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[Markets] FBI Testing Amazon's Facial Recognition Software

The CIA isn't the only federal agency making use of Amazon's vast offerings - as the FBI has been testing the Seattle-based megacorp's facial recognition software - Amazon Rekognition, as a potential method of scanning vast amounts of video surveillance footage which the agency routinely gathers during investigations. 

The pilot program was launched in early 2018 according to FBI officials, after several high-profile counterterrorism investigations which strained the FBI's current technological capabilities, reports Nextgov.com

One example of the FBI's struggle to keep up with data was during the 2017 Las Vegas mass shooting in which 64-year-old Stephen Paddock of Mesquite, Nevada killed Stephen Paddock killed 58 people and injured 422. As part of the investigation, the FBI gathered a petabyte worth of data (one million gigabytes) - much of it comprising video from cellphones and surveillance cameras. 

"We had agents and analysts, eight per shift, working 24/7 for three weeks going through the video footage of everywhere Stephen Paddock was the month leading up to him coming and doing the shooting," said FBI Deputy Assistant Director for Counterterrorism Christine Halvorsen, speaking from a Las Vegas Amazon Web Services conference in November. She described how the FBI has been using Amazon's cloud platform to carry out counterterrorism probes - noting that Amazon Rekognition could have processed the same amount of data from the Las Vegas shooting "in 24 hours," roughly three weeks faster than it took human FBI agents to find Paddock's face amid a mountain of video evidence. 

"Think about that,” Halvorsen said, noting that technology like Amazon Rekognition frees up FBI agents and analysts to apply their skills to other aspects of the investigation or other cases.

The cases don’t stop, the threats keep going,” Halvorsen added. “Being able to not pull people off that and have computers do it is very important.” -Nextgov.com

Amazon provides a significant number of services to the US government - primarily through its cloud business, AWS, which counts the Defense Department and the CIA among its customers. 

While it's unclear how the facial recognition software may be used in the public sector, the Daily Beast reported in October that Amazon had pitched the software to Immigrations and Customs Enforcement last summer, which has resulted in both lawmakers and Amazon employees asking questions, according to Nextgov

The company does not list any federal clients on its customer page, and currently only identifies as a customer one local law enforcement agency, the Washington County Sheriff Office.

Once a customer, the city of Orlando canceled its own pilot of Amazon Rekognition last June after public outcry over civil liberties. -Nextgov.com

Just one question; is Rekognition racist?

Published:1/4/2019 10:01:00 PM
[World] [John K. Ross] Short Circuit: A Roundup of Recent Federal Court Decisions

A blind websurfer, an accidental No Fly List designation, and a threat-inducing photocopy.

Please enjoy the latest edition of Short Circuit, a weekly feature from the Institute for Justice.

Friends, back in 2016, the Oregon engineering board fined Mats Järlström, who has a degree in electrical engineering, for calling himself an engineer. The board maintained that only licensed, board-certified engineers could call themselves "engineers" and that all the many software engineers, sound engineers, train engineers, and other folks who use the term to describe their occupation were breaking the law. Last month, a federal judge ruled that the government cannot redefine the meaning of common terms. Read more at Vice or check out Scott Adams' take on what all this means for popular cartoon engineer Dilbert.

  • Drug cartel hit squad attacks ICE agents traveling through central Mexico, an attempt to steal the agents' armored car. One agent is killed; one is seriously wounded. Mexican officials arrest members of the hit squad, including defendant (who didn't participate in attack on ICE agents). He pleads guilty in U.S. to RICO violation, among other things. District court: He gets 12 years in prison. D.C. Circuit: Could be that, in calculating his sentence, the district court considered defendant's murder of a rival cartel member (in Mexico) as relevant conduct, which it shouldn't have. Remanded for resentencing.
  • In 2017, President Trump tweeted that transgender individuals would no longer be allowed to serve in the military. (The gov't now says some can; plaintiffs say there is still a total ban.) Four district courts issued nationwide preliminary injunctions barring the military from enforcing the policy while lawsuits challenging it proceed. D.C. Circuit: One of those injunctions is now dissolved; courts should defer to military officials' "considered professional judgment."
  • Pretrial detainee at Philadelphia federal prison delivers notes between two members of drug gang (that had murdered six family members of witness against the gang). But first the detainee gives the notes to prison officials, who photocopy them. Yikes! Officials goof up; the detainee delivers a photocopy, rather than the original note, tipping off the gang. The detainee receives threats, makes officials aware of them. Nevertheless, he's placed in yard with the gang members, who beat him severely. Third Circuit: No qualified immunity for prison officials who allegedly failed to protect the detainee. But he can't sue over repeatedly being put in solitary confinement.
  • Blind websurfer sues Department of Labor's Federal Credit Union. Allegation: Credit union's website violates the Americans with Disabilities Act because it's not adapted to screenreading devices that blind people can use to navigate websites. Fourth Circuit: Regardless, this particular blind websurfer lacks standing. The credit union's services, described on its website, are available only to employees or former employees of the Department of Labor or their families. The plaintiff fits none of those criteria, so his inability to navigate the website is too abstract a harm.
  • Illinois officials sue Chicago officials over police department's use-of-force policies and practices. The parties start to negotiate a consent decree, which the local chapter of the Fraternal Order of Police condemns: It's a "potential catastrophe" that could threaten the chapter's collective bargaining agreement. Over the next year, state representatives meet with the chapter, assure it the decree won't conflict with the CBA. Surprise! That might not be true. Can the chapter now become a party to the lawsuit? Seventh Circuit: Nope. Shouldn't have waited so long to try to intervene.
  • Seventh Circuit (2017): When the state takes custody of seemingly abandoned bank accounts, the rightful owner can get their funds back, plus interest, less reasonable custodial fees. On remand, the district court says interest is available to only those property owners whose funds were earning interest when the state took them into custody. Seventh Circuit (2019): Again: A property owner is entitled to income that their property earns, which doesn't depend on what it was earning in the owner's hands before the state took custody.
  • In 2004, an FBI agent accidentally puts a Malaysian grad student on the No Fly List. (In the agent's defense, the form is not intuitive). After a decade of litigation, the gov't concedes it knew all along the student was never a threat to national security. Nevertheless, she remains barred from the country. Ninth Circuit (en banc): The gov't's conduct has been "ethically questionable." And the student's attorneys are probably entitled to more than the $450k the district court ordered the gov't to pay. Complete victory on one of the student's claims (procedural due process) doesn't preclude fees for other claims her attorneys raised (First Amendment and equal protection) that the district court didn't reach.
  • Upon receiving an anonymous tip alleging child abuse, social worker visits Colorado Springs, Colo. preschool, buttonholes 4-year-old girl, strips her, and (over child's objection) photographs her body—then falsely denies doing so when later confronted by the child's mom. An unconstitutional search under the Fourth Amendment? Maybe, says the Tenth Circuit. Or maybe not. Don't know, don't care. Qualified immunity. Dissent: The social worker "was never aware of facts that could have justified such an intrusive search of a four-year-old girl."
  • In 1970s, radical African-American activists squat in Philadelphia home; they pace around the roof with firearms and hold forth with loudspeaker, which annoys the neighbors. In 1978, during massive police operation to evict the group, an officer is shot in the back of the neck. (There is speculation the officer was hit by friendly fire.) Nine activists are convicted in his death. Two die in prison; two have been released on parole; and two more are suing over being denied parole. Eastern District of Pennsylvania: The parole board needs to turn over victim impact statements to the activists; the statements could shed light on whether the board's reasons for denying parole were arbitrary or pretextual.
  • According to sources, Russian agents placed polarizing ads on Facebook targeted at Baltimore residents in advance of the 2016 election. In response, Maryland legislators pass new campaign finance law requiring online platforms to post searchable index of data on purchasers, prices of political ads on their websites. Maryland District Court: No way the law survives strict scrutiny. Among other things, it applies to much smaller platforms than Facebook, and it won't remedy the harm it's meant to address.
  • In effort to crack down on short-term home rentals, NYC officials pass ordinance requiring Airbnb and HomeAway to turn over "breathtaking" amount of data to the authorities each month, including rental hosts' names, addresses, pricing, and advertisements—irrespective of whether there is cause to suspect a host is violating relevant health and safety laws. Southern District of New York: Could be the law violates the Fourth Amendment. No enforcing it while the suit proceeds. (More via SDNY Blog.)
  • Virginia's policy of suspending drivers' licenses for unpaid fines and fees—a policy that has resulted in hundreds of thousands of such suspensions—likely does not comport with due process, says the Western District of Virginia, as it appears drivers get insufficient notice of and opportunity to challenge suspensions. Moreover, the policy is counterproductive; if people are too poor to pay, making it harder for them to get to work harms the gov't's fiscal interests. (Last month, the governor announced plans to cease the policy.)

Over 130,000 students in Florida are able to attend the schools of their families' choice thanks to a pair of programs enacted over a decade ago. Opponents say these students must all be sent back to their assigned public schools because the programs violate the Florida Constitution's requirement that the state provide an "adequate" and "uniform" system of public education. Today, the Florida Supreme Court refused to strike down the programs, ruling that in nearly a decade of litigation, opponents never adequately preserved their constitutional arguments. The dissent: We should get to the merits anyway. The majority: No, we shouldn't. That would be "an approach that not so subtly attempts to drag politics into judicial decision making." Affirmed.

Published:1/4/2019 5:06:46 PM
[Markets] Senate Bill Seeks Aggressive Clamp Down On Chinese Tech Espionage

After top FBI officials testified before the Senate Judiciary Committee last month that Chinese espionage poses the "most severe" threat currently facing American security, and after greater scrutiny of major Chinese telecommunications that had before operated with seeming impunity in the US like Huawei Technologies Co. and ZTE Corp.  especially following the arrest of Huawei’s CFO Meng Wanzhou and others in Canada — senators are now proposing a bill to combat technology threats from China

Senators Mark Warner and Marco Rubio during a previous press conference on Russian election meddling. via Getty

Senators Mark Warner and Marco Rubio are co-sponsoring legislation that seeks to counter the risk of state-sponsored technology theft by establishing an "Office of Critical Technologies and Security" overseen by the White House. The bill would add greater teeth and oversight to current Trump administration efforts to quash Chinese attempts at stealing technology secrets from US firms, which often also involves supply chain infiltration at foreign manufacturing sites, following a related bill signed into law last August which attempted to strengthen a panel that reviews foreign-based investments in the US for national security risks, but which was widely viewed as "watered down" when it came to China

Mark Warner (D-VA) described, “It is clear that China is determined to use every tool in its arsenal to surpass the United States technologically and dominate us economically." Continuing his Friday statement, he said, "We need a whole-of-government technology strategy to protect U.S. competitiveness in emerging and dual-use technologies and address the Chinese threat."

And Rubio (R-FL) specified the China tech theft threat as follows

China continues to conduct a coordinated assault on U.S. intellectual property, U.S. businesses, and our government networks and information with the full backing of the Chinese Communist Party

Rubio added, “The United States needs a more coordinated approach to directly counter this critical threat and ensure we better protect U.S. technology."

This follows months of multiple major instances of China caught in brazen acts of theft of American technology and trade secrets, though which only very slowly picked up steam in the mainstream media. 

Trump has consistently blasted China's "unfair trade practices" which includes stealing US intellectual property as the "cost of doing business" with Beijing. The issue has sent tensions soaring amidst a trade war that's already disrupted the flow of hundreds of billions of dollars worth of goods, potentially slowing growth. 

Last month Presidents Trump and Xi Jinping called for a truce in their escalating trade war following a sideline meeting at the G20 summit in Buenos Aires, and starting early next week the two sides are set to hold governmental trade talks in Beijing (Jan 7-8).

Published:1/4/2019 11:27:05 AM
[Markets] Reporter Quits NBC Citing Network’s Support For Endless War

Submitted by Caitlin Johnstone

A journalist with NBC has resigned from the network with a statement which highlights the immense resistance that ostensibly liberal mass media outlets have to antiwar narratives, skepticism of US military agendas, and any movement in the opposite direction of endless military expansionism.

“January 4 is my last day at NBC News and I’d like to say goodbye to my friends, hopefully not for good,” begins an email titled ‘My goodbye letter to NBC’ sent to various contacts by William M Arkin, an award-winning journalist who has been associated with the network for 30 years.

“This isn’t the first time I’ve left NBC, but this time the parting is more bittersweet, the world and the state of journalism in tandem crisis,” the email continues. “My expertise, though seeming to be all the more central to the challenges and dangers we face, also seems to be less valued at the moment. And I find myself completely out of synch with the network, being neither a day-to-day reporter nor interested in the Trump circus.”

The lengthy email covers details about Arkin’s relationship with NBC and its staff, his opinions about the mainstream media’s refusal to adequately scrutinize and criticize the US war machine’s spectacular failures in the Middle East, how he “argued endlessly with MSNBC about all things national security for years”, the fact that his position as a civilian military analyst was unusual and “peculiar” in a media environment where that role is normally dominated by “THE GENERALS and former government officials,” and how he was “one of the few to report that there weren’t any WMD in Iraq” and remembers “fondly presenting that conclusion to an incredulous NBC editorial board.”

“A scholar at heart, I also found myself an often lone voice that was anti-nuclear and even anti-military, anti-military for me meaning opinionated but also highly knowledgeable, somewhat akin to a movie critic, loving my subject but also not shy about making judgements regarding the flops and the losers,” he writes.

Arkin makes clear that NBC is in no way the sole mass media offender in its refusal to question or criticize the normalization of endless warfare, but that he feels increasingly “out of sync” and “out of step” with the network’s unhesitating advancement of military interventionist narratives. He writes about how Robert Windrem, NBC News’ chief investigative producer, convinced him to join a new investigative unit in the early days of the 2016 presidential race. Arkin writes the following about his experience with the unit:

“I thought that the mission was to break through the machine of perpetual war acceptance and conventional wisdom to challenge Hillary Clinton’s hawkishness. It was also an interesting moment at NBC because everyone was looking over their shoulder at Vice and other upstarts creeping up on the mainstream. But then Trump got elected and Investigations got sucked into the tweeting vortex, increasingly lost in a directionless adrenaline rush, the national security and political version of leading the broadcast with every snow storm. And I would assert that in many ways NBC just began emulating the national security state itself?—?busy and profitable. No wars won but the ball is kept in play.
“I’d argue that under Trump, the national security establishment not only hasn’t missed a beat but indeed has gained dangerous strength. Now it is ever more autonomous and practically impervious to criticism. I’d also argue, ever so gingerly, that NBC has become somewhat lost in its own verve, proxies of boring moderation and conventional wisdom, defender of the government against Trump, cheerleader for open and subtle threat mongering, in love with procedure and protocol over all else (including results). I accept that there’s a lot to report here, but I’m more worried about how much we are missing. Hence my desire to take a step back and think why so little changes with regard to America’s wars.”

Arkin is no fan of Trump, calling him “an ignorant and incompetent impostor,” but describes his shock at NBC’s reflexive opposition to the president’s “bumbling intuitions” to get along with Russia, to denuclearize North Korea, to get out of the Middle East, and his questioning of the US military’s involvement in Africa.

“I’m alarmed at how quick NBC is to mechanically argue the contrary, to be in favor of policies that just spell more conflict and more war. Really? We shouldn’t get out Syria? We shouldn’t go for the bold move of denuclearizing the Korean peninsula? Even on Russia, though we should be concerned about the brittleness of our democracy that it is so vulnerable to manipulation, do we really yearn for the Cold War? And don’t even get me started with the FBI: What? We now lionize this historically destructive institution?”

