towards a deal ahead of Thursday’s EU Council summit. A long long way to go but unexpected hope after yesterday.

Prior to the Brexit developments the mood in markets started to pick up after a tweet from President Trump just after the US open, as he confirmed he would meet with Vice Premier Liu He at the White House today at 2:45pm. The fact that the President is meeting the Vice Premier directly can be seen as a positive sign for the path of negotiations, offering hope that some sort of ‘partial deal’ of the sort that has been briefed out might be possible. After US markets had closed, Trump said that the discussions were going “very well,” helping S&P 500 futures to trade +0.37% higher this morning. As part of this reported partial deal, Bloomberg reported that the White House is looking at rolling out a currency agreement with China that they’d previously agreed before the talks broke down earlier in the year, while not going ahead with the tariff hikes planned for October 15. For their part, China is reportedly asking for no further tariff hikes, as well as the elimination of sanctions on their national champion shipping company, COSCO. The US had barred American firms from doing business with the Chinese shipping giant last month, accusing the firm of transporting Iranian crude oil.

As a final point on the trade war, it’s worth reading this report (link here ) from our US economists from earlier this week. They delve into regional data to show that the trade war has had an outsized negative effect on counties that rely more on manufacturing. Interestingly, those counties also tended to be the ones which supported President Trump more in the 2016 election, meaning there are clear political implications to the current trade war.

Trade-sensitive stocks saw the biggest gains for the second consecutive day, with the Philadelphia semiconductor index up +0.97%, while the S&P 500 and the NASDAQ closed up +0.64% and +0.60% respectively. Meanwhile bonds continued their earlier sell-off following the tweet, with 10yr Treasuries +7.9bps, and we saw another slight steepening of the curve, with the 2s10s closing +0.3bps, its 3rd consecutive move steeper. Bunds (+7.8bps) and BTPs (+8.9bps) also lost ground, with 10yr bund yields closing above -50bps for the first time in in over 3 weeks. Gilt yields rose +12.7bps, their biggest one-day increase in over a year.

The initial catalyst for the Euro government move seemed to be the FT story we mentioned as we went to press yesterday that the ECB monetary policy committee was at odds with the governing council. As we’ll see below the minutes backed up the splits at the ECB but nothing that came out yesterday should be a surprise. The market just decided to react to it more yesterday, and the selloff was given further boosts by the improvement in risk sentiment and a move higher in oil prices (+2.03%) after OPEC Secretary General Barkindo committed to do “whatever it takes” to prevent a drop in prices.

Asian markets are higher this morning on the more positive trade sentiment with the Nikkei (+1.08%), Hang Seng (+2.19%), Shanghai Comp (+0.44%) and Kospi (+1.00%) all up alongside most other markets. Yields on 10yr JGBs are up +2.7bps to -0.190%. Elsewhere, WTI crude oil prices are also up a further +0.56% and most agriculture (CBT Soybean +0.68%) and base metal (Copper c. 1%) commodity futures are also up.

Overnight we also got some Fed speak with Cleveland Fed President Loretta Mester, a hawk, saying that US central bankers should wait for fresh economic information before deciding their next policy move. She also said that she did not support the central bank’s decision to cut interest rates in July and September as her preferred strategy “was to take action only if there were evidence of a material deterioration in the outlook and not merely on heightened risks”. Meanwhile, on the Fed’s ongoing framework review, she said that she understands the argument for a so-called make-up strategy, like average-inflation targeting, for addressing below-target inflation, but says the Fed would be challenged to commit credibly to such an approach and added that it would be better for the Fed to not overreact to variations of inflation around the 2% target. Elsewhere, in an interview with the WSJ, Minneapolis Fed President Neel Kashkari, a dove, said that if data continues to come in the way it has, he will support another rate cut of 0.25%.

Back to yesterday and the positive sentiment also supported European equities, with the STOXX 600 up +0.65% and bourses across the continent ending in the green. Amidst the sterling rally, the FTSE 100 underperformed other European bourses rising only +0.28% despite the positivity in the air. Brexit sensitive stocks like U.K. financials were strong after the joint statement with the more domestically-focused Lloyds and Barclays gaining +3.89% and +2.90% respectively, while the more international and sterling-exposed HSBC retreated -1.09%.

In terms of the data yesterday, there were signs that the UK might have avoided a recession this quarter. Although monthly GDP data for August showed a -0.1% contraction (vs. unch expected), the July figures were revised up a tenth to +0.4% mom. After the -0.2% contraction in Q2, there has been nervousness that the economy would enter a technical recession, but the quarterly growth for the 3 months to August was at +0.3% qoq (vs. +0.1% expected). In spite of this, a number of the sector readings disappointed, with industrial production contracting by -1.8% yoy, the biggest yoy contraction since August 2013.

This contraction in industrial production was a theme elsewhere in Europe, with data from France also disappointing. Industrial production fell -1.4% yoy (vs. +0.1% expected), which is the biggest contraction of 2019 so far. It was a similar story in Italy, where industrial production fell -1.8%, as expected, but also the biggest yoy fall this year so far.

Turning to the US, CPI came in slightly below forecasts, with the September reading showing no mom change in prices (vs. +0.1% expected), which meant that the yoy reading remained at +1.7% (vs. +1.8% expected). Core inflation was also slightly below expectations, +0.1% mom (vs. +0.2% expected), with the yoy reading remaining at +2.4% (vs. +2.4% expected). Meanwhile weekly initial jobless claims were better than expected at 210k last week (vs. 220k expected), with the 4-week moving average ticking up slightly to 213.75k (vs. 212.75k previously).

Back to Europe, and the release of the minutes from September’s ECB meeting confirmed much of what we already knew, in that a number of members on the Governing Council had been opposed to the package of easing the ECB unveiled. Although the account revealed that “a few members” had been prepared to cut the deposit facility rate by 20bps, “in particular as part of a package that would exclude net asset purchases”, there were others who were against even the smaller 10bp cut, “as they were concerned about the possibility of increasingly adverse side effects from additional rate cuts.” With President Draghi departing at the end of the month, there’s going to be work to do in bringing unanimity back to the Governing Council under the ECB’s next leadership.

Speaking of EU leadership, France’s candidate for the next European Commission, Sylvie Goulard, was rejected by the European Parliament yesterday. She currently serves as the Deputy Governor at the Banque de France, and is the 3rd candidate for the next Commission to have been rejected so far in the confirmation hearings.

The Eurogroup of finance ministers also met yesterday, and agreed on a new common budget instrument, the budgetary instrument for convergence and competitiveness or BICC. However, this instrument is small at around 0.2% of GDP and draws its funding from the EU budget, so it does not represent a new fiscal commitment by European authorities. Also, Commissioner Moscovici, who has been watched for signals that the EU would allow countries to loosen their purse-strings this year, said “if there is a more marked downturn, we should not tighten our policies.” That’s an extremely tentative signal that the Commission would allow for easing if growth deteriorates further.

Looking at the day ahead, the data highlights include the final September CPI readings from Germany, while the main US release will be October’s preliminary University of Michigan sentiment indicator. Elsewhere, we’ll have the US import price index for September, as well as the Canada’s unemployment rate for September. Central bank speakers include the Fed’s Kashkari, Rosengren and Kaplan, along with the ECB’s de Guindos, Hernzndez de Cos and Costa. Finally, the winner of this year’s Nobel Peace Prize will be announced.

Tyler Durden Fri, 10/11/2019 - 07:38
Published:10/11/2019 7:04:15 AM
[Entertainment] Original Content podcast: Malka Older on reviving the clones of ‘Orphan Black’ for Serial Box “Orphan Black” ended its five-season run back in 2017, but Serial Box is currently continuing the story with “Orphan Black: The Next Chapter,” a weekly series of e-books and audiobooks. While spinoff novels and licensed fiction are nothing new, I was particularly interested in this revival because Serial Box is a venture-backed startup bringing back […] Published:10/10/2019 6:31:40 PM
[Markets] Forget Facial Recog: DHS New Amazon-Based Database Uses Scars, Tattoos, & Your Voice To ID You Forget Facial Recog: DHS New Amazon-Based Database Uses Scars, Tattoos, & Your Voice To ID You

Authored by Daisy Luther via The Organic Prepper blog,

These days, you can’t really go anywhere without encountering cameras.  Going into a store? Chances are there are security cameras. Getting money at an ATM? More cameras. Driving through the streets of a city? More cameras still. Your neighbors may have those doorbells from Amazon that are surveilling the entire neighborhood.

And many of these cameras are tied into facial recognition databases, or the footage can be quite easily compared there if “authorities” are looking for somebody.

But as it turns out, it isn’t just facial recognition we have to worry about.

DHS has a new recognition system called HART.

Homeland Advanced Recognition Technology system is the alarming new identity system being put in place by the Department of Homeland Security.

DHS is retiring its old system that was based on facial recognition. It’s being replaced with HART, a cloud-based system that holds information about the identities of hundreds of millions of people.

The new cloud-based platform, called the Homeland Advanced Recognition Technology System, or HART, is expected to bring more processing power, new analytics capabilities and increased accuracy to the department’s biometrics operations. It will also allow the agency to look beyond the three types of biometric data it uses today—face, iris and fingerprint—to identify people through a variety of other characteristics, like palm prints, scars, tattoos, physical markings and even their voices. (source)

Incidentally, the cloud hosting for HART is being done by none other than Amazon – you know, the ones with surveillance devices like the Ring doorbell and the Alexa home assistant and the Nest home security system. Does anyone see a pattern here?

Also note that Amazon Web Services also hosts data for the CIA, the DoD, and NASA.

More about HART

As HART becomes more established, that old saying “you can run but you can’t hide” is going to seem ever more true. The DHS is delighted at how much further the new system can take them into surveilling Americans.

And by freeing the agency from the limitations of its legacy system, HART could also let officials grow the network of external partners with whom they share biometric data and analytics capabilities, according to Patrick Nemeth, director of identity operations within Homeland Security’s Office of Biometric Identity Management.

“When we get to HART, we will be better, faster, stronger,” Nemeth said in an interview with Nextgov. “We’ll be relieved of a lot of the capacity issues that we have now … and then going forward from there we’ll be able to add [capabilities].” (source)

The DHS wants to break free of the limitations of the old system with their new and “improved” system. HART will use multiple pieces of biometric data to increase identification accuracy.

Today, when an official runs a person’s face, fingerprint or iris scans through IDENT’s massive database, the system doesn’t return a single result. Rather, it assembles a list of dozens of potential candidates with different levels of confidence, which a human analyst must then look through to make a final match. The system can only handle one modality at a time, so if agent is hypothetically trying to identify someone using two different datapoints, they need to assess two lists of candidates to find a single match. This isn’t a problem if the system identifies the same person as the most likely match for both fingerprint and face, for example, but because biometric identification is still an imperfect science, the results are rarely so clear cut.

However, the HART platform can include multiple datapoints in a single query, meaning it will rank potential matches based on all the information that’s available. That will not only make it easier for agents to analyze potential matches, but it will also help the agency overcome data quality issues that often plague biometric scans, Nemeth said. If the face image is pristine but the fingerprint is fuzzy, for example, the system will give the higher-quality datapoint more weight.

“We’re very hopeful that it will provide better identification surety than we can provide with any single modality today,” Nemeth said. And palm prints, scars, tattoos and other modalities are added in the years ahead, the system will be able to integrate those into its matching process. (source)

HART will also use DNA.

Remember a while back when we reported that DNA sites were teaming up with facial recognition software? Well, HART will take that unholy alliance even further.

The phase-two solicitation also lists DNA-matching as a potential application of the HART system. While the department doesn’t currently analyze DNA, officials on Wednesday announced they would start adding DNA collected from hundreds of thousands of detained migrants to the FBI’s criminal database. During the interview, Nemeth said the agency is still working through the legal implications of storing and sharing such sensitive data. It’s also unclear whether DNA information would be housed in the HART system or a separate database, he said. (source)


The DHS is operating without any type of regulation.

Currently, there’s no regulation or oversight of government agencies collecting and using this kind of data. Civil liberty activists and some lawmakers are alarmed by this, citing concerns about privacy and discrimination. This hasn’t slowed down the DHS one iota, however.

Critics have taken particular issue with the government’s tangled web of information sharing agreements, which allow data to spread far beyond the borders of the agency that collected it. The Homeland Security Department currently shares its biometric data and capabilities with numerous groups, including but not limited to the Justice, Defense and State departments.

In the years ahead, HART promises to strengthen those partnerships and allow others to flourish, according to Nemeth. While today the department limits other agencies’ access to IDENT to ensure they don’t consume too much of its limited computing power, HART will do away with those constraints. (source)

Mana Azarmi, the policy counsel for the Freedom, Security and Technology Project at the Center for Democracy and Technology is one of those people voicing concern.

A person might give information to a single agency thinking it would be used for one specific purpose, but depending on how that information is shared, they could potentially find themselves subjected to unforeseen negative consequences, Azarmi said in a conversation with Nextgov.

“The government gets a lot of leeway to share information,” she said. “In this age of incredible data collection, I think we need to rethink some of the rules that are in place and some of the practices that we’ve allowed to flourish post-9/11. We may have overcorrected.” (source)

You think?

Many people voluntarily provide biometric data.

Many folks provide biometric data without giving it a second thought. They cheerfully swab a cheek and send it into sites like, providing not only their DNA, but matches to many relatives who never gave permission for their DNA to be in a database.

Then there are cell phones. If you have a newer phone, it’s entirely possible that it has asked you to set up fingerprint login, facial recognition, and even voice recognition. It isn’t a stretch of the imagination to believe that those samples are shared with folks beyond the device in your hand. Add to this that your device is tracking you every place you go through a wide variety of seemingly innocuous apps, and you start to get the picture.

You can’t opt-out.

Back in 2013, I wrote an article called The Great American Dragnet.  At that time, facial recognition was something that sounded like science fiction or some kind of joke. Our drivers’ licenses were the first foray into creating a database but even in 2013, it far exceeded that.

Another, even larger, database exists. The US State Department has a database with 230 million searchable images.  Anyone with a passport or an immigration visa may find themselves an unwilling participant in this database.   Here’s the breakdown of who has a photo database:

  • The State Department has about 15 million photos of passport or visa holders

  • The FBI has about15 million photos of people who have been arrested or convicted of crimes

  • The Department of Defense has about 6 million photos, mainly of Iraqis and Afghans

  • Various police agencies and states have at least 210 million driver’s license photos

This invasion of privacy is just another facet of the surveillance state, and should be no surprise considering the information Edward Snowden just shared about the over-reaching tentacles of the NSA into all of our communications. We are filing our identities with the government and they can identify us at will, without any requirement for probable cause. (source)

Some people don’t even seem to mind that their identities have been tagged and filed by the US government. And even those of us who do mind have no option. If you wish to drive a car or travel outside of the country or have any kind of government ID, like it or not, you’re in the database. Six years ago, I wrote:

The authorities that use this technology claim that the purpose of it is to make us safer, by helping to prevent identity fraud and to identify criminals.  However, what freedom are we giving up for this “safety” cloaked in benevolence? We are giving up the freedom of having the most elemental form of privacy – that of being able to go about our daily business without being watched and identified.  And once you’re identified, this connects to all sorts of other personal information that has been compiled: your address, your driving and criminal records, and potentially, whatever else that has been neatly filed away at your friendly neighborhood fusion center.

Think about it:  You’re walking the dog and you fail to scoop the poop – if there’s a surveillance camera in the area, it would be a simple matter, given the technology, for you to be identified. If you are attending a protest that might be considered “anti-government”, don’t expect to be anonymous.  A photo of the crowd could easily result in the identification of most of the participants.

Are you purchasing ammo, preparedness items, or books about a controversial topic?  Paying cash won’t buy you much in the way of privacy – your purchase will most likely be captured on the CCTV camera at the checkout stand, making you easily identifiable to anyone who might wish to track these kinds of things.  What if a person with access to this technology uses it for personal, less than ethical reasons, like stalking an attractive women he saw on the street?  The potential for abuse is mind-boggling.

If you can’t leave your house without being identified, do you have any real freedom left, or are you just a resident in a very large cage? (source)

When I wrote that, it still seemed far-fetched but remotely possible, even to me. This was before we were really aware of anything like the social credit program in China or how crazy the censorship was going to become or how social media would change the very fabric of our society.

Now, it’s here and it looks like there’s no stopping it.

Tyler Durden Wed, 10/09/2019 - 23:45
Published:10/9/2019 10:57:47 PM
[Markets] John Lennon Vs. The Deep State: One Man Against The "Monster" John Lennon Vs. The Deep State: One Man Against The "Monster"

Authored by John Whitehead via The Rutherford Institute,

“You gotta remember, establishment, it’s just a name for evil. The monster doesn’t care whether it kills all the students or whether there’s a revolution. It’s not thinking logically, it’s out of control.”—John Lennon (1969)

John Lennon, born 79 years ago on October 9, 1940, was a musical genius and pop cultural icon.

He was also a vocal peace protester and anti-war activist and a high-profile example of the lengths to which the Deep State will go to persecute those who dare to challenge its authority.

Long before Julian Assange, Edward Snowden and Chelsea Manning were being castigated for blowing the whistle on the government’s war crimes and the National Security Agency’s abuse of its surveillance powers, it was Lennon who was being singled out for daring to speak truth to power about the government’s warmongering, his phone calls monitored and data files illegally collected on his activities and associations.

For a while, at least, Lennon became enemy number one in the eyes of the U.S. government.

Years after Lennon’s assassination it would be revealed that the FBI had collected 281 pages of files on him, including song lyrics. J. Edgar Hoover, head of the FBI at the time, directed the agency to spy on the musician. There were also various written orders calling on government agents to frame Lennon for a drug bust.

“The FBI’s files on Lennon … read like the writings of a paranoid goody-two-shoes,” observed reporter Jonathan Curiel.

As the New York Times notes, “Critics of today’s domestic surveillance object largely on privacy grounds. They have focused far less on how easily government surveillance can become an instrument for the people in power to try to hold on to power. ‘The U.S. vs. John Lennon’ … is the story not only of one man being harassed, but of a democracy being undermined.”

Indeed, all of the many complaints we have about government today - surveillance, militarism, corruption, harassment, SWAT team raids, political persecution, spying, overcriminalization, etc. - were present in Lennon’s day and formed the basis of his call for social justice, peace and a populist revolution.

For all of these reasons, the U.S. government was obsessed with Lennon, who had learned early on that rock music could serve a political end by proclaiming a radical message. More importantly, Lennon saw that his music could mobilize the public and help to bring about change. Lennon believed in the power of the people. Unfortunately, as Lennon recognized: “The trouble with government as it is, is that it doesn’t represent the people. It controls them.”

However, as Martin Lewis writing for Time notes: “John Lennon was not God. But he earned the love and admiration of his generation by creating a huge body of work that inspired and led. The appreciation for him deepened because he then instinctively decided to use his celebrity as a bully pulpit for causes greater than his own enrichment or self-aggrandizement.”

For instance, in December 1971 at a concert in Ann Arbor, Mich., Lennon took to the stage and in his usual confrontational style belted out “John Sinclair,” a song he had written about a man sentenced to 10 years in prison for possessing two marijuana cigarettes. Within days of Lennon’s call for action, the Michigan Supreme Court ordered Sinclair released.

What Lennon did not know at the time was that government officials had been keeping strict tabs on the ex-Beatle they referred to as “Mr. Lennon.” Incredibly, FBI agents were in the audience at the Ann Arbor concert, “taking notes on everything from the attendance (15,000) to the artistic merits of his new song.”

The U.S. government, steeped in paranoia, was spying on Lennon.

By March 1971, when his “Power to the People” single was released, it was clear where Lennon stood. Having moved to New York City that same year, Lennon was ready to participate in political activism against the U. S. government, the “monster” that was financing the war in Vietnam.

The release of Lennon’s Sometime in New York City album, which contained a radical anti-government message in virtually every song and depicted President Richard Nixon and Chinese Chairman Mao Tse-tung dancing together nude on the cover, only fanned the flames of the conflict to come.

The official U.S. war against Lennon began in earnest in 1972 after rumors surfaced that Lennon planned to embark on a U.S. concert tour that would combine rock music with antiwar organizing and voter registration. Nixon, fearing Lennon’s influence on about 11 million new voters (1972 was the first year that 18-year-olds could vote), had the ex-Beatle served with deportation orders “in an effort to silence him as a voice of the peace movement.”

Then again, the FBI has had a long history of persecuting, prosecuting and generally harassing activists, politicians, and cultural figures. Most notably among the latter are such celebrated names as folk singer Pete Seeger, painter Pablo Picasso, comic actor and filmmaker Charlie Chaplin, comedian Lenny Bruce and poet Allen Ginsberg.

Among those most closely watched by the FBI was Martin Luther King Jr., a man labeled by the FBI as “the most dangerous and effective Negro leader in the country.” With wiretaps and electronic bugs planted in his home and office, King was kept under constant surveillance by the FBI with the aim of “neutralizing” him. He even received letters written by FBI agents suggesting that he either commit suicide or the details of his private life would be revealed to the public. The FBI kept up its pursuit of King until he was felled by a hollow-point bullet to the head in 1968.

While Lennon was not—as far as we know—being blackmailed into suicide, he was the subject of a four-year campaign of surveillance and harassment by the U.S. government (spearheaded by FBI Director J. Edgar Hoover), an attempt by President Richard Nixon to have him “neutralized” and deported. As Adam Cohen of the New York Times points out, “The F.B.I.’s surveillance of Lennon is a reminder of how easily domestic spying can become unmoored from any legitimate law enforcement purpose. What is more surprising, and ultimately more unsettling, is the degree to which the surveillance turns out to have been intertwined with electoral politics.”

As Lennon’s FBI file shows, memos and reports about the FBI’s surveillance of the anti-war activist had been flying back and forth between Hoover, the Nixon White House, various senators, the FBI and the U.S. Immigration Office.

Nixon’s pursuit of Lennon was relentless and in large part based on the misperception that Lennon and his comrades were planning to disrupt the 1972 Republican National Convention. The government’s paranoia, however, was misplaced.

Left-wing activists who were on government watch lists and who shared an interest in bringing down the Nixon Administration had been congregating at Lennon’s New York apartment. But when they revealed that they were planning to cause a riot, Lennon balked. As he recounted in a 1980 interview, “We said, We ain’t buying this. We’re not going to draw children into a situation to create violence so you can overthrow what? And replace it with what? . . . It was all based on this illusion, that you can create violence and overthrow what is, and get communism or get some right-wing lunatic or a left-wing lunatic. They’re all lunatics.”

Despite the fact that Lennon was not part of the “lunatic” plot, the government persisted in its efforts to have him deported. Equally determined to resist, Lennon dug in and fought back. Every time he was ordered out of the country, his lawyers delayed the process by filing an appeal. Finally, in 1976, Lennon won the battle to stay in the country when he was granted a green card. As he said afterwards, “I have a love for this country.... This is where the action is. I think we’ll just go home, open a tea bag, and look at each other.” 

Lennon’s time of repose didn’t last long, however. By 1980, he had re-emerged with a new album and plans to become politically active again.

The old radical was back and ready to cause trouble. In his final interview on Dec. 8, 1980, Lennon mused, “The whole map’s changed and we’re going into an unknown future, but we’re still all here, and while there’s life there’s hope.”

The Deep State has a way of dealing with troublemakers, unfortunately. On Dec. 8, 1980, Mark David Chapman was waiting in the shadows when Lennon returned to his New York apartment building. As Lennon stepped outside the car to greet the fans congregating outside, Chapman, in an eerie echo of the FBI’s moniker for Lennon, called out, “Mr. Lennon!”

Lennon turned and was met with a barrage of gunfire as Chapman—dropping into a two-handed combat stance—emptied his .38-caliber pistol and pumped four hollow-point bullets into his back and left arm. Lennon stumbled, staggered forward and, with blood pouring from his mouth and chest, collapsed to the ground.

John Lennon was pronounced dead on arrival at the hospital. He had finally been “neutralized.”

Yet where those who neutralized the likes of John Lennon, Martin Luther King Jr., John F. Kennedy, Malcolm X, Robert Kennedy and others go wrong is in believing that you can murder a movement with a bullet and a madman.

Thankfully, Lennon’s legacy lives on in his words, his music and his efforts to speak truth to power. As Yoko Ono shared in a 2014 letter to the parole board tasked with determining whether Chapman should be released: “A man of humble origin, [John Lennon] brought light and hope to the whole world with his words and music. He tried to be a good power for the world, and he was. He gave encouragement, inspiration and dreams to people regardless of their race, creed and gender.”

Sadly, not much has changed for the better in the world since Lennon walked among us.

Peace remains out of reach. Activism and whistleblowers continue to be prosecuted for challenging the government’s authority. Militarism is on the rise, with local police dressed like the military, all the while the governmental war machine continues to wreak havoc on innocent lives across the globe. Just recently, for example, U.S. military forces carried out drone strikes in Afghanistan that killed 30 pine nut farmers.

For those of us who joined with John Lennon to imagine a world of peace, it’s getting harder to reconcile that dream with the reality of the American police state.

Meanwhile, as I point out in my book Battlefield America: The War on the American People, those who dare to speak up are labeled dissidents, troublemakers, terrorists, lunatics, or mentally ill and tagged for surveillance, censorship, involuntary detention or, worse, even shot and killed in their own homes by militarized police.

As Lennon shared in a 1968 interview:

“I think all our society is run by insane people for insane objectives… I think we’re being run by maniacs for maniacal means. If anybody can put on paper what our government and the American government and the Russian… Chinese… what they are actually trying to do, and what they think they’re doing, I’d be very pleased to know what they think they’re doing. I think they’re all insane. But I’m liable to be put away as insane for expressing that. That’s what’s insane about it.”

So what’s the answer?

Lennon had a multitude of suggestions.

“If everyone demanded peace instead of another television set, then there’d be peace.”

“War is over if you want it.”

“Produce your own dream…. It’s quite possible to do anything, but not to put it on the leaders…. You have to do it yourself. That’s what the great masters and mistresses have been saying ever since time began. They can point the way, leave signposts and little instructions in various books that are now called holy and worshipped for the cover of the book and not for what it says, but the instructions are all there for all to see, have always been and always will be. There’s nothing new under the sun. All the roads lead to Rome. And people cannot provide it for you. I can’t wake you up. You can wake you up. I can’t cure you. You can cure you.”

“Peace is not something you wish for; It’s something you make, Something you do, Something you are, And something you give away.”

“If you want peace, you won’t get it with violence.”

And my favorite advice of all:

“Say you want a revolution / We better get on right away / Well you get on your feet / And out on the street / Singing power to the people.”

Tyler Durden Tue, 10/08/2019 - 22:45
Published:10/8/2019 9:52:38 PM
[Markets] "Panic At The Repo": One Of The World's Top Repo Experts Explains What Really Happened "Panic At The Repo": One Of The World's Top Repo Experts Explains What Really Happened

Authored by Curvature Securities' Scott E.D. Skyrm, one of the world's most-respected repo market participants and experts.

Panic At The Repo

As a professional trader, I keep an eye out for the next panic or market crisis. Since the beginning of my career, there was a crash or panic every few years in one market or another. You try to think about what market is overbought. What market is in a bubble. What market just appeared on the cover of Time Magazine! Little did I ever imagine the Repo market would experience the next big panic. This is a market consisting of AAA-rated risk-free securities backed by the United States of America! How can there be a crisis in U.S. Treasury securities? We didn’t even make the cover of Time Magazine!

I write about the Repo market every day. As a service to our clients, I decided to put everything I know about the Repo market collapse down on paper. So here it is!

Modern Day Bank Run

We’ve seen the old pictures or films of people lining up outside of a bank to collect their deposits. Think of the Depression in the 1930s. Knowing that a bank can’t make good on all of their customers’ deposits means the first people to get their money are more likely to get their money. Period. Banks never keep all of their customers’ deposits as cash on hand. They invest those customers’ deposits by making loans - like a mortgage loan to a family to buy a home or loan to a business to help start a new venture. Banks invest in loans and borrow money through deposits. That also means they loan long-term and borrow short-term. Don’t worry, this is important later on.

Though banks still have the same problem today - lending long-term and borrowing short-term, increased regulation and stronger risk management has forced them to narrow the tenure mismatch. These days banks have a larger percentage of their funding borrowed in the term markets by issuing CDs, medium-term notes, and even bonds. Since banks manage their tenure mismatch much better, they are not as susceptible to the classic “run on the bank.” However, in recent years, new categories of financial institutions have popped-up that are more susceptible to “bank runs.”

Shadow Banking

The term “shadow banking” is often thrown around as the perennial risk to the financial system. There is no real definition of a “shadow bank,” but they are a key part of the Repo market and the Repo market made “shadow banking” possible. Basically, a “shadow bank” is a financial institution that performs banking functions. A “shadow bank” can be anything from a REIT (Real Estate Investment Trust), to a mortgage finance company, to a hedge fund, to a broker-dealer (like MF Global). The easiest example is a mortgage REIT. They buy mortgage-backed securities (MBS), basically mortgage loans that were packaged into securities, and borrow money to finance those securities in the Repo market. Comparing the REIT to a bank, the REIT’s “loans” are the mortgage-backed securities and the Repo transactions are the “deposits.”

Just like a bank, the REIT’s MBS portfolio might have an average weighted maturity of, say, 7 years. Their Repo transactions might be anywhere from overnight to three months. In this simple example, the REIT is lending 7 years and borrowing between overnight and three months. This maturity mismatch problem exists for “shadow banks” just like it  exists for regular banks. But there is no regulation that forces “shadow banks” to mind their mismatch. As I said, this is all important later on.

Crisis of Too Few Securities

Maybe the whole Repo crisis really began several years ago. Yes! Blame it on the Financial Crisis. Just a few years ago, the Fed was in Quantitative Easing mode and buying Treasury and agency MBS securities, thus removing them from the market. At the time, I called it a back-door method to finance the budget deficit; but it worked. The combination of bond purchases and a fed funds target range of 0.0% to .25% pushed GC Repo rates close to zero. With rates set so low and the Fed still buying $50 billion of securities every month, Treasury securities were becoming scarce in the Repo market. By July 2013 QE purchases had taken so many Treasurys out of the market that the Fed was left with a SOMA portfolio of over $4 trillion. At this point, GC Repo rates were close to zero. If overnight rates turned negative, there would be tremendous stress on the Repo market, money market funds, and the Treasury market overall.

In the blink of an eye, the Fed announced the Reverse-Repurchase Program as a facility to put securities back into the market. And they rolled out this program very quickly. Announcing it in August 2013 and beginning operations in September 2013. Approved participants (not just Primary Dealers) could submit their cash to the Fed and receive Treasury securities in exchange as collateral. The perfect solution to a shortage of collateral. Cash investors, like money market funds, immediately found a new counterparty to invest their cash. They could trade with the AAA-rated Federal Reserve and receive AAArated U.S. Treasury securities. Not a bad deal! You can’t get any more risk free than that!

Pressure Building

Between 2013 and the present day, a lot of things changed. The Treasury kept issuing more and more debt to fund the budget deficit, thus putting more and more Treasury securities into the market. The Federal Reserve began the QE “runoff,” where they stopped reinvesting the principal and interest of maturing SOMA portfolio securities. This put upward pressure on GC Repo rates and the spread between GC Repo and fed funds began to increase. Whereas GC Repo rates were averaging about 5 basis points below fed funds in July 2013, they now average about 10 bps above fed funds. That’s a large move!

Bank Reserves

While more and more collateral was accumulating in the Repo market, bank reserves were dwindling. Banks are required to hold a certain percentage of their liabilities in cash. This cash can be delivered to a special account at the Federal Reserve and the Fed will pay the banks an interest rate on their cash/reserves. What’s more, if banks have extra cash, they can deposit that cash at the Fed and the Fed will pay them interest on their “excess reserves.” That’s the Interest On Excess Reserves (IOER) rate. But the key point is that banks choose to leave excess reserves at the Fed. If there is a better short-term investment, they are allowed to remove that cash and invest it elsewhere.

Total bank reserve balances peaked at around $2.8 trillion in 2014 and have slowly declined since then. These days, those reserves are down to about $1.7 trillion. Yes, there’s been a significant decline, but nothing off trend in 2019, let alone no significant changes in

September 2019.

The Fed had been cut ting the IOER all year long. At the beginning of 2018, the IOER was set at the upper end of the fed funds target range. Since then, when the FOMC either raised or cut the fed funds target range, they often raised the IOER less than 25 basis points with a tightening or lowered the IOER more than 25 basis points with an ease. Since the September FOMC meeting, the fed funds target range was lowered to 1.75% to 2.00% and the IOER was set at 1.80%, or 5 basis points above the lower end of the target range. Basically, between 2018 and 2019, the Fed moved the IOER from the top of the target range to near the bottom of the range. Why?

If you’re a bank and you can invest your excess cash at the Fed at 1.80%, or with another bank in the fed funds market at 1.90%, or in Repo GC at 2.00%, which one do you choose? As the Fed moved the IOER lower and lower within the fed funds target range, it provided a greater economic incentive to get excess reserves out of Fed and into the overnight markets. No doubt moving the IOER relatively lower within the target range is one reason why bank reserves declined over the past two years.

Repo Market Participants: Cash Investors

For every Repo transaction, there is one counterparty that is a cash investor and one counterparty that is a cash borrow. The cash investor borrows the securities from their counterparty and receives securities as collateral. By far, money market funds (MMF) supply the largest amount of cash to the Repo market each day, estimated to be around $1.3 trillion. After the money funds, the bulk of the cash comes from several other kinds of investors including: insurance companies, municipalities, small banks, GSEs (like Fannie Mae, Freddie Mac, and the federal home loan banks), broker-dealer segregated funds, and central banks. But here’s the catch – most of these cash investors need a counterparty with a rating to trade Repo. The largest money-center banks are the ones with a rating, and a rating high enough to attract the cash coming into the Repo market. Thus, bulk of customer cash coming into the Repo market each day goes to the banks.

Repo Market Participants: Cash Borrowers

Remember the discussion about the “shadow banks”? REITs, hedge funds, broker-dealers, etc.? These are the large cash borrowers. These are the leveraged entities that own securities and need the Repo market to finance their positions. Like in our example above, they own longer-term securities and loan those securities into the Repo market for three months, one month, one week, and overnight. But here is what’s important – these entities don’t have any other financing mechanism outside of the Repo market.

Repo Market Participants: Banks

The banks bring everyone together. They intermediate between the two kinds of Repo market participants – the cash investors and the cash borrowers. That’s called a Repo matched-book. The Repo desk at a bank borrows securities from a REIT or hedge fund and loans those securities to a money fund. They profit by the spread where they borrow cash and where they loan cash. Years ago, banks ran massive matched books, borrowing securities from hundreds of counterparties each day and loaning securities to hundreds of other counterparties each day. Back then, no one could compete with the big banks in the Repo market. They had all the capital and massive balance sheets.

However, that all changed after the Financial Crisis. New bank regulation from Dodd-Frank and Basel III changed the Repo market. Banks still intermediate, even though bank balance sheets are restricted by regulation. Under Dodd-Frank and Basel III, there are leverage ratios and a capital charge on Repo transactions. Regulation that never existed before. As a result, banks cut down on size of their balance sheets and reallocated assets based on revenue. Many Repo clients were the first closed because of the low Return On Assets (ROA) for Repo.

Beginning in 2015, banks were no longer sufficiently intermediating the Repo market. Liquidity issues started to appear. Banks expanded their “window dressing” on statement periods to make their balance sheets appear smaller and reduce regulatory capital charges and leverage ratios. The result was noticeably less liquidity in the Repo market on year-end, quarter-end, and sometimes month-end. At these times, if a bank Repo desk had reached its asset limit, they couldn’t book any more trades with clients. No matter what the profit was.

Market participants realized they could no longer rely on banks for Repo financing, especially on quarter-end, and they searched for new counterparties. A whole new cottage industry sprang up of “balance sheet providers.” Broker-dealers like Curvature Securities started running independent Repo matched-books. However, even with the new market participants, the Repo market still relies on banks to intermediate cash investors into the overall Repo market – like the money market funds that need a rated counterparty. On days when banks limit their balance sheets, less cash flows into the market it and causes increased volatility and rate spikes.

Market Timing

The Repo market opens at 7:00 AM EST and closes at 3:00 PM. Repo transactions generally settle for “cash” settlement; meaning the cash and securities are exchange on the same day the trade is executed. The settlement mechanism is called the “Fed Wire,” which is the electronic payments system that moves cash and securities from one counterparty to another. The Fed Wire opens at 8:30 AM.

Cash comes in the Repo market throughout the day. Some cash investors are there when the market opens, some enter the market around 8:00 AM, some around 9:00 AM, and Westcoast funds might arrive in the early afternoon. Most sellers of collateral (hedge funds, REITs, broker-dealers, etc.) – the borrowers of cash - are rushing to sell by 8:30 AM when the Fed Wire opens. Due to recent market infrastructure changes like Triparty reform and increased Daylight Overdraft (DOD) charges, most collateral sellers have a deadline to finance their positions by 8:30 AM. Many Prime Brokers require their hedge fund clients to have their trades booked by then. The key point is that the cash investors enter the market throughout the morning and even in the afternoon and the bulk of the cash borrowers need to finance their positions by 8:30 AM.

As an example, picture someone commuting into New York City each morning by car. Suppose that the George Washington Bridge charged no toll before 8:30 AM and the toll was jacked-up to $50.00 after 8:30 AM. Most people would make damn sure they crossed the bridge before 8:30 AM! It’s the same in the Repo market. Charges increase at 8:30 AM, so there is a big rush to get securities processed and delivered by then.

Cracks In The System

Cracks in the system started to appear on December 31, 2018 year-end. GC Repo rates opened at 2.93% and a panic ensued. Rates backed-up all the way to 7.25% before finally closing at 4.00% at 3:00 PM. It was a real eye opener. The Repo market had not seen such rate volatility in years. It was a shock. And, it was even more of a shock that the Fed did  not intervene to pump cash into the market with rates so high on a year-end.

Over the next several months, the market continued to experience increased rate volatility and small rate spikes on January month-end, March quarter-end and June quarter-end. During this time, the Fed talked about a permanent RP Program, but nothing happened. The market was waving the white flag, but there was no response from the Fed.

Lehman Moment

That brings us to September and the collapse of the Repo market. Monday, September 16 was supposed to be a normal day. The market was expecting some funding pressure due to

  • $19 billion in net new Treasury issuance (more securities in the market)
  • Tax date (cash leaving the market for the Treasury)
  • Money Market Fund cash decreased the previous week by about $20 billion (less cash in the Repo market)
  • Bond market sell-off the previous week (generally adds collateral to the Repo market)
  • A holiday in Japan (?)

All of these factors are a normal part of the Repo market. Cash comes in and out of the market. Securities come in and out of the market. The market finds a clearing price. In fact, on September 16, the Repo GC rate opened at 2.33%. The market was expecting a little funding pressure. Nothing extraordinary. In reality, there was no Lehman moment. The only thing the Repo panic has in common with Lehman are the calendar dates.

Market Panic Dynamics

During the week of September 16, bids were thin. That is, when a bid was hit, the sellers had much more collateral to sell than the buyers (who were long cash) wanted to buy. Bids were hit and the market backed-up immediately. 3.00% traded, 3.50% traded, then 4.00%, then 4.50%, etc. The amount of securities hitting the market kept overwhelming the buyers. Everyone who was long collateral was in a rush to sell because rates were going higher. Everyone who was long cash   didn’t want to buy because rates were going higher. The market peaked at 9.25%.

During the morning, as cash came into the market, rates recovered slightly. Behind the scenes it meant a cash investor had just locked-in their cash investment at a bank. The Repo trader at the bank now had actual cash to invest and they rushed to lock-in their profit. However, once that cash investment was all filled, the bids were thin again until another chunk of cash came into the market.

Look at it this way. Suppose you are a Repo trader at a large bank and your cash client calls you at 8:00 AM every day to invest their cash and set a rate. Before 8:00 AM, why lock-in a Repo rate of 3.00% at 7:30 AM when rates are gaping higher. Between 7:30 AM and 8:00 AM, there are a whole 30 more minutes for rates to keep moving higher. And 30 minutes are a long time in the Repo market at 7:30 AM! And that’s exactly what happened.

Fed Operations

On Tuesday, September 17 at 9:15 AM, during the depth of the market panic, the Fed realized they needed to inject cash into the market and announced an overnight RP operation. This was the first time the Fed used this operation in years. The operation was successful. They pumped $53.15 billion into the market and Repo GC rates closed at 2.30%; within the realm of normal. Over the next two days the Fed continued overnight operations entering the market at 8:15 AM each day and rates stabilized. On Friday, September 20, the Fed announced a schedule for overnight and term operations that went through quarterend and into October. The three term operations eventually pumped $139 billion in the market over quarter-end. On the day of quarter-end, the Fed executed a $63.5 billion overnight operation in addition to the term operations. The timing of that operation was moved up to 7:45 AM on quarter-end.

Overall, the Fed got it right. They pumped a total of $202.5 billion into the Repo market through quarter-end and progressively moved the timing of the operations from 9:15 AM to 7:45 AM. The Repo market is now functioning smoothly.

Who Won And Who Lost?

The question of who won and who lost during the Repo panic will inevitably come up. To sum it up, bank repo desks won, cash investors won, and leveraged market participants lost. Here is a closer look:

1. Bank Repo Desks – It’s pretty hard to determine exactly how much money was made or lost that week, but we can generate some rough estimates. Note: please remember there are a lot of moving parts. This is a simple estimate. If we compare the FICC GCF Index to the Fed Tri-Party Index, we can gauge, on average, where banks borrowed securities (FICC GCF) and where banks borrowed cash (Tri-Party). If we use Thursday, September 19 as a “control” date where the Street makes 7.5 basis points, we estimate that the Street normally makes about $1 million a day on Tri-Party Repo transactions. On Monday, September 16, the FICC GCF Index was 2.876% and the Tri-Party Index was 2.42% for a 45.6 basis point spread. Using the Tri-Party volume of $498 billion, means, just for Tri-Party transactions, the Street made about $6.3 million that day. The spread was even wider on Tuesday at 75.7 basis points and the profit that day was at least $10.7 million, followed by another $7 million on Wednesday. Naturally the Street marks-up clients more than the interdealer average and there is an undetermined about of deliverable GC Repo transactions, and, of course, wider spreads in the Specials market.

2. Cash Investors – Let’s say, under normal circumstances, the Tri-Party Index would be around 2.15% before the ease and at 1.90% after the ease. That means cash investors took in an additional $3.7 million in interest on Monday, $43.8 million on Tuesday, and $4.9 million on Wednesday. Thursday was a scratch. Not a bad week for cash investors! And, just like the banks, there are still a large amount of deliverable Repo GC transactions that can’t be counted.

3. Leveraged Market Participants – These are the entities that paid the price of the panic. If you add up the additional income that the banks and cash investors made, most of this came from the leveraged market participants. Based on the Tri-Party transactions, leveraged players lost, at a minimum, of $73 million that week. Once again, that figure does not include a calculation for deliverable GC Repo transactions. So … the bottom line is … I am comfortable saying that banks and cash investors earned an extra $150 million at the expense of leveraged market participants that week.


  • Bank Reserves – The decline in bank reserves didn’t cause the Repo panic, but the dwindling supply of reserves could have created a smaller cushion of extra liquidity ready to enter the Repo market. In other words, the amount of excess reserves coming out of the Fed account and into the Repo market is possibly maxed out. Perhaps the bank reserves that are rate sensitive already moved out of the Fed as the IOER rate was cut. What’s left are the reserves that are not rate sensitive and therefore a one-day Repo rate spike is not enough incentive to move that liquidity out
  • Declining excess bank reserves might be the result of Repo market funding pressure and not the cause. Over the past year as Repo rates moved relatively higher and the Fed lowered the IOER, perhaps funds moved out of reserves into Repo just for that reason
  • Modern Day Bank Run – The collateral sellers (shadow banks) need funding. And they need it between 7:00 AM and 8:30 AM. The panic was a classic “run on the bank.” Cash investors did not pull cash out of the market, but they made borrowing cash more expensive. The leverage market participants had no choice but to accept prevailing rates
  • Price Not Credit – At no point during the Repo market panic did credit break down. The market didn’t seize up. Counterparties continued to trade. Just interest rates went higher and higher. In other words, there was never a time when there was no bid for collateral. There was always a bid. The bids just kept moving higher
  • Though bank balance sheets are constrained by bank regulation, banks are still the main conduit for cash investors and the Federal Reserve to inject cash into the Repo market
  • Question: Did the Fed solve the Repo funding problem by the size of the operations or the timing? Naturally, most traders assume it’s the dollar amount that eased the Repo panic. Maybe it’s the fact that the Fed plugged the timing mismatch between the collateral sellers and cash providers?
  • One question that remains unanswered is what sparked the Repo panic? I still believe a block of cash left the market and has not yet returned


The market was spooked by the rate spike last year-end and was hoping for a structural change after every FOMC meeting this year. It all came to a head two weeks ago. Here are some things that the Fed should or should not do to fix the Repo liquidity problem:

1. RP Program

The program would be like the RRP Program, but in reverse. Instead of injecting securities into the market like the RRP Program, the RP Program would inject cash. Sounds like a good idea. A simple solution to eliminate funding spikes. However, the RP Program is a little more complicated. Such a program can come in two forms. Philosophically, is it a rate ceiling to eliminate rate spikes, like on year-end or quarter-end? Or is it a tool to better manage overnight rates, keeping them within the target range? There are pluses and minus for both.

  • Rate Ceiling Facility – If the goal to prevent rate spikes, the Fed can set the RP rate 25 or 50 basis points above the upper target rate. At the current target range, the RP rate would be set at 2.25% or 2.50%. Those rates are low enough to prevent rate spikes but high enough to avoid becoming an everyday funding tool for market participants
  • Better Manage Rates – If the Fed wants to fine tune Repo rates, keeping them within the target range, they can set the RP rate at the upper target rate. At the current range, that would be 2.00%. With the Fed willing to inject billions of dollars of cash in the market at 2.00%, Repo rates would rarely trade above 2.00%. The drawback is that it would appear the Fed is funding leveraged market participants. Lending cash to speculators (Gasp!). Such a tight spread is probably a no-go

2. More Quantitative Easing (QE)?

QE is a monetary policy and is not a tool to provide liquidity to the Repo market. It should not be a part of managing overnight interest rates.

3. Eliminate Interest On Excess Reserves (IOER)

The Fed should continue to pay interest to banks on required reserves but stop paying interest on excess reserves. That will get more cash out of the Fed and into the market. Why should private investors (banks) receive a market rate of interest investing with the government (the Fed)? Added bonus - the Fed will no longer need to keep tweaking the IOER rate.

4. Continue RP Operations

Back a few months ago, I recommended in my Repo Market Commentary that the Fed resume RP operations instead of initiating a permanent RP Program. “Bring back the System RP!” I wrote. My recommendation stands. I don’t believe a permanent facility is needed. RP operations give the Fed flexibility – they can choose overnight or term, choose the timing, and even enter the market twice in one day if necessary. The downside is that Fed overnight and term RP operations stress Primary Dealer bank balance sheets – balance sheets that are already restricted by bank regulation. Could the Fed open the RP operations to other financial institutions? Like the RRP Program?

Tyler Durden Tue, 10/08/2019 - 15:28
Published:10/8/2019 2:48:46 PM
[CIA] Kim Strassel Tells It Like It Is (John Hinderaker) Kim Strassel is popular with readers of the Wall Street Journal, where she has been a member of the editorial board since 2005 and author of the Potomac Watch column since 2007. She has written two books, The Intimidation Game: How the Left Is Silencing Free Speech, and Resistance (At All Costs): How Trump Haters Are Breaking America, which will be published next week. Tonight Kim spoke at Center of Published:10/7/2019 11:46:19 PM
[Energy and Environment] IEA declines the Guardian’s invitation to delete books

On 2 October 2019, the Guardian wrote to the IEA accusing us of having “a long history of climate denial”, setting out a small number of historic publications, going back to 1994, which the reporter implied supported this claim, and proposed we might wish to “retract” them. This in the context of an article the … Continue reading "IEA declines the Guardian’s invitation to delete books"

The post IEA declines the Guardian’s invitation to delete books appeared first on Institute of Economic Affairs.

Published:10/7/2019 11:42:21 AM
[Markets] Bannon Says Concept Of "Deep" State Is 'Conspiracy Theory For Nutcases' Because "It's Right In Your Face" Bannon Says Concept Of "Deep" State Is 'Conspiracy Theory For Nutcases' Because "It's Right In Your Face"

Former Trump 2016 campaign chair and White House strategist Steve Bannon says that the deep state is a 'conspiracy theory for nutcases,' explaining to author James B Stewart "America isn’t Turkey or Egypt.

Bannon says that while there is a formidable government bureaucracy in the United States - "there's nothing 'deep' about it," adding "It's right in your face.

Of course, many define the 'deep state' to include a group of powerful, unelected individuals calling shots while their servants carry out their agenda at all levels of government - but perhaps Bannon knows better, having operated on both sides of the curtain. 

Bannon's comments can be found in Stewart's upcoming book, Deep State: Trump, the FBI and the Rule of Law by James B Stewart, which will be published on 8 October according to The Guardian, which obtained a copy. 

The claim that the deep state is a 'conspiracy theory' flies in the face of White House senior adviser Stephen Miller, who suggested the deep state is behind an impeachment inquiry into President Trump's request that Ukraine investigate political rival Joe Biden. Last Sunday, Miller told Fox News he knows "the difference between a whistleblower and a deep state operative." 

On Thursday, Bannon's former outlet - Breitbart News, published a new essay by Virgil, "the pseudonymous author of the original Deep State series. The title: Lessons of Impeachment, from Watergate to Monicagate to Bidengate" according to The Guardian

And so when the New York Times informs us that the whistleblower works for the CIA—the former domain of Trump-hater John Brennan—and is thus “nonpolitical,” well, that’s good for a Virgilian belly laugh. Indeed, when one considers the legal craftsmanship of the report, it’s obvious that the whistleblower had a lot of help in the researching and writing of the document. -Breitbart

According to Virgil, "Yes, this is the deep state in action, and it's out for blood.

Tyler Durden Sun, 10/06/2019 - 12:30
Published:10/6/2019 11:37:10 AM
[Markets] Bank Crisis Hits India: "Bank Stops Functioning, People Crying Outside Bank Branches" Bank Crisis Hits India: "Bank Stops Functioning, People Crying Outside Bank Branches"

The Punjab Maharashtra Co-operative Bank (PMC), in India, has been caught cooking the books and misreporting non-preforming loans (NPL) of Mumbai-based real estate developer Housing Development and Infrastructure Ltd (HDIL). As Reuters reports,  PMC hid the bad loans with 21,000 fictitious accounts, which has spooked depositors, investors and government officials,

Reuters learned about the massive fraud through a complaint filed with the Economic Offences Wing (EOW) of Mumbai Police earlier this week, alleges that PMC concealed $616 million in NPLs. 

BloombergQuint said PMC's loan book had a 73% exposure to HDIL's failed real estate dealings. 

"The actual financial position of the bank was camouflaged, & the bank deceptively reflected a rosy picture of its financial parameters," said the complaint, noting that the fictitious loan accounts were not entered into the bank's core banking system - a factor key in the perpetration of a $2 billion fraud at Punjab National Bank that was uncovered in 2018, said Reuters. 

The complaint says PMC's Chairman Waryam Singh and its Managing Director Joy Thomas were at the center point of the fraud. It also names HDIL's former senior executives Sarang Wadhwan and Rakesh Wadhwa, who were the recipients of the real estate loans. 

As recession fears intensify in India, the PMC banking crisis has ignited the debate among government officials that the banking sector could be headed for turmoil.  

The Reserve Bank of India (RBI) took over PMC last week and has prevented the bank from new loan creation, while nearly 900,000 depositors have been informed that capital controls are being placed on their accounts for six months. 

Dozens of videos have been uploaded to social media this week, detailing how depositors are being locked out of their accounts, some fear the worst, as the bank has likely failed. 

One depositor said he lost all of his money in the PMC banking crisis.

Thousands of people have marched in the streets this week, demanding PMC return their savings.

Another heartbreaking moment when a woman discovers her family's savings were completely wiped out in the banking crisis.

Hundreds crowd inside one PMC bank branch, attempting to withdraw their savings, as they learn the bank failed.

CNBC TV18 reported depositors are feeling "anger and pain" as they learn capital controls have limited them to only withdrawing $100.

With a financial crisis developing, the Reserve Bank of India is scrambling to reassure the public that the banking sector isn't imploding. 

Tyler Durden Sat, 10/05/2019 - 14:30
Published:10/5/2019 2:01:45 PM
[Markets] CJ Hopkins: Trumpenstein Must Be Destroyed! CJ Hopkins: Trumpenstein Must Be Destroyed!

Authored (satirically) by CJ Hopkins via The Unz Review,

So here we go. Like a 1960s straight-to-drive-in Hammer Film Production, the 2020 campaign season has begun. Dig into your bucket of popcorn, pop the flap on your box of Good & Plenty, turn off your mind, and enjoy the show. From the looks of the trailer, it’s going to be a doozy.

That’s right, folks, it’s the final installment of the popular Trumpenstein horror movie series, TRUMPENSTEIN MUST BE DESTROYED! It will be playing, more or less around the clock, on more or less every screen in existence, until November 3, 2020 … or until Trump takes that lonely walk across the White House lawn to the Marine One chopper and flies off to Mar-a-Lago in disgrace.

Here’s a quick recap of the series so far, for those who may be joining us late.

When we last saw Trumpenstein he was out on the balcony of the White House South Portico in his Brioni boxers, ripped to the gills on Diet Coke and bellowing like a bull elephant seal. Having narrowly survived the Resistance’s attempts to expose him as a Russian intelligence asset (and the reanimated corpse of Adolf Hitler), he was pounding his chest and hollering angry gibberish at the liberal media like the Humongous in the second Mad Max movie.

The liberal mob was standing around with their torches and pitchforks in a state of shock. Doctor Mueller, the “monster hunter,” had let Trumpenstein slip through his fingers. The supposedly ironclad case against him had turned out to be a bunch of lies made up by the Intelligence Community, the Democratic Party, and the corporate media.

Russiagate was officially dead. The President of the United States was not a Russian secret agent. No one was blackmailing anyone with a videotape of Romanian prostitutes peeing on a bed where Obama once slept. All that had happened was, millions of liberals had been subjected to the most elaborate psyop in the history of elaborate deep state psyops … which, ironically, had only further strengthened Trumpenstein, who was out there on the Portico balcony, shotgunning Diet Cokes with one hand and shaking his junk at the mob with the other.

It wasn’t looking so good for “democracy.”

Fortunately, even though Russiagate had blown up in the Resistance’s faces and Trumpenstein could no longer be painted as a traitorous Russian intelligence asset (or as Vladimir Putin’s homosexual lover), he was still the reanimated corpse of Hitler, so they went balls out on the fascism hysteria, which kept the Resistance alive through the summer.

Which was all they really needed to do. Because these last three years were basically just a warm-up for the main event, which was always scheduled to begin this autumn. Russiagate, Hitlergate, and all the rest of it … it was all just a prelude to these impeachment hearings, and to the mass hysteria surrounding same, which the global capitalist ruling classes, the Intelligence Community, and the corporate media will be barraging us with until November 2020.

The details don’t really matter that much. They were always going to impeach him for something, and they were always going to do it now, and throughout the 2020 campaign season.

You do not honestly believe they are going to let him serve a second term, do you? He took them by surprise in 2016. That isn’t going to happen again.

Seriously, take a moment and reflect on everything we’ve been subjected to since Hillary Clinton lost the election... the unmitigated insanity of it all.

  • The Russiagate hysteria.

  • The Russian hacker hysteria.

  • The Russian Facebook mind-control hysteria.

  • The Hitler hysteria.

  • The mass fascism hysteria.

  • The anti-Semitism hysteria.

  • The concentration camp hysteria.

  • The white supremacist terrorism hysteria.

  • Russian spy whales.

  • Perfume assassins.

  • The endless stream of fabricated “news” stories pumped out by the corporate media.

  • Best-selling books, based on nothing.

  • Comedians singing hymns to former FBI directors on national television.

  • Celebrities demanding CIA coups.

  • Papers of record like The New York Times coordinating blatant propaganda campaigns.

The list goes on, and on, and on.

All of this because one billionaire ass clown won an election without their permission?

No, this was never just about Donald Trump, repulsive and corrupt as the man may be. The stakes have always been much higher than that. What we’ve witnessed over the the last three years (and what is about to reach its apogee) is a global capitalist counter-insurgency, the goal of which is:

(a) to put down the ongoing populist rebellion throughout the West,

and (b) to crush any hope of resistance to the hegemony of global capitalism … in other words, a War on Populism.

Not that Donald Trump is a populist hero. Far from it. Trump is a narcissistic clown. He has always been a narcissistic clown. All he really cares about is seeing his face on television and plastering his name on everything in sight, preferably in huge gold letters. He got himself elected president by being cunning enough to recognize and ride the tsunami of populist anger that was building up in 2016, and that has continued to build throughout his presidency. It is not going away, that anger. The Western masses are no more thrilled about the global capitalist future today than they were when voted for Brexit, and Trump, and various other “populist” and reactionary figures.

Which is precisely why Trumpenstein must be destroyed, and why Brexit must not be allowed to happen … or, if it does, why the people of the United Kingdom must be mercilessly punished. It is also why the Gilets Jaunes are being brutally repressed by the French police, and disappeared by the corporate media (while the Hong Kong protesters garner daily headlines), and why Jeremy Corbyn and the Labour Party must be smeared as a hive of anti-Semites, and Tulsi Gabbard as an Assad-apologist, and why Julian Assange must be smeared and destroyed, and why Bernie Sanders must also be destroyed, and why anyone of any ilk (left, right, it doesn’t matter) riding that wave of populist anger or challenging the hegemony of global capitalism and its psychotic, smiley-face ideology in any other way must be destroyed.

2020 is for all the marbles.

The global capitalist ruling classes either crush this ongoing populist insurgency or... God knows where we go from here. Try to see it through their eyes for a moment. Picture four more years of Trump … second-term Trump … Trump unleashed. Do you really believe they’re going to let that happen, that they are going to permit this populist insurgency to continue for another four years?

They are not.

What they are going to do is use all their power to destroy the monster … not Trump the man, but Trump the symbol. They are going to drown us in impeachment minutiae, drip, drip, drip, for the next twelve months. The liberal corporate media are going to go full-Goebbels. They are going to whip up so much mass hysteria that people won’t be able to think. They are going to pit us one against the other, and force us onto one or the other side of a simulated conflict (Democracy versus the Putin-Nazis) to keep us from perceiving the actual conflict (Global Capitalism versus Populism). They are going to bring us to the brink of civil war in order to prevent civil war. And, if that doesn’t work, and Trump gets reelected (or if it looks like he’s going to get reelected), they’ll probably have to just go ahead and kill him.

One way or another, this is it. This is the part where the global capitalist ruling classes teach us all a lesson. The lesson they intend to teach us is the same old lesson that masters have been teaching slaves since the dawn of slavery.

The lesson is, “abandon hope.”

The lesson is, “resistance is futile.”

The lesson is, “shut up, eat your tofu, get back to work at your three gig jobs, service your school loans and your credit card debt, vote for who and what we tell you, and be grateful we don’t fucking kill you. Oh, yeah … and if you want to rebel against something, feel free to take up identity politics, or to march around town with posters of Saint Greta demanding that we stop destroying the planet. We’ll get right on that, don’t you worry.”

What? You thought this had a happy ending, that Trumpenstein and the Bride of Trumpenstein were going to ride off into the orange sunrise at Mar-a-Lago in a Trump-branded golf cart, having made America great again … or that Bernie was going to storm the castle, vanquish Trumpenstein, and set up something resembling basic social democracy?

I told you it was a horror film, didn’t I?

*  *  *

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 Fri, 10/04/2019 - 23:45
Published:10/4/2019 10:58:03 PM
[Markets] McCarthy: Ignore The Hype - This Is Not An Impeachment Inquiry McCarthy: Ignore The Hype - This Is Not An Impeachment Inquiry

Authored by Andrew McCarthy, op-ed via The Hill,

There is no impeachment inquiry. There are no subpoenas.

You are not to be faulted if you think a formal inquest is under way and that legal process has been issued. The misimpression is completely understandable if you have been taking in media coverage — in particular, reporting on a haughty Sept. 27 letter from House Democrats, presuming to direct Secretary of State Mike Pompeo, on pain of citation for obstruction, to cooperate in their demands to depose State Department officials and review various records. 

The letter is signed by not one but three committee chairmen. Remember your elementary math, though: Zero is still zero even when multiplied by three.

What is portrayed as an “impeachment inquiry” is actually just a made-for-cable-TV political soap opera. The House of Representatives is not conducting a formal impeachment inquiry. To the contrary, congressional Democrats are conducting the 2020 political campaign. 

The House has not voted as a body to authorize an impeachment inquiry. What we have are partisan theatrics, proceeding under the ipse dixit of Speaker Nancy Pelosi (D-Calif.). It raises the profile, but not the legitimacy, of the same “impeachment inquiry” House Judiciary Committee Chairman Jerrold Nadler (D-N.Y.) previously tried to abracadabra into being without a committee vote.

Moreover, there are no subpoenas. As Secretary Pompeo observed in his fittingly tart response on Tuesday, what the committee chairmen issued was merely a letter. Its huffing and puffing notwithstanding, the letter is nothing more than an informal request for voluntary cooperation. Legally, it has no compulsive power. If anything, it is rife with legal deficiencies.

The Democrats, of course, hope you don’t notice that the House is not conducting a formal impeachment inquiry. They are using the guise of frenetic activity by several standing committees — Intelligence, Judiciary, Foreign Affairs, Oversight and Reform, Financial Services, and Ways and Means — whose normal oversight functions are being gussied up to look like serious impeachment business.

But standing committees do have subpoena power, so why not use it? Well, because subpoenas get litigated in court when the people or agencies on the receiving end object. Democrats want to have an impeachment show — um, inquiry — on television; they do not want to defend its bona fides in court.

They certainly do not want to defend their letter. The Democrats’ media scribes note the chairmen’s admonition that any failure by Pompeo to comply “shall constitute evidence of obstruction of the House’s impeachment inquiry.” What a crock. 

In criminal proceedings, prosecutors demand information all the time and witnesses often resist — just as congressional Democrats encouraged the Justice Department and FBI to resist when Republican-controlled committees were trying to investigate such matters as Foreign Intelligence Surveillance Act abuse. Presumptively, resisting an information request is not evidence of obstruction. It is evidence that the recipient of the demand believes he or she has a legal privilege that excuses compliance. The recipient can be wrong about that without being guilty of obstruction. 

Congressional Democrats know this, of course — many of them are lawyers. They are issuing partisan letters that pose legally offensive threats, rather than subpoenas, because this is a show, not an impeachment inquiry. Subpoenas don’t require chest-beating about obstruction. Everyone knows they are compulsory, but everyone also knows they may be challenged in court. Such challenges take time, though, and Democrats are in a hurry to close this show after a short run.

To be sure, the Constitution vests the House alone with the power of impeachment (as opposed to impeachment trials, which are the sole responsibility of the Senate). The judiciary has no authority to tell the House how to conduct impeachment proceedings. And the House is a “majority rules” institution, so if Speaker Pelosi and her partisans want to ipse dixit their way to impeachment articles, no one can stop them.

That said, the courts maintain their authority to protect the legal rights of persons and institutions ensnared in kangaroo tribunals. The fact that House Democrats invite you to their circus does not require you to beclown yourself.

Any competent court asked to evaluate a demand for information under the rubric of impeachment will observe that the process has a history. When the Framers debated whether to include an impeachment clause in the Constitution, they had serious concerns. They were designing a separation-of-powers system that endowed the coordinate branches with checks and balances to police each other. They understood that impeachment authority was necessary, but feared it would give the legislature too much power over the executive. 

They also worried that impeachment could be politicized. If it were too easy to do procedurally, or it could be resorted to for trifling acts of maladministration, factions opposed to the president would be tempted to try to overturn elections and grind the government to a halt.

To address these concerns, the Framers adopted a burdensome standard — high crimes and misdemeanors (in addition to treason and bribery) — that would restrict impeachable offenses to truly egregious abuses of power. Then they erected an even higher bar: a two-thirds supermajority requirement for conviction in the Senate. 

All this was to ensure that the electoral will of the people must never be overturned in the absence of misconduct so severe that it results in a broad consensus that the nation’s well-being requires removing the president from power. 

Although the House has the raw power to file articles of impeachment based on frivolous allegations and minor abuses, the Senate supermajority requirement for removal is designed to have a sobering effect on the lower chamber. Impeachment should not be sought out of partisanship. There must be misconduct that would convince objective Americans, regardless of their politics, that the president must be ousted — not merely criticized or censured, but stripped of authority.

In defending against any congressional demand for information, the president has various privileges against disclosure. Executive components such as the State Department are also repositories of highly sensitive information involving national security and foreign relations — conduct of the latter being a nearly plenary executive authority. The judiciary is generally deferential toward the executive’s claims of privilege. But Congress is given wider latitude to probe in a real impeachment inquiry. When the House, as an institution, endorses such an inquiry in a formal vote, the courts must presume the inquiry is based on a reasonable suspicion of grievous misconduct.

By contrast, any reasonable judge asked to weigh the demands for information presented to Pompeo would not give them the time of day. They do not reflect the judgment of the House. They are reflective, instead, of partisan House leadership that realizes it does not have impeachable offenses — so much so that Pelosi & Co. fear the wrath of voters if Democrats in districts friendly to President Trump are put to the test of voting to authorize a formal impeachment inquiry. 

Every presidential impeachment inquiry, from Andrew Johnson through Bill Clinton, has been the subject of bipartisan consultation and debate. The House has recognized that its legitimacy, and the legitimacy of its most solemn actions, must be based on the consideration of the whole body, not the diktat of a few partisan bosses.

Not this one. This one is a misadventure in exactly the bare-knuckles partisanship the Framers feared. To be sure, no one has the power to prevent willful House leadership from misbehaving this way. But we’re not required to pretend the charade is real. 

Democrats are mulishly determined to ram through an article of impeachment or two, regardless of whether the State Department and other agencies cooperate in the farce. Their base wants the scarlet-letter “I” attached to Trump. The party hopes to rally the troops for the 2020 campaign against Trump (although smarter Democrats know it could boomerang on them). 

If Democrats truly thought they had a case, they wouldn’t be in such a rush — they’d want everyone to have time to study it. But they don’t have a case, so instead they’re giving us a show.

Tyler Durden Fri, 10/04/2019 - 12:10
Published:10/4/2019 11:23:57 AM
[Markets] Will The Drive To Devalue The Dollar Lead To A Plaza Accord 2.0? Will The Drive To Devalue The Dollar Lead To A Plaza Accord 2.0?

Authored by Ronald-Peter Stöferle via The Mises Institute,

The Lead-Up to the Plaza Accord

To understand the Plaza Accord, one has to look back to August 15, 1971. On this day Richard Nixon closed the gold window. This step de facto ended the Bretton Woods system, which had been created in 1944 in the New Hampshire town of the same name and was formally terminated in 1973. The era of gold-backed currency was well and truly over; the era of flexible exchange rates had begun. Without a gold anchor, the exchange rate of every currency pair was supposed to be driven exclusively by supply and demand. National central banks — and indirectly governments as well — were at liberty to make their own decisions, free of the tight restrictions imposed by a gold standard, but they had to bear the costs of their decisions in the form of the devaluation or appreciation of their currencies. While a gold-backed currency aims to impose discipline on nations, a system of flexible exchange rates enables national idiosyncrasies to be preserved, with the exchange rate serving as a balancing mechanism.

However, unlike any other currency system, the system of free-floating currencies invites governments and central banks to manipulate exchange rates practically at will. Without reciprocal agreements, which can provide planning security to export-oriented companies in particular, the danger of international chaos is very high, as the system of flexible exchange rates lacks an external anchor.

In order to prevent this chaos, a repetition of the traumatic devaluation spiral of the 1930s, and the resulting disintegration of the global economy, IMF member nations agreed in 1976 at a meeting in Kingston, Jamaica, that “the exchange rate should be economically justified. Countries should avoid manipulating exchange rates in order to avoid the need to regulate the balance of payments or gain an unfair competitive advantage." And in this multilateral spirit — albeit under an US initiative that was strongly tinged by self-interest — an agreement was struck nine years later that has entered the economic history books as the Plaza Accord.

Macroeconomic Excesses in the 1980s?

In the first half of the 1980s the US dollar appreciated significantly against the most important currencies. In five years the dollar rose by around 150% against the French franc, almost 100% against the Deutschmark, and intermittently 34.2% against the yen (from the January 1981 low).

The significant appreciation of the US dollar was of course reflected in the US Dollar Index, which consists of the currencies of the most important US trading partners, weighted according to their share of trade with the US. The following chart, moreover, shows exchange rates in real terms — i.e., it takes price levels into account, which can vary substantially in some cases.

Real trade-weighted US Dollar Index, 03/1973=100, 01/1980–12/1989

Source: Federal Reserve St. Louis, Incrementum AG

From an interim low of 87.7 in July 1980, the index rose by about 50% to 131.6 by March 1985. Not surprisingly, the US current account balance deteriorated significantly in the first half of the 1980s as a result of this substantial dollar rally, as the following chart shows.

Current account balance, US, Germany, France, United Kingdom, Japan, in % of GDP, 1980–1989

Source: World Bank, Quandl, Incrementum AG

In 1980 and 1981 the US still posted a moderate surplus, but by 1985 this surplus had turned into a deficit of 2.9%. The trend in Germany and Japan was almost a perfect mirror image. While the two export nations had current account deficits of 1.7% and 1.0% in 1980, their current account balances turned positive in 1981 and 1982, respectively. In 1985, they already posted surpluses of 2.5% and 3.6%. Germany’s current account surplus in particular grew even further in subsequent years.

The Plaza Accord

Representatives of the US, Germany, Japan, France, and Great Britain, a.k.a. the G5 countries, met in September 1985 at the Plaza Hotel in New York under the leadership of US Treasury Secretary James Baker in order to coordinate their economic policies. Their declared aim was to reduce the US current account deficit, which they planned to accomplish by weakening the overvalued US dollar. Moreover, the US urged Germany and Japan to strengthen domestic demand by expanding their budget deficits, which was supposed to give US exports a shot in the arm.

In the Plaza Accord, the five signatory nations agreed to cooperate more closely when cooperation made sense. The criterion cited for adopting a joint approach was “deviation from fundamental economic conditions.” Interventions in the foreign exchange market were to be conducted with the aim of combating current account imbalances. In the short term the target was a 10%–12% devaluation of the US dollar relative to its level of September 1985.

The immediate outcome of the agreement was as desired. One week after the Plaza Accord had been signed, the Japanese yen gained 11.8% against the US dollar, while the German mark and the French franc gained 7.8% each, and the British pound 2.8%. However, the speed of the adjustment in foreign exchange markets continued to be the same as before the Plaza agreement, as the following chart clearly shows.

USD exchange rate vs. DEM, FRF, JPY, GBP, 01/01/1980=100, 01/1980–09/1985

Source:, Incrementum AG

However, the charts also show quite clearly that the depreciation of the US dollar had already begun several months before the official agreement was concluded in the heart of Manhattan. The Dollar Index had reached its peak in March of 1985, i.e., half a year before the Plaza Accord.

Plaza Accord 2.0?

Some people propose the creation of a new version of the Plaza Accord, i.e., a multilateral agreement that includes, inter alia, coordinated intervention in foreign exchange markets. The proponents of a Plaza Accord 2.0 point to the appreciation of the US dollar by almost 40% (particularly in the years 2011–2016), and to the large differences between the current account balances of the leading developed countries. However, such an agreement would represent a new turning point in international currency policy. After all, in 2013 the G8 agreed to refrain from foreign exchange interventions — in a kind of Anti-Plaza Accord.

The following chart illustrates the significant appreciation of the US dollar in recent years.

Real trade-weighted US Dollar Index, 03/1973 = 100, 01/2011–04/2019

Source: Federal Reserve St. Louis, Incrementum AG

And just as was the case thirty years ago, the US has a significant and persistent current account deficit, while Germany, Japan — and these days also China — have significant surpluses. Germany’s surplus, which intermittently reached almost 9%, is particularly striking.

Current account balances of US, Germany, France, Great Britain, Japan, China, in % of GDP, 2010–2017

Source: World Bank, Quandl, Incrementum AG

Long before Donald Trump weighed in on the issue, the US Treasury — which is in charge of the US dollar’s external value — repeatedly stressed that the dollar was too strong, especially compared to the renminbi. Time and again the US accused China, Japan, and the eurozone of keeping their currencies at artificially low levels in order to support their export industries. The fact that Donald Trump used the term manipulation in a tweet came as a bit of a surprise, as the US has not used this term officially since 1994.

In any case, such a significant adjustment in exchange rates would have to be implemented gradually; the risk of creating further distortions would be too great. An abrupt adjustment of rates might result in, for example, a significant increase in the pace of US inflation and/or a collapse of the export sectors of countries whose currencies would appreciate.

But as exchange rates — at least in the medium to long term — are mainly determined by fundamentals, exchange rates can change substantially only if underlying macroeconomic conditions (real interest rate differentials, trade and current account balances, the investment climate, and budget balances) change. Regardless of how powerful a government or how watertight an international agreement is, those who enter an agreement cannot get past this fact. As Eugen von Böhm-Bawerk has stated explicitly: “The most imposing dictate of power can never effect anything in contradiction to the economic laws of value, price, and distribution; it must always be in conformity with these; it cannot invalidate them; it can merely confirm and fulfill them.”