“There’s a saying about consultants, that organizations hire them to hear exactly what they want to hear,” Arkin writes in the conclusion of his statement. “ I’m proud to say that NBC didn’t do that when it came to me. Similarly I can say that I’m proud that I’m not guilty of giving my employers what they wanted. Still, the things this and most organizations fear most?—?variability, disturbance, difference?—?those things that are also the primary drivers of creativity?—?are not really the things that I see valued in the reporting ranks.”

That’s about as charitably as it could possibly be said by a skeptical tongue. Another way to say it would be that plutocrat-controlled and government-enmeshed media networks hire reporters to protect the warmongering oligarchic status quo upon which media-controlling plutocrats have built their respective kingdoms, and foster an environment which elevates those who promote establishment-friendly narratives while marginalizing and pressuring anyone who doesn’t. It’s absolutely bizarre that it should be unusual for there to be a civilian analyst of the US war machine’s behaviors in the mainstream media who is skeptical of its failed policies and nonstop bloodshed, and it’s a crime that such voices are barely holding on to the fringes of the media stage. Such analysts should be extremely normal and commonplace, not rare and made to feel as though they don’t belong.

Click here to read William M Arkin’s full email, republished with permission.

Published:1/3/2019 5:22:47 PM
[Politics] Dershowitz: Trump Firing Comey Was a Mistake It was a mistake for President Donald Trump to fire James Comey as FBI director, Harvard Law professor emeritus Alan Dershowitz told Fox News' "Outnumbered Overtime." Published:1/3/2019 2:52:36 PM
[Markets] The Only Meddling "Russian Bots" Were Actually Democrat-Led "Experts"

Authored by Mac Slavo via SHTFplan.com,

Cybersecurity “experts” in the United States have long alleged that “Russian bots” were used to meddle in the 2016 elections.

But, as it turns out, the authors of a Senate report on “Russian election meddling” actually ran the false flag meddling operation themselves.

A week before Christmas, the Senate Intelligence Committee released a report accusing Russia of depressing Democrat voter turnout by targeting African-Americans on social media. Its authors, New Knowledge, quickly became a household name. Described by the New York Times as a group of “tech specialists who lean Democratic,” New Knowledge has ties to both the U.S. military and the intelligence agencies.

The CEO and co-founder of New Knowledge, Jonathon Morgan, had previously worked for DARPA (Defense Advanced Research Projects Agency), the U.S. military’s advanced research agency known for horrific ideas on how to control humanity. Morgan’s partner, Ryan Fox, is a 15-year veteran of the NSA (National Security Agency) who also worked as a computer analyst for the Joint Special Operations Command (JSOC). Their unique skill sets have managed to attract the eye of authoritarian investors, who pumped $11 million into the company in 2018 alone, according to a report by RT.

Morgan and Fox have both struck gold in the Russiagate scheme, which sprung into being after Hillary Clinton blamed Moscow for Donald Trump’s presidential victory in 2016. Morgan, for example, is one of the developers of the Hamilton 68 Dashboard, the online tool that purports to monitor and expose narratives being pushed by the Kremlin on Twitter. And also worth mentioning, that dashboard is bankrolled by the German Marshall Fund’s Alliance for Securing Democracy – a collection of Democrats and neoconservatives funded in part by NATO (North AtTreaty Tready Organization)and USAID (United States Agency for International Development).

It is worth noting that the 600 Russia-linked Twitter accounts monitored by the dashboard is not disclosed to the public either, making it impossible to verify these claims. This inconvenience has not stopped Hamilton 68 from becoming a go-to source for hysteria-hungry journalists, however. Yet on December 19, a New York Timesstory revealed that Morgan and his crew had created the fake army of Russian bots, as well as several fake Facebook groups, in order to discredit Republican candidate Roy Moore in Alabama’s 2017 special election for the U.S. Senate.

Working on behalf of the Democrats, Morgan and his crew created an estimated 1,000 fake Twitter accounts with Russian names, and had them follow Moore. They also operated several Facebook pages where they posed as Alabama conservatives who wanted like-minded voters to support a write-in candidate insteadIn an internal memo, New Knowledge boasted that it had orchestrated an elaborate ‘false flag’ operation that planted the idea that the Moore campaign was amplified on social media by a Russian botnet.”RT

This scandal is being perpetrated by the United States media and has so far deceived millions, if not more. The botnet claim made a splash on social media and was further amplified by Mother Jones, which based its story on “expert opinion” from Morgan’s dubious creation, Hamilton 68.

Things got even weirder when it turned out that Scott Shane, the author of the Times piece, had known about the meddling for months because he spoke at an event where the organizers boasted about it!

Shane was one of the speakers at a meeting in September, organized by American Engagement Technologies, a group run by Mikey Dickerson, President Barack Obama’s former tech czar. Dickerson explained how AET spent $100,000 on New Knowledge’s campaign to suppress Republican votes, “enrage Democrats to boost turnout, and execute a false flag to hurt Moore. He dubbed it Project Birmingham.” -RT

There really was meddling in American democracy by Russian bots. Except those bots weren’t run from Moscow or St. Petersburg but from the offices of Democrat operatives chiefly responsible for creating and amplifying the Russiagate hysteria over the past two years in a textbook case of psychological projectionbrainwashing, and Nazi-style propaganda campaigns.

Published:1/1/2019 8:42:00 PM
[Markets] 2019 From A Fourth Turning Persepctive

Authored by Jim Quinn via The Burning Platform blog,

“An impasse over the federal budget reaches a stalemate. The president and Congress both refuse to back down, triggering a near-total government shutdown. The president declares emergency powers. Congress rescinds his authority. Dollar and bond prices plummet. The president threatens to stop Social Security checks. Congress refuses to raise the debt ceiling. Default looms. Wall Street panics.”

– The Fourth Turning – Strauss & Howe

Strauss and Howe wrote their book in 1996. They were not trying to be prophets of doom, but observers of history able to connect events through human life cycles of 80 or so years. Using critical thinking skills and identifying the most likely triggers for crisis: debt, civic decay, and global disorder, they were able to anticipate scenarios which could drive the next crisis, which they warned would arrive in the mid-2000 decade. The scenario described above is fairly close to the current situation, driven by the showdown between Trump and the Democrats regarding the border wall.

It has not reached the stage where all hell breaks loose, but if it extends until the end of January and food stamp money is not distributed to 40 million people (mostly in urban ghettos) all bets are off. The likelihood of this scenario is small, but there are numerous potential triggers which could still make 2019 go down in history as a year to remember.

As we enter the eleventh year of this Fourth Turning, the fourth Crisis period in U.S. history, the mood of U.S. citizens and citizens around the globe continues to darken. Fourth Turnings are driven by generational configuration and the emotional reaction to events by the Prophet generation leaders, Nomad generation spearheads, and Hero generation cannon fodder.

As we close out this year, stock markets are gyrating wildly, central bankers are trying to reverse their nine years of interventionist strategies to sustain the establishment, civil chaos spreads across the European continent, saber rattling between the U.S., Russia and China increases, the animosity between political parties reaches new heights, the Deep State relentlessly pursues their Mueller led coup against Trump, mega-social media corporations tighten their grip on free speech by silencing conservatives, leftists push their socialist, open borders, normalizing degeneracy agenda, and global recession gains momentum as trade declines and global debt reaches unserviceable levels.

Examining the three prior Fourth Turnings may give us a window into where we stand and what may happen in the coming year. We are in the tenth year of this Crisis, with the eleven-year anniversary slated for September 2019. The American Revolution Crisis was catalyzed in 1773 when the Boston Tea Party forever changed the colonial mood towards revolution. After eight years of struggle and desperate measures, the climax was reached with the surrender of Cornwallis at Yorktown in 1781.

But there was still thirteen more years of crisis as the new states forged a Constitution, elected Washington its first president, and he withstood the Jacobins, put down the Whiskey Rebellion and finalized a treaty with England. In year ten of the crisis, two years past the climax, the Treaty of Paris was signed, British troops left the continent, and Washington resigned as commander of American troops. The Articles of Confederation had been ratified in 1781 and remained in place until succeeded by the U.S. Constitution in 1789.

There was no tenth or eleventh year of the Civil War Crisis. Lincoln’s election with only 40% of the popular vote, prompting the attack on Fort Sumpter, and subsequent secession of Southern states, triggered the bloodiest conflict in world history, with 8% of all white men aged 13 to 43 killed in the war, including 6% in the North and 18% in the South. The acceleration of this Fourth Turning into a five-year window from 1860 to 1865 was not a positive development.

The extreme intensity of the conflict resulted in 700,000 tragic deaths. The catalyst occurred five years too soon and the resolution a generation too soon. A more extended crisis may have allowed tempers to moderate and the conflict to end in a more constructive manner. Instead, with the surrender at Appomattox and assassination of Lincoln, the resolution felt more like a defeat than a victory. Turmoil continued for at least a decade after the resolution.

The Great Depression/World War II Crisis saw its tenth and eleventh years as the most ominous, dangerous and destructive for Great Britain, as they bore the brunt of the German onslaught. 1939 saw the Nazi invasion of Poland and the official start of World War II. In May of 1940 Germany launched its blitzkrieg offensive through Holland and Belgium, defeating the French and British forces in a matter of weeks. Chamberlain resigned as Prime Minister, replaced by Churchill, as France surrendered in late June.

The Battle of Britain raged from July through October as Hitler relentlessly bombed England, trying to force their surrender. Germany, Italy and Japan signed the Tripartite pact in September, setting the stage for the U.S. eventual participation in the war. Einstein informed FDR of the potential for an atomic bomb during 1939 and the Manhattan Project was born. The climax of the crisis occurred with the successful D-Day invasion. The dropping of two atomic bombs on Japan and successful demobilization of military forces marked the end of the crisis.

History may not repeat, but human nature never changes, so the 80-year cycles of manmade crisis will repeat. The length of time from the American Revolution climax in 1781 until the Civil War climax in 1863 was 82 years. The next climax in 1944 was 81 years after the Civil War climax. Therefore, we can expect a climax to this current Crisis sometime in the 2025 range. The question is what events will transpire between 2019 and 2025 before a climax is reached.

Based upon history, the resolution will not be based on compromise, civility, reason, or peaceful means. The combustible combination of unpayable debt, civic anarchy, and global chaos are set to detonate, creating an era of maximum darkness, death, destruction, and decisions. Making America Great Again will require personal sacrifice, dreadful choices, survival skills, intelligent decisions, and the courage to win at all costs.

The first ten years of this Crisis were the early Winter solstice period when public order began to pass its nadir. The coldest days of Winter beckon with the harshest years of the Crisis ahead. Many melancholy days lie ahead, as bitter winter winds and blizzard like conditions sweep the bleak landscape, testing the mettle of even the bravest souls. The catalyst for the Crisis was the Wall Street created global financial meltdown in 2008. The election of Trump marked the beginning of the regeneracy, with Trump as the Gray Champion.

The last two years have certainly marked a new more volatile phase of this Crisis, setting the stage for the fireworks to come. The regeneracy is less like FDR’s New Deal initiated unification of the country and more like the Lincoln regeneracy after the First Battle of Bull Run when he ordered the enlistment of a half million men to fight a like number of fellow American men. Both American factions were unified in their cause. The chain reaction of emergencies and unyielding responses will continue unabated until a final resolution is achieved.

“In retrospect, the spark might seem as ominous as a financial crash, as ordinary as a national election, or as trivial as a Tea Party. The catalyst will unfold according to a basic Crisis dynamic that underlies all of these scenarios: An initial spark will trigger a chain reaction of unyielding responses and further emergencies.

The core elements of these scenarios (debt, civic decay, global disorder) will matter more than the details, which the catalyst will juxtapose and connect in some unknowable way. If foreign societies are also entering a Fourth Turning, this could accelerate the chain reaction. At home and abroad, these events will reflect the tearing of the civic fabric at points of extreme vulnerability – problem areas where America will have neglected, denied, or delayed needed action.” – The Fourth Turning – Strauss & Howe

Strauss and Howe foresaw the core elements which would surely propel the next Fourth Turning. They were plain to see for people who chose to see the world with eyes wide open. Debt, civic decay and global disorder are on center stage as we enter the fateful year of 2019. A madness seems to be gripping the nation, a melancholy realization all is not right. Everything has a chaotic feel, as financial markets are falling, politicians threaten and attack each other, government dysfunction is laid bare for all to see, Deep State snakes slither behind the scenes trying to bring down Trump, racial tensions grow, foreign governments topple, Russia and China challenge U.S. hegemony, and the global debt Ponzi scheme is entering its collapse phase.

There are no moderates, only pro-Trump and anti-Trump factions. Compromise and workable solutions to our deep-seated problems are off the table. The mood of the populace ranges from frustrated and angry to depressed and stressed. The aroma of conflict wafts through the air as battle lines are being drawn.

The initial spark of a global financial meltdown created by greedy Wall Street banks, the feckless Fed, and corrupt government officials was driven by bad debt, outright control fraud by the financial industry, captured rating agencies, easy money provided by the Wall Street owned Fed, and utter contempt for properly regulating the Wall Street cabal by the Fed and SEC.

This emergency was met by an unyielding response from the establishment, with the easiest money policies in world history, bailing out criminal bankers with taxpayer funds, increasing global debt by $80 trillion to $250 trillion (318% of global GDP), running fiscal deficits exceeding $1 trillion per year, and pretending all that debt will be repaid. Pretend and extend has been the solution.

The Deep State has taken extraordinary measures to try and retain their stranglehold on the wealth of the nation and control of the political, financial, social and media levers of society. They have utilized a combination of propaganda disguised as news, social media distractions, technological surveillance, misinformation campaigns, welfare to keep the poor sedated, and the continued issuance of debt to keep the masses satiated with consumer goods as their wealth dissipates. But the teetering edifice of debt, delusion and deception is poised to topple in 2019.

As we enter 2019, year eleven of this ongoing Crisis, you can sense the panic and distress permeating from the pores of the establishment figures and their rich shadowy benefactors trying to maintain their unseen presence behind the curtain as they pull the strings – operating as the invisible government running the show for their own benefit. It seems the unanticipated election of Trump has thrown a monkey wrench into their well- oiled pillage machine, forcing them to reveal themselves as they attempt a not so subtle coup against a sitting president.

Fourth Turnings always sweep away the existing social order in a torrent of violent upheaval and the blood of young men. But that doesn’t mean the existing establishment will give up their wealth, power and control without a fight. And the fight is underway. The volcano has erupted and the molten lava could flow in numerous pathways over the next six or so years.

“Imagine some national (and probably global) volcanic eruption, initially flowing along channels of distress that were created during the Unraveling era and further widened by the catalyst. Trying to foresee where the eruption will go once it bursts free of the channels is like trying to predict the exact fault line of an earthquake. All you know in advance is something about the molten ingredients of the climax, which could include the following:

  • Economic distress, with public debt in default, entitlement trust funds in bankruptcy, mounting poverty and unemployment, trade wars, collapsing financial markets, and hyperinflation (or deflation)

  • Social distress, with violence fueled by class, race, nativism, or religion and abetted by armed gangs, underground militias, and mercenaries hired by walled communities

  • Political distress, with institutional collapse, open tax revolts, one-party hegemony, major constitutional change, secessionism, authoritarianism, and altered national borders

  • Military distress, with war against terrorists or foreign regimes equipped with weapons of mass destruction” 

– The Fourth Turning – Strauss & Howe

The ingredients of distress in the next phase of this Crisis could include any or all of those pondered by Strauss and Howe twenty-two years ago. I can make the case for multiple levels of distress breaking free from their channels, making 2019 as historic a year as 1939 or 1940. My prognosis for 2019 follows:

Economic Distress

Economic distress is mounting, as the machinations of the Fed, Wall Street and the U.S. government prove to be nothing more than debt financed illusions. Once the easy money spigot is turned off and the tide of zero interest debt for Wall Street and mega-corporations recedes, you realize everyone was swimming naked. The national debt grew by $1.4 trillion in 2018 during “the best economy ever”, according to Trump.

We added $12 trillion to the national debt and have generated a historically weak recovery, especially for the working class. We’ve gone nine years without recession and the longest period in U.S. history between recessions was ten years. Without the tax cut stimulus, interest rates higher, corporate profits flagging, global trade waning, and central bankers withdrawing liquidity, recession is likely in 2019 – driving deficits towards $2 trillion.

The number of zombie companies (GE, Sears, JC Penney, Chesapeake, all fracking companies) propped up by cheap junk bond debt is astronomical. National debt default is still a ways off, but a tsunami of corporate debt defaults will inundate the economy once the recession knocks the legs out from beneath this faux recovery. Corporations and consumers have never been more indebted. Stock valuations have never been higher.

An economy that begins to self destruct when interest rates approach 3% proves the “solutions” implemented by those in power did nothing for the average American, while further enriching the parasitical class pulling the strings. At this point, a specific triggering event is unnecessary to provoke the economic conflagration. The unbearable weight of unpayable debt is going to cause the structure to collapse at free fall speed, like the Twin Towers pancaking everyone in the floors below.

With a recession inevitable in 2019, we know the stock market declines 30% to 40% during recessions, on average. When a stock market is this overvalued, based solely on Fed easy money and corporate buybacks (Apple has lost $9 billion on their buybacks this year), the withdrawal of liquidity combined with recession and declining profits will knock 50% to 60% off current prices. I wonder how many middle-class 401k contributors expect this to happen. Well this will be the third time in 18 years, so you would think they’d learn by now.

Recession means job losses, consumer debt defaults, less tax revenue for the government, more wasteful spending by politicians pretending to care, soaring deficits, currency gyrations, and the potential for rising interest rates as no one will be willing or able to buy the newly issued debt. Will we have massive deflation or hyperinflation? Anything is possible in a collapse scenario. What is certain will be millions of angry Americans looking for someone to blame and politicians seeking to distract them with some foreign “threat” to their safety and security. This is when trade wars morph into real wars.

Social Distress

The social distress sweeping the country gets the majority of attention on the left-wing corporate media propaganda machines as they purposely fan the flames of divisiveness. Keeping the sheeple angry at each other keeps them distracted from the continued pillaging of the national wealth by the Deep State scum operating in plain sight. The daily war against the normals has reached new heights of hypocrisy and idiocy.

The unceasing mantra of diversity, trying to normalize the lifestyles of the mentally ill, glorifying socialism as Venezuela implodes due to socialism, promoting the climate change agenda to abscond with more taxes, and trying to force left wing agendas down the throats of white traditional family-oriented people, is on the verge of starting civil violence as we are witnessing in France. The ruling class has gone too far in accumulating the wealth of the nation through the capture of regulatory, political, financial, and communication structures. Wealth inequality arisen through fraud, deception and corruption will lead to class warfare – likely after the next financial collapse.

The current government shutdown over funding for a border wall is essentially a showdown over the racial makeup of the country and allowing unfettered access to welfare benefits to illegal invaders who will loyally illegally vote for their Democrat benefactors for eternity. Racial politics is what has kept blacks enslaved on the welfare plantation in decaying urban ghettos run by Democrat politician plantation owners.

A black uprising led by Kanye West has struck fear into the hearts of Democrats, giving them further incentive to keeping the southern border open to new Democrat voters.  With gun grabbing liberal politicians attempting to disarm the deplorables in flyover country, while supporting antifa and black lives matter terrorists, and thwarting efforts to keep criminals and terrorists from illegally entering the country, a violent showdown is inevitable.

Political Distress

The political distress since the 2016 election has reached levels not seen since the Civil War Crisis period. The Deep State controllers’ next hand-picked figurehead president – Hillary Clinton – inexplicably lost the election to a NYC reality star real estate mogul who boasted about grabbing pussies and had a weakness for strippers and Playboy bunnies. Clinton’s arrogance and hubris were her downfall as the deplorables she ridiculed and a majority of white women in the country gave Trump a slim victory and drove millions of pussy-hat wearing feminazis into a rage.

College students across the land sobbed in their safe spaces and missed their Queer Theory or Pick your Gender classes. But not only were snowflakes across the land melting, but the surveillance state spooks who attempted to rig the election in Clinton’s favor went into a frenzy, as fear of their traitorous machinations being revealed forced them to begin a coup attempt against Trump. The Mueller, Comey, Clapper, Brennan, Obama, Clinton reactive coup attempt is ongoing and will come to a head in 2019.

The outcome of this epic struggle between the Deep State and the non-approved upstart president could create civil war like conditions. How will Trump supporters react if they believe their leader is removed through impeachment, based on false charges? Will they take to the streets in armed insurrection? Will the police and military fire on their fellow citizens? What if Trump refuses to step down, creating a Constitutional crisis? What if he is assassinated?

On the other hand, what if Trump’s allies within the DOJ and Military present evidence of collusion against the Obama administration, Clinton and top officials in the FBI, DOJ and CIA? How would the left wingers react to military tribunals with their beloved leaders in the docket? Even if these earth-shattering events don’t come to fruition, a Democrat controlled House will thwart everything Trump attempts to accomplish as they position themselves for the 2020 presidential election. The anger and disillusionment of the masses will deepen.

Military Distress

The potential for catastrophe on the military front hasn’t been higher in decades. The linear thinking lemmings dismiss the possibility of a global conflict because they are just as obtuse as “experts” before them throughout history. Since World War II we have only experienced proxy wars where the outcomes would not change the course of world history. There have been no “total wars”, where the loser is utterly shattered and complete victory is attained.

Those who practice revisionist history act as if the previous two Fourth Turning total wars were completely predictable before they began. In 1858 no one believed a Civil War taking the lives of 700,000 Americans was just over the horizon. Exactly 80 years later in 1938, few believed a global conflict which would kill 65 million people in six years was imminent. Here we are exactly 80 years later and anyone predicting a global conflagration killing millions is declared a loon.

Every previous Fourth Turning has ended in total war with victory of the “good guys” always in doubt. Every total war has ratcheted up the level of death and destruction, as technological “advancements” enhance our war making abilities. Human nature DOES NOT change. We are not smarter, less war-like, more humanitarian, or less arrogant than our predecessors throughout history. Hubris, power, and miscalculation by egomaniacal leaders leads to war.

We know the climax of this Fourth Turning is slated for around 2025. This infers a high likelihood of a major war involving the U.S. in the foreseeable future. Will it ignite in 2019? All the combustible elements are present. The onset of a global depression, trade wars, China & Russia feeling pushed into a corner and the volatile political situation in the U.S. and EU provide a potential pathway to global conflict.

Economic indicators from China show the slowest economic growth in a quarter century. Their natives are restless. Plunging oil prices will throw the Russian economy into recession. The EU economies, led by Germany, are seizing up with the slowdown in global trade. Japan has essentially been in recession since the 1990s. The U.S. is poised for a recession in 2019.

Immigration chaos in Europe, Brexit, Ukrainian nazis provoking Russia, South China Sea territorial disputes, the Syria, Turkey, Iran, Israel ticking time bomb, Saudi anarchy, socialist South American regimes imploding, and U.S. political pandemonium have created a perfect storm of domestic and international disasters. What do low-life politicians do when faced with terrible domestic issues? They seek to distract their citizens with a foreign threat. See “Blame Russia for Everything” as an example of this tried and true propaganda technique.

Desperate politicians do desperate things to retain power. Desperate Deep State actors care not one wit for their fellow countrymen. They are willing and able to sacrifice the youth of their nation to fight wars which will further enrich themselves and their fellow traitorous benefactors. We are nothing but cannon fodder to this psychopathic scum. Putin and Xi are essentially dictators who have no fear of elections every two years. They are serious men in possession of nuclear missiles, capable of destroying the world.

Blaming them for all the ills in your own country is a fool hardy tactic. The ever- increasing saber rattling, whether in the Ukraine, Syria, South China Sea, or during antagonistic trade negotiations can easily lead to unintended consequences. All leaders have enormous egos and are prone to over-confidence and miscalculation regarding how their opponent will react. Someone is going to do something stupid and then all hell is going to break loose.

No Escape

“The risk of catastrophe will be very high. The nation could erupt into insurrection or civil violence, crack up geographically, or succumb to authoritarian rule. If there is a war, it is likely to be one of maximum risk and effort – in other words, a total war. Every Fourth Turning has registered an upward ratchet in the technology of destruction, and in mankind’s willingness to use it.

History offers no guarantees. Obviously, things could go horribly wrong – the possibilities ranging from a nuclear exchange to incurable plagues, from terrorist anarchy to high-tech dictatorship. We should not assume that Providence will always exempt our nation from the irreversible tragedies that have overtaken so many others: not just temporary hardship, but debasement and total ruin. Losing in the next Fourth Turning could mean something incomparably worse. It could mean a lasting defeat from which our national innocence – perhaps even our nation – might never recover.” – Strauss & Howe – The Fourth Turning

There is no escape from the Fourth Turning. We are midway through this crisis and the existing social order retains tenuous control over the levers of finance, government and the legacy media. History tells us our society will be reshaped and transformed before this crisis resolves itself sometime between now and 2029. It would be the utmost of arrogance to believe our nation will be protected from destruction by an all-powerful God. We’ve made bad choices, deferred hard decisions, squandered our financial resources, allowed our educational system to be corrupted and valued all the wrong things.

There will be consequences. The overt last- ditch financial debt schemes concocted by the entrenched establishment, to prolong their power and control, are unraveling and a death and rebirth of the social order through a chaotic cleansing is in the offing. I believe the real fireworks will begin during 2019.

I don’t eagerly await the terrible storms headed our way. I wish we didn’t have to withstand the brutal gales of this coming winter, but we have no choice. You have to survive Winter to experience the blossoming Spring. The coming decade will try our souls and force everyone to make choices that will make a difference. The specific events are unknowable, but how we react and who we support during the events will be the decisive factor in whether this Fourth Turning is resolved in a positive way. Having it resolved in negative way could be an unimaginable tragedy.

Patrick Henry made his famous “Give me liberty or give me death” speech during the first American Fourth Turning. His words ring true today. We are already at war. Sides have been drawn. We are going to have to fight whether we like it or not. Our only other choice is chains and slavery. The time to choose has arrived. Welcome to 2019.

  “The war is actually begun! The next gale that sweeps from the north will bring to our ears the clash of resounding arms! Our brethren are already in the field! Why stand we here idle? What is it that gentlemen wish? What would they have? Is life so dear, or peace so sweet, as to be purchased at the price of chains and slavery? Forbid it, Almighty God! I know not what course others may take; but as for me, give me liberty or give me death!” – Patrick Henry – 1775

Published:1/1/2019 6:11:20 PM
[Markets] Blackwater Founder Erik Prince To Launch Fund For Electric Car Metals

Erik Prince, the founder of private security firm Blackwater, plans to raise as much as $500m to capitalize on the rush into metals required for batteries used in electric cars, according to the Financial Times.

"For all the talk of our virtual world, the innovation, you can’t build those vehicles without minerals that come from generally weird, hard-to-access places," said Prince, and adviser to president Trump and brother of US education secretary Betsy DeVos. 

Miners - particularly from China, have been pouring billions into the metals as the electric vehicle industry expands, which include cobalt, copper and lithium. 

One of the largest investors has been China, with Chinese companies buying stakes in deposits in the Democratic Republic of Congo and in Chile this year. Mr Prince also runs a Hong Kong-listed security and logistics company that is backed by China’s state-owned Citic Group. -Financial Times

Prince says his new fund will focus on unexplored deposits which could be brought into production and then acquired by larger mining companies, and will look to offload its investments within four to five years. 

"Chinese companies are not necessarily interested in the very upstream exploration," said Prince. "They want to buy something in production which leaves that gap for us."

More than 60 percent for the world's cobalt supply originates from the DRC, which has attracted major investments from Chinese companies including Citic, Jinchuan Group and China Molybdenum. 

Prince gained notoriety as the founder of Blackwater - the world's most famous private military contractor which has been targeted with lawsuits alleging civilian deaths in Iraq, including a 2007 incident in Nisour Square, Baghdad, where 17 civilians were killed and 20 injured after Blackwater guards claim their convoy was ambushed. And FBI investigation concluded that at least 14 of the 17 Iraqis were shot without cause. 

Prince sold the company in 2010, which has changed names and is now known as Academi. 

Since parting ways, Prince has run Frontier Services Group, providing logistics and security services to companies operating in risky or unstable countries. For example, they provide anti-piracy support to Somalia and security to oil firms doing business in South Sudan. The company has also ventured into natural resources, however, after discovering a copper and cobalt deposit in the Congo, and investing in a bauxite mine in Guinea. 

A former Navy Seal who now lives in Abu Dhabi, Mr Prince’s strong Chinese connections have helped with his mining investments. This year his mine in Guinea secured an agreement to supply China’s state-owned aluminium producer Chalco with bauxite.

Mr Prince, whose father sold automotive parts in West Michigan, said carmakers will need huge amounts of minerals to fulfil their visions. -Financial Times

"When I see the R&D budgets of all the major automakers ploughing huge money into hybrid or electric vehicles, I believe the demand curve for the unique minerals that make up an electric car and battery technology will be enormously high over the coming years," said Prince. 

Prince has been investigated by special counsel Robert Mueller over a meeting with Kirill Dmitriev, the head of one of Russia's sovereign wealth funds, which the Blackwater founder said was a chance encounter for the two to discuss trade and mineral wealth.  

Published:1/1/2019 10:09:19 AM
[Markets] Jim Kunstler: 2019, Ding! Ding! Margin Call USA

Authored by James Howard Kunstler via Kunstler.com,

Welcome to the American hall of mirrors... and mind the broken glass all over the floor. That’s Nature’s way of saying the country has run out room to punk itself. 2018 was the consolidation of bad faith in everything we do: politics, the news media, economics & finance, show biz, regular biz, jurisprudence, medicine, education, and relations between men and women — the year of peak dishonesty and self-deception. Of course, the trouble with dishonesty is that it doesn’t comport with Reality, and Reality being Mother Nature’s husband, bats in the cleanup position. Entering 2019, the bases are loaded with delusions, misdirections, and turpitudes. I shall get right to it without further throat-clearing.

Trumpology

The nation’s focus remains clamped to mercurial character in the White House. If you subscribe to Strauss and Howe’s theories about The Fourth Turning, then you might see president Donald J. Trump playing the archetypal role they call “The Gray Champion,” an elder figure of the “transcendental” Boomer generation sent by fate to rescue a floundering society at a grave moment in the seasons of history. Yes, I know: we might have been better off calling Ghostbusters. A cardinal precept at this blog is that fate is a trickster. You order a Gray Champion and room service sends up a Golden Golem of Greatness.

To put it mildly, Mr. Trump has failed to charm at least half the country. They are embarrassed at his physical presence: his lumbering gait, like unto a behemoth land mammal of the Oligocene; that swaying bay window stomach half-concealed by the flaps of his suit-jacket and bisected by the oddly elongated necktie; the pained smile he puts on for the photo-ops; his man-spreading when seated with the world’s poohbahs, and that strange confection of sculpted hair, like the spun sugar on a Croquembouche, or the pouf on some horrifying plastic dashboard figurine. His manner of speech, the weird, palindromic repetitions, the childish artlessness of his casual utterances, the absence of Beltway focus-group cant, and of course the reviled Tweets — drive his opponents up a tree. The gilt-plastic trappings he surrounds himself with also offend them. For all I know, they hate his cologne, too.