Tyler Durden Fri, 10/04/2019 - 02:00
Published:10/4/2019 1:21:40 AM
[Markets] New Weapons & The New Tactics Which They Make Possible: Three Examples New Weapons & The New Tactics Which They Make Possible: Three Examples

Via The Saker blog,

There are probably hundreds of books out there about the so-called “Revolution in Military Affairs”, some of them pretty good, most of them very bad, and a few very good ones (especially this one). For a rather dull and mainstream discussion, you can check the Wikipedia article on the RMA. Today I don’t really want to talk this or similar buzzwords (like “hybrid warfare” for example). Frankly, in my experience, these buzzwords serve two purposes:

  1. to sell (books, articles, interviews, etc.)

  2. to hide a person’s lack of understanding of tactics, operational art and strategy.

This being said, there are new things happening in the realm of warfare, new technologies are being developed, tested and deployed, some extremely successfully.

In his now famous speech, Putin revealed some of these new weapons systems, although he did not say much about how they would be engaged (which is quite logical, since he was making a political speech, not a military-technical report). For those would be interested in this topic, you can check hereherehereherehere and here.

The recent Houthi drone and missile strike on the Saudi oil installations has shown to the world something which the Russians have known for several years: that even rather primitive drones can be a real threat. Sophisticated drones are a major threat to every military out there, though Russia has developed truly effective (including cost-effective, which is absolutely crucial, more about that later) anti-drone capabilities.

First, lets look at the very low-cost end of the spectrum: drones

Let’s begin with the primitive drones. These are devices which, according to one Russian military expert, roughly need a 486 CPU, about 1MB of RAM, 1GB of harddisk space and some (now extremely cheap) sensors to capture the signals from the US GPS, the Russian GLONASS or both (called “GNSS”). In fact, the “good terrorists” in Syria, financed, assisted and trained by the “Axis of Kindness” (USA/KSA/Israel) have been attacking the Russian base in Khmeimim with swarms of such drones for years.According to the commander of the air defenses of Khmeiminover 120(!) drones were shot down or disabled by Russian air defenses in just the last two years. Obviously, the Russians know something that some “Axis of Kindness” does not.

The biggest problem: missile systems should not be used against drones

Some self-described “specialists” have wondered why Patriot missiles did not shoot down the Houthi drones. This is asking the wrong question because missiles are completely ineffective in engaging attacking drone swarms. And, for once, this is not about the poor performance of Patriot SAMs. Even Russian S-400s are the wrong systems to use on individual drones or drone swarms. Why? Because of the following characteristics of drones:

  1. they are typically small, with a very special low profile, extremely light and made up of materials which minimally reflect radar signals;

  2. they are very slow, which does not make it easier to shoot them down, but much harder, especially since most radars are designed to track and engage very fast targets (aircraft, ballistic missiles, etc.);

  3. they can fly extremely low, which allows them to hide; even lower than cruise missiles flying NOE;

  4. they are extremely cheap, thus wasting multi-million dollar missiles on drones costing maybe 10-20 dollars (or even say, 30,000 dollars for the very high end) makes no sense whatsoever;

  5. they can come in swarms with huge numbers; much larger than the number of missiles a battery can fire.

From the above, it is obvious how drones should be engaged: either with AA cannons or by EW systems.

In theory, they could also be destroyed by lasers, but these would require a lot of power, thus engaging cheapo drones with them is possible, but not optimal.

It just so happens that the Russians have both, hence their success in Khmeimim.

One ideal anti-drone weapon would be the formidable Pantsir which combines multi-channel detection and tracking (optoelectronics, radar, IR, visual, third-party datalinks, etc.) and a powerful cannon. And, even better, the Pantsir also has powerful medium range missiles which can engage targets supporting the drone attack.

The other no less formidable anti-drone system would be the various Russian EW systems deployed in Syria.

Why are they so effective?

Let’s look at the major weaknesses of drones

First, drones are either remotely controlled, or have onboard navigation systems. Obviously, just like any signal, the remote signal can be jammed and since jammers are typically closer to the intended target than the remote control station, it is easier for it to produce a much stronger signal since the strength of a signal diminishes according to the so-called “inverse square law“. Thus in terms of raw emission power, even a powerful signal transmitted far away is likely to lose to a smaller, weaker, signal if that one is closer to the drone (i.e. near the intended target along the likely axis of attack). Oh sure, in theory one could use all sorts of fancy techniques to try to avoid that (for example frequency-hopping, etc.) but these very quickly dramatically raise the weight and cost of the drone. You also need to consider that the stronger the signal from the drone, the bigger and heavier the onboard power cells need to be, and the heavier the drone is.

Second, some drones rely on either satellite signals (GPS/GLONASS) or inertial guidance. Problem #1: satellite signals can be spoofed. Problem #2 inertial guidance is either not that accurate or, again, heavier and more costly.

Some very expensive and advanced cruise missiles use TERCOM, terrain contour matching, but that is too expensive for light and cheap drones (such advanced cruise missiles and their launchers is what the S-3/400s were designed to engage, and that at least makes sense financially). There are even more fancy and extremely expensive cruise missile guidance technologies out there, but these are simply not applicable to weapons like drones with their biggest advantage being simple technology and low costs.

The truth is that even a non-tech guy like me could build a drone ordering all the parts from online stores such as Amazon, AliBaba, Banggood and tons of others and build pretty effective drones to, say, drop a hand grenade or some other explosive on an enemy position. Somebody with an engineering background could easily build the kind of drones the “good terrorists” have used against the Russians in Syria. A country, even a poor one and devastated by a genocidal war, like Yemen, could very easily build the kind of drones used by the Houthis, especially with Iranian and Hezbollah help (the latter two have already successfully taken remote control of US and Israeli drones respectively).

Finally, I can promise you that right now, in countries like the DPRK, China, Russia, Iran, Iraq, Syria, Yemen, Venezuela, Cuba, etc, there are teams of engineers working on the development of very low cost drones just like there are teams of military analysts developing new tactics of engagement.

This is, I submit, the first not-so-noticed (yet) kinda-revolution in military affairs.

Second, lets look at the very high end: 5th+ generation aircraft and 5-6th generation UAVs

While some in India have declared (for political reasons and to please the USA) that the Su-57 was not “really” a 5th generation aircraft (on the pretext that the first ones were deployed with 4th gen engines and because the Su-57 did not have the same kind of all-aspect RCS which the F-22 has), in Russia and China the debate is now whether the Su-57 is really only a 5th generation aircraft or really a 5th + or even 6th generation one. Why?

For one thing, rumors coming out of the Sukhoi KB and the Russian military is that the pilot in the Su-57 is really an “option”, meaning that the Su-57 was designed from the start to operate without any pilot at all. My personal belief is that the Su-57 has an extremely modular design which currently does require a human pilot and that the first batch of S-57s will probably not fly all alone, but that the capability to remove the human pilot to be replaced by a number of advanced systems has been built-in, and that the Russians will deploy pilot-less Su-57’s in the future.

This 3rd, 4th, 5th and now even 6th generation business is a little too fuzzy for my taste, so I rather avoid these categories and I don’t see a point in dwelling on them. What is important is what weapons systems can do, not how we define them, especially for a non-technical article like this one.

In the meantime, the Russians have for the first time shown this:

What you are seeing here is the following:

A Su-57 flies together with the new long range Russian strike drone: the Heavy Strike UAV S-70 Hunter and here is what the Russian MoD has recently revealed about this drone:

  • Range: 6,000km (3,700 miles)

  • Ceiling: 18,000m (60,000 feet)

  • Max speed: 1,400km/h (1,000mph)

  • Max load: 6,000kg (12,000lbs)

Furthermore, Russian experts are now saying that this UAV can fly alone, or in a swarm, or in a joint flight with a manned Su-57. I also believe that in the future, one Su-57 will probably control several such heavy strike drones.

Flag-waving patriots will immediately declare that the S-70 is a copy of the B-2. In appearance that is quite true. But consider this: the max speed of the B-2 is, according to Wikipedia, 900km/h (560 mph). Compare that with the 1,400km/h (1,000mph) and realize that a flying wing design and a supersonic flying wing design are completely different platforms (the supersonic stresses require a completely different structural design)

What can a Su-57 do when flying together with the S-70?

Well, for one thing since the S-70 has a lower RCS than the Su-57 (this according to Russian sources) the Su-57 uses the S-70 as a long range hostile air defense penetrator tasked with collecting signals intelligence and relaying those back to the Su-57. But that is not all. The Su-57 can also use the S-70 to attack ground targets (including SEAD) and even execute air-to-air attacks. Here the formidable speed and huge 6 tons max load of the S-70 offer truly formidable capabilities, including the deployment of heavy Russian air-to-air, air-to-ground and air-to-ship capabilities.

Some Russian analysts have speculated that in order to operate with the S-70 the Su-57 has to be modified into a two-seater with a WSO operating the S-70 from the back seat. Well, nobody knows yet, this is all top secret right now, but I think that this idea clashes with the Sukhoi philosophy of maximally reduce the workload of the pilot. True, the formidable MiG-31 has a WSO, even the new MiG-31BM, but the design philosophy at the MiG bureau is often very different from what the folks at Sukhoi develop and, besides, 4 decades stand between the MiG-31 and the Su-57. My personal guess is that the operations of the S-70 will be mostly full automated and even distributed along the network connecting all integrated air and ground based air defense systems. If an engineer reads these lines, I would appreciate any comments or corrections! After all, this is just my best guess.

The usual gang of trolls will probably object that the Russian computer/chip industry is so far behind the supposedly much superior western solid-state electronics that this is all nonsense; there was a human sitting inside the S-70; this thing don’t fly; the Su-57 is a 4th gen aircraft much inferior to the amazingly superb F-22/F-35; and all the rest of it. Especially for them, I want to remind everybody that Russia was the first country to deploy airborne phased array radars on her MiG-31s which, to boot, were capable of exchanging targeting data by encrypted datalinks with FOUR (!) other aircraft maintaining EM silence (while using their optoelectronics and relaying that data back). Furthermore, these MiG-31s could also exchange data with airborne (AWACS) and ground-based (SAMs) radars. And that was in the early 1980s, almost 40 years ago!

The truth is that the Soviet armed forces deployed plenty of network-centric systems long before the West, especially in the Soviet Air Force and Navy (while the Soviet Ground-Forces pioneered the use of so-called RSC “reconnaissance-strike complexes” which were the nightmare of NATO during the Cold War). Nowadays, all we need to do is parse the NATO whining about Russian Anti Access/Area Denial (A2/AD) capabilities to see that the Russians are still pioneering advanced military-technical capabilities which the West can only dream of.

Now let’s revisit some of the recent criticisms of the Su-57

So what about the fact that the Su-57 does not have all-around very low RCSWhat ifthe Su-57 was never intended to spearhead the penetration of advanced and integrated air defense systems? What if from day 1 the Sukhoi designers were warned by their colleagues at Almaz-AnteyNovatorKRET or even the good folks at the OSNAZ (SIGINT) and the 6th Directorate of the GRU that “stealth” is vastly over-rated?What if it was clear to the Russians from day 1 that a low frontal-RCS did not compromise other capabilities as much as a quasi-total reliance on all-aspect low-RCS never to be detected in the first place?

The crucial thing to keep in mind is that new technological capabilities also generate new tactics. By the way, western analysts understand that, hence the new network-centric capabilities of the F-35. This is especially true since the F-35 will be a pathetic dogfighter whereas the Su-57 might well be the most capable one out there: did you know that the Su-57 has several radars besides the main one, that they cover different bands and that they give the Su-57 a 360 degree vision of the battlefield, even without using the signals from the S-70, AWACS or ground based SAM radars?). And in terms of maneuverability, I will just show this and rest my case:

Lastly, the case of the invisible missile container 

Remember the Kalibr cruise-missile recently seen in the war in Syria. Did you know that it can be shot from a typical commercial container, like the ones you will find on trucks, trains or ships? Check out this excellent video which explains this:

Just remember that the Kalibr has a range of anywhere between 50km to 4,000km and that it can carry a nuclear warhead. How hard would it be for Russia to deploy these cruise missiles right off the US coast in regular container ships? Or just keep a few containers in Cuba or Venezuela? This is a system which is so undetectable that the Russians could deploy it off the coast of Australia to hit the NSA station in Alice Springs if they wanted, and nobody would even see it coming. In fact, the Russians could deploy such a system on any civilian merchant ship, sailing under any imaginable flag, and station it not only anywhere off the US coastline, but even in a US port since most containers are never examined anyways (and when they are, it is typically for drugs or contraband). Once we realize this, all the stupid scaremongering about Russian subs off the coast of Florida become plain silly, don’t they?

Now let’s look at some very interesting recent footage from the recent maneuvers in Russia:

Here is what the person who posted that (Max Fisher, here is his YT channel) video wrote about this coastal defense system, explaining it very well:

For the first time, during the tactical exercises of the tactical group of the Northern Fleet, carrying combat duty on the island of Kotelny, the coastal missile system “Bastion” was used The BRK was successful in firing a supersonic Onyx anti-ship cruise missile at a sea target located over 60 kilometers in the Laptev Sea, which confirmed its readiness to effectively carry out combat duty in the Arctic and perform tasks to protect the island zone and the Russian coast. Onyx is a universal anti-ship cruise missile. It is designed to combat surface naval groups and single ships in the face of strong fire and electronic countermeasures. On the basis of the rocket, there are two seemingly absolutely identical export options: the Russian Yakhont and the Indian BrahMos, but with significantly reduced combat characteristics. These vehicles are capable of starting from under water: they have a flight speed of 750 meters per second and carry the crushing high-explosive warhead with a weight of half a ton. The range of their flight is more than 600 kilometers. Previously, Rubezh BRK was used as the main coastal missile system of the tactical group of the Northern Fleet. At the end of August, he successfully hit two targets “Termit” missiles installed in the Laptev Sea at a distance of more than 50 kilometers from the coast.

Now let me ask you this: how hard would you think it would be for Russia to develop a container size version coastal defense system using the technologies used in the Bastion/Yakhont/BrahMos missile systems? Since the AngloZionists have now reneged on The Intermediate-Range Nuclear Forces Treaty, the Russians have already developed a land-based version of their Kalibr missile which is ready to deploy as soon as the US deploys any such missile in Europe.

The fact is that Russia has perfected an entire family of ballistic and cruise missiles which can be completely hidden from detection and which can be deployed literally anywhere on the planet. Even with nuclear warheads.

This capability completely changes all the previous US deterrence/containment strategies (which are still halfway stuck in the Cold War and halfway stuck with low-intensity/counter-insurgency operations like what they have been doing (with no success whatsoever!) in Afghanistan, Iraq, Syria, Yemen, Libya and in Latin America and Africa).

In the light of the above, what do you make of the steady flow of NATO ships deployed in the Black Sea to “deter” Russia? If you find it completely suicidal, I agree. In fact, all these ships are doing is allowing the Russians to train their crews on the “real thing”. But should it ever come to a shooting war, the life span of any and every NATO ship in the Black Sea would be measured in minutes. Literally!

Now lets think of Iran. As I said many, many times, Russia will not enter a full-scale war against the combined powers of the “Axis of Kindness” on behalf of Iran (or any other country on the planet). But Russia very much might get seriously fed up with the “Axis of Kindness” and sell Iran any missile the Iranians would be willing to acquire. In the past I have often written that the real sign that Iran is about to be attacked would not be the presence of USN ships in the Strait of Hormuz or along the Iranian coast, but the opposite: a flushing out of all ships from the Strait itself and a careful repositioning of the bulk of the USN ships inside sea and land based US air defenses “umbrella” available at that moment. I can only imagine the nightmare for CENTCOM if Iran begins to acquire even a small number of Bastions or Kalibers or Yakhont or BrahMos missiles 

Conclusion: the “Axis of Kindness” countries are in big, big trouble!

The US and Israel have tremendous technological capabilities, and in normal times US specialists could gradually deploy systems capable of countering the kind of capabilities (not only necessarily Russian ones) we now see deployed in various areas of operations. And there sure is enough money, considering that the US alone spends more on the “promotion of kindness” than the rest of the planet combined! So what is the problem?

Simple, the US Congress, which might well be the most corrupt parliament on the planet, is in the business of:

  1. Hysterically flag-waving and declaring any naysayers “un-American”

  2. Making billions for the US ruling nomenklatura

Thus, to admit that the “shining city on the hill” and its “best armed forces in history” are rapidly falling behind foes which the US propaganda has described as “primitive” and “inferior” for decades is quite literally unthinkable for US politicians. After all, the US public might wonder why all these multi-billion dollar toys the US MIC has been producing in the last decades have not yielded a single success, never-mind a meaningful victory! Trump in his campaign tried to make that point. He was instantly attacked by the Dems for not supporting the “best military in history” and he quickly changed his tune. Now even the weapons the US does not even have yet are better than those already being tested and, possibly, deployed by Russia.

This “feel good” approach to military issues is very nice, warm and fuzzy. But it sure does not make it possible to even identify present, or even less so, future dangers.

Then, of course, there is the issue of money. The US, in its short history, has deployed some absolutely world class weapons systems in technologies. My personal favorites: the Willys MBm, also known as a Jeep, and the superb F-16. But there are many, many more. The problem with these, at least from the point of view of the US nomenklatura, is that they were designed for warfare, for the many and very different real-world battlefields out there. They were never designed to enrich the already fantastically rich!

Hence the country which produced the Jeep now mostly produces massive hulks of metal which drive like crap, which constantly break, but which give the narcissistic and baseball cum sunglasses hat wearing left-lane male drivers a delightful feeling of macho superiority. And, of course, the country which created and deployed the formidable, yet economic, F-16 in the thousands (well over 4000 I think) now produces the F-35 (good thing that the US colonies like Poland or Japan are willing to buy them to please their beloved Uncle Shmuel).

From the point of view of the US nomenklatura, the F-35 is a stunning, amazing, success, not a high-tech flying brick! The costs of this system are not the proof of the incompetence of US engineers, or the cluelessness of US military analysts. Rather, these costs are proof of the combined effects of infinite greed and self-worship of the US ruling class.

Sadly, one of the best ways to learn the important lessons, is by means of a painful or catastrophic defeat. The Russia of today would not have been possible without the horrors of the “democratic rule” of Eltsin in the 1990s. Think of it: during the first Chechen war, the Russians had a hard time even finding one complete combat capable regiment and they had to use “combined battalions” (??????? ????????) instead. This will probably also happen to the USA.

Tyler Durden Fri, 10/04/2019 - 00:05
Published:10/3/2019 11:19:58 PM
[Markets] As The Softbank Tide Goes Out, Goldman Sachs Has Been "Swimming Naked" As The Softbank Tide Goes Out, Goldman Sachs Has Been "Swimming Naked"

Earlier this week, we penned a piece detailing how the SoftBank Vision Fund was "swimming naked" as its investments in WeWork and Uber imploded. 

Now Bloomberg has revealed that Goldman Sachs is swimming without a bathing suit, exposed to technology unicorns that have recently seen steep valuation losses over the last several months, forcing the bank to eat a $260 million loss. 

Goldman took heavy losses in Uber and Avantor in 3Q19. Uber has lost over 30% of its value in the last 100 trading days, while Avantor has suffered a similar amount in 62 trading days. Both declines led to a $200 million loss for the investment bank. 

One analyst told Bloomberg that quarterly volatility in Goldman's Investing & Lending (I&L) division is another reason for the 3Q loss. 

"The 'I' in the I&L can still be chunky and difficult to forecast," said Mike Mayo, a senior bank analyst at Wells Fargo & Co. "It's certainly a headwind in the quarter."

Mayo forecasted that Goldman's I&L could drop 30% from 2Q to 3Q. The bank's executives have said they plan to move their merchant banking units out of investing in unicorns and IPOs, and more towards wealth management. 

Goldman credited Uber, Avantor, Tradeweb, and HeadHunter, with boosting 2Q results. The firm said those companies going public generated an unusual one-time gain. The most significant gain was Tradeweb, the firm profited $500 million in gains. 

Since 2Q, Uber, Avantor, and Tradeweb have mostly imploded, besides HeadHunter holding 25% gains since debuting on the public markets about 102 days ago. 

The four companies made up at least half of the firm's $2.6 billion public investment portfolio as of June 30, CFO Stephen Scherr said in July.

Bloomberg said Goldman invested in Uber at an early stage. The firm holds nearly 10 million shares. 

Goldman made $400 million in proceeds from Avantor's IPO in 2Q, along with merger advisory work before the new listing hit public markets. 

And while Bloomberg didn't discuss Goldman's WeWork exposure, we're sure the valuation implosion of the shared workspace company will add more pain to the investment bank's books in the quarters ahead. 

From SoftBank to now Goldman, these are the firms swimming butt naked as the tide quickly goes out. This phrase has been widely popularized by Warren Buffett, who has famously said, "You only find out who is swimming naked when the tide goes out." And in our own view, the collapse of unicorn valuations and the implosion of the IPO market, has caught many off guard. 

Tyler Durden Thu, 10/03/2019 - 17:05
Published:10/3/2019 4:18:11 PM
[Entertainment] 8 nonfiction authors receive $40,000 Whiting grants Authors working on nonfiction books with subjects ranging from Cuban independence from Spain to gay rights have received $40,000 grants from the Whiting Foundation Published:10/3/2019 12:22:45 PM
[Markets] Another Narrative Collapse: Eating Meat Is Not Ritualistic Suicide Another Narrative Collapse: Eating Meat Is Not Ritualistic Suicide

Authored by Tom Luongo via Gold, Goats, 'n Guns blog,

I’ve been on some form of low-carb diet since the 1990’s. If not for a few years of intense martial arts training and that dietary switch, I would have been likely ended up with type-II diabetes.

And well on my way to the grave.

I know, some of you are thinking, “More’s the pity.” Fair enough.

But, the truth is that once my wife and I started down that path and our health rapidly improved there was no going back. I clearly remember an early article in, of all places, the Gainesville Sun talking about how butter may not be bad for you.

That planted a seed and things went from there.

We started with Dr. Atkins. Then we moved on to books like Neanderthin and devoured, all puns intended, the work of the Drs. Mary and Michael Eades of Protein Power fame.

I went from 250 lbs. with high blood pressure. triglycerides and the kind of temper that cost me jobs (no lie) to dropping below 200 lbs for the first time since high school and more patience for the world.

My belly shrank. I could fit into 36 inch waist jeans.

My friends noticed it. My wife noticed it. My co-workers and my boss thanked me.

Being on that diet allowed me to handle the heat and stress at 35 of building my house in the North Florida summer; working sun up to sun down three days a week for seven-months straight.

I held my full-time job as a Senior Chemist at the same time, working four ten-hour days.

So yes, I had the endurance, focus, strength and fitness to work as a professional researcher and laboratory manager four days a week and an amateur framer, roofer, plumber, general contractor and ditch-digger the other three.

From March to October… in Florida. No days off. No bullshit.

The self-education continues today to refine what works and what doesn’t for us; what foods we’re allergic to and how can we support our organs and gut health as we enter our fifties.

Have I ‘fallen off the wagon’? Of course. At times really badly. I haven’t told you how much I loved my goat milk/duck yolk custard ice cream I used to make when I had a small dairy on the side. I sincerely love ice cream.

That’s the pernicious thing about sugar, like any other powerful drug, you always think you have control over it.

But you don’t. It controls you.

And as humans we really have no defense against the combination of fat and sugar. That’s why there is always room for desert.

And its control is far worse than cigarettes or coffee. I’ve quit both, it’s true. The former permanently the latter only when fasting (because I’m no ascetic).

Then you look in the mirror one day and you’re disgusted with what you see. And the only thing worse than that is knowing that you knew better and did it anyway.

Giving in to the Imp of the Perverse undermines your spirit far worse than any other mistake you can make.

And when I was forced by circumstance in 2017 to chain myself to my keyboard and ‘write or die’ to build a new career path, I didn’t treat myself as well as I should have.

And so, while I was in better health than I could have been I wasn’t happy about it either. Because I knew I should be better than that.

And it had gotten to the point of interfering with my ability to write at a level that I expected of myself, no less y’all.

That’s why three weeks ago I followed my wife onto a near all-meat diet. No exceptions, no “I can have a small fries with my hamburger,” or this one candy bar. Just meat, salt, the occasional egg and a little garlic with 20 to 24 hour fasts in between.

The dietary equivalent of cold turkey of everything bad.

And guess what? I’ve already lost significant girth, I sleep better, my concentration has improved, my joints don’t ache and I’m just plain happier.

Recently I had a physical ordered by my life insurance company. This was before I made the switch. And even then, as unhappy with myself as I was, my blood work was fine: a testament to eating mostly low carb, whole foods and staying away from God forsaken vegetables.

It wasn’t that hard for me. My body knows how to cycle in and out of ketosis now. The first couple of days are the toughest, thinking about food constantly. But once you get in the groove it’s not an issue.

Once you put your mind to it, as the saying goes, the rest is just doing it.

It wasn’t as hard as quitting sugar the first time. That was hard. Three weeks of that empty feeling in your stomach, the brain fog, the feeling of just being ‘off.’ It’s like those old V-8 commercials from the 80’s.

But here’s the thing. I was likely pre-diabetic at the time. My body had zero idea how to burn fat and so it resisted doing so for weeks. Once through that, however, I didn’t need a glass of pulverized compost material to keep me upright.

Low carb isn’t anything new now. We helped plow that field twenty years ago. And that’s a great thing.

But there is still this horrific stigma against meat that has zero basis in dietary reality. It is a holdover of Ancel Keyes’ moronic and virulent Lipid Hypothesis which demonized saturated fats.

But Keyes, like Michael Mann and his hockey stick chart of global temperatures, cherry picked his data to prove his point. And because what he said was in accordance with what the political establishment wanted to push on us, meat was vilified and vegetable oils (which have never been a big part of human nutrition) were elevated.

To the detriment of us all.

Trillions of dollars in misallocated capital to a theory that made us all fat, sick, stupid and perpetually pissed off.

Trillions to a health care industry designed to treat these new problems caused mostly from people eating like they are pigs being fattened for slaughter.

And the irony is, of course, that now we raise lean hogs as opposed to lard hogs. So even our pork is fed a better diet than we feed ourselves.

So much of our political debate about rising health care costs come down to treating lifestyle diseases brought on by insipid and venal government propaganda and the ideological zealotry of vegans.

Health care wouldn’t be the Byzantine nightmare and wholly unethical quicksand of graft, corruption and corporate profiteering if it wasn’t for Ancel Keyes and his disciples.

And the Democrats wouldn’t be pushing for Health Care to be a right as defined by everyone else has to pay for my shitty choices about what foods I push down my gullet.

Worse, today, after the mainstreaming of low-carb, we are still dealing with the remnants of Keyes and the vilification of meat-eating. Because they know that once a critical mass of us get trim, healthy and independent-minded, their amateurish narrative control techniques don’t work on us.

This is why we laugh at “Soy Boys” with “Bitch tits.”

They’ve given ground gradually and grudgingly. First it was butter was better than margarine, after telling us that trans-fats were better than saturated fats.

Then it was eggs are okay, even though a lot more people are allergic to egg whites than you would think.

But they won’t bring themselves to admit that saturated fats are the healthy fats. They are the ones that your body uses to build cell walls resistant to oxidative stress. They are the ones that are made of the ‘good cholesterol’ and not the nasty stuff the body produces when you starve it.

But, even then, grudgingly as the data started coming back, to hold the line they keep telling us, if you have to eat them, avacado, coconut and fish are okay.

Just stay away from the red meat!

Because the demonization of red meat cuts to the heart of the political con job that is modern cultural Marxism and its supposed moral high ground.

You can see this in the response to the landmark study just completed that concluded there is no perceivable risk from eating red meat as opposed to anything else. It immediately provoked apoplexy akin to doctors prescribing hemlock to treat eczema.

“Based on the research, we cannot say with any certainty that eating red or processed meat causes cancer, diabetes or heart disease,” said Bradley Johnston, an associate professor at Dalhousie University in Canada who co-led the review published on Monday in the Annals of Internal Medicine journal.

However, in what amounts to a scientific food fight, experts from Harvard, Yale, Stanford and elsewhere, including one of the review authors, said guidelines that could lead people to eat more red and processed meats were irresponsible.

They asked in a letter to the journal that it “pre-emptively retract publication” of the papers pending further review.

I can’t wait until the study comes out comparing those on a carnivore diet to vegan one. That’s the study no one in power wants to see the results of.

We’re at the overwhelming evidence stage of the benefits of not eating like our dinner eats and these guys are trying to hold back the dam and force the truth under the rug.

Because they can’t give up the dream, man.

Veganism and ethical vegetarianism are inextricably bound up with the push towards modern forms of social control. They are religions based on the mistaken, inherently Marxist, belief that humanity is a virus that needs to be contained.

Vegetarians claim a moral high ground they can’t support as an extension of an ideology built on the guilt of being alive, of denying their basic humanity as predators.

It is another false narrative designed to rob you of your reason physically as well as psychologically, since diet affects both in a vicious feedback loop of auto-immune disorders which are entirely avoidable, just like the donuts in the break room.

And the idea that you can just go to the gym and burn that donut off is simply ignorant of how the body actually functions. Calories in do not just equal calories out.

The body doesn’t treat a teaspoon of sugar the same way it treats an ounce of bacon grease. If you think that. Then you aren’t just ignorant, at this point, you are being willfully obtuse.

We don’t have a bathtub metabolism anymore than we have Keynes’ idea of a bathtub economy. Reducing our food intake to the same gross generalization that we do the economy via GDP is not only stupid but antithetical to truth.

The idea that calories are just calories is, literally meaningless. It strips out all meaning as to how specific molecules are utilized by the body and for what purpose. Just like reducing the economy to gross spending also strips out the meaning about what we spent the money on and how it was utilized.

If we spend all our money on hookers and blow do you think that’s any more sustainable than living on pasta, pizza and paninis?

But like all gatekeepers they will fail to hold containment on the truth because, as I keep saying, lies are expensive, the truth sells itself.

Don’t you ever wonder why they have to sell us on tofu but bacon sells itself?

I don’t.

*  *  *

Join my Patreon to help me bust open false narratives.  Install Brave if you want to help me starve Google from keeping us from talking.

Tyler Durden Wed, 10/02/2019 - 17:15
Published:10/2/2019 4:30:31 PM
[Markets] Brexit Isn't David Cameron's Legacy... Libya Is! Brexit Isn't David Cameron's Legacy... Libya Is!

Authored by Kit Knightly via,

The MSM’s total disregard for the apocalyptic destruction of the most developed nation in Africa is a crime...

“The strong man with the dagger is followed by the weak man with the sponge.”

- Lord Acton

David Cameron has a book out. You’ve probably heard. There’s a lot of press coverage. The BBC did a retrospective documentary about him to coincide with it, The Guardian had a review of the book, a review of the documentary, and an interview with the man himself.

Oh, and then another article about how it’s selling less well than Blair’s biography.

This is obviously just about journalists reporting the news, you understand.

It is absolutely not at all a mass marketing strategy camouflaged as “current events”.

Shame on you for thinking otherwise.

Naturally, as is always the case when ex-Prime Ministers make appearances or churn out autobiographies, there is plenty of talk about “legacy”.

Well…what is David Cameron’s legacy?

The media are pretty clear: Brexit.

The BBC documentary is entitled The Cameron Years. It’s in two parts, somehow bloated out to two whole hours in runtime, and is only concerned with the Brexit vote. The first part is entirely dedicated to it, that’s literally all it’s about, with the second half being more general, but still very Brexit-centric.

The reviews of the book are no better. In fact they are worse.

The Telegraph liked it, as did the TimesThe Guardian and Independent didn’t, as much, but still praised its “honesty”. They all talk almost entirely about Brexit. Bloomberg headline “David Cameron Wants You to Remember Him for More Than Just Brexit”, pointing out: “The former prime minister’s new memoir, For the Record, spends just 50 of 700 pages on the disastrous referendum”…before going on to review just those fifty pages.

In fact, I’ve read over half-a-dozen reviews of this book, and none of them talks about anything but Brexit.

There is not a single use of the word “Libya” in any of them. Not anywhere. Not in even in passing.

Not. One. Single. Use.

For those of you foggy on the details, Libya was a place that used to look like this:

…and now looks like this:

You would think that the total and complete destruction of the most developed nation on the African continent would warrant at least brief discussion in the “legacy” of the Prime Minister responsible but, apparently, you would be wrong.

(I know we’re only Britain, and we only do what America tells us, but “Only following orders” didn’t work for Goering and probably shouldn’t work for anybody else. Cameron included).

The press silence on Libya is on another level.

They grudgingly discuss Iraq as a “mistake” or “blunder”, they carry on their insane propaganda-war on Syria with fresh gusto every few months (or whenever they need a distraction), but Libya…Libya is the country that must not be named.

Take Jonathan Freedland. He was ALL OVER Libya back in 2011. He campaigned for NATO to do something, preaching about the West’s “responsibility to protect”. Does he mention Libya once in his review of this book? Nope.

He even has the gall to open the piece with this:

Just as the 700 pages of Tony Blair’s autobiography could not escape the shadow of Iraq, so the 700 pages of David Cameron’s memoir are destined to be read through a single lens: Brexit.

As if his decision to totally disregard a war crime he not only apologised for, but cheerfully encouraged, was somehow just fate and totally beyond his control.

That’s probably got something to do with the organ trafficking and open-air slave markets.

This was no accident, you understand, Libya is exactly what NATO set-out to make it – a failed state where absolutely everything is for sale. A true capitalist paradise. But discussing that would make it harder to sell “R2P” in the future.

Better to just endlessly rant on about Brexit instead.

Now, obviously, Brexit is (potentially) an important decision for the fate of the country. You can’t deny that.

BUT – let’s be real here – Even IF we leave the EU (and right now that is far from guaranteed), and even IF our leaving is as bad as the worst doom-sayers are predicting, London isn’t going to end up like this…

….or this:

….or this:

And at the end of the day, THAT is Cameron’s legacy.

Just as it’s the legacy of the all slimy apologists who cheered him on, and the narrow-minded, self-centred xenophobes who clean up after him.

Tyler Durden Wed, 10/02/2019 - 02:00
Published:10/2/2019 1:08:50 AM
[Markets] The Myth Of Imminent Environmental Collapse The Myth Of Imminent Environmental Collapse

Authored by Joakim Book via The American Institute for Economic Research,

The ills that have haunted our species since time immemorial — starvation, illness, protection from the elements — are less prevalent than ever before. At the same time we’ve probably never been as disillusioned about the fruits of progress

Panicking about an imminent apocalyptic disaster, people march on the streets of the most prosperous cities in all of human civilization. They chant about impending extinction of humankind or the planet itself, about an unsustainable way of life, about an invisible gas produced as a by-product of our increasingly affluent lifestyles.

Sixteen-year-olds are addressing the World Economic Forum and the UN imploring us to reconsider the irresponsibly disastrous path we’ve entered upon. Elected officials are proposing one fanciful idea after another on topics none of them seem to understand

More than one commentator has pointed to a crisis of spirituality and how radical environmentalism has filled the void left behind by religion. Moral outrages over plastic and the Amazon are blown entirely out of proportion. Virtue signaling and “taking a stance” are more important than effecting change. 

In that light, looking at actual societal collapses is relevant. When podcasts like Paul Cooper’s Fall of Civilization are trending on most platforms and the popular historian Dan Carlin’s forthcoming book The End Is Always Near is making huge waves, it is clearly time to dust off the work of esteemed geographer Jared Diamond — particularly his book Collapse: How Societies Choose to Fail or Survive, the follow-up to his Pulitzer Prize–winning Guns, Germs, and Steel (which just came out in a 20th-anniversary edition). This year he released Upheaval: Turning Points for Nations in Crisis, which is a natural continuation of the broad-brushed portrait of the fundamental challenges for human societies that he has been painting for 20 years.

Diamond's personal, insightful, and accessible writing often consists of deep dives into various case studies. He might be cherry-picking his examples, but he usually does so in well-balanced and convincing ways to illustrate his major points. In Collapse he identifies five different factors whose presence or absence explains the dozen collapsing societies that he considers: 

  • Climate change (through little fault of societies themselves)

  • Eco-cide (“unintended ecological suicide”) 

  • Hostile neighbors

  • Collapse of trading partners essential to upholding lifestyle

  • Societies’ own response to these four factors

As Diamond is a geographer, ecological disasters always loom large in his account of civilizations — which is supremely relevant considering today’s quasi-religious emphasis on how humans destroy their surroundings. Diamond has seemingly long been ahead of his time. 

His introductory chapter in Collapse deals with Montana’s deforestation and soil-erosion problems — two topics that repeatedly appear in Diamond’s writing. The Greenland Norse overgrazed their fragile environment, which caused their nutrient-poor soils to erode. They refused to change their ways: they kept with a costly Northern European ideal of Christianity and stubbornly preferred cows to sheep even though the former were much less suited to Greenland than to the Norse’s ancestral Scandinavia. They did not learn from or establish friendly relations with their neighboring Inuits, who had successfully adopted hunting practices that allowed them to overcome the harsh Arctic climate. 