His adversaries say he is “undermining institutions.” By this perhaps they mean the beloved DC gravy-train of regular institutionalized grift divvied up between elected officials, Wall Street, the War-and-Intel matrix, and the unholy infestation of lawyer-lobbyists slithering around the Swamp. Just look what happened when Mr. Trump threatened to end US military operations in Syria: apoplexy among the Neocons and Progs-for War — though none of them could coherently state what our strategy is there (is it to overthrow Assad so we can have another failed state in the Middle East?). Whatever Trump proposes in the way of policy is inadmissible because, according to the Resistance, Mr. Trump should not be allowed to propose policy, or order it, or direct it. Because he is… Trump….

Whatever you think of his agenda, Mr. Trump made the fateful mistake of bragging on the bubble economy that is now collapsing, and it will probably un-do him more effectively than all of the attempts to pin some actual crime on him by Robert Mueller. The Special Prosecutor has spent two years and has come up with little more than a handful of rinky-dink “process crimes” — mainly lying under oath, engineered by Mr. Mueller’s legal team and old friends in the FBI and DOJ after-the-fact. The Mueller investigation started with a false predicate — collusion with Russia — and entailed loads of prosecutorial mischief. We approach the climax of all that in early 2019. Mr. Mueller will issue his report before March. Maybe it will contain surprises, but the investigatory process involves so many people that it’s hard to believe no hints of any “bombshells” have leaked to the papers and cable news outfits. Rather, Mr. Mueller will depict a whole lot of nothing in the darkest possible light for the convenience of a house impeachment process, the holy grail of the Resistance, though the exercise is likely to fail if it gets to a senate trial.

But before that, there is the question of Mr. Mueller himself. My view is that Mr. Mueller has run a colossal cover-your-ass operation for the many documented misdeeds among the FBI and DOJ in cooking up this mess starting in the spring of 2016. His appointment in the first place was a gross error, considering his mentor relationship with James Comey and prior association with his putative supervisor, Deputy Attorney General Rod Rosenstein. RR remains in that position despite being a witness in matters pending before Mr. Mueller (and other regulators such as federal prosecutor John Huber and DOJ Inspector General Michael Horowitz), including the FISA warrant scandal, the Uranium One deal, and the tortured doings of the Hillary Clinton and her foundation.

January will kick off with the congressional extravaganza I’ll call Investi-Gate, as committees headed by Democratic chairs Gerald Nadler (Judiciary), Elijah Cummings (Oversight), and Adam Schiff (Intelligence) swarm the President and his associates like army ants on a drove of peccaries. They’ll haul in everybody and his uncle to keep the show going for their pals in the media. The star attraction will be Trump ex-lawyer Michael Cohen, though he will appear as a convicted liar. He may even defy the committee by not answering their subpoena before he has to report to federal prison in March. After all, Rod Rosenstein successfully defied more than one summons to congress for months on end. What will the House committee chairs do to Cohen? — threaten him with jail?

The house committee Investi-Gate circus is a sure thing, though, don’t forget, minority members can also call witnesses, and there is room for blowback on the venture. Republicans still chair the senate committees, and there may be a mud-fight between the two houses. Otherwise, expect a whole lot of grandstanding at the expense of paying attention to any of the nation’s serious business. Mr. Huber and Mr. Horowitz will also release reports in early 2019. Much of the recent criminal misbehavior in FBI / DOJ / Mueller orbit  lies within their commissions. Abundant evidence has already been published concerning the conspiracy to defeat Mr. Trump by subterfuge in the 2016 election, and further illegal attempts to injure him in the years following. Some of the characters in this horror show have already testified to grand juries.

Gen. Flynn was sent to the doghouse by Judge Emmet Sullivan at his December sentencing hearing for the purpose of rethinking his guilty plea. The idea is to persuade him to go to trial and force Mr. Mueller to go through a discovery process (of evidence) that could easily derail Mr. Mueller’s case and reflect poorly on the Special Counsel, perhaps even lead to legal problems for him in the way of malicious prosecution. Gen Flynn’s case also resolves one way or another in March.

Finally, Mr. Trump will be free to declassify a trove of documents in all these matters after Mr. Mueller reports. Doing so prior to that might set up the president on an obstruction of justice charge. If there’s anything germane in those docs, they could change the whole dramatic arc of the story that took over two years to develop. There’s plenty of chatter across the web about Mr. Trump invoking martial law or declaring some kinds of national emergency, plus loose talk about military tribunals and “thousands of sealed indictments,” but I’m not persuaded that there’s any reality to that.

Politics That Maybe Matter

This country faces a lot of practical problems that are not likely to be addressed if congress is preoccupied with Investi-Gate, and depending on how ferocious the action gets in bear markets, currencies, and banking, which could alter the entire picture (more below).

The crisis in medicine is obvious. Whatever else you can say about ObamaCare, it just didn’t do enough and is now crippled by court decisions. Health Care is simply unaffordable for a growing demographic of the sinking middle class. Much of that is due to plain old racketeering, and I propose that it could be mitigated to some degree if a simple law were passed that required doctors, surgeons, hospitals, labs, and other players to publicly post prices for their services — to eliminate this ridiculous business of providers “negotiating” the price of every transaction in secret, according to deliberately incomprehensible guidelines. It may be too late to “solve” the health care problem in the way that much of the Left wishes: a single-payer system run by the government. True, other advanced nations ran single-payer systems with apparent success for decades, and still do, but they started these programs in an era of reliable economic growth based on industrial production and that era is over for reasons mostly having to do with dwindling cheap energy. The National Health Service in Britain is a shambles. France’s system still functions, but the high taxation needed to keep funding it is, ironically, a main beef of the Yellow Vest protesters. The deflating financial bubble will underscore a new order of austerity in the USA, and may usher in graver problems with the value of the dollar. One way or the other, congress will be stymied over health care reform in 2019.

The eventual result will be the disintegration of the current health care system and its eventual reorganization into local, clinic-based medicine at a much lower level of complexity and treatment. It was a tremendous blunder to consolidate hospitals and medical practices into gigantically-scaled conglomerates. The hallmark of The Long Emergency is that everything organized at the gigantic scale will fail one way or another. Get your mind right for that outcome and take care of yourself in the meantime.

The Left especially has no inclination to address immigration reform. As long as they mendaciously refuse to even make a distinction between legal and illegal immigration, nothing can be done. The Right is also dishonest and cowardly about it, fearing to alienate the ballooning Hispanic voter bloc. Still there is a better chance that some immigration reform may be possible because it doesn’t require the sort of titanic fiscal outlays that Health Care does — Mr. Trump’s wall aside. More likely, though, the current immigration impasse will continue and may provoke vigilante action along the border in 2019 that could be part of greater civil violence prompted by increasing economic disparities.

Markets and Money

The jig is really up. The big bad bear market is already underway, even if it rallies in January. The debt bubble engineered by the Federal Reserve is blowing up and thundering through the system. The epic market instability of December 2018 on the heels of persistent Fed rate hikes points to major credit problems and especially an inability to roll over old debt into new loans at higher interest rates — in particular loans to zombie enterprises that need to borrow to keep paying interest on previous loans (a lot of that among the shale oil companies). The US government can’t take higher interest rates either. It’s already paying about as much in annual interest on US debt as we pay for our war machine. There are only two ways out, both of them nasty. Either suck up debt defaults, which will induce an impoverishing disappearance of money; or provoke high inflation, by injecting more Central Bank QE “money” into the system, which can destroy the value of money. Inflation is typically the choice of governments because it reduces the face value of debts while it allows government to pretend that it is taking action. In the end, you may have plenty of worthless money, which is no different from having not enough money that retains value. The latter was the main feature of the Great Depression.

So, inflation is the usual choice, but it also typically leads to incendiary resentment among the citizenry when they realize they’ve been played and it takes a wheelbarrow full of cash to buy a loaf of bread and a jar of peanut butter. I suppose that Fed chief Jerome Powell knows all too well he’s popped the Mother-of-All-Bubbles. He can blame it on Mr. Trump. Everybody else will, of course. Sometime in the second quarter of 2019, the Fed will resume the money-for-nothing gambit of “quantitative easing” in the hope of arresting the damage, but this time the dollar will lose value uncontrollably and catastrophically. Many people will be ruined, especially retirees at the mercy of insolvent pension funds.

Before 2019 is out, the US could find itself in a situation worse than the Great Depression. Supply lines are much longer now than they were then. If suppliers can’t get paid because trust has collapsed in the short-term corporate paper system, they won’t deliver supplies, which means you may not eat, or fill your gas tank, or heat your house, or get whatever else you need. Also, the USA in 1931 had not yet transformed itself into the fiasco-waiting-to-happen called suburban sprawl. How is Dallas going to work for people who spend a substantial chunk of their income on mandatory motoring (if there’s little or no income)?

Stock market activity may appear to stabilize in January, but it will go south again later on in the first quarter and the Bear will growl louder for the rest of the year.

Civil Disorder

Be prepared for it in 2019. There are going to be a lot of pissed-off people around the country. They are liable to attack Federal property and their fellow citizens (and their property). The hungrier they are, the worse it will be. They will not understand the forces that are destroying the money system. There are a gazillion small arms out there and the government will not be able to control them or confiscate them. Any attempt to do that will only inflame the situation. A major principle of The Long Emergency is that government becomes increasingly impotent and ineffectual as it rolls out. We’re already seeing that in Washington, and it is not at all just because Mr. Trump has inspired such an impasse between the branches. The states, too, will be hard-pressed to do anything useful. Many of them, like Illinois, New Jersey, Connecticut, and California, are already technically insolvent. The federal government may have to pretend to rescue them financially, which will only make the national predicament worse.

Oil

The shale oil “miracle” was an impressive stunt. For a while, it goosed US production way above the former all-time production peak of 1970, and it achieved that with astounding speed — about a decade. But this is oil that is very expensive and complex to produce. It was made possible by massive borrowing at artificial low interest rates, which are now rising. Something like three-quarters of the shale operators never made a red cent in net profit, and many of these companies will find it hard or impossible to roll over their existing debt, especially with oil under $50-a-barrel. But the price is a deceptive metric. If it zoomed up to $100-a-barrel tomorrow, the effect would only be to crush economic activity, because industry requires cheaper oil to pencil out its operations and citizens can barely afford to drive when gasoline hits $4-a-gallon at the pump. At the lower $45-a-barrel, the price crushes the oil producers. Take your pick. There’s no “Goldilocks” price.

The other problems with shale oil have to do with the nature of the shale plays. The Permian Basin in Texas is very large, but the best plays are developed in the so-called “sweet spots” and there’s a limited amount of them. They are the places that the producers developed first, and when they are played out, the next round of plays will be in spots not-so-sweet (or productive) — possibly not worth drilling. The character of the shale oil wells is also way different from the old conventional classic oil wells. The old wells cost about $400,000 (in current dollars). It involved just sinking a pipe into the permeable source rock. The oil came out under its own pressure at the rate of thousands of barrels a day.  Eventually, you put a simple pump-jack on the well (the “nodding donkey”) and it produced for decades, like running a cash register. Shale oil wells cost between $6- 12 million. They require technically demanding horizontal drilling and fracking, with additional costs in highly technical labor, water for fracking, sand to hold open the fracks, chemicals to aid the process, and a gazillion truck trips to deliver all the water and sand (and take the oil away). Shale wells produce maybe a few hundred barrels a day for one year, after which they typically deplete by over 60 percent. After four years, they’re done. The oil is also different. Shale oil is typically ultra-light. It contains little-to-none of the heavier diesel, kerosene, jet fuel, and heating oil distillates, making it less valuable.

Trouble in the credit markets could shut down shale production for a period of time and create dire problems for the American economy. That could happen in 2019 as poorer-performing companies fail to get new financing. As mighty as it seems to be, the industry is fraught with fragility. Meanwhile, discovery of new, producible oil has fallen to the lowest level since the 1940s, after three recent previous record low years. Current low oil prices at around $45-a-barrel may give Americans a false sense of security. Low prices are mostly indicative of the collapse of the demand for oil at the global margins and among the large US demographic that cannot afford it anymore — that is, the impoverished former middle class. As the damage becomes more obvious, we could hear calls to nationalize the oil industry. The attempt to do that would collide with the aforementioned trend for government to become more strapped  for revenue, more impotent, and more incompetent.

Geopolitical

The Golden Golem has gone an extra mile to antagonize Russia the past two years. Is it to demonstrate how not Putin’s puppet he is? If so, it’s pathetic. For instance, heaping ever more sanctions on Russia, tossing Russian diplomatic staff out of the country because of the laughable Novichok poisoning of the Skripal father-and-daughter in Britain. Nobody believed that set up — who recovers from the world’s supposedly most potent, high-tech military toxin? The larger Russia hysteria, ginned up by the US “Intel Community” to cover the embarrassment of Hillary Clinton’s election loss, has destroyed the brains of thousands of Washington insiders and infected whole sectors of the educated coastal elites who really ought to know better. Meddling in elections? Is that something the US has never entertained? Recall that 1996 Time Magazine cover with the headline that bragged, “Yanks to the Rescue: the Secret Story of How American Advisors Helped Yeltsin Win.” And now we’re wetting our pants over a baker’s dozen Russian Internet trolls on Facebook? Yes, this is what the brightest people in the room have been doing for two years. The net result is a new cold war, pushing Russia into the arms of China, giving both of those countries an incentive to construct a new framework for global relations that excludes the toxic US as much as possible.

That new framework, by the way, will not be the same as the late, unwinding Globalism Release 2.0 (Release 1.0 was 1870 – 1914) that allowed America to exchange IOUs for flatscreen TVs lo these many years. Let’s call that Tom Friedman Globalism, after the pundit who said it would last forever. The world will become a wider place again as the Great Powers are increasingly bound to their own regions for trade relations in a world growing short of energy and capital resources. The exception to that is in weaponry, now that Russia has demonstrated its ability to launch hypersonic rockets that can reach the US in little more than a few Noo Yawk minutes. Do we have anything like that? I suppose we wish we did. The media is not even talking about it, the implications are so dreadful.

Has Mr. Trump actually accomplished anything with his deal-seeking in China while beating it on the snout with his tariff stick?  Well, he got a lot of US companies loading up on inventory of goods they feared will carry costly duties a year hence, so they’re all stocked up just in time for a vicious bear market and the recession / depression that it entails. A lot of that stuff may end up being distributed by the bankruptcy judges.

How does our antagonism against China work with the campaign to “normalize” the behavior of North Korea. I doubt it helps. In 2019, North Korea will be the whoopie cushion that China places under America’s seat at the negotiating table. Mr. Trump defied the conventional State Department wisdom by meeting face-to-face with Kim. It got the two Koreas actually speaking with each other for the first time in 60 years, with some concrete steps toward ending the de facto state-of-war. Will Li’l Kim play the role China assigns to him? I think so. They can squash him like bug. And, of course, everything that the US congress and Mr. Mueller do to injure and weaken Mr. Trump will make further progress in Korea unlikely.

How about the second greatest economy in the world? That would be the European Union. The EU’s financial system is way more dysfunctional than even ours, with no mechanism or provision for regulating each country’s spending vis-à-vis the debt generation of the Union as a whole. There’s no way it can continue and no prospect for debugging the set-up. What’s more, decades-long shenanigans of the European Central Bank have created imbalances that will never be corrected. Even the attempt to normalize operations — as the ECB ceases its debt monetization routines staring in the first quarter of 2019 — is guaranteed to crack up the EU economy, which is a horror show of zombie companies and zombie banks. They will suffer particularly in the recession / depression to come. The next domino to fall, theoretically Italy, will take the EU down, whatever happens with the dithering over Brexit. Without the ECB vacuuming up unwanted EU paper, nothing really pencils out over there. In 2019, expect a substantial fall in the value of the Euro, and possibly its demise as a currency.