The Easter Island society on Rapa Nui, one of the most isolated places on earth, is to Diamond “the closest approximation that we have to an ecological disaster unfolding in complete isolation.” When the Polynesians arrived, sometime between 800 and 1200 AD, they were met with a lush forest consisting partly of what was probably the tallest species of palm trees in existence — which is surprising to a modern visitor to the now almost treeless island. For those worrying over the Amazon forest, Easter Island is the worst possible outcome: complete deforestation. Even Diamond admits that it is a crucial warning: “The collapse of Easter Island society [is] a metaphor, a worst-case scenario, for what may lie ahead of us.” 

The dispute in the scientific community that Diamond engaged in (Paul Cooper discusses research that disputes many of Diamond’s conclusions) is between an intentional human-made ecocide — an extreme obsession with Moai, those iconic rock figures — and an accidental explosion of the rat population that ate all the seeds, preventing the trees’ regeneration. Cooper also mentions that rounds of diseases by initial European visits and subsequent kidnappings by whalers in the 19th century decimated the Easter Island population. In this account, the Easter Island trees were still there, until overstocking of sheep finally tilted the ecosystem into a tailspin. One way or another, it was a human-made ecological disaster. 

The collapses of lesser-known Polynesian islands (Mangareva, Henderson, and Pitcairn) are particularly interesting, as Diamond places the blame for their collapse on the ceasing of the crucial intra-island trade, vital for their inhabitants’ meager subsistence: oyster shells and critical crops from Mangareva, the “motherland island,” to Pitcairn and Henderson; volcanic glass and basalt from Pitcairn to Henderson and to Mangareva; and from Henderson to other islands, probably sea turtles and other perishables highly prized in Polynesian society. Thus, Diamond argues, “each island’s deficiencies were filled by the other islands’ surpluses.” 

Drawing examples from the modern world, Diamond’s account of the Tutsi genocide in Rwanda in 1994 is both revealing and disturbing. Rather than the normal explanation given for the Rwandan genocide — colonially induced ethnic conflicts — Diamond explores an ecological interpretation. Setting the stage for the slaughter were immense overpopulation and increasingly poor farm yields, followed by tensions created through extreme demographic and societal inequality. As the cows and the farms of the victims must be redistributed to somebody else, Diamond suggests that the ultimate cause of the Rwandan genocide was overshooting that society’s ecological limits. 

If there’s anything to criticize Diamond for, it is his poor grasp of economics. He seems to view world trade as zero-sum and presumes that countries need to — or ought to — be self-sufficient in resources. When Japan in the 20th century all but banned domestic logging and China more recently shifted to relying on imported timber, Diamond explicitly says that other countries “must suffer the harmful consequences of [their] deforestation.” Surely, Diamond is not suggesting that cutting down any trees, anywhere in the world, amounts to “harmful deforestation”? 

In his writing, Diamond often refers to a country’s per-capita grasslands or forest coverage, as if that’s a relevant constraint in a globalized world. He talks about a country earning “foreign exchange” as if we were still in the Bretton Woods system or as if all countries have internationally worthless currencies. In a modern, globalized world with developed financial markets, freely floating exchange rates, and lots of cross-border payments, there is no need for a country to earn foreign exchange or even to run balance-of-trade surpluses — which is ironically illustrated by the modern Australia that so vexes Diamond. 

In Collapse, Diamond frequently returns to the “horse race” between accelerating “development of environmental problems” and our capabilities of solving them. Economists have long been intelligently writing on this and have provided us with two fundamental — and much overlooked — insights. First, through the price mechanism, free markets with property rights ration natural resources such that they never run out. This is fundamental to all worries that forests, iron, or oil is running out — Diamond’s chapter on Australia again being a case in point. 

Second, to answer Diamond’s question (“Which horse will win the race?”) it seems the economists and “Kuznets’ Curvers” — those of us who believe that emissions increase with income up to a point, after which prosperous societies clean up their environment, decreasing emissions — are on to something. As we’re getting richer, we’re also getting more able to protect ourselves from the elements — whether naturally occurring or man-made. The richer we are, the smaller the effective problem of climate change becomes, which was illustrated in the Economist’s recent issue on climate change.

If the consequences of emissions are bad and harmful to human flourishing, we must pay for mitigation, damage reduction, and/or adjustments. Those payments come either out of current income or endowed wealth — and the growth of our incomes has outpaced the growth of emissions for the last 25 years. We seem to be getting better at squeezing out economic growth from every unit of carbon emission. While it’s theoretically possible that every unit of emissions causes more harm than its associated income allows us to offset, that’s a still-debated empirical question. 

In Upheaval, Diamond’s most political book thus far, he considers questions of the present and the future. He is quite clear about his negative outlook: “The issues that I discuss are the things that are still getting worse.” Despite the many discouraging examples of collapsing and struggling societies mentioned, shining through all his work is a mildly hopeful tone that societies’ fates are in their own hands.

That’s how I think we should view Diamond’s work: insightful, provocative, unconventional stories of our species that may carry some dire warnings. His flawed economic analyses do undermine some of his conclusions, but they do not detract from his storytelling. It is clear that worries about civilizational collapses by the Thunbergs and Extinction Rebellions of the world are exaggerated, as we are nowhere near the brink of disasters faced by the societies Diamond considers.  

The basic question becomes one of which comparison to make: are we modern-day Australia, continuing to flourish despite its so-called ecological limits — or are we Easter Islanders or Norse Greenlanders, positioned for inevitable civilizational collapse? 

Tyler Durden Tue, 10/01/2019 - 20:05
Published:10/1/2019 7:13:48 PM
[Markets] "Shoot. Me. Now.": New Insight Into Obama-Biden Relationship Offers Clues On Former President's Refusal To Endorse "Shoot. Me. Now.": New Insight Into Obama-Biden Relationship Offers Clues On Former President's Refusal To Endorse

An upcoming book chronicling the relationship between Barack Obama and Joe Biden reveals that the 'bromance' the two grew to share during the White House years has fizzled in the post-White House years, according to "Barack and Joe: The Making of an Extraordinary Partnership." 

Written by the Washington Post's nonfiction editor, Steven Levingston, Barack and Joe sheds light on trials and tribulations between the two very different politicians, which may explain Obama's refusal to endorse Biden's 2020 bid for the White House, according to the Daily Mail

The obvious answer is that Obama worked with the guy for eight years and knows he's a gaffe-prone, gropey, hair-sniffing racist with political baggage - but feel free to continue reading. 

While the two men did develop a strong affection for one another,  there were times Biden drove Obama over the edge as the book reveals a younger Obama once rolled his eyes at Biden's constant babbling, sending a note to his adviser saying: 'Shoot. Me. Now.' 

And it was a political embarrassment for Biden when Obama failed to step up and support his former vice president in both the 2016 and 2020 presidential races. -Daily Mail

In 2016, Joe was passed over in favor of Hillary Clinton - as Obama was reportedly more concerned about what a GOP victory would mean for his doomed health care program, among other things. 

"Joe, despite his many virtues, was just another white guy, one in a long line of American presidents — hardly the symbol of the Teutonic change that Obama hoped would mark his place in the history books," writes Levingston. 

"Barack had placed his bet on Hillary, the one he believed would confirm his revolutionary stamp on American's political culture - the first black president passing the baton to the first woman president.

As far as the 2020 election, Obama said in January 2019 that Democratic party leadership needed "new blood." 

Biden, meanwhile, said he doesn't want Obama's endorsement - stating that "Whoever wins the nomination should win it on their own merits," after Obama declined to support him. 

That said, Obama has met with other potential presidential candidates, including Texas Congressman Beto O'Rourke, prior to Biden's decision to run. 

What had been an unprecedented closeness between a president and vice president had changed.

'Now they were two high profile politicians considering their own futures' — and no longer brothers in arms they once were.

In the beginning, 'from a gaffe-meister, Biden had shaped himself into a conscientious, well informed partner to the president emerging as the heart to Obama's brain', write the authors.

Biden always had his eye on the Oval Office and made a promise to his son, Beau, when he was dying of brain cancer in 2015, that he would try for a third run for the presidency despite his lousy track record. -Daily Mail

The rest of the Daily Mail's article - along with Levingston's book - rattles off Obama and Biden's on-again / off-again trials and tribulations, such as the time Biden said of Obama "I mean you got the first sort of mainstream African American who is articulate and bright and clean and a nice-looking guy," to which Obama noted that there had been prior black presidential candidates - all of whom were (arguably) articulate - Jesse Jackson, Shirley Chisholm and Al Sharpton.  

When Obama picked Biden as his running mate, he said "I love this guy and he's got heart." 

Now, Biden has nothing but problems - and there's no sign of Obama's aforementioned love for him.

Tyler Durden Mon, 09/30/2019 - 21:25
Published:9/30/2019 8:34:01 PM
[The Blog] Joe diGenova: Fox News’s report about me working on the Ukraine matter “off the books” was absolutely false


The post Joe diGenova: Fox News’s report about me working on the Ukraine matter “off the books” was absolutely false appeared first on Hot Air.

Published:9/30/2019 7:34:44 PM
[Markets] Hunter Biden Must Be Investigated According To Former Ukraine PM Hunter Biden Must Be Investigated According To Former Ukraine PM

Ukraine's former Prime Minister Mykola Azarov has called for an investigation into Hunter Biden and his role as a highly compensated board member at a Ukrainian gas company while his father was the sitting US Vice President, Azarov told Reuters

Two months after he was kicked out of the navy for cocaine use (and before he had sex with his dead brother's wife, and returned a rental car with a crack pipe to an Arizona Hertz), Hunter - who had no experience in the energy sector, was appointed to the board of Burisma for $600,000 per year, where he sat alongside career CIA spook Joseph Cofer Black - Sen. Mitt Romney's (R-UT) 2012 pick for national security adviser in his failed presidential run against Barack Obama. 

Hunter Biden’s role in the company, Burisma Holdings Limited, is in focus after the White House released a memo showing U.S. President Donald Trump asked his Ukrainian counterpart, Volodymyr Zelenskiy, in a July phone call to get prosecutors to look into his activities. Zelenskiy agreed.

“It’s a fact (his directorship and fees) and not made up. It should be investigated so that the ‘i’s can be dotted and the ‘t’s crossed,” Azarov told Reuters. -Reuters

On Friday, Ukraine's National Anti-Corruption Bureau said that it was investigating Burisma's activities between 2010 and 2013, though it was not looking into the period which includes 2014 when Hunter Biden joined its board, leaving in 2018 according to corporate filings.  

Azarov served as prime minister from 2010 - 2014, and is himself under investigation by Ukrainian authorities for allegations that he abused his office. A 2015 Interpol red notice issued at the request of Ukrainian authorities during the (Biden / Obama - friendly) Poroshenko administration accuses Azarov of embezzlement and misappropriation. He has denied all wrongdoing, while Reuters said they could not determine whether there was an active investigation going on. 

Azarov said he was not aware of any evidence suggesting wrongdoing on Hunter Biden’s part, but said it was in the Ukrainian public interest to ascertain the legality of his activities.

In particular, he said it was important to investigate what Biden had done for Burisma to justify his remuneration from Burisma.

The younger Biden has said he consulted for Burisma, but critics have suggested he was not doing actual work in return for his compensation, an allegation he denies. -Reuters

"I think it’s essential (he’s investigated)," Azarov told Reuters from Moscow, where he fled after the pro-Russia President Yanukovych (Paul Manafort's client) was ousted in 2014. 

"If, using his knowledge, he played an active role then there’s nothing scandalous about it," Azarov added. "But if he was simply on the books and getting money, then that could be seen as a violation of the law."

We're sure if Donald Trump Jr. was a cocaine addict making $600K on the board of a Russian company with no obvious qualifications, and Trump Sr. had a foreign prosecutor investigating his company fired, the media would attack Biden instead of looking into the Trumps. 

Tyler Durden Mon, 09/30/2019 - 11:20
Published:9/30/2019 10:33:50 AM
[Markets] Marc Cohodes On Joe Nocera And MiMedx: "An Unholy Alliance" Marc Cohodes On Joe Nocera And MiMedx: "An Unholy Alliance"

Submitted by Marc Cohodes

I’ve been a short seller for over 30 years.  Mostly, I identify companies that are engaged in fraud, illegal conduct, or questionable accounting, I investigate, and I go public with what I’ve learned.  I put my money where my mouth is:  I sell the shares short knowing that I will lose money if I’m wrong, but also knowing I’ll make money if I’m right.  I’ve got a very good track record at uncovering frauds.  You don’t have to take my word for  it – you can read about me in Bloomberg and elsewhere.

MiMedx is a company that sells wound care treatments made from placentas to patients, many of whom are at veterans hospitals.  In 2017, I learned MiMedx was forcing products on its distributors in phony sales (“channel stuffing”), manipulating revenue, selling products that were unsafe or ineffective, coaching doctors on how to charge Medicare for its unnecessary treatments, improperly paying doctors to promote its products, discriminating against employees, and bullying, intimidating, and retaliating against employees who came forward to demand that illegal behavior stop.  After I challenged the CEO Pete Petit, management, and the board with the information I had gathered, they responded with more false statements and personal attacks on me. 

When you expose people who are doing bad things, they often lash out.  MiMedx, Petit, company management, and their backers were no exception, and they weren’t the first, either.  I expect that and it’s part of the job.  But I admit I was surprised to see Joe Nocera and Bloomberg pick up the MiMedx flag on behalf of people trying to make money off of unsuspecting investors, and by doing so, they have neutralized the previous Bloomberg news articles documenting the illegal and unscrupulous conduct at MiMedx. 

On August 19 and August 22, Nocera wrote a couple of articles about me and MiMedx.  The first article claimed that I was basically wrong about MiMedx, the company wasn’t so bad, and I went too far.  The second claimed that the company has now cleaned up its act, but that I am still conducting a “smear campaign” to destroy the company unfairly. 

Nocera’s two articles were sloppy, shallow, and consistently wrong.  I sent detailed letters pointing out the factual errors, but Bloomberg refused to correct the articles and even refused to publish this Op-Ed piece. 

I’m not going to try to correct every mistake Nocera made.  There are length limits for Op-Ed pieces, and we are talking about a reporter so careless that he once wrote an entire Bloomberg article headlined “Correction:  A Column Based on the Wrong Memo,” and who was reprimanded by The New York Times’s Public Editor for a serious ethical lapse in failing to disclose a conflict of interest.  But I’ll point out some of the big mistakes.

For starters, I was right about MiMedx all along.  MiMedx has admitted that six years of financial statements could not be relied on, three VA employees were indicted for taking bribes from MiMedx, the company’s CEO Petit, CFO Senken, COO Taylor, and Controller Cranston all were fired (and the Board is suing them to return their bonuses), MiMedx’s auditors at E&Y abruptly resigned, the stock was de-listed, the Wall Street Journal and Bloomberg reported that MiMedx had lied to the FDA about correcting thirteen health and safety violations; and the VA announced it would stop buying certain MiMedx products because they do not appear to be effective. 

On top of all that, in May 2019 the company filed a summary of an independent investigation, which confirmed senior management knowingly deviated from its distributor contracts in ways that caused the company to inflate revenue; the company knowingly manipulated revenue to meet guidance; Petit, Senken, Taylor, and Cranston all made material false statements to the SEC and auditors about the company’s revenue recognition practices; and the company engaged in a pervasive course of retaliation against employees who raised concerns about those unlawful practices.

That’s a lot of evidence you don’t see in Nocera’s articles, yet he opines that I overstated things and it wasn’t so bad at MiMedx.  According to him, the company’s investigation “strongly implied” some channel stuffing, but there was “no proof that MiMedx officials had bribed doctors, as Cohodes had alleged. Nor was there any evidence of Medicare fraud.”  Likewise, Nocera relies on someone named Eiad Asbahi, who told Nocera “the company’s critics had ‘failed to produce any smoking guns to support their claims of massive fraud.’”  (More on the undisclosed relationship between Asbahi and Nocera below.)

Nocera would know better if he read the public summary of the company’s own investigation.  That report – in addition to all the really bad stuff I described above – says MiMedx’s lawyers are still investigating allegations that the company violated the Anti-Kickback (a form of bribery) statute, the lawyers have already identified “certain customer accounts that present potential compliance risks and warrant additional review,” the lawyers are still evaluating the company’s “legal risk,” and the company “expects there to be additional departures in connection with the Investigation.” 

Nocera would also know better if he read, well, Bloomberg, which reported last year that, “MiMedx Group Inc. paid bribes to three Veterans Affairs Department health-care workers to promote the biotech firm’s products” according to the federal indictment.  Nocera also could have read that indictment, which charged the VA employees under the federal bribery statute.  Or Nocera could have read the company’s prospectus from May, which discloses that there are still ongoing federal investigations by the SEC, the US Attorney’s Office in the Southern District of New York, the VA Office of the Inspector General, the US Attorney’s Office in the Southern District of Georgia, as well as two separate pending False Claims Act lawsuits, brought by former employees.  And then there’s the Bloomberg and WSJ reports that the company lied to the FDA about the safety and efficacy of its products, and the VA’s decision to stop buying them.  So yeah, it was really bad at MiMedx, and it’s still really bad. 

So, did I go too far, like Nocera says?  No.  I accused people at MiMedx of doing very bad things, and while the original bad actors are gone, there are still bad actors at the company – and there are still whistleblowers working at the company who say so.  Originally, Petit and his cohorts tried to intimidate the brave employees who spoke out, as well as the professional skeptics like me.  For example, Petit sued analysts who reported the facts that the company itself has now admitted.  Petit boasts about his political connections, and especially to his local Senator Jonny Isakson, and then convinced Isakson to convince the FBI to send agents to my home to try to intimidate me. Actual Bloomberg reporters wrote about Petit’s intimidation attempt and how extraordinary it was.  A real journalist would take a dim view of that sort of thing, but Nocera leaves out the details and tells the story like Petit was a victim of a mugging, scared for his own safety  (Nocera also never mentions Petit’s secret video surveillance system designed to retaliate against whistleblowers.) 

Did I scare off MiMedx’s auditors at Ernst & Young, like Nocera says?  Seriously?  It’s silly to suggest that an auditor as large and experienced as E&Y would be scared off by a letter I wrote, or that it wouldn’t do its own investigation.  But more importantly, the company and E&Y explained why E&Y resigned in an 8-K.  E&Y had a disagreement with MiMedx’s (by then fired) senior management.  E&Y could not rely on statements by those discredited executives or even statements by their successors, because the new executive team “would have needed to rely on representations from certain legacy management personnel still in positions that could affect what is reflected in the Company’s books and records.”  E&Y was out because it realized it couldn’t trust MiMedx, not because I told them – correctly – that MiMedx couldn’t be trusted.

So, is everything fine at MiMedx now?  According to Nocera and Asbahi, it is.  And who is Asbahi, anyway?  Asbahi controls a groups of companies (Prescience Point) that together now own about 7% of MiMedx. Bloomberg readers would want to know there is a relationship between Nocera and Prescience Point.  Zach Kouwe is Prescience Point’s public relations agent in matters related to MiMedx.  Kouwe previously worked as Nocera’s researcher on a book and co-wrote articles with Nocera at The New York Times (prior to Kouwe’s abrupt resignation in a plagiarism scandal)Journalists are expected to disclose these kinds of relationships, as Nocera knows, since he was criticized for violating them when he was at the Times.  Nocera didn’t mention his relationship with Prescience Point’s PR agent, probably because he figured it would interfere with his anti-Marc Cohodes thesis. 

So, Asbahi has his own bias, and Nocera has a connection to Asbahi’s firm, but is Asbahi wrong?  Yes.  Nocera talks about a “research report” Asbahi published in January 2019 that supposedly found that “MiMedx products were ‘legitimate and sustainable’; that it had positive cash flow; and that, while ‘channel stuffing’ to improperly boost revenue at the end of the quarter had taken place, the company’s critics had ‘failed to produce any smoking guns to support their claims of massive fraud.’”  Before he wrote his articles, I told Nocera there were many reasons why the Asbahi report was wrong, and I could explain it to him.  He wasn’t interested.  Here’s what I would have told him. 

There are at least four big problems with Nocera’s reliance on the Asbahi report. 

One, when Asbahi published it in January, there were no MiMedx financial statements that anyone could rely on.  Even in May 2019, E&Y resigned saying it could not rely on the successor CEO and CFO because they were still dependent on unreliable statements by “legacy management personnel.” 

Two, at the same time that Asbahi said the company’s products were “legitimate and sustainable” (and it is never a good sign that people feel the need to say that), the company’s regulatory consultant, Lachman Consultants, found that MiMedx had failed to correct thirteen health and safety violations for which the FDA had cited it. Lachman recommended that MiMedx admit its failure to address violations identified by the FDA, but MiMedx refused to do so, and continued to market and sell noncompliant products.  The company has now admitted that it falsely told the FDA that it had resolved those defects. 

Three, it was premature at best to say there was “no smoking gun” four months before MiMedx’s audit committee released its damning report; but to repeat that  statement, three months after the report, is false and misleading to investors.  When the company admits that its C-Suite lied to the SEC, it will have to restate six years of financials, its auditor has abruptly resigned, it had a secret surveillance program to punish whistleblowers, it has identified accounts that pose risk for violations of the Anti-Kickback law, and it expects additional terminations as a result of its ongoing internal investigations; and the company’s own consultants find (and the company admits) the company lied to the FDA about correcting safety violations; and there are multiple federal agencies with active ongoing investigations; and there are multiple False Claims Act lawsuits pending; and the VA has stopped buying MiMedx products because there is insufficient evidence they are effective – I’d say the gun is smoking. 

Four, Nocera ignored the suspicious timing of Asbahi’s January 2019 report.  Prescience Point purchased millions of shares of MiMedx between August and December 2018, drove the price up with a large block purchase late in the day on December 31, 2018, and then, when the stock had been delisted, published a glowing report saying the stock could exceed $18 per share.  Then Prescience Point sold about 2.25 million MiMedx shares in January 2019.  When somebody publishes a report that says everything is rosy despite the company’s own disavowal of its prior financial statements, that contradicts what the company’s own consultants were saying about the products’ safety and efficacy, and that contradicts the findings by the company’s own lawyers of widespread unlawful conduct – right before dumping millions of shares – that’s reason alone to be skeptical. 

And that brings me to my last point.  I’ve been critical of Asbahi and his report, and I have accused Prescience Point of engaging in a “pump and dump” scheme.  On behalf of his old colleague’s client, Nocera says that’s “ludicrous.” 

So, is it ludicrous?  Nope.  Nocera ignores the main reasons I actually gave him for concluding this was a pump and dump (like the implausibility of the report, and the timing of Prescience Point’s trades). Instead, he tried to prove that I was way off when I said I understood Prescience Point bought stock at $6-10 per share prior to January 2019. I was right; Nocera was wrong (again).  Nocera claims that Prescience Point’s current cost basis for its MiMedx common stock holdings is about $2.60 based on a 13D from May 6, 2019.  That may be true, but it’s irrelevant because my point was that in 2018, Prescience Point purchased millions of dollars’ worth of shares on days that the stock traded at prices above $6.  (You can see that in the Schedule 14A Prescience Point filed May 29, 2019.)  By pumping up the stock in late December 2018 and in January 2019, Prescience Point reduced its losses somewhat when it sold about 2.25 million shares at about $2.50.  Then it bought back in at the lower prices reflected in the 13D that Nocera reviewed with his blinders on.  As a result, Prescience Point’s current cost basis is lower than what it was in January 2019, but the MiMedx share price has to rise significantly above that cost basis for Prescience Point to realize any gain from its total MiMedx common stock purchases.  That’s why it looks to me that Asbahi was engaged in a pump and dump scheme in January, and that’s why I suspect Nocera’s sloppy, poorly researched articles only help Asbahi’s manipulation.

All of this winds up with an accusation by Asbahi, adopted by Nocera, that I am engaged in a “smear campaign” to destroy MiMedx.  That’s false.  I’m engaged in a campaign to get at the truth about MiMedx, and I’m winning.  This company’s troubles are far from over, and with defenders like Nocera and Asbahi, they can only get worse fast. 

Marc Cohodes
Penngrove, CA
September 26, 2019

Tyler Durden Sun, 09/29/2019 - 21:00
Published:9/29/2019 8:28:51 PM
[Entertainment] Gwyneth Paltrow and Brad Falchuk Celebrate One-Year Anniversary in the Most Chill Way Gwyneth Paltrow, Brad Falchuk, The 71st Primetime Emmy AwardsIt's one for the books! Gwyneth Paltrow and Brad Falchuk are celebrating their one-year wedding anniversary in the most low-key and chill way. "Year one, done," The Politician...
Published:9/29/2019 6:55:41 PM
[Brexit] Prorogues and Pro-Rogues (Steven Hayward) I won’t pretend to have substantial knowledge of the intricacies of Britain’s unwritten constitution, or the workings of their judicial system that has sat uneasily beneath the doctrine of parliamentary supremacy since at least the time of Sir Edward Coke and Blackstone. One of my favorite books on my law shelf can help explain the conundrum for anyone not steeped in British law: It is Theodore Plucknett’s A Concise History of Published:9/28/2019 12:26:24 PM
[Markets] They're Murdering My Son – Julian Assange's Father Tells Of Pain And Anguish They're Murdering My Son – Julian Assange's Father Tells Of Pain And Anguish

Authored by Finian Cunningham via The Strategic Culture Foundation,

Julian Assange’s father, John Shipton, gave an interview to Strategic Culture Foundation over the weekend. After arriving from his home country of Australia, Shipton is visiting several European states, including Russia, to bring public attention to the persecution of Julian Assange by British authorities over his role as a publisher and author.

First though an introduction to the Assange case.

Few media figures can be attributed with transforming international politics and the global media landscape. Arguably, Julian Assange, author, publisher and founder of the Wikileaks whistleblower website (2006), is in the top tier of world-changing individuals over the past decade.

The Australian-born Assange has previously been awarded with accolades and respect for his truth-telling journalism which exposed massive crimes, corruption and nefarious intrigues by the US government and its Western allies.

One of the most shocking exposés by Wikileaks was the video ‘Collateral Murder’ (2010) which showed mass, indiscriminate deadly shootings by US troops in Iraq. Similar war crimes by American troops in Afghanistan were also revealed by Wikileaks. The so-called US and NATO “war on terror” was exposed as a fraud and gargantuan crime.

Assange worked with American whistleblowers Chelsea Manning and Edward Snowden, the latter revealing the illegal systematic global surveillance by US spy agencies against ordinary citizens and political leaders around the world in flagrant violation of human rights and Washington’s much-vaunted claims of upholding civil liberties and international law.

The powers-that-be have gone after these truth-tellers with a vengeance for daring to expose their hypocrisy and vile record. Snowden is in exile in Russia unable to return to the US out of fear of imprisonment for “treason”. Manning is currently being detained indefinitely in the US because she refuses to testify against Assange. Julian Assange’s ground-breaking journalism exposing government crimes did so in a way that so many established Western news media outlets failed to do out of cowardly deference to the powers-that-be. Such so-called “independent” media are now facilitating the persecution of Assange by smearing his reputation and ignoring his plight in prison. He has been smeared, among other slanders, as a “Kremlin agent” and a “cyber terrorist”.

After almost seven years (2012-2019) confined in the Ecuadorian embassy in London where he sought political asylum to avoid arbitrary arrest by British authorities over trumped-up sex assault claims (since dropped), Assange was illegally arrested in April this year by UK police storming the Ecuadorian embassy. He has since been detained in maximum security Belmarsh prison where he is held under conditions of solitary confinement. He is being detained indefinitely while the US prepares a request to British authorities to extradite him. If he is extradited to the US, Assange will face charges under the Espionage Act which could result in 175 years in jail.

Belmarsh prison in London is a Special Category A jail (the most severe of four grades of detention centers in the British penal system). It has been used previously to detain mass murderers and the most dangerous convicted terrorists. Julian Assange’s ongoing incarceration there under lockdown is preposterous. It is an outrage, and yet Western media show little or no concern to report on this gross violation of due process and human rights law.

Earlier this month, on September 13, Assange was ordered by a British judge to be detained further even though he was due to be released this week on September 22, after having served out his sentence over a minor bail infringement that occurred back in 2012 when he fled to the Ecuadorian embassy in London. That bail infringement is null and void since the original sex-assault claim in Sweden has been dropped due to lack of evidence against Assange.

Evidently, his detention is being used by the British government (no doubt at the behest of Washington) in order to destroy his health and very being. At age 48, his physical and mental condition are deteriorating by the day under the extreme conditions which amount to torture, as the UN special rapporteur Nils Melzer noted after visiting the prisoner back in May this year. The UN report called for Assange’s immediate release.

The following is an interview conducted with Assange’s father, John Shipton. He is currently on a tour of European countries to highlight the gross miscarriage of justice against his son. Shipton is visiting Britain, Ireland, Austria, Germany, France, Spain, Switzerland, Norway and Sweden to campaign for Julian’s immediate release. He is also traveling to Russia.

In contrast to Western media indifference, John Shipton says he has encountered great public support for Julian, demanding his freedom. Among his supporters are prominent public figures, award-winning journalist John Pilger, renowned thinker and writer Noam Chomsky, Pink Floyd singer-songwriter Roger Waters and the courageous actress Pamela Anderson.


Q: Can you describe the current prison conditions for Julian and his state of health?

Julian has lost 15 kilos in weight, is held in Belmarsh Maximum Security prison hospital 22 hours per day in solitary confinement. Nils Melzer, United Nation’s special rapporteur on torture, visited in company with two people expert in recognizing the effects of torture. Nils’ report stated Julian showed the effects of torture physically and mentally. Since Nils’ visit in May 2019, Julian continues to lose weight, now totaling 15 kilos. Nils and company describe Julian’s deeply distressing condition in firm language. UN report linked.

Q: It is reported that you are being restricted from contact with your son in prison despite you having traveled from Sydney, Australia, to visit him. Is that correct?

Julian can receive two, two-hour social visits per month. My visit was double-booked with another thus cancelled. A week later, in company with Ai Wei Wei, we visited Julian. Sitting in the prisoners’ meeting room for 46 minutes, upon complaining we were told Julian could not be found. Couple of minutes later Julian was brought in.

Q: Is Julian being restricted from contact with his lawyers in order to prepare his defense against the pending extradition case from Britain to the US?

Yes, severely. Sentenced to maximum security as a Grade B prisoner in solitary confinement, without access to computer or library. I gather the prison library has no books on criminal law.

Q: The latest development this month on September 13 saw a British judge rule that Julian’s detention in London’s max security Belmarsh prison is to be extended indefinitely despite him being due to be released on September 22 after serving his time for a bail infringement back in 2012. What, in your view, is objectionable about the latest ruling by the British judge?

The judge, Vanessa Baraitser, made her own application for Julian’s bail which, with bottomless ignominy, she promptly refused. Baraitser in summing her judgement used the phrase, “likely to abscond”. Julian has partaken of legal conventions of asylum, and to which the United Kingdom is a signatory, reviewed and supported by 32 states in the American Organization of States, and he has ceaselessly offered Swedish prosecutors opportunity to interview him on allegations or travel to Sweden if guarantees of no onward extradition to the United States. Stephania Maurizi’s Freedom of Information requests of United Kingdom’s Crown Prosecuting Service and Swedish Crown Prosecuting Authority had revealed irregular anti-procedural state cooperation keeping Julian in Ecuador’s London embassy. Mini Adolf Eichmanns all of them are.

Swedish prosecuting authority has had four prosecutors, two interviews, one in Sweden 2010 and 2017 in Ecuador’s London embassy, during nine years under regulations stating that cases must be progressed. To land a man on the moon took eight years!

This is prosecutorial and judicial insouciant malice towards Julian.

Q: What are your concerns about what could happen if your son is extradited to the US where he is facing charges of violating the Espionage Act?

They will murder Julian one way or the other.

Q: What do you say to politicians and media figures, like Meghan McCain, the daughter of the late US senator John McCain, who denounce Julian as a cyber terrorist”?

US Democratic presidential candidate Joe Biden, moron and crook or if you prefer, crook and moron, if memory serves, first uttered this phrase purportedly bringing Julian under the Patriot Act as a terrorist, thereby able to be extra-judicially murdered. Floundering morons repeat meaningless phrases echoing other bubble-head nonsense. Everyone of those morons are horrified by and terrified by truth and facts which everyone all can see and read on Wikileaks.

Q: Are you proud of your son’s work as a publisher and whistleblower? What do see as his main achievement from his publishing work?

The achievements are many. In diplomatic cables we can read of how the geopolitical world is composed and disposed of people therein. We can understand what Uncle Sam wants and how the US state gets what its wants. Many millions of people, communities and states benefit from Wikileaks, some greatly. Example, Chagos Islanders at the International Court of Justice. Iraq War and Afghan files exposing war crimes. Vault 7 exposing CIA cyber illegalities and crimes. The ‘Collateral Murder’ video’s revelation of US war crimes in Iraq. The list of revelations and beneficiaries is long and deep. Julian Assange and WikiLeaks are a necessity.

War crimes revealed, sordid practices, blackmail and bribery. Seven countries destroyed, millions dead, rivers of blood and millions displaced. Yet only Julian Assange and Chelsea Manning, both innocent of giving hurt and crime, rot in jail.

Q: Is Julian’s treatment by British and US authorities a grave warning to all citizens about the danger to their right to freedom of expression and independent media?

Yes, a grim warning. Shut up or be crushed. What free press? English-speaking mass media is homogenous in its deceptions, prevarication and banal lies. Popular internet search engines deflect enquiry to corporate cronies. Facebook corporation is greed incarnate. All these entities can be simply regulated. Nations states have powers, however, do nothing but salivate over access to data we generate… our data.

For Julian Assange and Chelsea Manning are icons of oppressive state violence towards revelation of astonishing corruption and staggering criminality.

Many gifted, brave writers, commentators and film-makers continue a furious fight in alternate media and blogs. We give our gratitude and salute such men and women, for they all know, intimately, there is no monster colder than the US state and its allies.

Q: Australian Prime Minister Scott Morrison and the government in Canberra have refused to make appeals for Julian’s release despite him being an Australian citizen. How do you view the Australian government’s lack of response to the case? Why are they apparently derelict? For example, Premier Morrison is visiting US President Donald Trump this week but he is reportedly scheduled to not raise the Assange case or to request his release. Why is Morrison acting with such indifference, and deference to the US?

The Australian government is complicit. More than complicit as silence indicates agreed involvement. Notable exception are ex Australian Foreign Minister Julie Bishop, with concordance of ex-Prime Minister Malcolm Turnbull, raising Julian with Jeremy Hunt, the former United Kingdom Foreign Minister and Mike Pompeo, the current United States Secretary of State.

Q: Are you hopeful that Julian will be released in the near future? How important have public supporters like journalist John Pilger, Pink Floyd singer-songwriter Roger Waters and actress Pamela Anderson, as well as ordinary members of the public, been to Julian’s spirits?

To Julian’s spirits, friends and supporters are alpha to omega of life.

Tyler Durden Wed, 09/25/2019 - 02:00
Published:9/25/2019 1:27:44 AM
[Markets] Normal Intrusions: Globalising AI Surveillance Normal Intrusions: Globalising AI Surveillance

Authored by Binoy Kampmark via Oriental Review,

They all do it: corporations, regimes, authorities.  They all have the same reasons: efficiency, serviceability, profitability, all under the umbrella term of “security”.  Call it surveillance, or call it monitoring the global citizenry; it all comes down to the same thing.  You are being watched for your own good, and such instances should be regarded as a norm.

Given the weaknesses of international law and the general hiccupping that accompanies efforts to formulate a global right to privacy, few such restrictions, or problems, preoccupy those in surveillance.  The entire business is burgeoning, a viral complex that does not risk any abatement.

The Carnegie Endowment for International Peace has released an unnerving report confirming that fact, though irritatingly using an index in doing so.  Its focus is Artificial Intelligence (AI) technology.  A definition of sorts is offered for AI, being “an integrated system that incorporates information acquisition objectives, logical reasoning principles, and self-correction capacities.”

When stated like that, the whole matter seems benign.  Machine learning, for instance, “analyses a large amount of information in order to discern a pattern to explain the current data and predict future uses.”

There are several perturbing highlights supplied by the report’s author, Steven Feldstein.  The relationship between military expenditure and states’ use of AI surveillance systems is noted, with “forty of the world’s top fifty military spending countries (based on cumulative military expenditures) also [using] AI surveillance technology.”  Across 176 countries, data gathered since 2017 shows that AI surveillance technologies are not merely good domestic fare but a thriving export business.

The ideological bent of the regime in question is no bar to the use of such surveillance.  Liberal democracies are noted as major users, with 51 percent of “advanced democracies” doing so.  That number, interestingly enough, is less than “closed autocratic states” (37 percent); “electoral autocratic/competitive autocratic states” (41 percent) and “electoral democracies/illiberal democracies” (41 percent).  The political taxonomist risks drowning in minutiae on this point, but the chilling reality stands out: all states are addicted to diets of AI surveillance technologies.