In fact, expect wholesale disintegration of many structural arrangements all over Europe beginning in 2019, along with more political violence that exceeds the simple street actions of the Yellow Vests in France. NATO has been staging war games on Russia’s border for two years, apparently with no awareness that the NATO members are deeply dependent on Russian oil and natural gas to remain advanced nations with comforts and conveniences, like heating their homes. Perhaps that recognition will hit in 2019. But there will be plenty of noise for that signal to cut through.

Climate Change

Something’s going on ‘out there’ though the picture is deeply non-linear and is being confused for the moment by an extraordinary low level of cyclical sunspot activity. Not being a scientist, I have only two salient points worth considering about the issue:

The first is, we’re not going to do anything about it — because nothing can be done about it. Whatever’s happening, we’re going to have to roll with it. I’m also not persuaded that many of the proposed mitigations — carbon taxes, seeding the upper atmosphere with reflective particles — will accomplish anything.

The second thought is this: the civilized world has experienced many many instances of climate change over the past several thousand years. Civilizations rise and fall with these changes, but the human project as a more general matter continues, with periods of history that appear to be restful time-outs. The Roman Optimum (warming period) segued into the Dark Age Cooling, and then the Medieval Warming (viniculture in England!), and eventually the Little Ice Age comes along with Isaac Newton and skaters on the Dutch canals. The difference this time is that our civilization is so deeply complex that successful adaptation to new conditions is a low percentage outcome, at least in the form of salvaging many of our current arrangements. In other climate disruptions, people adapted, sometimes with very severe changes in customs, practices, political arrangements, and life-styles.

It will be especially stark this time, and the broad pop culture of Collapse suggests that we intuit this — everything from Game of Thrones to The Road, to my own World Made By Hand novels. It begins with the wobbling of the most abstract and fragile of our systemic arrangements, finance, which is mostly based on ephemeral trust (that the other fellow will pay you). From there, the trouble proceeds to politics and culture. A few concluding words on the latter:

Culture

2018 was a low point for American culture, such as it is. The idiotic drivel emanating from the university campuses has infected the entire nation like a toxic shock disease. Most damaging, of course is the umbrella ideology of “multiculture” in a society that formerly thrived precisely because of the opposite of that: a common culture composed of ethics, customs, norms, and standards of decent behavior that people not insane could subscribe to. Remove the common culture of a nation and you will not have a nation — it’s that simple. Hence Americans are divided foolishly into battling identity groups who do not believe in a common culture and are doing everything possible to defeat it. They have no idea what E Pluribus Unum used to mean and they have no desire or intention to rediscover it. I return to the cardinal theme of The Long Emergency: that we can’t construct a coherent consensus about what is happening to us, and therefore we can’t make any coherent plans about what to do.

The financial hardships of 2019 provide an opportunity for some overdue mind-cleaning on these matters. There may even be a significant number of survivors among the brain-damaged former thinking classes who refuse to go along with the emperors-new-clothes ideas of recent years any longer. The main thing to understand about the so-called Progressive Left behind this toxic shock is that the whole crusade has been less about ideas of justice or fairness than the sheer joy of coercing others, of pushing people around and punishing them because its fun! The ideologies around that behavior are just window dressing.

The response to it so far has been surprisingly mild. If the financial unwind shapes up as harshly as it looks from here, the response will get more severe. The universities themselves will suffer hugely as their budgets crash through floor and all, of a sudden, they have to issue pink slips to a half dozen Diversity deans on six-figure salaries. Many colleges will begin the process of shutting down in 2019 as their student loan racket disintegrates.

Well, you’ve suffered long enough for today, and I’ll leave it at that.

Happy 2019 everybody!

Published:1/1/2019 7:41:21 AM
[Markets] FBI, New Jersey AG Obtains Evidence Trump Golf Club May Have Given Illegals Fake Documents

Federal and state investigators are reportedly analyzing employment documents of illegal immigrants who allegedly worked at President Donald Trump's New Jersey golf club, according to their attorney, Anibal Romero. 

Anibal Romero, a Newark attorney who represents five undocumented immigrants who say they worked at the Trump National Golf Club in Bedminster, said in an interview Saturday that he met with investigators from the New Jersey state attorney general's office and two FBI agents in November, before the workers began to go public with their stories. -SF Gate

Romero says he turned over fake green cards and Social Security numbers "that supervisors at the golf club allegedly gave one of his clients," a 44-year-old Guatemalan national named Victorina Morales. Romero also produced pay stubs for Costa Rican native Sandra Diaz who now has legal status, but says she was undocumented during her three years of employment at the club. 

Romero says he reached out to special counsel Robert Mueller's office since he was afraid to loop in the Justice Department - then headed by former Attorney General Jeff Sessions. 

"I wasn’t sure, one, if they’d take me seriously and, two, if this could backfire on my clients," Romero told the NY Daily News

Mueller’s office, which is separately investigating Trump’s campaign for possible collusion with Russians during the 2016 election, made contact and informed Romero the matter was not within their jurisdiction. -NY Daily News

Mueller's office referred the matter to the FBI, after which an agent in New Jersey called Romero.

"He said to me that he had received a referral from Robert Mueller’s office and that he already knew the specifics and that he wanted to meet with me in person," Romero said, adding that he then met with two agents at a Branchburg, NJ federal office where he outlined the same evidence he had already given the New Jersey Attorney General's office. FBI agents said they would "coordinate" with the New Jersey AG. 

"I’m confident that federal and state authorities will conduct a complete and thorough investigation," said Romero. 

Morales and Diaz first came forward with their allegations in interviews with The New York Times earlier this month.

Both women allege management at the Trump club knew they were undocumented and set them up with fake work documents.

In Morales’ case, Romero said a supervisor compiled all of her information and then took her photo in the laundry room of the club.

A few days later, the boss — who’s not being named by The News — told Morales he had received her fake documents and said he would hold on to them.

“This was a practice and pattern,” Romero said. “My clients felt like they were trapped and they felt like the fake documents could be used against them.” -NY Daily News

According to Harry Sandick, a former assistant US attorney for the Southern District of New York, the undocumented workers may have committed immigration fraud if they knowingly used fake documents - a federal offense which carries prison time, heavy fines and deportation. 

Sandick added that the supervisor who allegedly procured the fake documents, and/or anyone else involved in the matter, are subject to being charged with the same crime. 

"Immigration crimes are hard to prosecute so the government may see something like this as a possible deterrent case," said Sandick. "To show that even someone who works at the President’s golf club is under the microscope is very impressive and tells you that anyone can be charged."

Romero said that while his clients have not been given any assurances, "They are the victims here." 

"Any attempt at charging them would ignore the real problem." 

Published:12/30/2018 3:29:08 PM
[Markets] The Ghost Of Christmas Future

Submitted by Chris Martenson of PeakProsperity.com

Here in the brief period between Christmas and New year’s, as a writer I am obligated to say happy, wishful things. I have to confess, I’m just not feeling it this year, so I’ll just do the minimum here and return to being a curmudgeon, because that’s what the times call for.

So, happy new year. I hope everything works out well for you in 2019.

There, with that behind us we can now return our attention to the true state of the world, which is deteriorating and getting worse.

For most people things will be decidedly worse, not better, as things progress along their current trajectories. The only planet we’ve got to live on is being killed by human activity and gross inattention, while economically the greatest and most ill-advised credit bubble in all of human history flirts with the sort of sudden disaster that follows shortly after the failure of one’s reserve parachute.

As I've often repeated, I truly wish this weren’t the case.  I don't have a “bummer gene” that relishes bad news nor do I enjoy being "that guy” who says what no one wants to hear. 

Many of you reading this know exactly what I'm talking about.  You, too, had to keep your lips zipped over the holidays lest the strained family small talk and opening of cheaply-made forgettable gifts be ruined by any talk of 'reality'.  Sure, everyone can inwardly wince at uncle Jack’s sixth bourbon and tolerate the buffoonery and social awkwardness sure to follow because  “it’s only once a year.”

But collapsing insect populations, species loss, shrinking aquifers, and the utter betrayal of the younger generations by the “olders” running the fiscal and monetary policies of the world are not as easily dismissed. There’s no relief at the end of the day when the problem drives itself home. 

Instead, these many predicaments lurk and fester, as stubbornly as a rotted beam in the basement.  An adult with a problem beam in the basement deals with it.  But the immature person pretends the problem doesn’t exist, and then scolds and shames anyone who brings it up.

Well, for those of us in the mature reality-based camp, we can point out not one but many dozens of rotten beams in the basement, and the walls, and the roof.  So, holidays are quite often more a burden to us than a comfort.  “Why, yes, Aunt Karen, that is a nice set of coasters you gave to John” as you think to yourself “I wonder if those are made from pressed microplastics or virgin rainforest?”

To be completely clear, I deplore the decisions that got us to this point in history. But here we are.

I wish the Federal Reserve, the ECB and the rest of the world's major central banks had not printed up $16 trillion of thin-air money and caused the greatest collection of asset price bubbles in all of history. I wish that the US had heeded Jimmy Carter back in the 1970s and developed a workable long-term energy strategy that made sense.  I wish that disappearing insect population were not relegated to the back pages of major newspapers, and instead were front and center each and every day until responsible actions were undertaken.  I wish that savers, pensioners and the young hadn't been sacrificed upon the altar of bank profits so that the obscenely wealthy could become even more so.

But, that’s not how things turned out. So now we’ve just got to make the best of it individually, whatever may come.

Two Questions

Back in November of 2018, I participated in a superb evening event put on by modern Poet-Historian Stephen Jenkinson where he posed the following to the audience, which mostly consisted of people with grey hair.  He said that every older person needs to be ready for the day when a younger person walks up to them and asks them two questions:

  1. When did you know, and
  2. What did you do about it?

When did you know about the many problems and predicaments facing our world today?  When did you find out about species loss, and peak oil, the generationally destructive policies of your peers, and the unsustainability of our entire economic model? 

And what did you do about any of it?  Did you make any changes at all to your behavior, or did you close your eyes and slip into a strategy of false hope? Hope that ‘somebody’ would do 'something'?  Did you fight at all for the things in which you once believed?

These aren't easy questions to face, because they cut right to the heart of the matter. They put our integrity into question and threaten to expose whether we have any at all.

Not easy stuff, to be sure.

So, by way of preparation for what's coming, let me act as a stand-in for that future young person and be the one to ask you:

When did you know?

And what did you do about it?

Psychological Projection

Psychological projection is a defense mechanism in which the human ego defends itself against unconscious impulses or qualities (both positive and negative) by denying their existence in themselves while attributing them to others.

(Source)

In the US, the older generation, the Baby Boomers, have a lot to answer for.  I'm among them, so I'm pointing my accusing fingers right back at myself, too.  It's incumbent on every group to be its own best critic (a credo the FBI, many police departments, large corporations, and political parties seem to be woefully ignorant of).

Instead of being appropriately self-critical, 2018 was the year the entire mainstream establishment decided to engage in a mass act of psychological projection instead. With Millennials as the hapless targets.

In the US, after spending $trillions on unnecessary wars and neglecting to invest for the future (adequately funding pensions, maintaining vital infrastructure, etc), the establishment decided 2018 would be a good year to wag its collective finger at the Millennial generation, going so far as to blame its low home ownership rate on eating too much avocado toast:

But it didn’t stop there. The establishment went on an absolute tear of a blaming spree. It accused Millennials of so many vices that long lists had to be created. As those lists became exhaustively long, Millennials were branded “mass murderers”:

The reason that so many Millennials are turning away from the blindly-consumptive patterns of their parents is because they got locked out of that game long enough to peer back in. As they did, many decided that their parents' material pursuits and life choices weren't worth repeating.

A lifetime of paying off mortgage and other debts to bankers or…spending their money instead on valued experiences while still young and vigorous?  Hmmmm.  Not exactly a tough choice, is it?

The Boomers and their journalistic lackeys decry Millennials' opting-out as “killing” valued institutions like for-profit colleges and the housing market, but the reality is if you give people a bit of breathing room to assess their options, few will willingly choose a lifetime of debt servitude. Most prefer financial freedom and a life well-lived.

I know that my own children (all young adults now) have opted not go into debt. Or overspend on college. Or purchase cars until absolutely forced to (and even then they bought beaters). 

I like to think that they got some of that frugality from me but, truthfully, after about the age of 13 parents’ influence on their children hovers between 0 and -3.  From the age of 13 on their peers shape their outlook. And many of my children’s peers are making similar purchasing and life decisions, so that sets the direction of their age cohort.

For the journalists making a show out of struggling to understand why the Millennials are making different choices than the Boomers did, I offer up this quote:

"It is difficult to get a man to understand something, when his salary depends upon his not understanding it."

           ~ Upton Sinclair

It’s important to note that the mainstream press has a couple of important jobs: keeping everyone firmly seated in the consumer mind-rut, and deflecting any criticism away from the wealthy and their corporate masters (should any distinction between those groups exist).

If I sound harsh on the mainstream press, that’s because far too many in that profession have settled into being little more than scribes for the powerful; doing little more than repeating scripted talking points, inaccurate “facts,” and overt corporate and political propaganda.

In other words: the criticism is entirely deserved. Especially when one asks, “When did you know? And what did you do about it?”

2019: The Beginning Of The End

2018 has been the year that things began to unravel, as the accumulated mistakes of the prior decades finally settled in.

2019 will see the repercussions of that unraveling. It's going to be a very hard year as reality starts to settle in.

As far as the financial markets go, which are the preferred self-enrichment and public signaling devices of the powers that be, our operating model is contained in the phrase: Until and unless.

Until and unless the world’s central banks reverse course and once again undertake more Quantitative Easing, or “QE,” financial asset prices will continue to fall throughout 2019.  Stocks, bonds, real estate.  You name it.

For all the investors out there now habituated to ever-rising asset prices, this will be a very unpleasant and painful period.  

But beyond just our portfolios, the imbalances facing us are extraordinary and they're spread all across the world’s stage -- economically, politically, ecologically, demographically -- and there simply are not sufficient resources to ever again return to the reliable and fast pace of economic growth experienced in the 20th century.

It’s time for each of us to focus on preparing financially, emotionally, and physically.  Things are changing, quickly, and pretending that they aren't isn’t a winning strategy.

Few are ready to hear these messages.  More will be ready over the coming year, but still the numbers will be surprisingly small.

This makes it even more important that we stick together and offer each other support and encouragement as we navigate increasingly difficult waters over the coming months and years.

For those who'd benefit from specific guidance and support in developing a personal preparation plan, be sure to consider joining Peak Prosperity's annual seminar in April. (more details here)

Look, I wish I could join the untold millions in looking past all of these predicaments and cheerily wish everyone a Happy New Year and leave it at that.  But I cannot.  We don't pick the times in which we live, But we can control how we respond, as well as how we decide to meet the challenges we face.

Published:12/30/2018 7:57:01 AM
[Gun News] FBI Reveals Record Number Of Illegal Aliens Barred From Buying Guns

By Jason Hopkins -

FBI coat of arms

The FBI released its list of those prohibited from gun purchases in 2018, with illegal aliens topping the list by a landslide. A new report from the National Instant Criminal Background Check System breaks down the number of people blocked from buying guns in 2018. At 7,836,600, the “illegal/unlawful alien” ...

FBI Reveals Record Number Of Illegal Aliens Barred From Buying Guns is original content from Conservative Daily News - Where Americans go for news, current events and commentary they can trust - Conservative News Website for U.S. News, Political Cartoons and more.

Published:12/28/2018 8:48:58 PM
[News] Record Number Of Almost 8 Million Illegal Aliens Tried To Buy Guns This Year

They have already committed a criminal act by being in the country illegally, yet a number of almost 8 million illegal aliens attempted to compound their criminal activity by buying guns. That’s according to a new report of background checks, the FBI has rejected a record number of illegal aliens tried to purchase guns in 2018. ...

The post Record Number Of Almost 8 Million Illegal Aliens Tried To Buy Guns This Year appeared first on Godfather Politics.

Published:12/28/2018 5:17:25 PM
[News] Record Number Of Almost 8 Million Illegal Aliens Tried To Buy Guns This Year

They have already committed a criminal act by being in the country illegally, yet a number of almost 8 million illegal aliens attempted to compound their criminal activity by buying guns. That’s according to a new report of background checks, the FBI has rejected a record number of illegal aliens tried to purchase guns in 2018. ...

The post Record Number Of Almost 8 Million Illegal Aliens Tried To Buy Guns This Year appeared first on Godfather Politics.

Published:12/28/2018 5:17:25 PM
[Security] Plot Against Toledo Synagogues Is the 105th Islamist Terror Plot or Attack

In early December, an FBI Joint Terrorism Task Force in Ohio arrested 21-year-old Damon Joseph for planning an attack on a synagogue in Toledo, Ohio.... Read More

The post Plot Against Toledo Synagogues Is the 105th Islamist Terror Plot or Attack appeared first on The Daily Signal.

Published:12/28/2018 11:16:42 AM
[Markets] Mueller Must Be Investigated For Destruction Of FBI Evidence: Giuliani

Special counsel Robert Mueller needs to be investigated for destruction of FBI evidence, President Trump's attorney Rudy Giuliani said in an interview with Hill.TV's John Solomon and Buck Sexton. 

Referencing recent reports that Mueller's office allowed text messages from former FBI employees Peter Strzok and Lisa Page to be destroyed, Giuliani levied harsh accusations at the special counsel. 

"Mueller should be investigated for destruction of evidence for allowing those text messages from Strzok to be erased, messages that would show the state of mind and tactics of his lead anti-Trump FBI agent at the start of his probe," said Giuliani. 

The Inspector General of the DOJ revealed in a report this month that it found large gaps in text message records between Strzok and Page, the top FBI agents in charge of investigating both Hillary Clinton and Donald Trump during the 2016 US election. Of note, the two agents harbored extreme animus against then-candidate Trump, while supporting Hillary Clinton - bias which the DOJ claims never made its way into their work. 

After Strzok was kicked off the special counsel investigation following the discovery of anti-Trump text messages between he and Page, his Mueller's Records Officer scrubbed Strzok's iPhone after determining "it contained no substantive text messages," reported the Conservative Review's Jordan Schachtel in mid-December. 

"That should be investigated, damn it, that should be investigated fully. You want a special counsel, get one for that.

When pressed about whether he thought the erasure was intentional and not just a mistake, Giuliani alluded to the infamous erasure of a Watergate tape by President Richard Nixon’s loyal secretary a half-century earlier.

It’s actually worse than Rose Mary Woods,” he explained. “She erased less than 19 minutes of conversation, but the FBI got rid of more than 19,000 messages" and the messages from the time Strzok and Page worked for Mueller are lost forever.

Giuliani said the Russia probe investigators also should be investigated for using the Christopher Steele dossier, which he called a “piece of garbage,” to justify a search warrant on a Trump adviser without telling the court it was paid for by Hillary Clinton’s campaign and the Democratic Party.

“Do I think that is improper? Yeah, that borders on, that sounds to me a lot more like a false statement than some of the ones they charged,” he said, referring to Mueller’s team. -The Hill

Giuliani knocked Mueller's team for what he claims are "false statements" by former Trump attorney Michael Cohen during Cohen's sentencing several weeks ago on charges mostly unrelated to the Trump campaign. 

"He just lied the other day. He told the judge, ‘I was fiercely loyal to Donald Trump.’ No, he wasn’t. He taped him surreptitiously while he was fiercely loyal. He hid it. And he disclosed it," said Giuliani, adding that the Mueller team's failure to stand up during sentencing and correct Cohen's lie "is unethical in and of itself. "Making a false statement to a court, even a lawyer, you’ve to correct it." 

Giuliani added that the Mueller probe has traveled well beyond its original mandate: 

He said Mueller’s current focus on whether Trump friends such as Roger Stone were communicating with WikiLeaks outside the campaign about hacked Hillary Clinton emails shows just how far astray the probe had gone.

We’re now four degrees of separation from the original mandate of the investigation, which was collusion which did not occur,” he noted.

When asked whether Mueller should be the last special prosecutor ever appointed by the Justice Department, Giuliani hedged: “I never like to say never but I must say I have great pause after seeing the abuses in this investigation.”

The FBI, he added, still needs to rehabilitate itself from the damage done by missteps in the Russia probe. Giuliani said he believed that “99 percent of the FBI agents” were doing a great job but that a small group of “FBI politicians” had improperly hijacked the Russia probe during fired director James Comey’s tenure.  -The Hill

The former New York City mayor added that he doesn't know if FBI director Christopher Wray will help right the wrongs from the Russia probe. 

"I’m uncertain because I haven’t heard anything from him ... . The first way you fix problems is by acknowledging them." 

Published:12/27/2018 9:41:11 AM
[Politics] Jerome Corsi Says Mueller, FBI 'Harassing' His Family Jerome Corsi, one of the targets of special counsel Robert Mueller's Russia investigation, claims the FBI is surveilling and "harassing" members of his family. Published:12/26/2018 9:11:33 PM
[Politics] Jerome Corsi Says Mueller, FBI 'Harassing' His Family One of the targets of special counsel Robert Mueller's Russia investigation claims the FBI is surveilling and "harassing" members of his family.Jerome Corsi, who said last month he is expecting to be indicted by Mueller over allegations that he had advance knowledge of... Published:12/26/2018 8:36:40 PM
[Markets] The Daily Caller's List Of 2018's Worst 'Fake News' Stories

Authored by Amber Athey via The Daily Caller,

As 2018 comes to a close, it’s time to review the year’s worst cases of media misquotes, misleading narratives, major corrections and straight-up fake news...

While last year’s fake reporting largely occurred during the media’s relentless pursuit to prove Russian collusion, this year’s list is much more varied. However, some themes emerged: stories about then-Supreme Court nominee Brett Kavanaugh and the U.S. border were routinely flagged for misinformation.

Without further ado, here is the list of 2018’s worst examples of fake news:

1. WAPO BLAMES BORDER PATROL FOR DEATH OF 7-YEAR-OLD MIGRANT

The Washington Post published a story in December focusing on a 7-year-old migrant child from Guatemala who died in border patrol custody.

Despite WaPo’s misleading headline suggesting border patrol was to blame for the girl’s death, the full timeline of events and statements from the girl’s father praising border agents revealed a different story.

2. CNN AND THE HILL SPREAD RETRACTED SEXUAL ASSAULT CLAIM AGAINST KAVANAUGH

CNN and The Hill both reported on a sexual assault claim against Supreme Court nominee Brett Kavanaugh in late September without ever mentioning that the claim had been quickly retracted.

WASHINGTON, DC – SEPTEMBER 27: Judge Brett Kavanaugh testifies to the Senate Judiciary Committee during his Supreme Court confirmation hearing in the Dirksen Senate Office Building on Capitol Hill September 27, 2018 in Washington, DC. Kavanaugh was called back to testify about claims by Christine Blasey Ford, who has accused him of sexually assaulting her during a party in 1982 when they were high school students in suburban Maryland. (Photo by Win McNamee/Getty Images)

Jeffrey Catalan apologized for making a “mistake” in leveling the false claim against Kavanaugh, but CNN and The Hill’s initial reports on the claim failed to note the retraction. The Hill later retracted a tweet bolstering the claim and CNN updated its misleading report.

3. BOSTON GLOBE CORRECTS LIZ WARREN STORY — MAKES HER LESS NATIVE AMERICAN

Democratic Massachusetts Sen. Elizabeth Warren released a DNA test in October seeking to prove her repeated claims that she has Native American ancestry.

The Boston Globe initially reported on the DNA test by explaining that Warren was somewhere between 1/32 and 1/512 Native American. However, the paper eventually issued two corrections that damaged Warren’s ancestral claims even further.

“The generational range based on the ancestor that the report identified suggests she’s between 1/64th and 1/1,024th Native American,” The Globe admitted.

4. NYT ACCUSES NIKKI HALEY OF PURCHASING EXPENSIVE CURTAINS

The New York Times initially tied U.S. Ambassador to the UN Nikki Haley to expensive curtains hanging in the ambassador’s apartment in New York, writing, “Nikki Haley’s View of New York Is Priceless. Her Curtains? $52,701.”

US Ambassador to the UN Nikki Haley addresses the UNSC during a United Nations Security Council meeting on Ukraine November 26, 2018 at the United Nations in New York. (Photo by DON EMMERT/AFP/Getty Images)

However, NYT’s own article later admitted that the curtains were approved in 2016 and that Haley had no say in the matter.

5. MEDIA STILL BLAMING REPUBLICANS FOR STEELE DOSSIER

CNN’s Jim Sciutto, MSNBC’s Katy Tur, and MSNBC’s Ari Melber were all responsible for falsely claiming that Never-Trump Republicans were responsible for initial funding of the salacious Steele dossier.

Washington Free Beacon founder Paul Singer did pay Fusion GPS for standard opposition research, however, he stopped paying Fusion GPS well before they contracted Christopher Steele to create the dossier. That research was paid for solely by the DNC and the Clinton campaign.

This falsehood has been shared so many times that even former FBI director James Comeyhas repeated it.

6. NBC SAT ON INFORMATION THAT CONTRADICTED KAVANAUGH ALLEGATIONS

While NBC’s story is not incorrect, its choice to sit on evidence that contradicted a serious sexual assault allegation against Supreme Court nominee Brett Kavanaugh earned them a spot on this list.

Celebrity porn lawyer Michael Avenatti claimed he knew a second woman who could back up gang rape allegations made against Kavanaugh by his client, Julie Swetnick.

That second woman actually contradicted the allegations in a phone interview with NBC News on September 30. Mysteriously, NBC chose not to publish this information until weeks later and after Kavanaugh had already been confirmed to the Supreme Court.

7. MCCLATCHY CLAIMS MUELLER HAS EVIDENCE THAT CORROBORATES PIECE OF DOSSIER

McClatchy reported in April that special counsel Robert Mueller had evidence that former Trump attorney Michael Cohen had been in Prague in the summer of 2016. The report appeared to corroborate a key part of the largely unverified Steele dossier.

US President Donald Trumps former attorney Michael Cohen leaves US Federal Court in New York on December 12, 2018 after his sentencing after pleading guilty to tax evasion, making false statements to a financial institution, illegal campaign contributions, and making false statements to Congress. (Photo by TIMOTHY A. CLARY/AFP/Getty Images)

But no other news outlets came forward to confirm McClatchy’s reporting and a spokesperson for Mueller’s team hinted to The Daily Caller News Foundation that the report may be false.

Cohen’s attorney, Lanny Davis, emphatically denied in December that Cohen had ever been in Prague as the dossier alleges.

8. JIM ACOSTA SAID ILLEGAL IMMIGRANTS WOULDN’T CLIMB BORDER

CNN Chief White House Correspondent Jim Acosta got into an ugly, public battle with President Donald Trump over immigration in November. During the testy exchange, Acosta claimed that illegal immigrants would “not be” trying to climb over the U.S.-Mexico border wall.

TOPSHOT – US President Donald Trump points to journalist Jim Acosta from CNN during a post-election press conference in the East Room of the White House in Washington, DC on November 7, 2018. (Photo by JIM WATSON/AFP/Getty Images)

Unfortunately for Acosta, images a week later revealed that immigrants were doing exactlywhat he claimed they wouldn’t.

9. WAPO RAN KAVANAUGH STORY WITH KNOWINGLY FALSE INFORMATION

The Washington Post ran a story in October suggesting that Georgetown Preparatory School was hiring a new employee to deal with fallout from the Kavanaugh hearings.

The author of the report was informed by a spokesperson for Georgetown Prep that the new position was actually listed well before the Kavanaugh hearings. Somehow, that information didn’t make it into the report and WaPo had to issue a correction.

“This was a completely unintentional error-I read right over the date in haste. Story was corrected and correction is noted. Have a great weekend, all!” reporter Emily Heil wrote in response to backlash.

10. ANDREA MITCHELL SAYS DISGRACED FL ELECTION OFFICIAL IS A REPUBLICAN

Allegations of voter fraud and electoral misconduct in Florida during the 2018 midterms brought Broward County Elections Supervisor Brenda Snipes into the spotlight.

Snipes, a Democrat, had been accused of misconduct in the past and was slammed again for violating Florida election law.

NBC’s Andrea Mitchell bafflingly said on air that Snipes is a Republican and “hardly a Democratic official, or someone doing the bidding of the Democratic candidates there.”

11. WAPO FORCED TO CORRECT NIKKI HALEY MISQUOTE

The Washington Post had to issue a correction after falsely attributing a quote about poverty to U.S. Ambassador to the UN Nikki Haley.

After multiple requests by Haley for WaPo to issue a correction, the paper admitted that the quote in question was actually said by The U.S. Permanent Mission to the United Nations and International Organizations in Geneva.

12. MEDIA CLAIMS TRUMP CALLED THE FBI A ‘CANCER’

President Donald Trump referred to corruption and bias within the FBI, particularly related to the Russia probe, as a “cancer” during a September interview with The Hill.

The media repeatedly misquoted the president and claimed he called the FBI itself “cancer,” despite clarification from the two people who interviewed him.

13. RACHEL MADDOW ACCUSES WH OF EDITING PUTIN TAPE

MSNBC anchor Rachel Maddow opened a show in July by insisting that the Trump administration edited a tape of the president’s meeting with Russian President Vladimir Putin on July 16 in Helsinki.

The Washington Post’s Phillip Bump pointed out that the error was made by reporters too and was due to a change “between the feed from the reporters and the feed from the translator.”

14. NBC’S BRIAN WILLIAMS BUNGLES HIT PIECE ABOUT TRUMP AND DOGS

MSNBC anchor Brian Williams — also a noted survivor of a helicopter attack during the Iraq war — thought he exposed the president for being a dog-hater in an August segment.

Williams claimed his team “launched an extensive web search” and only found one photo of President Donald Trump with a dog.

The Daily Caller revealed, with the help of a quick Google search, multiple photos of the president holding dogs.

15. NPR: DONALD TRUMP JR. COMMITTED PERJURY

NPR published a report in November insisting that Donald Trump Jr. lied to Congress about efforts to build a Trump Tower in Moscow because his statements conflicted with those of former Trump attorney Michael Cohen.

However, NPR failed to realize that the piece of Trump Jr.’s testimony they quoted was about a different project.

“Trump Jr.’s statements about work on a Trump Tower Moscow that ended in 2014 referred to negotiations with Aras Agalarov,” The Daily Caller News Foundation’s Chuck Ross explained. “Felix Sater, a businessman with links to Cohen and Russian officials, tried to make a Trump Tower Moscow happen in 2015.”

16. TIME MAGAZINE’S FAMILY SEPARATION COVER FEATURING CRYING HONDURAN CHILD

Time Magazine published an infamous cover in June that showed a Honduran child crying at the U.S. border, apparently after she had been separated from her mother. The image quickly became the face of the “issue of family separations at the border,” despite the fact that the child in question was never separated.

An AFP journalists reads a copy of Time Magazine with a front cover using a combination of pictures showing a crying child taken at the US Border Mexico and a picture of US President Donald Trump looking down, on June 22, 2018 in Washington DC. (Photo by ERIC BARADAT/AFP/Getty Images)

Later reports also revealed that, in contrast to common left-wing talking points, the mother and her child were not fleeing violence, and the mother had been previously deported from the U.S. In addition, the mother left three other children in Honduras and allegedly paid a smuggler to help her and her daughter cross the border illegally.