Feldstein makes the fairly truistic point that “autocratic and semi-autocratic” states so happen to abuse AI surveillance more “than governments in liberal democracies” but the comparisons tend to breakdown in the global race for technological superiority.  Russia, China and Saudi Arabia are singled out as “exploiting AI technology for mass surveillance purposes” but all states seek the Holy Grail of mass, preferably warrantless surveillance.  Edward Snowden’s revelations in 2013 did more than anything else to scupper the quaint notion that those who profess safeguards and freedoms are necessarily aware about the runaway trends of their security establishment.

The corporation-state nexus is indispensable to global surveillance, a symbiotic relationship that resists regulation and principle.  This has the added effect of destroying any credible distinction between a state supposedly more compliant with human rights standards, and those that are not.  The common thread, as ever, is the technology company.  As Feldstein notes, in addition to China, “companies based in liberal democracies – for example, Germany, France, Israel, Japan, South Korea, the UK, the United States – are actively selling sophisticated equipment to unsavoury regimes.”

These trends are far from new.  In 1995, Privacy International published a report with the unmistakable title Big Brother Incorporated, an overview of surveillance technology that has come to be aptly known as the Repression Trade. 

“Much of this technology is used to track the activities of dissidents, human rights activists, journalists, student leaders, minorities, trade union leaders, and political opponents.”

Corporations with no particular allegiance except to profit and shareholders, such as British computer firm ICL (International Computers Limited) were identified as key designers behind the South African automated Passbook system, Apartheid’s stand out signature.  In the 1980s, the Israeli company Tadiran, well in keeping with a rich tradition of the Repression Trade, supplied the murderous Guatemalan policy with computerised death lists in their “pacification” efforts.

The current galloping power in the field of AI surveillance technology is China, underpinned by the clout-heavy Belt and Road Initiative rosily described by its fans as a Chinese Marshall Plan Where there are market incentives, there are purchasing prospects for AI technology. 

“Technology linked to Chinese companies are found in at least sixty-three countries worldwide.  Huawei alone is responsible for providing AI surveillance technology to at least fifty countries.” 

Chinese technology, it is speculated, may well boost surveillance capabilities within certain African markets, given the “aggressiveness of Chinese companies”.

Other powers also participate in what has become a field of aggressive competitors.  Japan’s NEC is its own colossus, supplying technology to some 14 countries.  IBM keeps up the pressure as a notable American player, doing so to 11 countries.  That particular entity made something of a splash in May, with a report revealing sales of biometric surveillance systems to the United Arab Emirates security and spy agencies stirring discussion in May this year.  Another recipient of IBM surveillance technology is the Philippines, a country more than keen to arm its police forces with the means to monitor, and more than occasionally murder, its citizens.  (The Davao City death squads are a bloody case in point.)

Issues with the report were bound to arise.  A humble admission is made that the sampling method may be questionable in terms of generating a full picture of the industry.  “Given the opacity of government surveillance use, it is nearly impossible to pin down by specific year which AI platforms or systems are currently in use.”  Nor does the index “distinguish between AI surveillance used for legitimate purposes and unlawful digital surveillance.”  A murky field, indeed.

For all the grimness of Feldstein’s findings, he is also aware of the seductive element that various platforms have offered.  Rampant, amoral AI surveillance might well be a hideous by-product of technology, but the field teems with promise in “deep learning; cloud computing and online data gathering”, “improved performance of complex algorithms; and market-driven incentives for new uses of AI technology.”  This shows, in a sense, the Janus-faced nature in critiquing such an enterprise; such praise tends to come with the territory, given Feldstein’s own background as former deputy assistant secretary of state in the Democracy, Human Rights, and Labor Bureau of the US State Department.

Feldstein leaves room to issue a warning.  “As these technologies become more embedded in governance and politics, the window for change will narrow.”  The window, in many instances, has not so much narrowed as closed, as it did decades ago.

Tyler Durden Tue, 09/24/2019 - 22:25
Published:9/24/2019 9:26:27 PM
[US News] Linda Sarsour says hero Rashida Tlaib will be in the history books for spearheading Trump’s impeachment

Rashida Tlaib led the way on impeachment? Get in line, sister.

The post Linda Sarsour says hero Rashida Tlaib will be in the history books for spearheading Trump’s impeachment appeared first on

Published:9/24/2019 6:55:40 PM
[Economy] For Bureaucrats, It’s ‘Christmas in September’

For the federal government, September is the real holiday: with the federal fiscal year ending, it’s spending mayhem. Adam Andrzejewski of Open the Books joins... Read More

The post For Bureaucrats, It’s ‘Christmas in September’ appeared first on The Daily Signal.

Published:9/24/2019 2:59:08 AM
[Markets] Why Are So Many Top-Tier College Girls Turning To 'Soft Prostitution'? Why Are So Many Top-Tier College Girls Turning To 'Soft Prostitution'?

Are you a rich guy who wants to bang debt-laden college girls with all your extra money? 

Are you a struggling college girl facing decades of six-figure debt so you can follow your unsinkable dreams? 

Great news; thanks to the internet, your bases are covered! As we've previously reported (here and here), 'soft prostitution' may have been going on for a long time - but its normalization is relatively new - and undoubtedly linked to the $1.5 trillion+ student debt problem. 

As an example, according to 'sugar daddy / sugar baby' website SeekingArrangement, there are 1,304 students at Georgia State University signed up to be Sugar Babies right now - up from just 306 in 2018

Given that there are 15,277 female students at Georgia State, - nearly one in ten girls at the college are willing to whore themselves out to make ends meet. 

Top 20 Sugar Baby colleges

Of this list, several universities are considered top-tier - such as UCLA, University of Southern California, Columbia and New York University

According to, "Sugar Babies do not want to be in monotonous, traditional relationships prescribed by society — that no longer works today. Rather, she is seeking a modern relationship — one that is different and matches her ambition and drive — with a romantic partner who can play the traditional role of provider or gentleman, without placing unreasonable limitations on personal growth," according to the website. 

Overall, there are 2.7 million US students signed up and 4.7 million worldwide. 

According to the website, "Students registered on SeekingArrangement get help paying for tuition and even more benefits. Finding the right Sugar Daddy can help students gain access to the right network and opportunities. College Sugar Babies can also get help paying for other college-related costs, such as books and housing.

And while the site claims 4.5 million students across the globe, SeekingArrangement says it has 20 million members worldwide - of which students are most common.

What do they Sugar Babies do with the money they earn with their vaginas? 30% is spent on tuition and other school related expenses, while 25% goes towards living expenses

Meanwhile, the average Sugar Daddy is 41-years-old and has an annual income of $250,000. Most common professions are Tech Entrepreneur and CEO are their two top occupations, followed by Developer, Financier, Lawyer and Physician. 

As for cities - New York tops the list, followed by London, Toronto and Los Angeles. 

Follow your dreams people. 

Tyler Durden Sat, 09/21/2019 - 17:45
Published:9/21/2019 5:13:15 PM
[Markets] The Weird Obsessions Of Central Bankers, Part 1 The Weird Obsessions Of Central Bankers, Part 1

Authored by Pater Tenebrarum via,

How to Hang on to Greenland

Jim Bianco, head of the eponymous research firm, handily won the internet last Thursday with the following tweet:

Jim Bianco has an excellent idea as to how Denmark might after all be able to hang on to Greenland, a territory coveted by His Eminence, POTUS GEESG Donald Trump (GEESG= God Emperor & Exceedingly Stable Genius).

Evidently the mad Danes running the central bank of this Northern European socialist paradise were reacting to the ECB Council’s decision earlier that day to carpet-bomb the euro zone economy with another dose of monetary napalm.

The sad spectacle was the outcome of the penultimate ECB meeting chaired by Mario Draghi, who will undoubtedly enter the history books in the “what not to do” section, inter alia as the only central bank chieftain who didn’t raise interest rates even once during his entire term.

Mario Draghi, the scourge of Old World savers

The Beatings Will Continue Until Morale Improves… or Something

The following tablet engraved with decisions was handed down from the Europe’s Central Planning Olympus:

(1) The interest rate on the deposit facility will be decreased by 10 basis points to -0.50%. The interest rate on the main refinancing operations and the rate on the marginal lending facility will remain unchanged at their current levels of 0.00% and 0.25% respectively. The Governing Council now expects the key ECB interest rates to remain at their present or lower levels until it has seen the inflation outlook robustly converge to a level sufficiently close to, but below, 2% within its projection horizon, and such convergence has been consistently reflected in underlying inflation dynamics.

(2) Net purchases will be restarted under the Governing Council’s asset purchase program (APP) at a monthly pace of €20 billion as from 1 November. The Governing Council expects them to run for as long as necessary to reinforce the accommodative impact of its policy rates, and to end shortly before it starts raising the key ECB interest rates.

(3) Reinvestment of the principal payments from maturing securities purchased under the APP will continue, in full, for an extended period of time past the date when the Governing Council starts raising the key ECB interest rates, and in any case for as long as necessary to maintain favorable liquidity conditions and an ample degree of monetary accommodation.

(4) The modalities of the new series of quarterly targeted longer-term refinancing operations (TLTRO III) will be changed to preserve favorable bank lending conditions, ensure the smooth transmission of monetary policy and further support the accommodative stance of monetary policy. The interest rate in each operation will now be set at the level of the average rate applied in the euro-system’s main refinancing operations over the life of the respective TLTRO. For banks whose eligible net lending exceeds a benchmark, the rate applied in TLTRO III operations will be lower, and can be as low as the average interest rate on the deposit facility prevailing over the life of the operation. The maturity of the operations will be extended from two to three years.

(5) In order to support the bank-based transmission of monetary policy, a two-tier system for reserve remuneration will be introduced, in which part of banks’ holdings of excess liquidity will be exempt from the negative deposit facility rate.”

(emphasis added)

We will briefly comment on points 2–5 of this long list of interventions below and focus on the first one in Part 2.

Regarding point (2), the resumption of QE: market participants reportedly expected that €40 billion in monthly purchases were in the offing and were therefore somewhat disappointed by the announcement. European bond markets have become junkies, and QE is their heroin.

Disappointment disturbance in the negative yields farce: yields on German Bunds rise to minus 44.5 basis points in the wake of the ECB announcement…

Point (3) means that the central bank’s balance sheet is not going to shrink for a long time to come –  hence all the money created by the original QE program will continue to slosh around in the economy. This is less of a problem than the decision to create even more money ex nihilo, since prices and economic activity have in the meantime adjusted. This is evident by the fact that the brief sugar high provided by previous QE operations has completely dissipated.

Regarding point (4), the modalities of the TLTRO-3 program are now such that banks will be able to borrow funds at interest rates ranging from zero to minus 0.5%, i.e., they will be paid for borrowing money from the ECB. Why this is even called an “interest rate” is a bit of a mystery.

If this arrangement strikes you as perverse, that’s because it is perverse. The more new credit a bank pumps out, the better the rate that will be applied to its TLTRO borrowings. It is an additional money (and debt) creation program.

Point (5), the introduction of tiered deposit facility rates, is intended to alleviate the impact of negative rates on bank earnings. Our guess would be that the amounts falling under the exemption will be fairly small, since the negative deposit facility rate is supposed to propagate outward through overnight interbank lending rates (if a bank has to pay a 0.5% penalty rate on bank reserves deposited with the ECB, it will be happy to lend its reserves at -0.45%, since losing 0.45% is obviously better than losing 0.50%).

Obviously, none of the “non-standard” monetary policies implemented by the ECB and other central banks have even met their stated goal of boosting price inflation, not to mention economic growth. Evidently, since they are opting for even more of the same, it has yet to occur to them that their policies may actually be counter-productive.

The process is reminiscent of many previous attempts in history to revive economic activity by means of money printing.

Tyler Durden Sat, 09/21/2019 - 17:15
Published:9/21/2019 4:36:56 PM
[Entertainment] 2 Greta Thunberg books coming out in the United States Swedish climate change activist Greta Thunberg has two books coming out in the United States, including an English-language edition of her memoir Published:9/19/2019 3:24:37 PM
[Markets] Mish Blasts NYT Kavanaugh Smear: "Editorial Mistake My Ass" Mish Blasts NYT Kavanaugh Smear: "Editorial Mistake My Ass"

Authored by Mike Shedlock via MishTalk,

As details emerge in the New York Times Kavanaugh scandal, it's very clear the NYT repeatedly made serious errors

Blatant Sleaze

On September 14, the New York Times resurrected unsubstantiated and graphic rumors about Supreme Court Justice Brett Kavanaugh in a purposeful smear article Brett Kavanaugh Fit In With the Privileged Kids. She Did Not.

The article was by disgraced NYT authors Robin Pogrebin and Kate Kelly to promote their upcoming book “The Education of Brett Kavanaugh: An Investigation.”

I do not normally report on sleaze but to understand what the NYT did, I have to.

Here is one controversial paragraph.

"We also uncovered a previously unreported story about Mr. Kavanaugh in his freshman year that echoes Ms. Ramirez’s allegation. A classmate, Max Stier, saw Mr. Kavanaugh with his pants down at a different drunken dorm party, where friends pushed his penis into the hand of a female student."

Coverup Whitewash

The NYT later added this correction.

"The book reports that the female student declined to be interviewed and friends say that she does not recall the incident. That information has been added to the article."

That's one hell of a correction don't you think?

Editing Error

Making matters worse for itself, The NYT came out and blamed it all on an "editing error".

Reporters Robin Pogrebin and Kate Kelly said in an interview on MSNBC that they wrote in the draft of their Sunday Review piece that a woman who Kavanaugh was said to have exposed himself to while a student at Yale had told others she had no recollection of the alleged incident.

Their editors, they say, removed the reference. “It was just sort of. . . in the haste of the editing process,” said Pogrebin.

The editor responsible for editing the Kavanaugh piece, Times Deputy Editorial Page Editor James Dao addressed select questions about the piece on a Times “Bulletin Board” posted on Monday and updated Tuesday. But he did not address why the information about the woman’s recollection was removed from the story.

Dao declined a POLITICO request for comment.

Half Bullshit

We certainly never intended to mislead in any way,” Pogrebin said in discussing the editor’s note on MSNBC.

“We wanted to give as full a story as possible.”

I know bullshit when I see it. The whole story is bullshit. On second thought, make that half bullshit (I will explain in a moment).

Since when do you post unsubstantiated sleaze of this nature when the people allegedly involved do not remember the incident?

Someone shoved a penis in my face and I don't remember.


Here's the believable part: “We wanted to give as full a story as possible.”

Robin Pogrebin and Kate Kelly want to sell books and sleaze sells.

Of course they wanted as "full a story as possible" and the more bullshit the better.

Bullshit Replicated

Entire Book Unravels

Zerohedge fills in the remaining pieces in his take As Kavanaugh Smear Unravels, Original Accuser's 'Witness' Now Doubts Story

As the left-wing smear against Supreme Court Justice Brett Kavanaugh continues to unravel amid a journalistic malpractice scandal at the New York Times, original Kavanaugh accuser Christine Blasey Ford's "lifelong friend" and alleged witness now doubts her story.

Keyser - who said she was pressured by Ford's ex-FBI buddy to lie and say that she didn't remember the party instead of saying that it never happened - originally said through her attorney that she "does not refute Dr. Ford's account," however "the simple and unchangeable truth is that she is unable to corroborate it because she has no recollection of the incident in question."

"I was told behind the scenes that certain things could spread about me if I didn't comply," Keyser told the Times journos - who felt it wasn't notable enough for their smear article.

Now, Keyser says she doesn't believe Ford's story at all

"We spoke multiple times to Keyser, who also said that she didn’t recall that get-together or others like it," wrote Pogrebin and Kelly in their new book, The Education of Brett Kavanaugh: An Investigation (yet another item that didn't make it into their inflammatory Times article). "In fact, she challenged Ford’s accuracy."

Editors Should Be Fired

At a minimum, the editors responsible should be fired. They are corrupt, incompetent, or both.

Anyone at the NYT defending the editors should also be fired.

NYT Pours On the Bullshit

NYT opinion columnist Jamelle Bouie says Mad About Kavanaugh and Gorsuch? The Best Way to Get Even Is to Pack the Court.

So what should Democrats do? They should play hardball back. Congress, according to the Judiciary Act of 1789, decides the number of judges. It’s been 150 years since it changed the size of the Supreme Court. I think it’s time to revisit the issue. Should Democrats win that trifecta, they should expand and yes, pack, the Supreme Court. Add two additional seats to account for the extraordinary circumstances surrounding the Gorsuch and Kavanaugh nominations.

To post that article in the wake of blatant errors adds fat to the fire.

It's also asinine.

The fact of the matter is Republicans control the Senate and Trump gets to make the nominees.

Even assuming that changes, all it would do is encourage Republicans to counter the next time they are in charge.

Nonpolitical Court

The court is supposed to be nonpolitical.

In that regard, Trump made two excellent choices. He could easily have appointed two far-right choices but didn't.

Excellent Choices

Some of my own readers incorrectly accused me of TDS (Trump Derangement Syndrome).

The notion is absurd. I am a free market, anti-war Libertarian.

When Trump strays from either, I criticize.

Here, Trump is correct.

Trump Tweets

Instead of admitting how stupid they were, Democrat presidential nominees want a Kavanaugh impeachment.

The people in charge of this fiasco at the NYT should be fired.

Tyler Durden Wed, 09/18/2019 - 09:00
Published:9/18/2019 8:18:20 AM
[Markets] Blain: "Something Is Happening, And We Don’t Know What It Is" Blain: "Something Is Happening, And We Don’t Know What It Is"

Blain's Morning Porridge, submitted by Bill Blain

Why so Calm?

Even as the Fed meeting pondered raising rates by a smidge, it had to intervene to pump money into the short-term US financial system for the first time since the 2008 crisis.  That’s a clear sign of financial dislocation – but markets seem utterly unconcerned.  (The wires all quote issues such as tax payments and an imbalance between new funding and low redemptions to explain the sudden lack of cash, but none of my money market chums are convinced. They fear something else, a big No-See-Em is underway.) 

The last crisis started in money markets.  Add that to the ongoing WTF-happened questions about the Saudi bombings, and there seems to be a curious sense of false calm in markets.  No vol, no concern, and gold hardly moving.  I can’t help but think of ducks; serenely floating upstream while their legs are furiously paddling below the surface.  Something is happening, and we don’t know what it is.

Since I don’t know either, today is the day to take a pop at the Green Puritan movement: 

There is a great comment from Bill Gates in the FT - Fossil fuel divestment has “zero” climate impact, says Bill Gates.  Worth a read, and maybe get yourself thinking about what damage ESG/Green group-think nonsense is doing? Its distorting the global economy and voiding perfectly sane investment strategies. As regular readers will know, I absolutely believe Climate Change is The Big Threat – but I’m more and more convinced that much of the ESG / Green Investment bandwagon is utter bollchocks! 

We are not going to solve Climate Change by going back to the Stone Age.  It will require technological solutions.  Yet, a whole green investment industry of advisors, influencers, and whatever the financial equivalent of an Instragram is, have taken over the agenda.  They’ve become the market equivalent of whinny millennials, brutally offended by everything, but failing to realise how much they offend us and hold back solutions.  They are fleas looking to feast.  Every time I read some b*llsh*t about a wonderful and insightful Green Bond conference I reach for the barf bag.  The organisers are fleas biting into bigger fleas.

The Gates article hits it squarely.  Divesting from the oil majors will not change the world.  Changing the world will change the world – Doh!  And the best way to do that is to get everyone on the same side – understanding the problems and the costs of solving it.

Let me give you an example:  we all accept renewable energies are critical to replace fossil fuels pumping Co2 into the atmosphere.  It makes perfect sense to replace dirty coal fired power stations with sustainable solar, hydro and wind power (and I hope tidal soon). 

But building a new Wind Generator, or an array of solar cells, or the turbines for a hydro scheme, requires high-grade steel.  Steel is a wonderful material – you can recycle and reuse it. But you also need Carbon, from coking coal, to make it.  A typical off-shore wind generator requires 250 tonnes of Met Coal to make. It’s a 1.8 bln tonne per annum market, and it’s in increasingly short supply.  It’s known in the business as metallurgical coal – because that’s what its used for.  Met Coal is a high value, clean commodity – but can you fund it? 


That’s because most fund managers have got ESG and Green guidelines that start and end with Coal is evil.  They don’t want to propose it to investment committees as they might reject it for “reputational risk” reasons.  As a result its bundled alongside dirty coal and cannibalism as too difficult to fund – meaning any smart investor should be taking notes on the basis Met Coal investments are cheap and rewarding.  Making them attractive is a more difficult matter – but it has to happen.

And yes – I am working on such difficult deals. If your investment committee hasn’t already been taken over by the ESG pod-people or Green Puritans activists, and you want to make proper returns from real assets that are good for the planet – then give me a call…

Repeat the same exercise on anything that might be a wee bit polluting, environmentally challenging, squishes a few crested newts while saving the rest, and you rule out loads of perfectly good investments that are likely to be as environmentally sound as anything the Green lobby sticks a Green Finance label on. 

If the default scenario is don’t do it – then we are missing opportunities.  The right way to save the planet is to mitigate, solve, fund and finance things in such a way the environment is protected, the climate improved and things to solve the crisis get made.  I believe Greta Thunberg is absolutely on the right track. It’s not her I’m mocking… it’s the lack of bravery by investment managers to do right thing in the face of misguided and ill-informed environmental populism led by Green Puritans!

If you want a decent omelette – you need to crack a few eggs.    

Softbank going Flaccid?

Back on Planet reality…  I’m struggling to find the time to do more in-depth digging on Softbank, but I’m more and more convinced we’re looking at a massive negative feedback loop.  I won’t say its headed into a death-spiral.. (for that might get me a wrist-slapping), so I’ll let you draw your own conclusions.

What we do know is Softbank’s strategy of investing in disruptive tech to bring them to IPO is  creaking.  The plan looked brilliant – hype up disruptive tech opportunities and rewards, ignore the lack of profitability, talk up their own expertise to spot and fund opportunities, then pile millions into start-ups and reap billions from the ones it could quickly bring to market.  It worked as long as hype preceded reality.  Reality caught up as it became clear disruptive technologies are only unicorns if they work, are uniquely monopolistic and catch money.  The ride-hailing market is awash with competitors.  Streaming is something everyone wants a piece of.

The critical point is Softbank valued WeWork at nearly $50 bln a few weeks ago.  Or think about it this way.  Softbank pumped $100 bln into Tech Start Ups, creating its own market in its own holdings.  What are they really worth?

Uber was a wake up moment.  The embarrassment of the We-Work failed IPO demonstrates how far off kilter they now are.  As a strategy, Tech Disruptive Hype has had its time.  Sure, there are more Unicorns that will likely become multi-billion businesses to be snapped up, but how many has SoftBank got on its books?  How much less hyped will prices be?  How much less when you strip out Softbank and other Tech funds making their own prices on their own investments?

Softbank’s investors sound unhappy.  Backers of Vision Fund 2 are pulling out.  It’s clear the Saudi SWF Public Investment Fund and Abu Dhabi’s Mubadala are not best pleased. They invested $60bln into the $100bln fund.  How much have they made?  And will firms like Apple really want to put money into Vision 2 as the model creaks from the We-Work catastrophe?  

Next couple of weeks are going to be very interesting.  I’ll stick to my earlier thesis WeWork would be the IPO to break the Tech craze, but now I think it could bring down Softbank as well..

Tyler Durden Wed, 09/18/2019 - 07:26
Published:9/18/2019 6:46:03 AM
[Entertainment] Original Content podcast: ‘The Family’ investigates a secretive evangelical group “The Family” is a new documentary series on Netflix, based on the work of journalist Jeff Sharlet — whose books promise to expose “the secret fundamentalism at the heart of American power” and “the fundamentalist threat to American democracy.” Sarah Perez joins us on the latest episode of the Original Content podcast to discuss the series […] Published:9/15/2019 10:55:32 AM
[Markets] Red Flag Gun Laws Are Rooted In Communist Methods Of Oppression Red Flag Gun Laws Are Rooted In Communist Methods Of Oppression

Authored by Brandon Smith via,

This week government officials came back from their summer recess, and I have heard from a couple different sources that the US Senate in particular is seeking to fast track legislation on Red Flag gun laws as well as a possible ban on private party transfers of firearms and a possible ban on high capacity magazines. I can only hope that these are just rumors, but I suspect they are accurate.

Senate Majority Leader Mitch McConnell has publicly vowed to pursue any new gun control legislation that the Trump Administration supports, and Donald Trump has openly called for Red Flag gun laws involving mental health guidelines. The mainstream media now claims that a majority of Americans on both sides of the political divide support red flag legislation, but we all know how rigged such polls can be. The real question is, does the average American even know what red flag laws would entail? I think they do not.

Red flag gun laws are a method of gun control by which a family member or law enforcement can petition the court to confiscate a person's firearms on the SUSPICION that the person may present a danger to themselves or others. But it doesn't necessarily stop there. Some reports indicate that Trump is seriously considering using big tech companies like Amazon and Apple to monitor people's behavior and link this data to a social credit system similar to the system that already exists in China. Your gun rights could then be determined by algorithms that mark you as a potential risk simply by what you post online.

Prosecution using the public to spy on itself is a hallmark of these kinds of laws. It is also nothing new. The Puritans in early America used intangible evidence, such as “spectral evidence” to punish people of various crimes including witchcraft. This encouraged extreme collectivism and conformity, for anyone stepping outside the lines of what the group saw as righteous behavior could find themselves secretly accused using rhetorical evidence and unable to defend themselves. Their only option was to admit to the crime, whether they were guilty or not, and then repent.

But in a social or political witch hunt, you are not repenting to get in God's good graces, but to get in the good graces of the collective. You are supposed to sublimate yourself for the group and beg their forgiveness; not for the crime you are accused, but for the crime of acting as an individual. The message is clear – There is no way to fight back. Just give in and if you are lucky the collective will let you continue living, under their watchful eye, of course.

This might sound like something that could never happen in the US today, but it already has. The existence of the No Fly List, which is generated in secret, is often politically motivated and is based on evidence that the accused is never allowed to see.  It is a perfect example of a “law” that is similar to Red Flag legislation. While the no fly list has been confronted in court numerous times, it still endures and is little changed since its inception. Once ingrained, these laws are rarely ever removed.

It is likely that Red Flag gun laws will operate in the same way. One day you may walk into the sporting goods store and be denied a gun purchase by the ATF. There will be no explanation, only the denial of your rights.

Accusations can come from anywhere, even complete strangers using anonymous online applications (this is how the Chinese social credit system works). They could be based on legitimate behavior, such as suicide or murder threats, or they could be based on a political statement you wrote or said years ago. It doesn't matter. The goal will be to take gun rights away from as many people as possible while the government still claims to support the 2nd Amendment. It's about the back door destruction of gun rights, not public safety.  It's also about silencing public dissent.

The bottom line is, if you allow pre-crime judgment based on hearsay evidence for one person, then you are allowing it for ALL people including yourself. And, it might not stop with whether or not a person is allowed to buy or own a gun. These systems of control expand into every facet of life. Again, simply look at what is happening in China.

The method of using “mental health” or social disruption as an excuse to silence dissent was not actually mastered by China, however.  It was standardized in communist Russia during the reign of the Soviets.  The mental health excuse was exploited on a regular basis in order to quietly sweep government critics and dissidents under the rug never to be seen again. The metal hospitals where these deplorables were kept were called “Psikhushka”, an ironic diminutive label. The hospitals worked hand in hand with the Cheka secret police and their vast networks of civilian informants.

'See Something Say Something' began under communists in the East.  It's only being recycled today in the West.

For the Soviets, the methodology made sense. The message they were sending was that anyone who criticized socialism/communism MUST be crazy. And, in a way, this is how Red Flag laws function. For if you are put on the list, or denied gun rights, then there MUST be something mentally wrong with you. And, by extension, if you are placed on the list for political reasons, then your political beliefs or convictions MUST also be psychologically disturbed. You see how this works?

Red Flag laws and social credit systems take the Psikhushka and flip it around. They don't need mental health prisons, they simply turn the whole country into a mental health prison. The wardens and guards of this prison will be the citizenry, and they will police each other.

Make no mistake, the mainstream media and the government have been conditioning the public for years to the concept that certain ideals and political activists are on the “fringe”. They are “conspiracy theorists”. They are exhibiting “defiance disorders”. They are not right in the head. Red Flag gun laws are meant for people like me, or perhaps people like you.

Precursor testing of denial of gun rights based on mental health accusations has already taken place against war veterans in the US based on PTSD (post traumatic stress disorder).  It makes sense that the government would seek to disarm trained combat experienced veterans first, as they tend to present the biggest source of resistance to a totalitarian shift.

I can't say that Trump's open support of Red Flag laws surprises me in the slightest. Trump's long term business relationships and debts to the Rothschild banking elites as well as his many dubious cabinet choices including Pompeo, Ross, Mnuchin, Kudlow, Lightheizer, etc., indicate to me that Trump is not on the side of liberty activists.  John Bolton's recent exit from the White House does not impress me.  It is clearly a crumb thrown to conservatives as a means to keep them close to the Neo-Con table.  The goal of the elites to lure conservatives into blind adulation of the Trump Admin. is starting to fail, and they had to do something.  Also, it is not uncommon for elitist members to jump ship from an administration right before their agenda's are implemented so that they get none of the blame for the consequences.

Bolton should never have been in Trump's cabinet to begin with, he was there for years, and just because Bolton is leaving doesn't mean his agendas will be leaving.  Trump has many elitist handlers, and I'm sure Bolton will be replaced with yet another reprehensible ghoul in due course.

In my recent article 'The Real Reasons Why The Media Is Suddenly Admitting To The Recession Threat', I noted that if an economic crisis strikes in the next year, then it's highly unlikely that Trump is slated to be president after the 2020 elections. If he supports Red Flag laws, then it is almost assured that he will not be president for another term.

In our controlled political machine in which presidents from both parties are merely puppets for elitist interests, these kinds of liberty crushing laws are not generally designed for the current Administration's use. Rather, they are supported by one president or party, and then exploited by the next president or party in power. In this way, conservatives could be tricked into backing unconstitutional laws in the name of “helping their side win”, only to discover that the laws they supported (or ignored) are being used against them by Democrats a few years later.

I think this would be especially true for Red Flag legislation. If conservatives do not raise hell in response to these laws just because they don't want to derail the Trump train, then they will find themselves complicit in their own disarmament if markets tank and the Dems take over in 2020. The socialist front runners will say that we “asked for this” under Trump, and now we're getting what we wanted. And, once these laws are in the books, expect that a majority of police will comply with them and enforce them.

Of course, this leads to an inevitable outcome – War. There are millions of people in the US that are not going to fold to the dismantling of gun rights or gun confiscation. No doubt, we would all be labeled terrorists, and our defiance would be held up as further proof of our mental instability. So be it.

Once the Pandora's box of pre-crime and hearsay evidence is opened, the sky is truly the limit for the violation of American constitutional rights.

For whatever it's worth, now would be a good time for gun rights advocates to contact their representatives and warn them that Red Flag laws are unacceptable. Also keep in mind that the government may push a long list of new gun control restrictions on top of Red Flag laws as a means to frighten the public. They will then rescind many of the items on the list (except the red flag legislation) in order to make it appear as thought we “got lucky”. The real goal here is the mental health restrictions and the ability for government to deny your rights according to hearsay evidence.

Gun ownership is as integral to a free society as free speech and property rights. Without firearms ownership, the public is at the mercy of any criminal or criminal government that seeks to oppress them. Remember, if your "military style" rifle was not a threat to the elites then they would not constantly seek to take it away. Never let it go.

*  *  *

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Tyler Durden Sat, 09/14/2019 - 00:05
Published:9/13/2019 11:16:18 PM
[Entertainment] Prize winning historian Jean Edward Smith dead at 86 Jean Edward Smith, a prize-winning historian known for his books on Franklin Roosevelt and Ulysses Grant, has died at 86 Published:9/13/2019 8:15:44 PM
[Markets] "We're In A Demographic & Fiscal Dead-End" - Stockman On The Coming Financial Panic & The 2020 Election "We're In A Demographic & Fiscal Dead-End" - Stockman On The Coming Financial Panic & The 2020 Election


Doug Casey’s Note: David Stockman is a former congressman and director of the Office of Management and Budget under Ronald Reagan.

Now, anyone with connections to the government should elevate your suspicion level. But as you’ll see, David is a genuine opponent of government stupidity. Although his heroic fight against the Deep State during the Reagan Administration was doomed, he remains a strong advocate for free markets and a vastly smaller government.

We get together occasionally in the summer, when we’re both in Aspen. He’s great company and one of the few people in this little People’s Republic that I agree with on just about everything. Absolutely including where the US economy is heading.

I read his letter the Contra Corner every day and suggest you do likewise.

International Man: We seem to be near the top of the “everything bubble.” Almost nothing is cheap… anywhere. What are your thoughts on where people should put their money for prudence and for profit?

David Stockman: I would recommend recognizing that the “everything bubble” is the most extreme, exaggerated, severe financial bubble in world history. It will inevitably collapse, and there will be massive losses, even greater than occurred in 2008 and 2001.

So, the first thing is to stay out of the casino. By that, I mean the financial-market stocks, bonds, and everything else.

These markets are so artificial. They’re just chasing what the central banks are doing. There’s no honest price discoveries or supply and demand; nobody’s discounting the future of economic growth, productivity, and investment. You’ve got the chart monkeys, 29-year-old day traders who are in charge of the market.

When the big correction comes, there are going to be massive losses, and the panic will be great. All correlations will go to 1—which means everything will fall: the good, the bad, and the indifferent.

There’s this old saying among traders that when the cops raid the house of ill repute, they carry out the good girls, the bad girls, and the piano player too. That’s essentially what’s going to happen.

You can’t be saved by picking high-yielding stocks or conservative blue chips or stocks that provide daily necessities like food—it doesn’t matter. Everything’s overpriced right now because of this huge financial distortion.

When the real correction comes and the central banks are revealed to be impotent and powerless, then everything is going to collapse. You’ll be in harm’s way no matter how clever you’ve been in trying to pick and choose. And stay away from the bubble stocks like Amazon or Beyond Meat or any of those.

The time for speculation is over. We’ve had 30 years of central bank subsidized speculation. We’re going to go into the time and era for capital preservation, and that means the highest priority is to not lose money. It’s to keep your capital safe.

I think the only way to do that is in very short-term, liquid instruments.

I don’t think the U.S. government is going to disappear. I don’t think we’re going to have a national bankruptcy or anything like that. There’s going to be a tremendous fiscal disaster coming. But 90-day Treasury bills will continue to pay you their meager interest, and they will be a safe place to put your money.

We have to recognize that the 30-year experiment in what I call “Keynesian Central Banking”—which is almost like central planning—is over.

Therefore, the central banks of the world are going to be in enormous disrepute. They’re not going to be your friends or your savior.

Remember the Time magazine cover from the late ’90s, “The Committee to Save the World”? It had Robert Rubin, Alan Greenspan, and Larry Summers on the cover. They’re now going to be the ogres who destroyed the world.

The one thing that Donald Trump is going to accomplish in his misbegotten tenure is that his ferocious attack against the Federal Reserve will tear away the veil that it’s a beyond-politics cabal of geniuses who are safeguarding your livelihood.

He’s going to tear it apart. He’s going to totally besmirch and destroy the credibility of the Fed, at least in the eyes of his base. It’s going to create an enormous political debate about central banking.

Now, he’s coming at it from left field. He’s totally wrong. But Trump is unlike other presidents who were totally choreographed and scripted and moved their lips in the way that their advisors told them to.

And he’s going to go after the Fed. We haven’t seen anything yet. And I relish the prospect. They need to be beat to smithereens with a strong, lethal political club, and that’s Trump. And after the fragments end up all over the cutting room floor, we can figure out what to do next. But you must take down this institution.

The Fed is the number one, the number two, and the number three enemy of prosperity, capitalism, free markets, individual liberty, and the wealth of people in the world today.

Central banks have to be totally discredited and taken down.

The one thing that Trump is going to accomplish—as he desperately struggles for re-election—is he’s going to finally rip off the Band-Aid. We’re going to have a real debate about this awful curse of Keynesian central banking.

International Man: I think that’s the silver lining. For the first time, we have a president who is regularly tweeting about the Fed and bringing it to the attention of average Americans, many of whom have no idea what the Fed is or does.

Will Trump be able to pin the blame for the next recession on the Fed? What do you think the implications are for that?

David Stockman: It’s very difficult to know. It is not inconceivable that the Fed and other central banks could pull a couple more rabbits out of their hats.

Also, Trump could take the trade war to the edge and then pull back like he constantly does. He flinches constantly. He could do so again if he sees the market moving lower too fast. But if you look at the charts, there are massive air pockets down below, let’s say, the 2700, 2800 level on the S&P 500.

If there’s an event—like some tankers blow up in the Persian Gulf or something really bad happens in the Taiwan Straits or the Chinese pull some real retaliatory stunt like dumping a couple billion bonds in one hour—it could tank the market.

And remember 80% of daily volume in the stock market is essentially either index-driven ETFs or various kinds of quantitative, machine-driven investment strategies. If that ever breaks loose, the market will go through an air pocket, and then it’s all over except for the shouting.

Because if the S&P 500 drops 400, 500, 600 points, you will trigger another go-round in the corporate C-suites. They’ll suddenly wake up like they did in October 2008 and say, “Oh my God, we’ve got too much inventory, we’ve horded too much labor, we’ve got a lot of assets that aren’t producing returns.” And then they go into these big restructuring programs where they lay off workers by the tens of thousands and take huge write-downs, close facilities, and so forth. The next thing you know, you have a C-suite–triggered recession. That’s how it happens these days.

Recessions don’t happen because the Fed is tightening credit costs for Main Street. That’s the old days. That’s your grandfather’s economy and your grandfather’s Fed. But we’re now in the era of bubble finance. The Fed basically inflates the financial system until it collapses, and then it spills over into the mainstream economy through corporate C-suite panics.

If the stock market cuts through these air pockets down below, the recession will happen instantly, and no one will see it coming—just like in 2008.

I remember in the spring of 2008 they were still talking about the Goldilocks economy. And in November 2008, they were talking about the end of the world.

This is exactly what I think will happen if the stock market breaks loose.

We don’t know when it will happen. It could happen before November 2020 or after it. No one can really predict.

I think the odds are that it will happen before then, and if it does, Trump is toast. Elizabeth Warren will be the next president of the United States, and as that prospect becomes even more probable, the panic in the stock market will be something to behold. It will be worse than anything we’ve seen since October 1987.

If you talk about volatility, you haven’t seen nothing yet. Wait until the election gets really in full heat next year.

I think Elizabeth Warren will come to the top. Joe Biden is quasi senile, and he’s going to fall by the wayside. Bernie just isn’t going to cut it with the mainstream Democrats. So, Warren is going to pull ahead.

And if the stock market is faltering or it has crashed and the economy’s in trouble, you’ll have a populist, redistributionist, big government statist president and Congress.

That’s a totally different world from this dance fantasy that we’ve been living for the last 10 or 15 years.

International Man: With Trump’s recent budget deal with the Democrats, the last semblance of financial responsibility in US politics—which was a charade anyway—is explicitly dead. The US is headed for record deficits under Trump. The Democrats would of course be orders of magnitude even worse.

There is no meaningful force in US politics that could reign in the out-of-control spending. What do you think the implications of these political trends are for the future of the country?

David Stockman: The short answer is that, objectively, we are already fiscally bankrupt. And by that, I mean the $22 trillion of debt we have today, that’s the rear-view mirror.

That’s what the first 44 presidents in American history have managed to accomplish—including the last two before Trump, who took it from about $4 trillion to $19 trillion.

But Donald Trump is the most reckless, irresponsible president we’ve had since Lyndon Johnson, in terms of fiscal policy.

This guns-and-butter deal for two years that he just signed with the Democrats and the Congress was an abomination. It added $1.7 trillion more to the debt over the next 10 years. It eliminated entirely these spending or sequester caps that we’ve had since 2011.

But the more important point is that all deficits are not created equal. Deficits of a large magnitude at the top of the longest business expansion in history are an absolute abomination.

Even the original Keynesians in the 1960s and ’70s said you’ve got to manage fiscal policy over the cycle. When you get to a very strong economy or at the top of a business cycle, you have to reduce the deficit and even run surpluses.

Well, Trump has taken policy the other way. At the time when you’re supposed to be reigning things in, he’s actually pushed the deficit over the trillion-dollar mark.

Trump has created a monster defense budget for no reason except that he’s stupid and has been totally bamboozled by the military and the defense contractors. After all, we’ve got defense contractors running the Department of Defense. First, it was Boeing, now you have another guy in there who spent his whole life in the defense contract business.

Let’s just consider what Trump has already done at the worst time in the cycle. In the four budgets that he’s now signed up for, including this last deal, he’s increased spending by $140 billion per year.

How does that compare to Bill Clinton?

In 2019-dollars purchasing-power terms, Clinton’s budgets went up $40 billion a year.

Obama—the big spender, the terrible Democrat Socialist that Trump is always ranting about—his nine budgets went up $75 billion per year. And that’s including the huge deficit spending breakout of 2009 during the recession.

So, at the very worst time in the business cycle, Trump is massively increasing the structural deficit.

When I say the very worst time, it is both in calendar time and in cycle time. Because in calendar time, we’re entering the 2020s when all 80 million baby boomers are going to retire.

We’re going to be having 10–11,000 retirements a day for most of the decade. And by the end of the decade, there will be 80 million more people on Social Security, Medicare, and Medicaid.

The cost of the welfare state is going to soar even as the political environment will become totally nonfunctional, because no one wants to pay more taxes.

The military-industrial complex is running with a trillion-dollar budget. There’s just no give anywhere, not on taxes, not on defense spending, not on entitlements, not on the entire welfare state.

So, the fiscal situation is going to completely unravel in the decade ahead.

The real debt of the country today is not the $22 trillion that’s on the books. That’s backward looking. It’s really $42 trillion. That’s because we have $20 trillion more baked into the cake under almost any scenario you can look at over the next decade, based on these factors I’ve just enumerated.

Now, $42 trillion of debt on a GDP that might get to be, in nominal terms, $27, $28 trillion by then (but probably less), that’s a 150% debt-to-GDP ratio. I just don’t see how you get out of that box.

We’re in a demographic and fiscal dead end. It’s a very dangerous prospect and one with no obvious answer on how to escape.

*  *  *

It’s clear the Fed’s money printing is about to go into overdrive. The Fed has already pumped enormous distortions into the economy and inflated an “everything bubble.” The next round of money printing is likely to bring the situation to a breaking point. We’re on the cusp of a global economic crisis that could eclipse anything we’ve seen before. That’s precisely why bestselling author and legendary speculator Doug Casey just released this urgent video. Click here to watch it now.

Tyler Durden Fri, 09/13/2019 - 13:36
Published:9/13/2019 12:43:06 PM
[World] D.C. charter schoool children should be the focus, not the buildings

The D.C. government has a law on the books: D.C. charter schools have a “first right of offer” on vacant school buildings.

But the D.C. government has a conflicting policy: If a schoolhouse owned by the city is closed, first right of refusal for leasing it belongs to the D.C. ... Published:9/12/2019 8:38:25 PM

[Markets] Demythologizing The Roots Of The New Cold War Demythologizing The Roots Of The New Cold War

Authored by Ted Snider via,

When Soviet president Mikhail Gorbachev received his peace prize in 1990, the Nobel Prize committee declared that "the two mighty power blocs, have managed to abandon their life-threatening confrontation" and confidently expressed that "It is our hope that we are now celebrating the end of the Cold War." Recently, U.N. General Secretary António Guterres funereally closed the celebrations with the realization that "The Cold War is back."

In a very short span of history, the window that had finally opened for Russia and the United States to build a new international system in which they work cooperatively to address areas of common interest had slammed back closed. How was that historic opportunity wasted? Why was the road from the Nobel committee’s hope to the UN’s eulogy such a short one?

The doctrinal narrative that is told in the U.S. is the narrative of a very short road whose every turn was signposted by Russian lies, betrayal, deception and aggression. The American telling of history is a tale in which every blow to the new peace was a Russian blow. The fact checked version offers a demythologized history that is unrecognizably different. The demythologized version is also a history of lies, betrayal, deception and aggression, but the liar, the aggressor, is not primarily Russia, but America. It is the history of a promise so historically broken that it laid the foundation of a new cold war.

But it was not the first promise the United States broke: it was not even the first promise they broke in the new cold war.

The Hot War

Most histories of the cold war begin at the dawn of the post World War II period. But the history of U.S-U.S.S.R. animosity starts long before that: it starts as soon as possible, and it was hot long before it turned cold.

The label "Red Scare" first appeared, not in the 1940s or 50s, but in 1919. Though it is a chapter seldom included in the history of American-Russian relations, America actively and aggressively intervened in the Russian civil war in an attempt to push the Communists back down. The United States cooperated with anti-Bolshevik forces: by mid 1918, President Woodrow Wilson had sent 13,000 American troops to Soviet soil. They would remain there for two years, killing and injuring thousands. Russian Premier Nikita Khrushchev would later remind America of "the time you sent your troops to quell the revolution." Churchill would record for history the admission that the West "shot Soviet Russians on sight," that they were "invaders on Russian soil," that "[t]hey armed the enemies of the Soviet government," that "[t]hey blockaded its ports, and sunk its battleships. They earnestly desired and schemed for its downfall."

When the cause was lost, and the Bolsheviks secured power, most western countries refused to recognize the communist government. However, realism prevailed, and within a few short years, by the mid 1920s, most countries had recognized the communist government and restored diplomatic relations. All but the US It was not until several years later that Franklin D. Roosevelt finally recognized the Soviet government in 1933.

The Cold War

It would be a very short time before the diplomatic relations that followed the hot war would be followed by a cold war. It might even be possible to pin the beginning of the cold war down to a specific date. On April 22 and 23, President Truman told Soviet foreign minister Vyacheslav Molotov to "Carry out his agreement" and establish a new, free, independent government in Poland as promised at Yalta. Molotov was stunned. He was stunned because it was not he that was breaking the agreement because that was not what Roosevelt, Churchill and Stalin had agreed to at Yalta. The final wording of the Yalta agreement never mentioned replacing Soviet control of Poland.

The agreement that Roosevelt revealed to congress and shared with the world – the one that still dominates the textbook accounts and the media stories – is not the one he secretly shook on with Stalin. Roosevelt lied to congress and the American people. Then he lied to Stalin.

In exchange for Soviet support for the creation of the United Nations, Roosevelt secretly agreed to Soviet predominance in Poland and Eastern Europe. The cold war story that the Soviet Union marched into Eastern Europe and stole it for itself is a lie: Roosevelt handed it to them.

So did Churchill. If Roosevelt’s motivation was getting the UN, Churchill’s was getting Greece. Fearing that the Soviet Union would invade India and the oil fields of Iran, Churchill saw Greece as the geographical roadblock and determined to hold on to it at all cost. The cost, it turned out, was Romania. Churchill would give Stalin Romania to protect his borders; Stalin would give Churchill Greece to protect his empire’s borders. The deal was sealed on October 9, 1944.

Churchill says that in their secret meeting, he asked Stalin, “how would it do for you to have ninety percent predominance in Romania, for us to have ninety percent predominance in Greece? . . ." He then went on to offer a fifty-fifty power split in in Yugoslavia and Hungary and to offer the Soviets seventy-five percent control of Bulgaria. The exact conversation may never have happened, according to the political record, but Churchill’s account captures the spirit and certainly captures the secret agreement.

Contrary to the official narrative, Stalin never betrayed the west and stole Eastern Europe: Poland, Romania and the rest were given to him in secret. Then Roosevelt lied to congress and to the world.

That American lie raised the curtain on the cold war.

The New Cold War

Like the Cold War, the new cold war was triggered by an American lie. It was a lie so duplicitous, so all encompassing, that it would lead many Russians to see the agreement that ended the cold war as a devastating and humiliating deception that was really intended to clear the way for the US to surround and finally defeat the Soviet Union. It was a lie that tilled the soil for all future "Russian aggression."

At the close of the cold war, at a meeting held on February 9, 1990, George H.W. Bush’s Secretary of State, James Baker, promised Gorbachev that if NATO got Germany and Russia pulled its troops out of East Germany, NATO would not expand east of Germany and engulf the former Soviet states. Gorbachev records in his memoirs that he agreed to Baker’s terms "with the guarantee that NATO jurisdiction or troops would not extend east of the current line." In Super-power Illusions, Jack F. Matlock Jr., who was the American ambassador to Russia at the time and was present at the meeting, confirms Gorbachev’s account, saying that it "coincides with my notes of the conversation except that mine indicate that Baker added "not one inch." Matlock adds that Gorbachev was assured that NATO would not move into Eastern Europe as the Warsaw Pact moved out, that "the understanding at Malta [was] that the United States would not ‘take advantage’ of a Soviet military withdrawal from Eastern Europe." At the February 9 meeting, Baker assured Gorbachev that "neither the President or I intend to extract any unilateral advantages from the processes that are taking place."

But the promise was not made just once, and it was not made just by the United States. The promise was made on two consecutive days: first by the Americans and then by West German Chancellor Helmut Kohl. According to West German foreign ministry documents, on February 10, 1990, the day after James Baker’s promise, West German Foreign Minister Hans-Dietrich Genscher told his Soviet counterpart Eduard Shevardnadze "‘For us . . . one thing is certain: NATO will not expand to the east.’ And because the conversation revolved mainly around East Germany, Genscher added explicitly: ‘As far as the non-expansion of NATO is concerned, this also applies in general.’"

A few days earlier, on January 31, 1990, Genscher had said in a major speech that there would not be "an expansion of NATO territory to the east, in other words, closer to the borders of the Soviet Union."

Gorbachev says the promise was made not to expand NATO "as much as a thumb’s width further to the east." Putin also says mourns the broken promise, asking at a conference in Munich in February 2007, "What happened to the assurances our Western partners made after the dissolution of the Warsaw Pact? Where are those declarations today? No one even remembers them."

Putin went on to remind his audience of the assurances by pointing out that the existence of the NATO promise is not just the perception of him and Gorbachev. It was also the view of the NATO General Secretary at the time: "But I will allow myself to remind this audience what was said. I would like to quote the speech of NATO General Secretary Mr. [Manfred] Woerner in Brussels on 17 May 1990. He said at the time that: ‘The fact that we are ready not to place a NATO army outside of German territory gives the Soviet Union a firm security guarantee.’ Where are those guarantees?"

Recent scholarship supports the Russian version of the story. Russian expert and Professor of Russian and European Politics at the University of Kent, Richard Sakwa says that “[r]ecent studies demonstrate that the commitment not to enlarge NATO covered the whole former Soviet bloc and not just East Germany.” And Stephen Cohen, Professor Emeritus of Politics at Princeton University and of Russian Studies and History at New York University, adds that the National Security Archive has now published the actual documents detailing what Gorbachev was promised. Published on December 12, 2017, the documents finally, and authoritatively, reveal that "The truth, and the promises broken, are much more expansive than previously known: all of the Western powers involved – the US, the UK, France, Germany itself – made the same promise to Gorbachev on multiple occasions and in various emphatic ways."

That key promise made to Gorbachev was shattered, first by President Clinton and then subsequently supported by every American President: NATO engulfed Poland, Hungary and the Czech Republic in 1999; Estonia, Latvia, Lithuania, Bulgaria, Romania, Slovakia and Slovenia in 2004, Albania and Croatia in 2009 and, most recently, Montenegro.

It was this shattered promise, this primal betrayal, this NATO expansion to Russia’s borders that created the conditions and causes of future conflicts and aggressions. When, in 2008, NATO promised Georgia and Ukraine eventual membership, Russia saw the threat of NATO encroaching right to its borders. It is in Georgia and Ukraine that Russia felt it had to draw the line with NATO encroachment into its core sphere of influence. Sakwa says that the war in Georgia was “the first war to stop NATO enlargement; Ukraine was the second.” What are often cited as acts of Russian aggression that helped maintain the new cold war are properly understood as acts of Russian defense against US aggression that made a lie out of the promise that ended the Cold War.

When Clinton decided to break Bush’s promise and betray Russia, George Kennen, father of the containment policy, warned that NATO expansion would be "the most fateful error of American foreign policy in the entire post-cold-war era." "Such a decision," he prophesied, "may be expected to . . . restore the atmosphere of the cold war in East-West relations . . .."

The broken promise restored the cold war. Though it is the most significant root of the new cold war, it was not the first. There was a prior broken promise, and this time the man who betrayed Russia was President H.W. Bush.

The end of the Cold War resulted from negotiations and not from any sort of military victory. Stephen Cohen says that "Presidents Reagan and George H.W. Bush negotiated with the last Soviet Russian leader, Mikhail Gorbachev, what they said was the end of the Cold War on the shared, expressed premise that it was ending ‘with no losers, only winners.’"

The end of the Cold War and the end of the Soviet Union occurred so closely chronologically that it permitted the American mythologizers to conflate them in the public imagination and create the doctrinal history in which the US defeat of the Soviet Union ended the cold war. But the US did not defeat the Soviet Union. Gorbachev brought about what Sakwa calls a "self-willed disintegration of the Soviet bloc." The Soviet Union came to an end, not by external force or pressure, but out of Gorbachev’s recognition of the Soviet Union’s own self interest. Matlock flatly states that "pressure from governments outside the Soviet Union, whether from America or Europe or anywhere else, had nothing to do with [the Soviet collapse]." "Cohen demythologizes the history by reinstating the chronological order: Gorbachev negotiated the end of the cold war “well before the disintegration of the Soviet Union.” The Cold War officially ended well before the end of the Soviet Union with Gorbachev’s December 7, 1988 address to the UN

Matlock says that "Gorbachev is right when he says that we all won the Cold War." He says that President Reagan would write in his notes, "Let there be no talk of winners and losers." When Gorbachev compelled the countries of the Warsaw Pact to adopt reforms like his perestroika in the Soviet Union and warmed them that the Soviet army would no longer be there to keep their communist regimes in power, Matlock points out in Superpower Illusions that "Bush assured Gorbachev that the United States would not claim victory if the Eastern Europeans were allowed to replace the Communist regimes that had been imposed on them." Both the reality and the promise were that there was no winner of the Cold War: it was a negotiated peace that was in the interest of both countries.

When in 1992, during his losing re-election campaign, President Bush arrogantly boasted that "We won the Cold War!" he broke his own promise to Gorbachev and helped plant the roots of the new cold war. "In psychological and political terms," Matlock says, "President Bush planted a landmine under the future U.S.-Russian relationship" when he broke his promise and made that claim.

Bush’s broken promise had two significant effects. Psychologically, it created the appearance in the Russian psyche that Gorbachev had been tricked by America: it eroded trust in America and in the new peace. Politically, it created in the American psyche the false idea that Russia was a defeated country whose sphere of interest did not need to be considered. Both these perceptions contributed to the new cold war.

Not only was the broken promise of NATO expansion not the first broken American promise, it was also not the last. In 1997, when President Clinton made the decision to expand NATO much more than an inch to the east, he at least signed the Russia-NATO Founding Act, which explicitly promised that as NATO expanded east, there would be no "permanent stationing of substantial combat forces." This obliterated American promise planted the third root of the new cold war.

Since that third promise, NATO has, in the words of Stephen Cohen, built up its "permanent land, sea and air power near Russian territory, along with missile-defense installations." US and NATO weapons and troops have butted right up against Russia’s borders, while anti-missile installations have surrounded it, leading to the feeling of betrayal in Russia and the fear of aggression. Among the earliest moves of the Trump administration were the moving of NATO troops into Lithuania, Romania, Bulgaria and nearby Norway.

Mikhail Gorbachev, who offered the West Russia and cooperation in place of the Soviet Union and Cold War, was rewarded with lies, broken promises and betrayal. That was the sowing of the first seeds of the new cold war. The second planting happened during the Yeltsin years that followed. During this stage, the Russian people were betrayed because their hopes for democracy and for an economic system compatible with the West were both destroyed by American intervention.

The goal, Matlock too gently explains, "had to be a shift of the bulk of the economy to private ownership." What transpired was what Naomi Klein called in The Shock Doctrine "one of the greatest crimes committed against a democracy in modern history." The States allowed no gradual transition. Matlock says the "Western experts advised a clean break with the past and a transition to private ownership without delay." But there was no legitimate private capital coming out of the communist system, so there was no private money with which to privatize. So, there was only one place for the money to come. As Matlock explains, the urgent transition allowed "privileged insiders[to] join the criminals who had been running a black market [and to] steal what they could, as fast as they could." The sudden, uncompromising transition imposed on Russia by the United States enabled, according to Cohen, "a small group of Kremlin-connected oligarchs to plunder Russia’s richest assets and abet the plunging of some two-thirds of its people into poverty and misery."

The rape of Russia was funded, overseen and ordered by the United States and handed over by President George H.W. Bush to the International Monetary Fund and the World Bank. Much of their advice, Matlock says generously, "was not only useless, but sometimes actually damaging."

Sometimes damaging? In the first year, millions lost their entire life savings. Subsidy cuts meant that many Russians didn’t get paid at all. Klein says that by 1992, Russians were consuming 40% less than they were the year before, and one third of them had suddenly sunk below the poverty line. The economic policies wrestled onto Russia by the US and the transition experts and international development experts it funded and sent over led to, what Cohen calls, "the near ruination of Russia." Russia’s reward for ending the Cold War and joining the Western economic community was, in Cohen’s words, "the worst economic depression in peacetime, the disintegration of the highly professionalized Soviet middle class, mass poverty, plunging life expectancy [for men, it had fallen below sixty], the fostering of an oligarchic financial elite, the plundering of Russia’s wealth, and more." By the time Putin came to power in 2000, Cohen says, "some 75% of Russians were living in poverty." 75%! Millions and millions of Russian lives were destroyed by the American welcoming of Russia into the global economic community.

But before Putin came to power, there was more Boris Yeltsin. Yeltsin was a necessity for Clinton and the United States because Yeltsin was the pliable puppet who would continue to enforce the cruel economic transition. But to continue the interference in, and betrayal of, the Russian people economically, it would now be necessary to interfere in and betray the Russian democracy.

In late 1991, after the fall of the Soviet Union, Boris Yeltsin won a year of special powers from the Russian Parliament: for one year, he was to be, in effect, the dictator of Russia to facilitate the midwifery of the birth of a democratic Russia. In March of 1992, under pressure from the, by now, impoverished, devastated and discontented population, parliament repealed the dictatorial powers it had granted him. Yeltsin responded by declaring a state of emergency, re-bestowing upon himself the repealed dictatorial powers. Russia’s Constitutional Court ruled that Yeltsin was acting outside the constitution. But the US sided – against the Russian people and against the Russian Constitutional Court – with Yeltsin.

Intoxicated with American support, Yeltsin dissolved the parliament that had rescinded his powers and abolished the constitution of which he was in violation. In a 636-2 vote, the Russian parliament impeached Yeltsin. But, President Clinton again sided with Yeltsin against the Russian people and the Russian law, backed him and gave him $2.5 billion in aid. Clinton was blocking the Russian people’s choice of leaders.

Yeltsin took the money and sent police officers and elite paratroopers to surround the parliament building. Clinton "praised the Russian President has (sic) having done ‘quite well’ in managing the standoff with the Russian Parliament," as The New York Times reported at the time. Clinton added that he thought "the United States and the free world ought to hang in there" with their support of Yeltsin against his people, their constitution and their courts, and judged Yeltsin to be "on the right side of history."

On the right side of history and armed with machine guns and tanks, in October 1993, Yeltsin’s troops opened fire on the crowd of protesters, killing about 100 people before setting the Russian parliament building on fire. By the time the day was over, Yeltsin’s troops had killed approximately 500 people and wounded nearly 1,000. Still, Clinton stood with Yeltsin. He provided ludicrous cover for Yeltsin’s massacre, claiming that "I don’t see that he had any choice…. If such a thing happened in the United States, you would have expected me to take tough action against it." Clinton’s Secretary of State, Warren Christopher, said that the US supported Yeltsin’s suspension of parliament in these "extraordinary times."

In 1996, elections were looming, and America’s hegemonic dreams still needed Yeltsin in power. But it wasn’t going to happen without help. Yeltsin’s popularity was nonexistent, and his approval rating was at about 6%. According to Cohen, Clinton’s interference in Russian politics, his "crusade" to "reform Russia," had by now become official policy. And so, America boldly interfered directly in Russian elections. Three American political consultants, receiving "direct assistance from Bill Clinton’s White House," secretly ran Yeltsin’s reelection campaign. As Time magazine broke the story, "For four months, a group of American political consultants clandestinely participated in guiding Yeltsin’s campaign."

"Funded by the US government," Cohen reports, Americans "gave money to favored Russian politicians, instructed ministers, drafted legislation and presidential decrees, underwrote textbooks, and served at Yeltsin’s reelection headquarters in 1996."

More incriminating still is that Richard Dresner, one of the three American consultants, maintained a direct line to Clinton’s Chief Strategist, Dick Morris. According to reporting by Sean Guillory, in his book, Behind the Oval Office, Morris says that, with Clinton’s approval, he received weekly briefings from Dresner that he would give to Clinton. Based on those briefings, Clinton would then provide recommendations to Dresner through Morris.

Then ambassador to Russia, Thomas Pickering, even pressured an opposing candidate to drop out of the election to improve Yeltsin’s odds of winning.

The US not only helped run Yeltsin’s campaign, they helped pay for it. The US backed a $10.2 billion International Monetary Fund (IMF) loan for Russia, the second-biggest loan the IMF had ever given. The New York Times reported that the loan was "expected to be helpful to President Boris N. Yeltsin in the presidential election in June." The Times explained that the loan was "a vote of confidence" for Yeltsin who "has been lagging well behind … in opinion polls" and added that the US Treasury Secretary "welcomed the fund’s decision."

Yeltsin won the election by 13%, and Time magazine’s cover declared: "Yanks to the rescue: The secret story of how American advisers helped Yeltsin win". Cohen reports that the US ambassador to Russia boasted that "without our leadership … we would see a considerably different Russia today." That’s a confession of election interference.

Asserting its right as the unipolar victor of a Cold War it never won, betraying the central promise of the negotiated end of the cold war by engulfing Russia’s neighbors, arming those nations against its written and signed word and stealing all Russian hope in capitalism and democracy by kidnapping and torturing Russian capitalism and democracy, the roots of the new cold war were not planted by Russian lies and aggression, as the doctrinal Western version teaches, but by the American lies and aggression that the fact checked, demythologized version of history reveals.

Tyler Durden Thu, 09/12/2019 - 02:00
Published:9/12/2019 1:06:39 AM
[Markets] Afghanistan Is Both Stalemate And Quagmire Afghanistan Is Both Stalemate And Quagmire

Authored by Danny Sjursen via,

When they saw Afghanistan, all they could think of was Iraq. Indeed, most military thinkers are perennially driven by the tunnel-vision of personal experience; rarely a good thing. Indeed, the generals and colonels managing the foolish, politically driven 2009-12 Obama "surge" into Afghanistan – what he’d absurdly labeled the "good war" – had few fresh ideas. Convinced, and feeling vindicated, by the myth that Baby Bush’s 2007-09 Iraq surge had "worked," most commanders knew just what to do and sought to replicate these tactics in the utterly dissimilar war in Afghanistan. That meant the temporary infusion of some 30,000 extra troops, walling off warring neighborhoods, and plopping small American units among the populace.

Some of us, mostly captains who’d cut our teeth in the worst days of the Iraq maelstrom, were skeptical from the start. I, for one, had long sensed that the "gains" of that surge were highly temporary, that the U.S. military had simply bought the fleeting loyalty of Sunni insurgents, and that the whole point of the surge – to allow a political settlement between warring sects and ethnicities – had never occurred. The later rise of ISIS, breakdown of centralized governance, and rout of the U.S.-trained Iraqi Army in 2013-14 would prove my point. But that was in the future. From my viewpoint, the legacy of surge 1.0 had really only been another 1,000 or so American troop deaths – including three of my own men – and who knows how many Iraqi casualties.

Then again, no one cared what one lowly, if dreamy yet cynical, officer thought anyway. I was a tool, a pawn, a middle-managing "company man" expected to carry out surge 2.0 with discipline and enthusiasm. And so I tried. My team of cavalry scouts raised a dubiously loyal local militia, partnered with the often drug-addicted, criminal Afghan Army and police, and parsed out my squads to live within the local villages semi-permanently. That’s when things got weird.

Impressed by the minor, momentary drop in violence – such deceptive stats were a way of life in the US Army – these early measures had allegedly produced, both my squadron commander, and his boss, the brigade commander, suddenly took interest in my troop. Now they wanted to expand on what we were doing and toss in their own misguided two cents. What was needed, my colonel informed me, was to wall off the nearest contested village – Charcusa – with tall concrete "T-walls." That way, so his twisted logic went, the Taliban couldn’t get in. See, for him, a complex war was that simple. In an oddly prescient foreshadowing of his future commander-in-chief, Donald Trump’s, border tactics, my squadron commander never saw a problem a section of wall couldn’t solve.

Now, once again, it was my turn to attempt to pour a dose of reason all over his best laid plans. This rarely ended well. Thus, I explained that surrounding the small agricultural village with concrete barriers would separate farmers from their fields, and thus their livelihood. Besides, even if we created a few guarded exits to the fields, the T-walls would seal off the many canals the villagers used for drinking and irrigation, essentially drying out the whole joint. Oh, and the Taliban could climb, I reminded him. The Taliban were probably already in the village, related to the villagers, and didn’t wear uniforms or big Ts on their foreheads. The aesthetic nightmare of walling off a village would alienate the people and cause psychologically deep reactions of insecurity combined with resentment of us Americans. I tried, well, every single argument I could muster.

Mister "lower-caters-to-higher” was far from pleased. See, the real brainchild of the Charcusa concrete bonanza was actually the brigade commander, and my lowly unit certainly couldn’t defy his wishes. Heck, my squadron commander’s own evaluation and career progression might be on the line. Weighed against that, what did tactical commonsense or the livelihood of meaningless Afghans matter? The brigade commander had himself been a battalion commander in Western Baghdad during surge 1.0, where he and others, gleefully walled off the area neighborhoods and divided conflicting Muslim sects. It "worked" in urban Baghdad, so why not rural, no electrical grid, religiously homogenous, Southern Afghanistan? There it was again: a colonel who saw an Afghan problem and reflexively sought to apply an uncreative Iraqi solution.

Well, after weeks of wrangling, and certainly another blight on my leadership reputation with the squadron commander, my irrigation ditch argument won out with the more practical elements on the brigade staff…sort of. There’d be no concrete barriers, the commander reluctantly conceded, but we just had to "throw a bone" to the brigade commander’s Baghdad-based vision. The solution: I was ordered to surround the village after all, only with thousands of strands of menacing, ugly, triple strand concertina (barbed) wire. I wasn’t going to stop this one, and hardly bothered.

For days on end my weary troopers turned the village of Charcusa into what discomfiting resembled a concentration camp. Not that it worked, or mattered. The results produced amounted to little more than the few hundred cuts on my soldiers’ hands. Within a couple years my unit was gone, and so were our successors. Today, most of Kandahar is again contested by the Taliban, the rusting barbed wire naught but a monument to American obtusity. Still, it pleased both of my bosses, one off which told me I’d done a "great" job with the concertina wire mission, a macabre gold star of sorts for my own impending evaluation.

So today, on that wars rolls in an ongoing combination of stalemate and quagmire. Just this week, another American soldier was killed by a suicide car bomb. His death, ultimately, changes nothing as the Afghan War now has a preposterous inertia all its own. As for my colonel, he got the next promotion and his own brigade. His boss, the king of concrete himself, well he’s a rising star and a prominent general officer today. Now that President Trump has foolishly called off seemingly promising peace talks with the Taliban, maybe my old brigade commander will lead the next phase of an Afghan War with no end in sight. If he does, expect more of the same. He’ll have his troops and their Afghan mentees needlessly walling off more tiny villages in no time…

*  *  *

Series note: It has taken me years to tell these stories. The emotional and moral wounds of the Afghan War have just felt too recent, too raw. After all, I could hardly write a thing down about my Iraq War experience for nearly ten years, when, by accident, I churned out a book on the subject. Now, as the American war in Afghanistan – hopefully – winds to something approaching a close, it’s finally time to impart some tales of the madness. In this new, recurring, semi-regular series, the reader won’t find many worn out sagas of heroism, brotherhood, and love of country. Not that this author doesn’t have such stories, of course. But one can find those sorts of tales in countless books and numerous trite, platitudinal Hollywood yarns.

With that in mind, I propose to tell a number of very different sorts of stories – profiles, so to speak, in absurdity. That’s what war is, at root, an exercise in absurdity, and America’s hopeless post-9/11 wars are stranger than most. My own 18-year long quest to find some meaning in all the combat, to protect my troops from danger, push back against the madness, and dissent from within the army proved Kafkaesque in the extreme. Consider what follows just a survey of that hopeless journey...

*  *  *

Danny Sjursen is a retired US Army officer and regular contributor to His work has appeared in the LA Times, The Nation, Huff Post, The Hill, Salon, Truthdig, Tom Dispatch, among other publications. He served combat tours with reconnaissance units in Iraq and Afghanistan and later taught history at his alma mater, West Point. He is the author of a memoir and critical analysis of the Iraq War, Ghostriders of Baghdad: Soldiers, Civilians, and the Myth of the Surge. Follow him on Twitter at @SkepticalVet.

Tyler Durden Wed, 09/11/2019 - 23:25
Published:9/11/2019 10:36:18 PM
[Markets] Is Orwell's Ministry Of Truth Alive? Why Don't We Hear Much About Julian Assange? Is Orwell's Ministry Of Truth Alive? Why Don't We Hear Much About Julian Assange?

Authored by Michelle Wood via,

In Orwell’s dystopian fiction 1984, the government’s mission through the Ministry of Truth is to supply its people with news, entertainment, books, films, plays and songs, packed with the information it wants the people to know. It constructs lies to fit the narrative it wishes to establish and sets about rewriting historical documents so they match the constantly changing current party line.

Have we slept walked our way into 1984 with the curious witchhunt of Julian Assange?

From the time Wikileaks published Collateral Murder in 2010, exposing the slaying of Iraqi civilians at the hands of merciless US Apache soldiers, in what became the biggest news story of its time, the United States has wanted Julian Assange silenced and forgotten.

He has lived in a state of confinement since May 2010 when he was arrested and jailed in the United Kingdom, lived under house arrest for a further 18 months in England and then sought political asylum in the Ecuadorian embassy from June 2012 .Yet many people think Assange was in a position where he could simply walk free.

Has there been a well crafted smear campaign to dehumanise Assange and coax the public into forgetting him? How else could he have been detained within two tiny rooms devoid of sunlight for more than six years without public commentary and concern? The apparent dismantling of Assange’s character and disinformation has been thorough. Most people do not know the specifics of his case, but “believe” he is an arrogant rapist and an ungrateful, badly behaved houseguest, smearing faeces on the embassy walls and being cruel to his cat. These disputed claims are now so well accepted it’s inconceivable that they could actually be lies.

The one surety about Assange was that he did publish secret State documents and videos. Embarrassing yes, but surely not indictable in a country that protects freedom of speech in its constitution. Never mind the fact that Assange is an Australian citizen, but far from protecting him against being tried for espionage in America, the Morrison government’s public statements have been limited to assurances that he is being treated like any other citizen with ongoing consular assistance.

Are we being served by our “free media’ in its reportage of the Wikileaks expose and the subsequent treatment of Julian Assange?

Instead of seeing the 2016/17 Democratic National Committee (DNC) email leaks as important data on presidential candidate Hillary Clinton, the prevailing narrative by the mainstream media was that Wikileaks’ handed the presidency to Donald Trump. Although the voter count showed Clinton had the majority by just over 3M votes and that Trump’s win had more to do with the American Electoral College system, the focus remained on the now debunked “Russiagate.”

Julian Assange before his internet was taken away in 2018

In March 2018, the Ecuadorian government imposed new conditions on Assange, removing all forms of communication and restricting his social visits. He was then unable to do any further work with Wikileaks and had limited connection with the outside world. His silencing was almost complete.

In April this year, Ecuador’s illegal breach of Assange’s asylum followed with his immediate arrest by UK police and a 50 week sentence in a maximum security prison for breaching bail. News organisations had been alerted to Assange’s imminent arrest by Wikileaks press releases but these were ignored. Ironically the images of the world’s “most dangerous man” being hauled from the embassy were supplied by only one agency, Ruptly, a branch of Russia Today. Without this footage how might this story have been reported?

It appears the news media is choosing not to report much of Assange’s ongoing plight. Strange, given he was once feted for his courage and innovation, winning the Sydney Peace Prize and one of Australian journalism’s coveted Walkley awards. The case against Assange concerns the criminalisation of journalism at a time when media organisations in his own country are under siege. Federal Police raided the Australian Broadcasting Corporation in June for reporting alleged warcrimes by Australian forces in Afghanistan. This followed search warrants being executed at the home of Murdoch media journalist Annika Smethhurst over a leaked plan to allow government spying on its citizens. The coverage included detailed reporting of detectives rifling through her underwear drawer.

Contrast this with the lack of reportage on some important aspects of the Assange case.

In May, the United Nations Special Rapporteur on Torture Nils Melzer visited Assange in Belmarsh Prison producing a damning report which was widely circulated, but surprisingly had little impact.

“It was obvious that Mr. Assange’s health has been seriously affected by the extremely hostile and arbitrary environment he has been exposed to for many years. Most importantly, in addition to physical ailments, Mr Assange showed all symptoms typical for prolonged exposure to psychological torture, including extreme stress, chronic anxiety and intense psychological trauma.

Mr Melzer’s report included this extraordinary claim:

“In 20 years of work with victims of war, violence and political persecution I have never seen a group of democratic States ganging up to deliberately isolate, demonise and abuse a single individual for such a long time and with so little regard for human dignity and the rule of law. The collective persecution of Julian Assange must end here and now!”