17. MIC WRITER CLAIMS RUSSIAN SPY WAS IN THE OVAL OFFICE

Shortly after it was revealed that a Russian spy was attempting to infiltrate right-wing networks, Mic writer Emily Singer claimed that same Russian spy was present during an Oval Office meeting with Russian diplomat Sergey Lavrov.

Singer claimed Russian spy Maria Butina was spotted in a photo of the meeting, citing the fact that she has red hair like the woman in the photo.

The woman in the photo is actually NSC staffer Cari Lutkins.

18. NEW YORKER PUBLISHES KAVANAUGH ACCUSATION WITH ZERO CORROBORATION

The New Yorker’s Jane Mayer and Ronan Farrow — generally known for their sharp reporting on sexual harassment — made a major blunder with their report on Deborah Ramirez’s allegations against Supreme Court nominee Brett Kavanaugh.

Ramirez claimed Kavanaugh thrust his penis in her face at a college party, but The New Yorker was unable to produce any firsthand witnesses or even confirm that Kavanaugh was at the party in question.

The New York Times even opted not to run the same allegation because they were unable to corroborate it. Ramirez herself admitted she had significant memory gaps about the incident and she told former classmates that she wasn’t even sure if Kavanaugh was the offender.

19. DAILY BEAST CLAIMS MIGRANTS IN CARAVAN DON’T HAVE DISEASES

The Daily Beast claimed that there is “zero evidence” that members of the migrant caravan were bringing HIV and TB into the United States.

The Tijuana Health Department reported a handful of cases of tuberculosis, HIV and chickenpox among the caravan. Officials with the Mexican state of Baja California disputed that there have been cases of tuberculosis, but confirmed that some migrants are carrying HIV and chickenpox.

20. MEDIA CLAIMS OBAMA DIDN’T SEPARATE FAMILIES AT THE BORDER

Several reporters claimed during the uproar over President Donald Trump’s family separations at the border that President Barack Obama never separated families.

However, reports from McClatchy and statements from former Obama administration officials revealed that, yes, Obama did separate some families who crossed the borderillegally.

MCALLEN, TX – SEPTEMBER 08: A girl from Central America rests on thermal blankets at a detention facility run by the U.S. Border Patrol on September 8, 2014 in McAllen, Texas. The Border Patrol opened the holding center to temporarily house the children after tens of thousands of families and unaccompanied minors from Central America crossed the border illegally into the United States during the spring and summer. (Photo by John Moore/Getty Images)

“ICE could not devise a safe way where men and children could be in detention together in one facility,” Leon Fresco, a deputy assistant attorney general under Obama, said. “It was deemed too much of a security risk.”

...

*  *  *

This is the just the Top 20... See the rest of The Daily Caller's full list of incredible 'fakest' mews stories here...

Published:12/23/2018 10:19:57 PM
[US Headlines] Galapagos Twitchers In A Flap At FBI Grand Jury Subpoena Galapagos Islands, Ecuador - (Agencies, Associated Mess): There are reports this weekend that FBI Special Counsel Robert Mueller has subpoenaed a dozen indigenous Ecuadorian â??bird watchersâ?? in the ongoing Rump Golden Showers Witch *unt probe. Pap... Published:12/23/2018 9:15:55 AM
[Politics] Wash Post: FBI Rejects Holiday Deadline for Bias Probe Docs The FBI has rejected a House Judiciary Committee documents deadline of Christmas Eve, saying it does not have the time or the resources amid the government shutdown to review redactions on 3,400 pages of transcripts related to an internal Justice Department investigation,... Published:12/23/2018 8:47:50 AM
[9fa47f01-1fd2-5609-8746-be772841dff2] Comey’s anti-Trump and pro-Hillary bias in 2016 clear from new developments – Why was the Russia probe begun? Fired FBI Director James Comey clearly tried to to help Hillary Clinton defeat Donald Trump in the 2016 presidential race. Published:12/22/2018 1:40:22 PM
[Markets] David Collum's 2018 Year In Review: "The Year Everything Changed"

Authored by David B. Collum, Betty R. Miller Professor of Chemistry and Chemical Biology - Cornell University (Email: dbc6@cornell.edu, Twitter: @DavidBCollum),

“Dave: You are roundly tolerated.”

~Danielle Dimartino Booth, former Fed advisor and founder of Quill Intelligence

2018 Year In Review: "The Year Everything Changed"

The whole beast can be downloaded as a single PDF Here...

Contents

  • Introduction
  • Background: The Author
  • Sources
  • My Personal Year
  • Investing
  • The Economy
  • Valuations
  • Broken Markets
  • The FAANGs
  • Gold
  • Bitcoin: Tales from the Crypt
  • Real Estate
  • Pensions
  • Debt
  • Corporate Debt
  • Personal Debt
  • Sovereign Debt
  • Inflation versus Deflation
  • Banks
  • The Fed
  • Human Achievement
  • Nature
  • Middle East
  • Syria
  • Nerve Gas Poisoning
  • Kavanaugh versus Blasey Ford
  • Political Correctness–Adult Division
  • Political Correctness–Collegiate Division
  • Political Correctness–Youth Division
  • Conclusion
  • Acknowledgments
  • Books

Introduction

Every December, I write a Year in Review that’s first posted on Chris Martenson & Adam Taggart’s website Peak Prosperity and later at ZeroHedge. This is my tenth, although informal versions go back further. It always presents a host of challenging questions like, “Why the hell do I do this?” Is it because I am deeply conflicted for being a misogynist with sexual contempt—both products of the systemic normalization of toxic masculinity perpetuated by an oppressively patriarchal societal structure? No. That’s just crazy talk. More likely, narcissism and need for e-permanence deeply buried in my lizard brain demands surges of dopamine, the neurotransmitter that drives kings to conquer new lands, Jeff Bezos to make even more money, and Harvey Weinstein to do whatever that perv does. The readership has held up so far. Larry Summers said he “finished the first half.” Even as a fib that’s a dopamine cha-ching.

"If you think you are too small to make an impact, try spending the night in a room with a mosquito."

~African proverb

A non-pejorative justification for writing this beast is that life, with the aid of the digital world, hurls information at us so fast we cannot process it. Who could forget when Knight Capital Group launched an algorithm that sent them into bankruptcy within 45 minutes? What ever came of the Vegas shootings? Will David Hogg's 10 minutes of fame as a world-class douche be forgotten? (If not, please euthanize me.) It seems a shame to simply let these fragments of life drift into the void without trying to find an underlying meaning to the human folly. I mostly ponder broken markets and the antics of bankers looking for signs of unintelligent life. The markets have been well over the historical fair value marks for 15 years. I have been a bear long enough to earn my permabear merit badge. The always-chipper Mark Dow called me a “bunker monkey.” John Hussman referred to some of my ideas as “bloodthirsty,” although I prefer the term “ghoulish.” The odds that I understand what has already happened are vanishingly small. I don't know if markets are going up or down, only that they will move from left to right. None of what I say should be taken as investment advice; channel George Costanza and do the opposite.

“I would have written a shorter letter, but I did not have the time.”

~Blaise Pascal, French mathematician, 1656

What’s with the trite “matrix” metaphor? (I swear I will not refer to naked swimmers, rhyming history, or kicking cans.) I'm not even sure the puzzle pieces are real, fake, or as Ben Hunt calls them, “counterfeit.” It is deeper than that. I have like-minded friends sharing seemingly common interests who look at events—think Brett Kavanaugh, for example—and extract from them unrecognizably different messages because our perspectives are not similar; they are profoundly different. If you shuffle a deck of cards, the odds that the resulting order has ever before been created is zero (52! = 8 × 1067). What are the odds all of us share common websites, read the same articles or blogs, or have the same Twitter feed? Zero. It is preposterous to think that we are looking at the same world through similar lenses. The viral audio in which some hear “Yanny” and others hear “Laurel” is metaphorical.ref 4 This document is what I saw and heard described as fact-based hyperbole. It is the Year According to Dave.

“I want to thank everybody who made this day necessary.”

~Yogi Berra

Background: The Author

When reading Dave's Year In Review
You'll note one conclusion rings true
His odd observations
And strange contemplations
Have proven he's missing a screw

@TheLimerickKing

By way of introduction—despite a knowledge and understanding of economics, finance, and politics that one would expect from a lifetime of studying organic chemistry—I am 1/1,024th economist. There is absolutely no substitute for a genuine lack of preparation. I’ve managed to get cameos in the most improbable of venues including the Wall Street Journal, Russia Today (RT), the Guardian, and even Rolling Stone (but not “on the cover”). With some regularity and little forethought, I routinely manage to risk career and what's left of my tattered reputation by getting embroiled in international incidents, which included brawling publicly with the American Federation of Teachers in 2017ref 5 and locking arms with Nassim Taleb in defense of Nobel Prize winner Tim Hunt in 2015.ref 6 This year was no exception. I risked an international incident by being the only chemist in the world calling bullshit on the Sergei and Yulia Skripal Novichok poisoning story. That gets its own section.

Aristotle noted that an educated man can entertain an idea without endorsing it. I also have a penchant for entertaining any idea until it dies of SIDS or gets legs, and I have to chase it down. I am, in short, a conspiracy theorist. We all should be conspiracy theorists because men and women of wealth and power conspire. If some ideas make you uneasy, just shut up. Pejoratively denouncing the rest of us as “conspiracy theorists” is intentionally shutting down uncomfortable discussions. If you do this in the current political climate, I get to smack you to get you to agree with me. If you wish to discuss dicey topics, quit apologizing by saying, “I am not a conspiracy theorist but . . .” because you are one.

Figure 1. Jeff Macke (@JeffMacke) original. CNBC's Fast Money and chartist-artist extraordinaire.

I can't control what topics go on and off my radar; they just do it. Hardly a shot was fired this year in the War on Cash. Some issues are huge but change on geologic timescales. We're all doomed to burn in eternal hell, but I can only say that so many years in a row before it starts getting old. I got the most email complaints for not discussing the opioid crisis. I still haven't gone there, but I’m about to read Beth Macy’s Dopesick. Energy has been a hot topic and had moments of hilarity this year, but my bandwidth limitations and lack of investment exposure left me bored.

There is a tractor beam that pulls economic blogs into the political realm. I have saved more notes and links and destroyed more gray matter than I thought possible trying to understand Russian collusion, the politics of Trump and Trump haters, and criminal behavior inside the FBI and CIA. I could write a book, but I just can’t do these topics justice in this forum. I'm letting them go for now, concluding that we desperately need a wall . . . around the Beltway.

If I have offended you already—I guarantee that at least a few readers are—it’s time to stop reading. Although no puppies were killed writing this blog, trust me: I am just warming up.

Sources

I sit in front of a computer 16 hours a day gerrymandering my brain, at least three of which are dedicated to non-chemistry pursuits. I’m a huge fan of Adam Taggart and Chris Martenson (Peak Prosperity), Tony Greer (TG Macro), Doug Noland (Credit Bubble Bulletin), The Automatic Earth, Grant Williams (Real Vision and Things That Make You Go Hmmm), Raoul Pal (Real Vision), Bill Fleckenstein (Fleckenstein Capital), Mike Krieger (Liberty Blitzkrieg), Demetri Kofinas (Hidden Forces), James Grant (Grant’s Interest Rate Observer), Campus Reform, and any nonsense spewed by Twitter legend @RudyHavenstein. There are so many others, many of whom I consider friends that I am simply waiting to meet. ZeroHedge is by far my preferred consolidator of news; it’s an acquired taste and requires a filter, but I think those rogues are great. Twitter is a window to the world if managed correctly—especially for a chemist attempting to connect with the finance world. Warning: the Holy Grail of maximizing follower counts is an illusion; it produces a counterproductive hyperconnectivity that makes extracting signal from noise difficult. So much flow, so little time.

My Personal Year

My emergent role as a Roosky apologist (pronounced “Roo-ski”) brought in a wave of interviews including two each with British provocateur George Galloway, RT,ref 7,8,9 Lee Stranahan and Garland Nixon on Fault Lines,ref 10 and Scott Horton.ref 12 Other interviews focusing on economics, markets, and the absurdity we call “college” included Crush the Street,ref 11 Jason Burack (Wall St. for Main Street),ref 13 Chris Martenson (Peak Prosperity),ref 14 several with Lance Roberts,ref 15,16 and several on local radio.ref 17 Last year’s write-up on pensions was reproduced verbatim in the Solari Report on pensions.ref 18

A three-hour dinner with Jonah Goldberg. I'll remember vividly. I also played a role in coaxing one of my favorite economists, Stephen Roach, and one of my readers and friend, Tony Deden, to do RealVision interviews purely out of self-interest: I wanted to hear what they had to say. This much heralded two-part Deden interview was his first interview ever.ref 19 In return, I got to spend 10 hours sitting on my deck chatting with Tony about the meaning of everything. Y’all are now free to eat your hearts out.

On the chemistry front. Somebody recorded a chemistry lecture I gave in Portugal in which you can hear my Yankee-dog jokes bomb.ref 20 Halfway through dinner that night, I remembered that one of my three compatriots had won the Nobel Prize in chemistry six months earlier. Another was six months shy of winning this year’s prize. (Congrats, Frances) In 2017 I had two NIH grants hit the same study section. Any academic will tell you that was guaranteed to be a “Sophie’s choice” moment at best. I only needed a few stitches—I got one of them funded—and it looks like the other is coming back in the spring. (Phew!)

Investing

My investing acumen has been pretty lucky, with one notable bad streak. From 1980 to 1987, I was all long-dated bonds. Those suffering acute equityphilia may not realize that bonds were great. The ’87 dip prompted me to switch to equities, which I held until mid-1999. Here's a dark secret that I’ve never told anybody: I had tech stocks on leverage. Ding! Ding! Ding! They ring bells at the top! I woke up in time, sold everything, and held only cash, gold, and a token short position from late 1999 forward, dumping the short position during the ’02–’03 recession. From around 2003 through 2010 it was gold, cash, and energy-based equities with a pinch of tobacco. That was my best decade, relatively speaking, cranking out >10% annually compounded returns like a boss in an otherwise brutal environment. Yahtzee! Then we get to 2010 through the present, and Mr. Smarty Pants got a ’tude adjustment. Energy, gold, and cash hoisted me by my own petard and put me headfirst through a wood chipper. As explained last year, my employer booted me out of my entire (15%) energy position after the beatings. Thanks. I've been sitting on gold and cash witnessing an epic equity ’roid rage accumulating skid marks in my boxers.

Precious metals, etc.: 28%
Energy: 0%
Cash equivalent (short term): 63%
Standard equities: 9%

For me, however, investing is all about valuations. The section on “Valuations” will explain why I didn’t buy equities when they were dirt cheap—hint: they were never dirt cheap—and where I think it all goes from here. I have one overarching goal: don’t fuck up. If I hit this goal, I will retire in comfort. The one variable I have no control over, however, is time, and that is why the chronostrictesis of sitting on the sidelines for nearly a decade caused me to start cutting myself again. Let me show you a foreshadowing chart that should give you pause (Figure 2):

Figure 2. Peak-to-peak or trough-to-trough (full cycle) inflation-adjusted capital gains of 1.8–2.2% per annum since 1870.

If you negate timing—if you measure peak-to-peak or trough-to-trough—your inflation-adjusted capital gains will average about 2%. If you get caught holding your life savings in equities at the wrong time, you will not recover in your lifetime. Hold that thought until “Valuations.”

"But there is one course of action – one classic mistake – that I most strongly feel is wrong: reaching for return."