How could such a grave statement not have triggered further investigation and commentary other than by independent journalists? Melzer’s horrific diagnosis involves the life of a western journalist going to a western jail for doing his job.

UN Rapporteur on Torture Nils Melzer discussing Julian Assange

In July 2019 US Federal District Judge John Koeltl dismissed a DNC lawsuit against Wikileaks, emphasizing the “newsworthiness” of Wikileaks publishing activities describing them as “plainly of the type entitled to the strongest protection that the First Amendment offers.”

“If WikiLeaks could be held liable for publishing documents concerning the DNC’s political financial and voter-engagement strategies simply because the DNC labels them ‘secret’ and trade secrets, then so could any newspaper or other media outlet,” — Judge Koeltl

Even today an online search of reportage of this Federal court judgement appears to show an absence by Australia’s main media outlets such as the ABC, Nine news media and News Corporation. Would it influence the public perception of Julian Assange if more knew a US Judge considered his work to be worthy?

Recently multi-awarding winning journalist Mark Davis gave an eyewitness account refuting claims Assange was reckless and that he carelessly dumped documents endangering the lives of many. Instead he reported the Wikileaks founder took great care to redact and protect innocent people named in the trove of documents released as part of the Afghan war logs. Davis said he considered Assange acted with journalistic integrity.

Mark Davis via @CNLive

Where was the mainstream reportage of the Davis testimony? Social media posts of articles by independent journalists appear to be the most reliable way to keep up with the unfolding Assange story. These are primarily shared within circles of advocates and independent media which limits their reach and sometimes creates questions about their accuracy.

This means the majority of people wont know how shocked veteran Australian journalist John Pilger was after seeing Assange in prison last month. They wont know his health is said to be deteriorating while confined to his single cell for almost 21 hours a day. Nor will they know that he gets just two social visits a month and is denied the opportunity to prepare with his US lawyers for his upcoming extradition trial.

John Pilger joined with musician Roger Waters to organise a rally this week in London to honour their friend, calling for the UK government to resist the US extradition request.

About 1000 people gathered in front of the Home Office to listen to an emotional Waters sing his hit song “Wish You Were Here”. Just as Julian Assange couldn’t hear the tribute from his cell at nearby Belmarsh, the majority of people did not hear of this public event.

The general public will likely miss the plea by Gabriel Shipton, Assange’s younger brother, who read a letter at the rally that he’d written to Australian Prime Minister Scott Morrison. His concerns about his brother’s welfare and the PM’s silence, have largely gone unnoticed by mainstream media. More silencing? More forgetting?

Gabriel Shipton

On September 7 on Twitter, Julian Assange’s name was trending when people started sharing an interview with celebrity and activist Pamela Anderson.

Anderson appeared on the American ABC’s long running talk show The View. As she was talked over and drilled for information, the former Baywatch star kept her cool as she schooled her fellow panellists with facts about Assange’s case and countered their claims, calling them smear and lies.

Here was a story that combined celebrity and controversy, but it has barely received mention in the Australian press?

At a recent press freedom conference in England, Special Envoy for Media Freedom, Amal Clooney, spoke of the alarm felt by journalists around the world at the Assange US indictments which “criminalises common practices in journalism that have long served the public interest.” If this is true who are the concerned journalists and why aren’t we hearing from them?

Not only has the UK government silenced Assange in prison, but the last decade of his life appears to have been censored. Who is steering the narrative in a near vacuum of information and repeated disinformation? Is there are a modern day “Ministry of Truth” behind the ongoing media blackout of one of the most influential and controversial people of our times?

“Until they become conscious they will never rebel, and until after they rebelled they cannot become conscious” — George Orwell

Tyler Durden Wed, 09/11/2019 - 03:30
Published:9/11/2019 2:59:20 AM
[Markets] Thanks To Tech Totalitarians, US Already Has A China-Style "Social Credit System" Thanks To Tech Totalitarians, US Already Has A China-Style "Social Credit System"

Authored by James Kirkpatrick via,

While protesters in Hong Kong fly American flags and rip down security cameras, an even more insidious Chinese-style “social credit” system is solidifying in the United States [Hong Kong Protesters Wave U.S. Flags, Urge Trump to Take Actionby Owen Franks, Bloomberg, August 31, 2019]. The Trump Administration is considering an alliance with Big Tech to determine who is allowed to own guns [Power Up: White House ponders new proposal to identify links between mental health and violenceby Jacqueline Alemany, Washington Post, August 22, 2019]. The Main Stream Media wields more power than the state itself, blithely doxing private citizens it wants to destroy because of their political views. Finally, the mysterious purge (and equally mysterious re-establishment) of some Dissident Right YouTube accounts shows that political debate is being managed from the top-down. Every American can have his job, constitutional rights, and reputation destroyed by a power structure that is completely unaccountable–and it’s being imposed on us in the name of “freedom.”

Sadly, President Donald Trump seems oblivious to this attack. He’s failed to defend those who defended him. He instead filled his administration with enemies eager to smear him in tell-all books [John Kelly told Trump his memoir would wait unless attackedby Caitlin Yilek, Washington Examiner, September 4, 2019].

He’s now taking this self-defeating principle outside his administration. Though Google and other Big Tech companies will do everything they can to prevent his re-election, President Trump is mulling partnering with them to gather data on “risk factors” in order to prevent mass shootings. This reportedly includes using data from “Apple Watches, Fitbits, Amazon Echo, and Google Home” [White House considers new project seeking links between mental health and violent behaviorby Jacqueline Alemany, Washington Post, August 22, 2019].

Only the most naïve can believe that private data or recorded conversations won’t be weaponized against patriots. After all, an email, Facebook comment, or old tweet can already get you fired from your job–even a government job. Leif Olson’s rehiring may not have been a true victory against “cancel culture," but we shouldn’t lose sight of the casual cruelty that motivated the attack in the first place. Hurting people, rather than informing people, seems to be the only motivation of MSM journofa.

We’ll never know the story behind Jeffrey Epstein or what motivated the mass shooter in Las Vegas (remember that?). But journofa won’t rest until they’ve doxed every Gamestop employee and pizza deliveryman who went to Charlottesville!

Another example: “dozens” of Customs and Border Protection officers may lose employment or suffer lesser penalties after their comments in a private Facebook group were leaked [Customs and Border Protection moving to fire and discipline dozens of agents for Facebook postsby Anna Giaritelli, Washington Examiner, September 5, 2019]. An unnamed “senior CBP official” proclaims that this isn’t enough because they need to “change the culture” of the service.

But meanwhile, a recent video shows dozens of illegals casually walking around an incomplete border fence—just the latest example of the total collapse of border security [Video shows dozens of families walk illegally around border fence and into the United Statesby Simon Veazy, Epoch Times, September 2, 2019].

There has also been yet another attack against an immigration law enforcement facility, this time with a woman allegedly throwing a lit Molotov cocktail [Molotov cocktail toss in Florida is latest attack against DHS facility: reportby Danielle Wallace, Fox News, August 31, 2019].

It’s hard to imagine a more perfect example of anarcho-tyranny than a government incapable of protecting its own border or facilities but eager to punish those expected to accomplish an impossible mission.

Of course, there’s a rationale why speech must now be policed—to stop “radicalization.” The YouTube purge did not come out of nowhere. The MSM has been relentlessly campaigning against YouTube supposedly “radicalizing” people [YouTube recommendation algorithm audit uncovers paths to radicalizationby Khari Johnson, VentureBeat, August 28, 2019].

But what journofa really mean by “radicalized” is “voting in a way we don’t like.” This explains the strange American focus on Brazil and President Jair Bolsonaro [How YouTube Contributed to Radicalization in Brazilby Nancy LeTourneau, Washington Monthly, August 14, 2019].

The implicit premise, gradually becoming more explicitly voiced by journofa and tech oligarchs, is that only certain people should be permitted to speak. This is also why so many journalists responded like someone had committed lèse-majesté when President Trump’s allies began scrutinizing their social media accounts. They truly believe they should be beyond criticism and should oversee what we say, write, and hear.

What’s particularly terrible about this situation is how arbitrary and random it is. “Radicalization” is in the eye of the beholder. To an Obama voter in 2004, something like “Drag Queen Story Hour” would be a ridiculous fever dream from the Christian Coalition. Today, opposing it will get you labeled a bigot [Crowds rally for Drag Queen Story Hour: ‘It just shows how far we’ve come,’ by Marcella Corona, Reno Gazette-Journal, July 20, 2019]. If you oppose it too energetically, it might spark a hit piece and that’s your job.

Words and symbols can also be labeled “hateful” retroactively. A month ago, “kritarchy” was an objective term that referred to “rule by judges.” Today, it’s an anti-Semitic slur because journalists simply declared it so.

In Utah, an interracial couple who brought a Betsy Ross flag to a soccer game was threatened with ejection. The stadium management said the flag was a symbol of “hatred, divisiveness and/or intolerance, whether intentional or otherwise” [Controversy erupts over Betsy Ross flag at RSL soccer gameby Lauren Steinbrecher, Fox 13, August 29, 2019]. Yet nobody thought this until Colin Kaepernick declared it so because of its “connection to an era of slavery”–which, of course, could be said about anything related to the Founding.

The System’s arbitrary nature makes it even more dangerous. Already, websites have been stripped of payment processors or access to PayPal (VDARE among them) after attacks by journalists and “nonprofits” like the Southern Poverty Law Center and the Anti-Defamation League. The loss of a YouTube account can mean the end of a creator’s career. Some individuals have been banned from Airbnb or Uber or have lost their personal PayPal accounts, not because of any violation of terms of service, but because of an unknown ideological test. This is the equivalent of the gas company cutting off any California residents who voted for Proposition 187.

Don’t laugh—it’s coming.

You just don’t know what will be decreed offensive–or for that matter, beyond criticism–a year from now. You don’t know if your YouTube account will be banned or not because the terms of service are meaningless. If you lose your PayPal, your bank account, your web domain, or some other necessity, there’s no appeal and there’s no objective standard.

The cuckservative cop-out “Build your own platform” has turned into “build your own web hosting,” “build your own servers,” and “build your own banking system.”

Will this end with “build your own country”?

The obvious implication: if dangerous individuals must be depersoned and “radicalizing” videos banned, ordinary people cannot be trusted with political power either. They shouldn’t be allowed to vote because they’re too easily manipulated. It would be more honest to simply let the corporate heads of Facebook, Google, and Twitter pick the next president (with the heads of the SPLC and the ADL given power to veto).

Yet that would make what’s happening too obvious. The ritual of voting gives the System the veneer of legitimacy–even though, as Ann Coulter points out, what we vote for bears no resemblance to the policies we actually get.

“Authoritarian” political systems have one key virtue compared the American system: They don’t disguise who has control. We know that Vladimir Putin in Russia and Xi Jinping in China are, if not fully sovereign, at least operating at the nexus of political power.

In contrast, President Trump does not seem to run his own administration, let alone the country. Instead, the power to shape opinion, to make and end careers, and to command who is and isn’t accountable to the law lies in the hands of tech oligarchs, far-left journalists, and wealthy “nonprofits.” It is effective precisely because it eschews the symbols of power for the reality. Its tyranny is even more insidious for that reason.

I’m tired of hearing warnings about Silicon Valley’s upcoming Social Credit system. [Uh-oh: Silicon Valley is building a Chinese-style social credit system, by Mike Elgan, FastCompany, August 26, 2019] I’m already living under it.

It’s almost enough to make one wish for a Politburo. At least the people in Hong Kong know what to tear down.

Tyler Durden Tue, 09/10/2019 - 18:25
Published:9/10/2019 5:36:05 PM
[Entertainment] A beautiful lesson in empathy other best books for children and young adults this month New books by Sydney Smith, Mike Unwin, Sy Montgomery and Stacey Lee. Published:9/10/2019 7:23:59 AM
[Markets] Shades Of 2007: Subprime Auto Lender Verified Income On Only 3% Of Loans In Latest Bond Shades Of 2007: Subprime Auto Lender Verified Income On Only 3% Of Loans In Latest Bond

The US subprime auto industry is doing everything in its power to recreate another 2008 crisis. After all, it takes a (Potemkin) village.

One of the largest subprime auto finance companies, Santander Consumer USA Holdings, verified the income on less than 3% of borrowers this year, according to Bloomberg.  And in painfully vivid shares of 2008, it then took those loans and bundled them into more than $1 billion in bonds sold this year. 

This laughable number which was taken straight from the Countrywide playbook ("If they can fog a mirror, we'll give 'em a loan") was down from 17% for loans for various asset-backed securities issued as recently as 2017. For comparison, GM Financial's AmeriCredit, another major ABS issuer, verified income on about 68% of loans for a deal it priced in June and 66% of loans that it priced for a deal in March, according to Bloomberg. 

And no, you didn't read that wrong: according to Moody's - which this time has no intention of getting blamed for the bursting of the biggest asset bubble in history - Santander's ABS priced in June had 2.6% of loans verified for income and the one priced prior to that had 3.2% checked. 

Another transaction being marketed by Santander will also be in the 3% range "or possibly lower", said Moody's analysts. Borrowers involved in the bond that Santander is currently marketing have an average FICO score of 581 and are paying an average annual interest rate of 18.9%. 

What can possibly go wrong? Oh wait, everything, because as Bloomberg notes, these ridiculously lax underwriting standards is why expected losses on Santander subprime auto bonds are higher than bonds from its peers, Moody's analyst Nicky Dang said. Moody’s expects average losses up to 17% for loans underlying the bonds from Santander’s typical subprime series of transactions, although it forecasts losses of 24% for the deal currently marketing, which is from a deeper subprime series. In comparison, expected losses for comparable peers are roughly half, and stand at about 10% for similar subprime auto ABS from GM Financial.

The decline in Santander's income verification levels suggest the obvious that there is a higher chance of borrowers having weaker credit profiles than they have stated."

Santander didn't comment, but instead pointed to information on its earnings calls stating that the percentage of income verification has decline as the company is working to refine its processes of screening high risk dealers and borrowers from its securitizations. Meanwhile, we guess that just means give up on income verification altogether?

Santander also claims that the "performance of those transactions has been consistent or better than the historical deals that had a higher percentage of income-verified loans." We'll check back in on this statement in 12 months, although at the rapid surge in 90+ day delinquent auto loans, we doubt we will have to wait nearly that long.

Meanwhile, ratings firms have demanded higher levels of credit protection in deals over recent years to mitigate increasing delinquencies in underlying loans, although judging by Santander's actions, they did not get them.

Moody’s Dang said: "Income verification is only one part of the entire underwriting process for the loans. It’s only one factor that is baked into the historical deal performance we’ve seen, which has generally been consistent and stable."

Then again, considering that one of the biggest subprime auto lenders barely bothers with any income verification we won't be holding our breath to find out just how much more thorough it has been with the remainder of underwriting process checklists. On the other hands, those who naively hold their money at Santander, may want to consider doing just that as their funds now appear to be collaterlized by billions in worthless subprime auto bonds.

Tyler Durden Tue, 09/10/2019 - 04:15
Published:9/10/2019 3:29:45 AM
[Markets] The Secret History Of The Monopolization Of Welfare By The State The Secret History Of The Monopolization Of Welfare By The State

Authored by Richard Ebeling via The American Institute for Economic Research,

The fundamental political issue always confronting society is whether human relationships shall be based on free association and voluntary choice, or on governmental compulsion and command. Of course, in most societies there are elements of both, often called the interventionist state or the “mixed economy.” But, nonetheless, the basic institutional alternatives are liberty or coercion. 

This often seems difficult for people to fully appreciate or understand. We select where we live, we accept or not accept a job offering, we decide on the furniture in our home and what (if anything) we will read in terms of books or magazines, or to watch on television. We pick our friends and choose the clubs and associations we want to join. A thousand other everyday choices and decisions reflect our freedom in still much of what we do. 

Political Interference in Market Affairs

Yet, at the same time, we take for granted many aspects and facets of our lives where such decision-making is narrowed or co-opted for us by those in political authority. We are compelled to pay into the government pension system called Social Security; we are taxed to pay for types and degrees of medical and health care that we may or may not desire or consider worth what the government garnishes from our salaries to pay for it before we even see a penny of our earned incomes. 

The government regulates how business is done, under what terms and conditions an employer may hire a worker, what products may be produced and with what qualities, features and characteristics, and sometimes the price at which the good or service may be sold. 

These, too, are taken for granted and presumed to be the appropriate and necessary tasks of government in modern society. Indeed, in many if not most instances, the majority of Americans and the citizens of other countries, as well, don’t or rarely think twice about these roles for the political authority in our daily affairs. In fact, when they are challenged, a good number of people are shocked that it should be even questioned. 

Yet, all these government activities inescapably reduce and restrict our free choices. Think of medical and health care. Increasingly government prevents people from deciding on the health insurance and medical treatment they may receive or purchase on their own. Practically all of the candidates vying for the Democratic Party presidential nomination have said they want to see implemented some form of a “single-payer” system, which, in reality, is socialized medicine under which government centrally plans all medical matters for everyone in society. 

What Of Politically Mandated Euthanasia? 

When friends of freedom raise serious questions about this, including government being handed control over life and death decisions for all of us, in terms of type and duration of medical treatment, they are often scoffed at. Yet, this danger has been warned about for more than a century. In 1916, in the midst of the First World War, a fairly well known British lawyer and classical liberal, E. S. P. Haynes (1877-1949), published a book called The Decline of Liberty in England. He explained how the British government had been encroaching on people’s personal, social and economic freedom in Great Britain for nearly 40 years, and the wartime emergency had merely exacerbated this trend. He wondered how much of all this could or might be reversed once the war was over. 

Haynes reprinted as an appendix a brief article that had appeared in a magazine called, The Free Woman, shortly before the publication of his own book in 1916. The article was on, “Home Life in A.D 2000.” It tells the tale of an old and ill gentleman in the far off future year of 2000, who is waiting for the government to enforce mandatory euthanasia, since government planned and managed medical care dictate treatments and termination of life.  

The gentleman says to his son in this imagined future:

“It really seems a pity that the Medical Control Board won't let me live a little longer. Of course, there is a good deal of pain for one hour out of the twenty-four, which requires a certain amount of medical attention, but I should not mind paying a little extra for that if the State allowed any doctor or nurse to have a private practice. (However, I daresay I should never have been born under the new Inspection of Parents Act.) The point is that I am quite interested in the morning paper and talking to all of you and seeing a friend sometimes . . . and in old days I could have gone on indefinitely." 

The son comments that, yes, some are wistful for the “anarchy” of the old days, of around 1900, when people could make those decisions for themselves. But had not his father commented about how excited people were with the Voluntary Euthanasia Act of 1940? The elderly gentleman admits that that is so, “but, of course, it had to become compulsory soon . . .The expenses of the State medical service have been considerably reduced by the power of the Local Board to decide when a patient is not worth further attention.” He then asked his son, “By the way, did you see the official form? Did it give me a week or a fortnight,” before his mandatory termination?

His son read him the official government notice that had arrived:  ?

“I regret to inform you that my Board have decided to allow you no further medical service after a week from this date, and they are of opinion that you would save yourself and your relations much inconvenience and pain by availing yourself of Section 3 subsection (1) of the Compulsory Euthanasia Act of 1980. Everything can be done at your house, if suitable preparations are made, as our Travelling Euthanasia expert will be in London at that date. You are probably aware that in cases like yours the Board will allow a grant of five pounds towards the cremation expenses, and will accept a preliminary Probate affidavit from yourself for the purpose of assessing death duties. For your guidance I enclose a special form which you must forward within three days to the Inland Revenue Department.”

The old gentlemen tells his son that there was a time when people would have considered such a compulsory ending to human life at the command of the State as against the very idea of a society of free individuals. However, such people who believed in liberty “were all ultimately secluded under the third Mental Deficiency Act,” that is, placed in mental institutions for those with the insane idea that freedom mattered.  

How long ago, he reflects, was that bygone time when people, “swore, drank alcoholic preparations at meals, married without medical permission . . . Why, they actually owned houses and land in perpetuity, and read books which were excluded from the British Museum Catalogue, and wrote quite scurrilously about the Government. Those were indeed turbulent times. Everything was so casual and unforeseen.” 

Finally, the gentleman thinks that he better make sure his will is in order before his mandatory termination, and he mentions to his son that as part of any eulogy, they might mention his important work on legislation relating to the “Better Regulation of Female Underclothing Act,” of which he is clearly very proud. 

British National Health Care Can be an Indirect Euthanasia 

In the first decades of the 20th century, this must have seemed all a fantasyland of “reactionaries” and “anti-social,” old fashioned laissez-faire liberal types. But, in fact, in the years before the First World War, the British government introduced the first legislative elements that eventually became the “single-payer” system under the inspiration of the welfare state already established in Imperial Germany, the very country with which Great Britain was then at war. Britain’s socialized healthcare system only was fully implemented following the Second World War under a socialist government. 

Under the current British system, the government may not order your death after some point due to age or illness, but the stories are notorious concerning the wait times for seriously sick individuals to have access to doctor’s appointments or to the possible treatment that could cure them or at least noticeably prolong their lives. It is merely compulsory euthanasia through indirect means. 

The Friendly Societies Provided Voluntary Social Safety Nets

Throughout the 19th century, a primary means for the provision of what today we call the “social safety nets” was by the private sector outside of government. The British Friendly Societies were mutual assistance associations that emerged to provide death benefits for the wives and children of the breadwinner who had passed away. But they soon offered a wide array of other mutual insurance services, including health care coverage, retirement pension programs, unemployment insurance, savings clubs to purchase a family house, and a variety of others.

A number of scholars who have devoted time to researching the lost history of the Friendly Societies estimate that by the end of the 19th century around two-thirds to three-quarters of the entire British population was covered by one or more of their programs and insurances. The research also discovered that a large majority of the subscribers were in the lower income brackets of the time; precisely because of their more modest financial circumstances, the “working poor” and the lower middle class were very conscious of the need to set aside a certain sum of their limited budgets to anticipate unexpected circumstances, as well as those situations that were inescapable for anyone, such as old age.  

What stands out is that these were all private and voluntary associations and exchanges, in which the government paid little or no role. One part of this system of freedom was charity and philanthropy; that is, the voluntary giving by those better off to assist those who were financially worse off and deserved a helping hand. 

The Generosity of Private Charity was Criticized!

How pervasive was such philanthropy and charity? William Stanley Jevons (1835-1882), one of the leading British economists of the second half of the 19th century, and one of the developers of marginal utility theory, called for the end to private charity and its replacement with a fuller government system. This was not due to the paucity of private benevolence, but rather due to what he considered its excessive generosity. 

At a meeting of the British Association for the Advancement of Science in September 1870, Jevons criticize the open-handedness of the wealthy and better off in voluntarily helping the poor through various philanthropic endeavors. Private charity was creating a class of permanent poor, he said, which resulted in “the casual paupers [having] their London season and their country season, following the movements of those on whom they feed.” 

The government programs for caring for the poor are “frustrated by the over-abundant charity of private persons, or religious societies.” He even was critical of the over-generosity of the private sector in the voluntary funding of hospitals for the poor and less fortunate. There were so many such charity hospitals, Jevons lamented, that these private medical establishments “compete with each other in offering the freest possible medical aid to all who come.” 

Here was the heart of the problem. Rather than fears that private benevolence would not be enough to assist those unable to fully pay for food or medical treatment, there was too much of it! Jevons prayed, “that we are rapidly approaching the time when the whole of these pernicious charities will be swept away.” Instead, all such charitable matters needed to be shifted to “the supervision of the [government] Poor Law Board,” so bureaucrats could make wiser decisions concerning how much assistance and support the less well off should receive, rather than the uncontrolled generosity of individuals and private associations. 

According to William Stanley Jevons, Great Britain needed more government responsibility for the poor and the unfortunate to bring a halt to the excessive voluntary giving of a free people. Central planning of charity was needed to replace the spontaneous giving of non-governmental civil society. Jevons wanted government imposed welfare austerity, if you will, in place of private philanthropic abundance. So much for the constant hue and cry by those on “the left” that if not for compulsory government welfarism, “the poor” would die in the streets!

Perverse Incentives of the British Poor Law Welfare System

Of course, Great Britain had had a form of the welfare state since the time of Queen Elizabeth I (1533-1603) in the 16th century. But the excessive waste of government redistribution and its perverse incentive effects had become clearly known by the 19th century, and became a point of criticism by the classical liberals of that period, and the basis of their case for reform in the private sector instead, in spite of the type of criticisms made by someone like Jevons. 

For instance, one of the last of the important British classical economists, Henry Fawcett (1833-1884), explained the perverse consequences under the government system of social safety nets in his book, Pauperism: Its Causes and Remedies (1871). Investigations were made in the first half of the 19th century concerning the impact of the Poor Laws, under which taxed wealth was redistributed through the Church of England parishes. 

Fawcett pointed out that illegitimacy was fostered under the government’s welfare state, that government redistribution became viewed as an “entitlement,” and that it created an attitude that taking the money of others through the State was as honest and acceptable as wages earned from a day’s work. Explained Fawcett: 

“Men were virtually told that no amount of recklessness, self-indulgence, or improvidence would in the slightest degree affect their claim to be maintained at other people’s expense. If they married when they had no reasonable chance to being able to maintain a family, they were treated as if they had performed a meritorious act, for the more children they had the greater was the amount of relief obtained. All the most evident teachings of commonsense were completely set to naught . . .

“Population was also fostered by a still more immoral stimulus. A woman obtained from the parish a larger allowance for an illegitimate than for a legitimate child. From one end of the kingdom to the other people were in fact told not only to marry with utter recklessness and let others bear the consequences, but it was also said, especially to the women of the country, the greater is your immorality the greater will be your pecuniary reward. Can it excite surprise that from such a system we should have had handed down to us a vast inheritance of vice and poverty? . . .

“Pauperism often came to be regarded as a paying profession, which was followed by successive generations of the same family.  Thus the Commissioners [of the Poor Laws] tell us of three generations of the same family simultaneously receiving relief . . . The feeling soon became general that pauperism was no disgrace, and that allowance which was obtained from the parish was just as much the rightful property of those who received it, as the wages of ordinary industry. Indolence was directly encouraged, and a spirit of lawlessness and discontent resulted.” 

The Logic and Facts about Welfare Statism Cannot be Denied

Now, a liberal economist such as Henry Fawcett was not a proponent of strict laissez-faire in welfare matters, any more than he was in a number of other government policy issues. But logic and facts were what they are, and could not be wished away. If you pay people not to work, you have more people not working; if you do this long enough a system of intergenerational dependency emerges and recipients used to receiving such redistributed wealth start considering it a “right,” equal to a wage earned from employment in the marketplace. 

Furthermore, if you reward people with larger welfare benefits for having more children including, especially, children out of wedlock, don’t be surprised if those women on welfare become less concerned about the more traditional notions of family responsibility in deciding how many children to have. 

These were some of the consequences that classical liberals in 19th century Great Britain became concerned about, and wished to see alleviated and improved through the private sector alternatives to government compulsion through taxes for redistribution under the older Poor Law system.

Jevons’ Misplaced Concerns and Understandings about Welfare

In response to Jevons’ arguments, we all, no doubt, know parents who are excessively indulgent of their children’s wishes and wants. This sometimes creates an irresponsible attitude on the part of the child that they can and should have anything they want with no thought to the cost or the possibly negative impact on others. A few such children grow up thinking they can get away with murder. 

But this is not generally the case in private households. Even with errors and mistakes along the way, most parents attempt to bring up their children with notions of responsibility and self-supporting habits for their later adult life. It would be absurd and dangerous for the State to declare that it will “plan” the upbringing of children within family households with schedules, detailed procedures, and surveillance of what is going on inside the family all day and night. 

The same is true with private charity and philanthropy by individuals and voluntary associations. First, there is an ethical dimension not really touched upon by Jevons, and that is the morality of those who have honestly earned income and accumulated wealth being considered the rightful owners of it, and who should have the liberty to use and dispose of it as they think fit as a matter of individual right. 

Second, Jevons seemed to be disturbed by the multitude of competing private charities serving the poor in the Great Britain of his time – and, by the way, this was before any notion of a charitable deduction on one’s income tax; it was guided simply by the idea that it was “the right thing to do.” What Jevons missed is that the charitable competition that he considered misplaced wasteful duplication is in fact the very avenue, like all other forms of peaceful rivalry, to discover the best and most efficient means and methods to reach an end or goal in mind. 

And, third, it never seemed to enter Jevons’ mind that those who man and manage government welfare programs are not only as imperfect as the rest of us about how best to assist those in financial and other forms of need, but that those in political power in elected office and in the appointed bureaucracy have their own agendas and purposes that have nothing to do with the stated goals of any government program implemented. 

The self-interests of those administering the government welfare system of that time resisted all change into a less compulsory paternalistic direction.  A leading liberal reformer of the 1830s, Thomas Chalmers, pointed out the resistance to any reduction to government redistributive actions by the administrators of the relevant programs. The proponent of voluntarism, he said, “comes into collision with the prejudices and partialities of those who at present have the right and power of management” of the then-existing Poor Law system. 

That is why it always comes down to that fundamental issue of voluntary choice and free association, including for purposes of social benevolence as well as decision-making in the marketplace, versus, instead, politically imposed force through taxes and compulsory redistribution and regulation of human affairs. 

The tragedy of contemporary politics in America and abroad is that the debates and decisions all concern in what forms and for what purposes compulsion in social and personal affairs will be imposed. Left out of today’s public discourse is the issue that guided classical liberals in the 19th century: should people be free or shall they be coerced to do what others consider to be “the right thing”? 

Tyler Durden Mon, 09/09/2019 - 20:45
Published:9/9/2019 7:52:34 PM
[Markets] Brexit - As Explained To The Bemused And Befuddled Brexit - As Explained To The Bemused And Befuddled

Authored by Rob Slane via,

There is a big part of me that hopes to never hear the word Brexit again. Like many across the country, whether dyed-in-the-wool remainers, dyed-in-the-wool leavers, or those somewhere in between, the word has come to fill me with a deep sense of boredom, an unhappy feeling of nausea, and also the unnerving foreboding that whatever happens in the next few months, it is quite likely to lead to some sort of civil disorder.

The situation in Parliament is as utterly extraordinary as it is dire.

A minority Government that says it doesn’t really want an election, calling for one. An opposition majority that has constantly called for an election, refusing to grant permission to hold one.

The very idea that a Government should need the consent of the opposition to hold an election is itself quite mad. The very idea that a Prime Minister should be unable to go to the Monarch at a time of his or her choosing, to request the dissolution of Parliament, is plainly nuts. Yet it is just another of those rotten legacies left to us by David Cameron — Wrecker of Libya, and the man who cynically added the promise of a referendum to the 2015 Conservative Party manifesto to prevent the party haemorrhaging votes the United Kingdom Independence Party. Together with his then partner-in-crime, Nicholas Clegg, he brought in the Fixed Term Parliament Act in 2011, which fixes the lifetime of each Parliament to five years, unless two-thirds of Parliament agree to its dissolution. I recall telling a friend all those years ago that this was ludicrous, and also a potentially dangerous piece of legislation. However, I could not have guessed how it would come back to bite us, as it now surely has.

Even though there are no doubt a few honourable individual exceptions, I am left utterly appalled by all parties in Parliament, with each one exhibitting their own particular flavour of cynicism and duplicitousness.

Infographic: Brexit: What Now? | Statista

You will find more infographics at Statista

Let’s start with de Pfeffel and his Conservative Party. As a Burkean conservative, I already had an intense loathing for this party, which despite the name, has failed to stand up for pretty much every “small c” conservative cause during my lifetime. But I am doubly appalled by the way Johnson, at the behest of his Rottweilers, Dominic Cummings and Gavin Williamson, has attempted to sledgehammer his way through all opposition. It’s quite obvious that these arrogant numbskulls gambled on the following scenario and lost:

Prorogue Parliament in order to create a huge stink and calls for an election;

Allow the opposition to bring about a bill to stop a no-deal Brexit;

Threaten rebels with expulsion from the party;

Use the ensuing chaos to call an election, which the Labour Party - which has constantly called for an election for two years - cannot refuse, but which they would subsequently lose.

I’m sure it sounded like a brilliant scheme, except that it contained the sort of miscalculation that is common to such high and lofty types. That is, they completely failed to factor in the possibility that other people might not act in the way they game-planned them to act. And so the rebellion in the Tory Party was much bigger than expected, with the consequence that the subsequent withdrawal of the whip felt more like the purge of a tinpot despot, than the quiet shuffling off of one or two rebels. And then the Labour Party did a volte face, throwing a huge spanner in the works by refusing to grant Mr Johnson his election, with the mad Fixed Term Parliament Act giving them the ability to do so.

Joining them on the podium of contempt is the Labour Party. You only need to watch the Shadow Foreign Secretary, Emily Thornberry’s ludicrous performance on BBC’s Question Time this week to see this. Not only has her Party just refused to vote for the election they’ve been incessantly calling for, but when she was asked by the Question Time presenter, Fiona Bruce, about how she would proceed if her Party won an election and negotiated a deal with the EU, she reached what may well be peak insanity — although it’s up against some pretty stiff competition of late — with the following extraordinary exchange:

Fiona Bruce: “Are you going to campaign for your deal, assuming you get one, or will you campaign for remain, against your own deal?”

Emily Thornberry: “Personally, I will campaign to remain.”

Bruce: “Even if you’ve negotiated the deal?”

Thornberry: “I will negotiate to the best of my ability, a deal which will look after jobs and the economy. But the best way to protect our economy is for us to remain.”

I’m not making that up. It really did happen. The shadow Foreign Secretary really did pledge to campaign against the deal she pledged to negotiate (you can give yourself a good laugh by looking at it here).

She sums up the Labour Party well. It has a leader who has been against the EU all his political life, until the very moment when it suddenly mattered, but who has since hidden his anti-EU opinions behind the pro-EU views of those around him. And so we now have a Party that nobody knows what its position is, because the Party itself doesn’t know what its position is, but we can be comforted by the knowledge that it’s chief foreign policy spokesperson says she would go into negotiations with the EU trying her best to get the best deal — which she would then refuse to support.

And what need I say of the Liberal Democrats, when its new boy, Chuka Umunna, can say it for me. Mr Umunna, who has been in more parties this year than my eight-year-old, stated the following on his Twitter feed:

“Voting with @joswinson and @timfarron just now in the @House of Commons to take over the Commons business tomorrow to pass a Bill to stop a ‘no deal’ Brexit – which for us is the first step to #StopBrexit altogether!”

Let me remind you that he is the Shadow Foreign Secretary of a party calling itself The Liberal Democrats. And yet here he is brazenly telling his followers that their ultimate aim is to thwart the result of the biggest democratic vote in British history. Of course, we knew that anyway, but it’s nice of him to be so open. Now I don’t personally care if he and his Party want to try to get elected on a platform of stopping a massive democratic vote. That’s up to them. But I would point out that continuing to call themselves Liberal Democrat really is a bit much. I would suggest something like The Literal Hypocrites, but readers may well have far better ideas which they can perhaps send to Mr Umunna.

As for the Green Party, they have a leader who recently admitted (just before her master plan to sort out this mess with an all-women cabinet) that even if there was a second referendum, which she has been calling for, she still wouldn’t accept the result. Perhaps after ten or so she might grudgingly accept it.

The current situation is so utterly absurd that it reminds me of that explanation of the rules of cricket, which goes like this:

“You have two sides, one out in the field and one in. Each man that’s in the side that’s in goes out, and when he’s out he comes in and the next man goes in until he’s out. When they are all out, the side that’s out comes in and the side that’s been in goes out and tries to get those coming in, out. Sometimes you get men still in and not out. When a man goes out to go in, the men who are out try to get him out, and when he is out he goes in and the next man in goes out and goes in. There are two men called umpires who stay all out all the time and they decide when the men who are in are out. When both sides have been in and all the men have out, and both sides have been out twice after all the men have been in, including those who are not out, that is the end of the game!”

So here’s the current state of Brexit, as explained to the bemused and befuddled:

“There are a number of parties. One of them wants to take us out, but there are some within that party that didn’t want to take us out, so they were kicked out by the man who just came in. In order to get us out, the man who just came in tried to get himself out, so that he could then get back in, in order to take us out. But he was thwarted by the other parties, who despite wanting him out, kept him in because they fear that if he gets out, he will then get back in and will then take us out. But if they can keep him in long enough, and prevent him from taking us out, they figure that soon after he has failed to take us out, they will be able to get him out and get themselves in. And then after he gets out and they get in, they may try to take us out or they may try to keep us in. It’s anyone’s guess. Then again, it’s entirely possible that if they do get in, they might try to get us out, then campaign against their deal for taking us out to try and keep us in. It really is that simple.”

Can anything be done? Indeed. I thoroughly recommend ignoring it as much as possible, going on plenty of walks, and reading lots of good books (I’ve been reading lots of Dickens recently and can thoroughly recommend him as a Brexit detoxifier). Other than that, trust in God and keep yer powder dry.

Tyler Durden Sun, 09/08/2019 - 11:35
Published:9/8/2019 10:48:22 AM
[Markets] 100 Years Ago Today, This Was The World's Most Disruptive Technology 100 Years Ago Today, This Was The World's Most Disruptive Technology

Submitted by Nick Colas of DataTrek Research

The history of US consumerism starts with the Sears Roebuck mail order catalog. Yes, the very same Sears that is struggling to emerge from bankruptcy today. But 125 years ago the company was every bit the disruptive innovator. A brief summary of how that happened:

  • Mail order became viable in the late 1800s because of the expansion of the US rail system, post office regulations that allowed for catalog mailers at 1 cent/pound, and Rural Free Delivery.

  • The first Sears catalog was published in 1894 with the slogan “The Cheapest Supply House on Earth”.

  • Its target audience was rural America, which in 1900 was 60% of the US population. This was a deeply underserved community, often with just a thinly stocked general store to supply all their needs.

  • The 1903 catalog added the commitment of “Your money back if you are not satisfied”, reassuring customers that buying a product sight-unseen was a viable way to shop.

We recently bought a 1920 Sears catalog from an eBay seller. Printed in late 1919, it is a fascinating snapshot of American life 100 years ago. And, at 1,493 pages, it is a remarkably wide-angle view of that image.

In studying this early bible of the American consumer, three points struck us as particularly salient when comparing 1920 to 2019:

#1: The comparison to Amazon.

  • Our catalog was published 25 years after Sears began its mail order business; Amazon is 25 years old today.

  • The scope of the Sears offering in 1920 was every bit as vast as Amazon’s is today. The company offered everything from men’s/women’s/children’s clothing to furniture, appliances, jewelry, home entertainment, toys, and even entire houses and farm buildings.

  • Sear’s merchandising method was exactly the same as what you see on Amazon’s website. Every item for sale had a picture, description, and price. The catalog is organized by the type of product offered for sale, something akin to “If you like this item, you might also like this…”

  • One key difference: Sears offered credit on expensive items. If, for example, you wanted to buy a “New Freedom” coal/wood stove, you could pay $86.50 ($1,100 today) or make a first payment of $10 and then $7.50/month thereafter until you had paid $95.50. That’s a 7.1% annualized interest rate, in case you were wondering. Amazon, of course, takes credit cards.

Conclusion: Sears was actually a more ambitious business model than Amazon when it started. On day one, it was already selling a wide array of products – not just books. In terms of consumer offerings, Amazon now is right where Sears was in 1920. Yes, there are more SKUs on the website, but in terms of what people needed in 1920 the Sears catalog is remarkably complete.

#2: Early stage technology.

  • The new technologies in 1920 were electric-powered appliances and phonograph players. Radio was still some years off – the only items in the 1920 catalog were Morse code transceivers.

  • A 110-volt vacuum cleaner retailed for $57.50 - $68.00 ($740 - $870 today). For reference, a top-rated vacuum on Amazon goes for $70 today.

  • A hand-crank record player went for $30 (basic tabletop) to $225 (solid wood standup), or $385 - $2,900 today. A Bluetooth speaker today goes for about $20.

  • A basic bicycle sold for $53, or $680 in today’s dollars.

Our takeaway: the big difference between 1920s technology and today is how quickly prices come down as demand rises. Part of that is related to infrastructure; for example, in 1920 only 35% of American homes had electricity but by 1929 68% were wired for power. That, plus the disruption created by World War II, explains why vacuum cleaners remained expensive and adoption rates remained below 50% until the late 1940s. The rest, of course, is globalization, both in terms of supply and demand.

#3: A big idea can go a long way.

  • Our 1920 catalog is a relatively early manifestation of a business that continued to prosper and grow for another +50 years. In 1974, at the height of its powers, Sears built the tallest building in the world in Chicago to house its home office.

  • The company started opening retail stores in the 1920s, predominantly in urban areas to augment its rural business, and eventually had thousands of retail locations. It built its own brands like Craftsman tools, Kenmore appliances and DieHard automotive batteries.

  • In 1931 Sears created Allstate Insurance and by 1934 it had agents in every store. In 1981 it added broker Dean Witter and real estate company Coldwell Banker. In 1985 it created the Discover credit card. It was even an early Internet adopter, developing the Prodigy system with IBM.

The lesson here: even if Sears is now a tiny shadow of its former self, it pays to remember this company had an almost 100 year run of success. It survived and prospered through 2 world wars and the Great Depression, living long enough to benefit from the post World War II boom. All from one big idea: a mail order catalog.

Tyler Durden Sat, 09/07/2019 - 22:00
Published:9/7/2019 9:10:29 PM
[Markets] What Martin Luther Can Teach Us About Bitcoin What Martin Luther Can Teach Us About Bitcoin

Authored by Max Gulker via The American Institute for Economic Research,

Bitcoin and its primary cryptocurrency competitors have been on a bumpy ride since early 2018, and the tension among investors and enthusiasts is spilling over. Bitcoin maximalists, who believe that blockchain’s very first application is the only one of value, angrily condemn those who envision a competitive process fueling cryptocurrency adoption. Others see the conflicts among miners that defined 2017 as a point where the dream died.

But somewhat counterintuitively, if blockchain and the concept of cryptocurrencies truly has world-changing potential, we should still have very little idea how to use it. Blockchain is a foundational technology, useful primarily for the applications (like Bitcoin) built to run on top of it. As the dot-com crash illustrated, the discovery process of just what apps people want can be a painful one. But history shows the road from foundational technology to world-changing applications can be much bumpier still.

In the 1440s Johannes Gutenberg developed a printing press capable of mass producing books, and though people knew it was going to be huge it took nearly a century to answer the questions of why and how. That process required not only market experimentation, but a catalyst in the form of one of history’s greatest social disruptions.

The Salvation of Printing

In his book Brand Luther, historian Andrew Pettegree gives a fascinating look at the role the Protestant Reformation, particularly its founder Martin Luther and his city of Wittenberg, played in the rise of books as we know them. These events coalesced right when they needed to, for the printing industry had just endured the bursting of a bubble.

After its initial rollout, printing presses became the must-have item for Europe’s wealthy nobility. Within decades (lightning speed by the standards of the era) there were over 200 printing presses scattered across Europe. But what then? To our modern sensibilities, virtually inseparable from books and the printed word, that question seems absurd.

One key missing piece was understanding the economics of the printed word. The wealthy owned plenty of books, but their creation for centuries had been a one-to-one transaction between collector and scribe. Neither the increasingly literate general public, nor the entrepreneurs behind the first printing presses, had any concept of buying a book, going home and reading it.

Like railroads and the internet centuries later, the bubble burst. Nobility supplying the capital lost interest and more than half of Europe’s presses shut down. And even among the survivors it was only twelve presses in major cities that did the vast majority of pre-Reformation printing.

Printing in these early years began to prosper not by disrupting the old order but by serving it. They printed books that were then ornately illustrated by hand, making the production of books as luxury items a bit more efficient. And of particular importance in these urban centers were far more mundane projects done for church and state, such as informational fliers, and quite ironically, indulgences.

A key part of Luther’s initially renegade theology was communicated with ordinary people in their own language. Pettegree shows how this catalyzed the publishing industry to take a major step toward what we know today. Luther became the first bestselling author, publishing books, pamphlets, and his translation of the Bible in German. 

Until that time it was customary not to list the book’s author on the cover or front page unless it was a revered figure from antiquity. But Luther, his theological associates, and the blooming Wittenberg publishing industry perceptively understood the concept of branding. In addition to Luther’s name right up front, they developed a specific look across multiple titles that would become familiar and stand out to people in an ordinary stall.

History Minimalists

Fast forward to today and we rightly expect change to happen faster than it did during the Renaissance. But we still need markets to teach us how to use novel technologies. Bitcoin maximalists who often tout free markets start sounding a lot like central planners when they posit that Bitcoin is and must be the only use of blockchain technology and the only money used across the globe. Given Bitcoin was the first application of blockchain technology, introduced alongside it, the maximalists do not have history on their side.

The other question Pettegree’s book leaves for technology watchers today is that of a catalyst. Many Bitcoin proponents, from the sensible to the maximalist, are libertarians who would like to see a similarly large sea change in society. But the fact is that in 2019, the vast majority of people don’t share these views, and have no problem with their government fiat money.

If, for whatever reason, public opinion shifts either gradually or seismically toward a libertarian outlook, cryptocurrencies might have a similar catalyst. But rather than Bitcoin, at least as we know it, a libertarian reformation of sorts would fuel innovation to create the private currency or currencies most useful for a future we can’t come close to predicting. Rather than protecting a preselected champion, we should all be competition and innovation maximalists.

Tyler Durden Sat, 09/07/2019 - 20:00
Published:9/7/2019 7:08:57 PM
[Markets] Economic & Social Vandalism: It's The Pace Of Change That Kills You Economic & Social Vandalism: It's The Pace Of Change That Kills You

Authored by Chris Martenson via,

...and it has now sped up beyond our means to control it.

A treasured member of my family is in the process of dying right now.  She has lived a full, rich life; but her passing is a sad affair for us.

I’ve spent a lot of time recently with hospice workers. I’ve learned that they’re often asked by their patients, “How much time do I have left?”

While sometimes loathe to offer an answer, hospice staff can predict the timing of the end pretty accurately.

They do so by measuring by the changes they see. Or, more accurately, the pace of change in those changes.

Could a patient pick a book up off the floor in June, but not in July?  If not, then their remaining time is likely to be measured in months.

Could they raise themselves out of a chair last week but not today?  If not, then it may be only weeks until the end.

Are they losing function every day?  Then death is likely just days away.

And so on, right through hours, minutes and seconds.

It is the pace of change that matters.  Tracking the pace of change is as important as the actual changes themselves.

Both provide critical information about what’s going on, but it’s the pace that informs our timing predictions.

This is equally true for larger systems like economies and ecosystems.

The Pace Is Accelerating All Around Us

Losing a certain population of a given species over a million years is a very different proposition from losing the same number  within just 40 years.  Or even yearly, as now appears to be the case.

The years 2016, 2017, 2018 and 2019 each saw one or more Cat 5 hurricanes form in the Atlantic. This is the longest such stretch of years in the record books.

Dorian was absolutely brutal to the Bahamas; the damage was unprecedented and extreme.  I simply cannot imagine the sustained horror of being pinned down by a Cat 5 for 36 hours as it brutally dismantled my home.

Like slow-moving Hurricane Harvey (not a Cat 5, but hugely damaging) Dorian just parked itself over the Bahamas and laid waste to all that lay beneath, churning like a massive blender.

Are monster storms that move slowly a new meteorological trend? Or has it simply been ‘bad luck’ to experience so many of late?

We don’t know yet. But there have only been 35 Cat 5 hurricanes in the past 100 years. However, at our current pace, there will be 125 such storms over the next century. That’s four times as many vs the past.

Negative Rates Multiplying At A Staggering Rate

Financially, the latest and most head-spinning change concerns the explosive proliferation of debts with negative interest rates.

Unheard of since the Mesopotamian invention of debt in 2,400 BC, negative interest rates have suddenly appeared on the financial landscape like a new mutant species, an invader without natural predators, gaining a sudden foothold and then spreading rapidly.

It’s as if a virulent chestnut blight landed in a virgin forest of corporate and sovereign debt.

From literally ‘none’ ten years ago, to more than $17 trillion now. And up from a ‘mere’ $6 trillion in the past ten months alone:

Is this a new, permanent trend?  We don’t know yet.

But the pace of change is sure intensifying.

First, Switzerland gave negative rates a tentative go. Then Denmark timidly followed. But eventually, the entire Euro complex followed with gusto, with most countries’ rates crossing below the 0%-boundary in late 2014:

Whatever the final repercussions are, one fact is clear: the world’s central banks are completely, 100% responsible for these bizarro-world negative interest rates.

They try to pretend that the $20+ trillion money printing spree they engineered after 2008 isn’t a root cause. Instead, they claim “the markets” are responsible. But this is as weak a defense as Ted Bundy claiming his victims all killed themselves. It’s just not a credible defense.

Emboldened by seeing that nothing terribly bad happened in the early years of negative rates, the ECB went on an absolute tear of a printing spree in 2016 and 2017. It went so far as to buy corporate debt via private placement, meaning that the debt was never issued to the bond market.  The ECB just conjured up the necessary billions of euros and directly credited corporate accounts while taking their bonds onto its books.

Again, it’s worth noting just how unusual this all is.  It has never been done before.

5,000 years of accumulated knowledge is being chucked out the window by activist central bankers who assume they know best.

But do they?  And what will be the repercussions if they don’t?

Economic And Social Vandalism

The financial media is working very, very hard to defuse concerns about negative rates and sell them as a talisman against anything that could hurt the economy.

They dutifully scribe down what the central bankers say, and then pitch it to us as gospel.

Instead, I propose that now is the time to ask stiff questions of the central bankers, and to not let them avoid answering.  And to keep asking until we either receive reasonable responses, or clarify that they have no good answers to give.

Here are questions I would love to hear posed to Chairmen Powell, Draghi or Kuroda:

  • “Your actions were designed to spike the prices of stocks and bonds and you’ve succeeded. This has led to an enormous wealth gap.  What’s ‘too far’ in your view?  Right now 5 people have as much wealth as the bottom half, by which we mean 3.8 billion humans.  Is ‘too far’ when those same five individuals own as much as the bottom 75%? The bottom 90%? Or is it your aim that these top five individuals should actually possess everything in the world with everyone in their debt?”

  • “5,000 years of financial trial and error has firmly established that saved capital deserves a positive rate of return. You are now certain that negative interest rates are what the world needs.  What empirical data do you rely on to make that assessment? What happens if you’re wrong?”

  • “All investment decisions depend upon an assumed rate of return. Pensions, for example, require matching future liabilities with current assets and an assumed rate of return.  Now that central banks are certain that negative yielding debt is just what the doctor ordered, and under the principle of “you break, it you buy it“, we’re wondering what responsibilities the central banks are prepared to assume here for broken pensions?”

  • “Same question as above, but for savers and endowments.”

  • “Money is not actual wealth, but a claim on real wealth. More importantly, it’s a social contract.  Central bankers are monkeying with that social contract and the effects are obvious.  Corporations are incentivized to make returns by financially engineering their balance sheets and rigging their share counts instead of taking actual risks, hiring more people, and investing in R&D.  Can we not just take this all the way to the end and propose eliminating risk for everyone and just give everybody money without anyone performing any work at all?  Obviously not, but we’re also obviously somewhere along that path.  The question is, how far is ‘too far’ and what criteria are you using to determine that?”

  • “Endless growth is not possible on a finite planet. Your policies are all geared towards stoking the fastest economic growth possible.  Do central banks have any responsibility to future generations and leaving behind a world worth inheriting?”

We deserve to know the answers to these — and a dozen other — questions.  Why nobody in the press or Congress is asking any of them is a different story for another day.

While it’s possible that central bankers are competent, benevolent experts doing their best, it’s equally possible they are the largest economic and social vandals in all of history.

Given that possibility, the Overton Window really needs to be smashed wider, and quickly, so that we can get answers to those ‘impolite’ but necessary questions above.  If it turns out that the central bankers have thoughtful, intelligent responses to them, then fine. We can debate the assumptions and data.

If, on the other hand, they get snippy and affronted by being challenged, then it will mean they have no good answers.  It will unveil that they’re merely ‘winging it’ when literally everything is on the line.

It will mean, for the sake of ease and expediency, they’re basically dismantling a cultural heritage site as they scavenge for handy building materials.  Turning architectural splendors into crude stone huts.

In other words, they’d be unmasked as economic and social vandals.  Wrecking the infrastructure of financial knowledge and thousands of years of cultural arrangements simply because they are too intellectually lazy or too emotionally weak to do otherwise.

We Have To Be Our Own Rescuers

The Powers That Be, like central bankers and politicians, are just humans.  They err. They have to operate with imperfect information.

But they are also mostly untrained in systems thinking, resource limits, and other such necessary fields — which they could correct for if they cared or dared.

But they aren’t. And because of this, the pace and the scope of the changes happening are beyond their powers of comprehension, let alone their powers to fix.

So many things are changing. And the rate of change is speeding up, too.  It’s barely possible to fashion a comprehensive plan for what to do about it.  It’s probably too much to expect that anyone in power would have the necessary broad-based systems thinking required to concoct a reasonable plan forward.

Someday we’ll begin to run out of fossil fuels, and we have no plan for that.  We haven’t a clue what to do about the rapidly intensifying weather.  Nobody knows how we’re going to grow enough food for 9 billion people when the phosphate runs out.

But instead of planning for these certain challenges, what are our leaders doing instead?

The central bankers are continuing to lower interest rates. Politicians squabble about marginal, ultimately unimportant distractions. And universities enforce spaces safe from micro-aggressions so that nobody is ever offended (leaving them woefully unprepared for what’s coming next).

Everybody is still busy doing the very same things that have moved us away from what has served us well for 5,000 years: positive interest rates and a stable climate.

The rate of change is accelerating.  Things are speeding up.  That’s how exponential systems behave.  It’s not surprising to those who understanding it, but it’s shocking to behold.

It’s dead simple at this point to conclude that we’re on course for a massive financial accident.  And a major ecological upheaval that will make it difficult, if not impossible, to feed everyone, too.

If we don’t change direction, dramatically and soon, those eventualities are about as close to guaranteed outcomes as you can get.

Will society make the necessary change in time? I doubt it. Don’t you?

Our signposts along the way for timing the arrival of the next crisis will come from closely tracking the pace of change in developments from here.

And for me, recent events have accelerated to the point that I’m no longer comfortable residing in my current location.

In Part 2, ALERT: Time To Relocate, I explain the factors compelling me to leave my community of 15+ years for a safer, more resilient and liberty-respecting location. And I share the qualities I’ve prioritized highest when evaluating the new property to relocate to.

Those who have followed me for years know that I very rarely issue Alerts.  I only do so when I arrive at important conclusions that cause me to take major action in my own life.

The pace of change in world developments is now high enough for me to undertake big life change like this.

How about for you?

Click here to read Part 2 of this report (free executive summary, enrollment required for full access).

Tyler Durden Sat, 09/07/2019 - 19:00
Published:9/7/2019 6:09:22 PM
[Markets] US Army Major (Ret.): We Are Living In The Wreckage Of The War On Terror US Army Major (Ret.): We Are Living In The Wreckage Of The War On Terror

Authored by US Army Major (ret.) Danny Sjursen via,

It has taken me years to tell these stories. The emotional and moral wounds of the Afghan War have just felt too recent, too raw. After all, I could hardly write a thing down about my Iraq War experience for nearly ten years, when, by accident, I churned out a book on the subject. Now, as the American war in Afghanistan – hopefully – winds to something approaching a close, it’s finally time to impart some tales of the madness. In this new, recurring, semi-regular series, the reader won’t find many worn out sagas of heroism, brotherhood, and love of country. Not that this author doesn’t have such stories, of course. But one can find those sorts of tales in countless books and numerous trite, platitudinal Hollywood yarns.

With that in mind, I propose to tell a number of very different sorts of stories – profiles, so to speak, in absurdity. That’s what war is, at root, an exercise in absurdity, and America’s hopeless post-9/11 wars are stranger than most. My own 18-year long quest to find some meaning in all the combat, to protect my troops from danger, push back against the madness, and dissent from within the army proved Kafkaesque in the extreme. Consider what follows just a survey of that hopeless journey...

The man was remarkable at one specific thing: pleasing his bosses and single-minded self-promotion. Sure he lacked anything resembling empathy, saw his troops as little more than tools for personal advancement, and his overall personality disturbingly matched the clinical definition of sociopathy. Details, details…

Still, you (almost) had to admire his drive, devotion, and dedication to the cause of promotion, of rising through the military ranks. Had he managed to channel that astonishing energy, obsession even, to the pursuit of some good, the world might markedly have improved. Which is, actually, a dirty little secret about the military, especially ground combat units; that it tends to attract (and mold) a disturbing number of proud owners of such personality disorders. The army then positively reinforces such toxic behavior by promoting these sorts of individuals – who excel at mind-melding (brown-nosing, that is) with superiors – at disproportionate rates. Such is life. Only there are real consequences, real soldiers, (to say nothing of local civilians) who suffer under their commanders’ tyranny.

Back in 2011-12, the man served as my commander, a lieutenant colonel in the U.S. Army. As such, he led – and partly controlled the destinies of – some 500 odd soldiers.

Then a lowly captain, I commanded about one-fifth of those men and answered directly to the colonel. I didn’t much like the guy; hardly any of his officers did. And he didn’t trust my aspirational intellectualism, proclivity to ask “why,” or, well, me in general. Still, he mostly found this author an effective middle manager. As such, I was a means to an end for him – that being self-advancement and some positive measurable statistics for his annual officer evaluation report (OER) from his own boss. Nonetheless, it was the army and you sure don’t choose your bosses.

So it was, early in my yearlong tour in the scrublands of rural Kandahar province, that the colonel treated me to one his dog-and-pony-show visits. Only this time he had some unhappy news for me. The next day he, and the baker’s dozen tag-alongs in his ubiquitous entourage, wanted to walk the few treacherous miles to the most dangerous strongpoint in the entire sub-district. It was occupied, needlessly, by one of my platoons in perpetuity and suffered under constant siege by the local Taliban, too small to contest the area and too big to fly under the radar, this – at one point the most attacked outpost in Afghanistan – base just provided an American flag-toting target. I’d communicated as much to command early on, but to no avail. Can-do US colonels with aspirations for general officer rank hardly ever give up territory to the enemy – even if that’s the strategically sound course.

Walking to the platoon strongpoint was dicey on even the best of days. The route between our main outpost and the Alamo-like strongpoint was flooded with Taliban insurgents and provided precious little cover or concealment for out patrols. On my first jaunt to the outpost, I (foolishly, it must be said) walked my unit into an ambush and was thrown over a small rock wall by the blast of a rocket-propelled grenade (RPG) with my apparent name on it. Since then, it was standard for our patrols to the strongpoint to suffer multiple ambushes during the roundtrip rotation. Sometimes our kids got wounded or killed; sometimes they were lucky. Mercifully, at least, my intelligence section – led by my friend and rebranded artillery lieutenant – did their homework and figured out that the chronically lazy local Taliban didn’t like to fight at night or wake up early, so patrols to the strongpoint that stepped off before dawn had a fighting chance of avoiding the worst of ambush alley.

I hadn’t wanted to take my colonel on a patrol to the outpost. His entourage was needlessly large and, when added to my rotational platoon, presented an unwieldy and inviting target for Taliban ambush. Still I knew better than to argue the point with my disturbingly confident and single-minded colonel. So I hedged. Yes, sir, we can take you along, with one caveat: we have to leave before dawn! I proceeded to explain why, replete with historical stats and examples, we could only (somewhat) safely avoid ambush if we did so.

That’s when things went south. The colonel insisted we leave at nine, maybe even ten, in the morning, the absolute peak window for Taliban attack. This prima donna reminded me that he couldn’t possibly leave any earlier. He had a “battle rhythm,” after all, which included working out in the gym at his large, safe, distant-from-the-roar-of-battle base each morning. How could I expect him to alter that predictable schedule over something as minor as protecting the lives and limbs of his own troopers? He had “to set an example,” he reminded me, by letting his soldiers on the base “see him in the gym” each and every morning. Back then, silly me, I was actually surprised by the colonel’s absurd refusal; so much so that I pushed back, balked, tried to rationally press my point. To no avail.

What the man said next has haunted me ever since. We would leave no earlier than nine AM, according to his preference. My emotional pleas – begging really – was not only for naught but insulted the colonel. Why? Because, as he imparted to me, for my own growth and development he thought, “Remember: lower caters to higher, Danny!” That, he reminded me, was the way of the military world, the key to success and advancement. The man even thought he was being helpful, advising me on how to achieve the success he’d achieved. My heart sank…forever, and never recovered.

The next day he was late. We didn’t step off until nearly ten AM. The ambush, a massive mix of RPG and machine gun fire, kicked off – as predicted – within sight of the main base. The rest was history, and certainly could’ve been worse. On other, less lucky, days it was. But I remember this one profound moment. When the first rocket exploded above us, both the colonel and I dove for limited cover behind a mound of rocks. I was terrified and exasperated. Just then we locked eyes and I gazed into his proverbial soul. The man was incapable of fear. He wasn’t scared, or disturbed; he didn’t care a bit about what was happening. That revelation was more terrifying than the ongoing ambush and would alter my view of the world irreparably.

Which brings us to some of the discomfiting morals – if such things exist – of this story.

American soldiers fight and die at the whims of career-obsessed officers as much they do so at the behest of king and country. Sometimes its their own leaders – as much as the ostensible “enemy” – that tries to get them killed. The plentiful sociopaths running these wars at the upper and even middle-management levels are often far less concerned with long-term, meaningful “victory” in places like Afghanistan, than in crafting – on the backs of their soldiers sacrifices – the illusion of progress, just enough measurable “success” in their one year tour to warrant a stellar evaluation and, thus, the next promotion. Not all leaders are like this. I, for one, once worked for a man for whom I – and all my peers – would run through walls for, a (then) colonel that loved his hundreds of soldiers like they were his own children. But he was the exception that proved the rule.

The madness, irrationality, and absurdity of my colonel was nothing less than a microcosm of America’s entire hopeless adventure in Afghanistan. The war was never rational, winnable, or meaningful. It was from the first, and will end as, an exercise in futility. It was, and is, one grand patrol to my own unnecessary outpost, undertaken at the wrong time and place. It was a collection of sociopaths and imbeciles – both Afghan and American – tilting at windmills and ultimately dying for nothing at all. Yet the young men in the proverbial trenches never flinched, never refused. They did their absurd duty because they were acculturated to the military system, and because they were embarrassed not to.

After all, lower caters to higher

Tyler Durden Fri, 09/06/2019 - 23:55
Published:9/6/2019 11:08:24 PM
[Markets] Go For 'Woke': Children's Book Publisher Promotes Bisexuality, Political Activism At School Fair Go For 'Woke': Children's Book Publisher Promotes Bisexuality, Political Activism At School Fair

Authored by Alexander Pease via The College Fix,

A national publisher of children’s books has refocused its marketing on a hot new trend: diversity.


But it’s not tackling the subject on its own. As Scholastic gears up for back-to-school presentations with its book fairs, the publisher is teaming up with a nonprofit coalition that promotes “diverse books.”

The official catalog of this year’s Scholastic book fair cycle shows the publisher taking a hard turn toward literature that highlights issues of sexual identity, intersectionality and social justice. It was first documented by The Federalist.

For example, instead of introducing children to Shakespeare’s “Romeo & Juliet,” Scholastic promotes the book “Star Crossed,” a bisexual version of the play.

It’s centered around a female character who plays Romeo in a middle-school play – and ends up falling in love with the also-female Juliet. The catalog ponders, referring to a middle-school student:

“Could she really be crushing on both boys and girls?”

Another Scholastic-promoted book features a girl who realizes that her dad “is secretly dating her best friend’s mom,” both of whom are divorced.

The catalog promotes politically correct storylines about religious and ethnic minorities as well. One features a Pakistani-American girl whose mosque is vandalized in a “hate crime,” while another introduces children to “Native American Heroes” including political activists.

Another is a graphic novel on Syrian refugees, titled “The Unwanted.”

The Scholastic description reads:

“Imagine you’re a Syrian refugee, desperate to escape a war zone,” Now imagine the countries you’re fleeing to don’t want you.” 

The Federalist says it literally paints a picture of “mass misery and repression” among Syrian refugees.

Publishing industry must promote ‘all diverse experiences’

Getting “queer literature” in the hands of children – especially if their parents disapprove – is a popular cause in higher education.

In a recent column for the Emerson College newspaper The Berkeley Beacon, the author argues this type of literature “needs have its own sections in libraries and bookstores, especially in the children’s sections”:

Publishing companies need to set quotas for the number of books they publish by LGBTQ+ authors and books covering LGBTQ+ topics each year. Schools and universities need to make a bigger effort at promoting LGBTQ+ writing as well, such as including queer-friendly books in their curriculum.

Scholastic’s nonprofit partner We Need Diverse Books is keen to fill this role. Its mission is to push for “essential changes in the publishing industry.”

Rather than teaching children timeless lessons from popular classes, WNDB aims to expose them to “diverse characters” who invariably promote progressive ideals.

It recognizes “all diverse experiences, including (but not limited to) LGBTQIA, Native, people of color, gender diversity, people with disabilities*, and ethnic, cultural, and religious minorities,” according to WNDB’s website. The asterisk on “disabilities” goes into an even longer description:

We subscribe to a broad definition of disability, which includes but is not limited to physical, sensory, cognitive, intellectual, or developmental disabilities, chronic conditions, and mental illnesses (this may also include addiction). Furthermore, we subscribe to a social model of disability, which presents disability as created by barriers in the social environment, due to lack of equal access, stereotyping, and other forms of marginalization.

Peer pressure to make boys act like girls

WNDB’s target audience includes the elementary and middle school age group, and this is reflected in Scholastic’s advertising for its upcoming book fair cycle.

The publisher’s interest in integrating LGBTQ+ literature into middle school libraries goes back at least a year, when “top teaching blogger” John DePasquale gave a roadmap for schools to “Create Inclusive, Affirming Schools for LGBTQ Students.”

The new catalog features just such an affirming story about a child who learns to be an “ally.” That is progressive jargon for someone who “uses their privilege to advocate on behalf of someone else who doesn’t hold that same privilege,” in the formulation of the University of Missouri-Kansas City’s diversity office.

Gender-neutral children’s author Alex Gino wrote “You Don’t Know Everything, Jilly P!” as a followup to Gino’s previous book, “George,” about a boy who “know she’s not a boy.”

Jilly learns how to be “an ally, a sister, and a friend … and that being open to change can make you change in the best possible ways,” according to Amazon’s description. While it largely focuses on the title character’s habit of accidentally offending a deaf friend and learning deaf culture, the novel for 8-12 year-olds also deals with race and sexuality.

An Amazon reviewer says Jilly “prides herself on not being a bigot” because she has “an aunt who is black and her aunt has a partner, whom Jillian loves as well.” (Presumably they are a lesbian couple.)

But Jilly’s grandmother shows soft bigotry against her black daughter-in-law Alicia by asking her “to bring ethnic foods such as a sweet potato pie” and making comments about Alicia’s daughter’s hair, according to the reviewer. Jilly eventually realizes from the “gaffes” of her relatives that she does the same thing to her deaf friend.

Another book pushes alternative gender theories through a fantasy lens“The Witch Boy” by Molly Ostertag outlines the life of a 13-year-old who breaks the gender role – boys are raised to be “shapeshifters” – and instead becomes infatuated with witchcraft.

“When a mysterious danger threatens the other boys, Aster knows he can help — as a witch,” according to the book’s description. He is prodded to embrace this role by his similarly “non-conforming” new friend Charlie.

LGBTQ+ books are being geared toward even younger children as well. The children’s picture book And Tango Makes Three tells the story of “a same-sex penguin couple hatching an egg together.” It received a top rating on Goodreads and was named to the American Library Association’s Notable Children’s Books of 2006, among other accolades.

Author Ibi Zoboi was extremely candid with Bustle about the aims of the project between WNDB and Scholastic.

“We need diverse scholars and educators who will subvert the canon, the form, and many of our hierarchical systems of selecting and lauding books,” Zoboi told the women’s magazine.

Translated by The Federalist, that means “making sure nobody reads Shakespeare ever again, unless we decide he was really a closeted gay woman.”

Scholastic did not respond to inquiries from The College Fix for further information on the inventory of this semester’s book fair cycle and whether it still carries literary classics.

Tyler Durden Fri, 09/06/2019 - 19:55
Published:9/6/2019 7:04:49 PM
[Markets] "It's American Hegemony That's Being Backed Into A Corner" - The Dollar Is More At Risk Than The Yuan

Authored by Alasdair Macleod via,

China has made some silly errors in its conflict with the US, reflecting the arrogance that often afflicts every state actor. But the appearance that China is being backed into a corner over Huawei, trade tariffs and Hong Kong is misleading. China is progressing her own plans, and they do not require an accommodation with America. With Russia in tow, she is now the chief foreign influencer for up to three-quarters of the world’s population, so it is American hegemony that’s being backed into a corner. One day, this will be reflected in a currency shoot-out. This article concludes that the dollar is more at risk than the yuan, the opposite of perceptions in western capital markets.


In the undeclared war between the US and China, the focus has been on the obvious battles.

  1. Huawei has been badly wounded but looks like surviving.

  2. The trade tariff battle continues and,

  3. the battle in Hong Kong is ongoing and yet to be resolved.

China made expensive choices in all three.

With Huawei, accusations of security breaches from the Americans perhaps could have been more immediately addressed with British and European governments.

Over tariffs, China should have ignored President Trump’s provocation and not imposed tariffs of her own. Tariffs arise out of political ignorance of the economics of trade imbalances. They are a tax on the people and are therefore self-harming. China should have recognised that it was better to leave America depressing its own economy. By refusing to get involved, China would have also taken the high ground internationally, keeping the objective of free trade open, isolating American trade policy and isolating America itself.

Hong Kong should never have been allowed to escalate. The proposed extradition law should have been killed at birth. Instead, it has given the US an opportunity to encourage riots in Hong Kong. China’s intelligence services were well aware of America’s involvement, and there’s no excuse for this blunder. Now that this has finally been recognised with Hong Kong dropping the proposed law only this week, it remains to be seen whether the rioting subsides.

Hong Kong was also the most serious of the three errors. The island is the channel through which international money flows freely into and out of China through Shanghai Connect, and international portfolio flows will now be deterred from investing in China and her projects. America’s true objective regarding Hong Kong was probably to undermine China’s future development plans and to divert international portfolio flows to finance US Government spending instead.

China’s errors are certainly serious, but they hog the headlines to the exclusion of the bigger picture. China in partnership with Russia is consolidating control over the Eurasian continent. Furthermore, with Russia being the world’s largest energy exporter, Iran being driven by America under the Chinese/Russian umbrella, and the Saudis increasingly recognising their future lies with Asian energy consumers, China with Russia is positioned to take control of the global energy market. That’s three vital quasi-monopolies: physical gold, rare earths and energy.

As the ace up its sleeve, America obviously believes the world’s dependency on the dollar makes it its prisoner. But the more that ace is played, the shallower other nations’ toleration with America becomes. Through its demand for energy and commodities, China has already forged alliances with all sub-Saharan Africa, helping to turn it into the most dynamic regional prospect outside Asia for the next fifty years. South-East Asia is the cultural preserve of the Chinese diaspora, links with America only being a legacy of the past. Putting the whole of Asia and Africa together with Eastern Europe accounts for three quarters of the world’s population, no longer suited to and slipping from American hegemony.

We can therefore say the informal war between China and the US is far from over. America’s undoing could be accelerated by her new inward-looking foreign policies, rendered by the Trumpian introspective view that the world has been taking America for a ride. But there is another factor: the credit cycle is on the turn and combining with American and Chinese trade tariffs this synergistic mix threatens a crisis likely to change the outlook for fiat currencies entirely. Bolstered by the risk of owning anything else, will the dollar re-emerge as a safe haven, and will the yuan collapse under a sea of debt? This is the focus for the rest of this article.

The dollar and yuan in a crisis

From their tweets and writings, many commentators appear to be aware that too much debt is dangerous, and they seem to buy into a theory of a cycle of credit. How much so is often hard to discern, since very few of them in this Keynesian milieu appear to have a consistent grasp of economic theory, and more specifically a tenable theory of money and credit. This should not surprise us. They are, one must admit, often ahead of central planners in these matters, but then we are setting a very low bar.

Commentary from Western capital markets is also couched in an east versus west theme. China bad, America good. In Europe it’s China not so good, America getting worse. Or for Germany it is America bad for screwing up its exports to China and possibly to America as well. But sticking with money and credit rather than trade, a common theme from American commentators is that China has created too much debt and has expanded credit proportionally at a far greater rate than the US. Presumably, their thoughts are that if there’s a financial crisis, or a new slump, China will suffer catastrophically, and often there is an additional subtext: it will no longer be a threat to American hegemony and world peace.

One can imagine this line of thinking being popular in the White House, where the rock-crushing machinery of trade tariffs and restrictions on Chinese technology is expected to bring China to her knees. But there are two issues with very different considerations. There is the currency and how that is likely to behave in a credit and trade downturn, and there is credit. While their unit values are the same, they don’t necessarily suffer the same fate. It will be the interplay between the two that will determine relative monetary prospects between the US and China.

Which will be the stronger in a crisis: dollar or yuan?

Let’s take the currency first. There are two background considerations ahead of any crisis: the level of government debt and the potential increase of it in a credit-induced recession or a credit crisis (which amounts to the same thing). In this, the Chinese government scores far better than the US, with a government debt to GDP of 51% against 105%.

Furthermore, the Congressional Budget Office forecasts a baseline of projected budget deficits of $903bn for next year rising to $1,138 in 2023, assuming real GDP growth in the US averages 1.7%. Obviously, in a recession, US budget deficits will turn out to be far higher even without allowing for the cost of rescuing the financial system in a credit crisis.

How China’s government finances will hold