- Howard Marks, founder of Oaktree Capital

How’d I do in 2018? Large physical gold and much smaller silver investments went moderately down (–5% and –15%, respectively). Fixed income finally offered returns without a zero preceding the decimal point, but they’re still pyrrhic gains at best. My TIAA retirement account returns 3.6% per year guaranteed (unless the zombie apocalypse arrives). I am also laddering 2-year treasuries and CDs; reaching any further for yield makes sense only if you’re a diehard deflationist because the yield curve is dangerously flat. To my joy, my former energy position would have cost me another –10% loss had it not been liquidated by my employer. I will get it back when I’m ready—when the next recession is making headlines. All this compares with a –10% return on an S&P index fund.

Here is my maxim: Save to retire, and invest to combat inflation. I have prided myself on saving 20–30% of my gross salary per year, but for the first time ever (including the college tuition years!), my spending exceeded earnings. Adult children are expensive as hell, especially when the youngest spawn is trying to be a non-starving musician and starting a new venture—buying and selling violins.ref 21 (You wanna buy a violin?) You could call the money loans, but that means you’ve never loaned money to your children. Also, being married to a grandmother of three who is armed to the teeth with credit cards and digitally linked to point-and-click purchases of toys and kid’s clothing (Amazon) is quite the experience. I bought her a Jacuzzi for our deck overlooking Cayuga Lake (Figure 3) knowing that she can't order toys and clothes while while in the tub. I plunged into the antique furniture bear market after a multi-decade hiatus by buying some nice pieces at seriously low prices; those in Figure 4 are emblematic. They will be in my estate, but I’m still hoping they don’t get seriously cheaper. Did I mention the dental implant, which seems almost metaphorical? To top it all off, I got an altogether unexpected 30% hit on annual gross income, which appears to be a one-off event. I see a return to profitability in Q1 2019—the ol’ first-half recovery story.

Figure 3. Hot tub city, and I am the mayor.

Figure 4. (a) Mid-19th century tiger maple drop-leaf dining room table; (b) Circa 1770 century Boston highboy.

The Economy

"In our current framework the economy is singularly brittle."

~Larry Summers (@LHSummers), former secretary of the Treasury

“Absolute blowout number for ISM Manufacturing Index in August. 61.3 is a 14-year high. While many keep pointing to threats, this economy is Kevlar.”

~Brian Wesbury (@wesbury), chief economist, First Trust Portfolios

“I am not playing this down at all. I think we have a very serious global synchronized downturn.”

~Lakshman Achuthan (@businesscycle), Economic Cycle Research Institute (ECRI)

It is instructive to ponder the meaning of wealth creation. It’s about making our collective lives better. The U.S. built an empire founded on strong property rights, a growing populace with a gritty work ethic, a resource-rich continent with seemingly limitless room for expansion, and global European competitors hobbled by relentless tribal fighting. How many of these factors are still intact? The first industrial revolution was about converting enthalpy (heat) obtained from fossil fuels into negative entropy (order we call civilization). I keep wondering what will drive the gains over the next 100 years. We are told FAANGs are replacing the smokestack industrial juggernauts. We'll see.

Heady questions aside, how about this year? This time last year I was writing about downturns in housing and autos, and now I’m hearing about downturns in housing,ref 22 autos,ref 23 lumber,ref 24 retail,ref 25 trucking,ref 26energy,ref 27 and semiconductors (chips ’n’ dips).ref 28 Did we have a boom I missed? Yes and no. Assuming inflation corrections using “substitution” and “hedonic improvements” are accurate—I don’t—and assuming GDP corrections using these inflation numbers are accurate—I don’t—then the GDP grew a paltry 2% off the ’09 bottom, quite literally tracking the Great Depression from 1931 to 1939.ref 29 BLS employment numbers are generated by a trend-cycle statistical modelref 30 (read: making shit up). Nonetheless, even Helen Keller could’ve seen the help wanted signs on the lowest economic rung (retail). Personal consumption expenditures (PCEs) are said to be soaring relative to GDP despite stagnant wages and no personal savings.ref 31

“It doesn't take even 10 minutes’ worth of investigation to show that the BLS tightness gauge—the U-3 unemployment rate—is not worth the paper it's printed on.”

~David Stockman (@DA_Stockman), former Reagan economic advisor and former Blackstone group partner

In 2018 we somehow witnessed a couple quarters of 3–4% GDP growth. I am so dark that I wonder whether the numbers have been jiggered explicitly to provide cover for the Fed to raise rates. Even so, more balanced individuals than I wonder whether we are creating real wealth or witnessing economic activity stimulated by yet another credit bubble. Luke Gromen (FFTT, LLC) notes that the 4% GDP print was suspicious in light of a 6.5% year-over-year drop in tax receipts and a 1.8% drop in gasoline demand.ref 32 (Fuel consumption and economic activity go together like Starsky and Hutch.) Something is amiss. David Stockman says that “these goal-seeked numbers are notoriously unreliable at cyclical turning points like late 2007 and early 2018.” He also notes that S&P profits haven’t grown for over three years.ref 33 In a really engaging interview,ref 34 economist Mariana Mazzucato seems to contradict Stockman, noting that “this is the sharpest post-recession rise in reported EPS in history.” She goes on to say that the “sharp increase in earnings did not come from revenue.” Stephen Roach, former executive director at Morgan Stanley asks, "Are the fundamentals really that sound? For a U.S. economy that has a razor-thin cushion of saving, nothing could be further from the truth."ref 35 He notes the anemic personal savings rate of 2.4%—the lowest in a dozen years and one-fourth of the historical norm—cannot support a strong economy. The scholarly market historian and market maven Lacy Hunt calls the economy “very weak.” Let us not forget the obvious: The views are always the best from the summit.

Today’s economic boom is driven not by any great burst of innovation or growth in productivity. . . . The global economy is now awash in debt.”

~Steven Pearlstein, Washington Post

“If it’s debt financed, you cannot increase GDP. You can only increase components of GDP.”

~Lacy Hunt, economist

The main problem is that growth, whether tepid or strong, was driven largely by a doubling of global debt over the decade,ref 36 which I am tempted to call 7% annualized inflation. The debt-to-GDP ratio in the third world—called “emerging markets” on Wall Street and “shitholes” inside the Oval Office—created a mania of mergers and share buybacks while the real economy sputtered. Debt is consumption pulled forward. The bill for that hamburger you eat today is coming due on Tuesday, Wimpy.

Pre-pubescent Paul Volcker: "Why can't we have a boat like those people?"

Momma Volcker: "They have mortgages; we don't."

Figure 5. Popular plot asserting that federal debt is losing its stimulatory effect.

The real story of the 2018 economy appears to be that it was juiced by several large, one-time stimuli. Hurricane repairs holding over from the 2017 carnage lifted GDP while creating no additional net wealth.ref 37 (One could argue trashing the old and replacing with new brings minor benefits.) The 14% Trump tax cuts and massive one-time tax repatriation of overseas earnings—one time since the last one in 2004ref 38—is said to have contributed significantly to the economy. The bulk was preordained to go to share buybacks despite blathering by corporate chieftains. Even so, that is said to represent a new slug of coin pulsing through the economy somewhere—but maybe not. That money wasn’t just parked in a vault in Zurich; it was in the multinational banking system already juicing economies worldwide.

“For now, we estimate that the U.S. economy has peaked—the powerful expansionary cocktail of unfinanced tax cuts, repatriation of capital, and fiscal spending ramped up growth in the U.S., but these one-off effects will peter out as the year ends.”

~Steen Jakobsen (@Steen_Jacobsen), chief economist and CIO at Saxo Bank

Meanwhile, corporate debt grew way faster than GDP.ref 39 Of course, some debt for pump ’n’ dump schemes (share buybacks) was offset by cash waiting for repatriation, but debt is the lifeblood of a leveraged system (Ponzi finance), and it grew. The IMF suggests that the benefits of the one-time boluses should wear off soon, leaving a 2.5% growth rate by 2019.ref 40 (I'm looking for contraction, but that's just me.) Before moving to the last one-off stimulus, let me add that these routine overseas tax repatriations rot the system by giving advantage to slow-growing multinationals while providing no benefit to rapidly growing smaller companies. Look at it this way: If you can make money overseas and then get a tax jubilee every decade or so to “make America great,” where will you build your plants? Where will wily corporate bean counters declare all their earnings? Of course, the share buybacks don’t stimulate the economy at all because these monetary ’roids never left the system, so they can’t return to it. Shares and money just change hands. The real point is that since taxpayers will have to fill the void left by the tax jubilee, then what we just witnessed were taxpayer-funded corporate share buybacks.

The third one-time bolus for the economy this year was the looming trade war with China. Scrrrrratch! Come again? Are you nuts? Stay with me here as I digressively peel back a few layers of this onion. First, some claim that there has been a trade war on slow burn for decades and that the U.S. is finally starting to fight back. Obama fired the first shot with a tariff on rolled steel in 2014ref 41 to garner union support while, according to Roach (personal communication), it merely shifted business to higher cost producers. Trump then took the tariff debate to 11 on the dial. (He had been talking about doing this years before the election.)ref 42 One can squeal that this is a tariffying repeat of the Smoot–Hawley tariffs. The Smoot–Hawley Tariff Act was a political football for Roosevelt during the 1928 election, causing the putative damage from the bugger-thy-neighbor tariffs to be overplayed in the history books. The tariffs also conveniently take the blame off central bankers for creating a ginormous credit bubble in the '20s as promulgated by the 500+ economists on the Fed’s payroll. Hoover’s failure to get authority to change the tariffs without Congressional approval may have left a destructive rigidity—an unresponsiveness—in the Smoot–Hawley Act (see "Books"). Through the auspices of the “United States Fair and Reciprocal Tariff Act"—yes, the U.S. FART Act—Trump requested the same authority.ref 43 Somehow giving the Donald discretionary power to do anything important makes people nervous. He is rumored to be a little volatile.

Do you have a point here, Onion Boy? Sure, but drop the ’tude, ya punk. Tariffs were GDP positive in 2018 as industry scrambled to make hay while the pre-tariff sun was still shining. The Atlanta Fed claimed that up to 60% of U.S. economic growth stemmed directly or indirectly from industry front-running the tariffs by stockpiling and accelerating exports.ref 44 Of course, billions of dollars of subsidies are already budgeted to offset the negative effects on farmers with presumably more to come.ref 45 The savvy reader will notice that the consumer will pay more for imported goods and higher taxes for the subsidies—a one-two punch to the groin. In the short run, the tariffs generated a little wiggle in the economy this year and may even be a powerful bargaining chip to get concessions during a period of Chinese vulnerability, but they will be a problem if they linger.

“What does it say about productivity when the retail sector reportedly hires 50k in the same month when sales dip 0.1%. Or maybe the payroll number was completely bogus.”

~David “Rosie” Rosenberg (@EconguyRosie), chief economist and strategist at Gluskin Sheff

We hear how employment is tightref 46—said by Alan Greenspan to be the tightest labor market ever—while 100 million working-age Americans are not working and while inflation-adjusted wages have been stagnant since the 1980s. The law of supply and demand says there’s something wrong with this picture. Indeed, we have a system in which 100 million are incented not to work even if jobs are aplenty. The other problem is that rising wages (oh thank the Lord. Finally!) will create what economists call “negative externalities” or, as the rest of us say, “shit happens.” What comes next is predictable. First, the wage pressures will cut into corporate profits—real wage growth conflicts with bubble-level corporate profit margins—driving equity valuations skyward or equity prices earthward. Second, the rising wages will be labeled “inflation,” which will cause the bean counters to correct for it declaring, “inflation-adjusted wages are stagnant.” Third, the Fed will get their thongs in knots and slay the inflation dragon by stepping on the economy. Just as consumers are trying to pull themselves up from the precipice, our Fed overlords will be stepping on their fingers.

“We have abolished the idea of failure—nature’s cleansing mechanism. As a consequence, we’ve lost real economic vitality. We’ve substituted finance for industry as the locomotive of economic growth. In GDP terms, it looks terrific. But it is neither enduring nor real.”

~Tony Deden, founder of Edelweiss Holdings

That’s a great segue into a chat about wealth inequality, a topic that is causing even the gazillionaires living in modern-era Versailles palaces to get nervous. I submit that a healthy economy naturally distributes wealth with a Machiavellian fairness. As you grow an economy that is firmly founded on wealth creation—making and moving goods and services—it is not a zero-sum game; all boats rise, albeit to different levels. (It will never be fair; get over it.) The natural tension between the cost of labor and the cost of labor-saving technology is dealt with by the supply–demand curve. When you have to redistribute wealth at a wholesale level to keep the mobs from charging the Bastille, however, something got out of whack. As you financialize the economy—as the GDP becomes a measure of how much money is being moved around or what economists call “rent seeking”—it is a reverse Robin Hood wealth distribution. The rich accumulate wealth at the expense of the poor because nobody is actually creating wealth. It becomes a zero-sum game with winners and losers. Rockefeller, Carnegie, and Vanderbilt got fabulously wealthy building an empire. I remain unconvinced that Zuckerberg, Bezos, and What’s His Name at Apple will be able to make such claims. David Tepper, Ray Dalio, Stevie Cohen, and Warren Buffett create none of the Wealth of Nations. They are wealth aggregators, much to the joy of their adherents.

“The greatest economic recovery the top 0.1% has ever seen.”

~@RudyHavenstein, legend

One more point. Economic models assume dislocated workers will just move, but they don’t. The impacts of “rolling industry recessions” is to leave workers behind and instill social instability owing to epidemic levels of cognitive dysphoria slathered with some serious hysteresis (lingering negative externalities!). The gutting of the middle class is setting up to be emblematic of the gutting of the American empire. What role did the Fed play? Their fake-it-till-you-make-it monetary policies financialized the economy. What do you think?

Valuations

“We’re probably only 10 years into another 50-year bull-market cycle.”

~Andy Sieg, head of Merrill Lynch Wealth Management

Jeepers. How long was Andy floating in the harbor when they found him? I recall sitting in a room with friends when the Nasdaq had just crept over 5,000 for the first time and proclaiming it would be back to triple digits. They laughed. I missed by <200 points. Benjamin Graham, the most legendary investor of the twentieth century and mentor of Warren Buffett, lost 70% in the ’29–’33 bear market. Failing to exit the highway before hitting the traffic jam taught him about risk. Every year I talk about valuations, but I will lay it out in detail so that, in the end, I can sleep knowing that you’ve been warned.

Let’s first illustrate the consequences of buying at secular highs. Many analyses show how long it has taken those fully invested at tops to break even. Of course, you must inflation-adjust to even approximate capital gains and losses. I have taken a slightly different tack by asking how long it takes to go from a secular high to that same value for the last time (Figure 6).

Figure 6: Inflation-adjusted S&P capital gains. Blue arrows show time required to return to the peak valuation for the last time (hopefully).

“So imagine valuations never see their norms, or 2009 levels again, and this cycle completes at 2002 levels—the highest level of valuations ever seen at a cycle low. That would still be more than enough to wipe out every bit of S&P 500 total return above T-bills since 2000.”

~John Hussman (@hussmanjp), Hussman Funds

The blue arrows illustrate four instances in which investors caught holding equities at the peaks paid profoundly. In each case, the big dip is followed by a recovery—the break-even point—followed by an extension of the rally that eventually fails. As though pulled by a tractor beam, the price revisits the original peak for the third and final time. Those arrows representing zero capital gains—treading water during the biblical flooding before finding terra firma from which to launch new gains—are 40–75 years! Let me repeat: on four separate occasions over the last 140 years, investors obtained zero inflation-adjusted capital gains for periods spanning half to three quarters of a century. The entire gains during those periods came from dividends eroded by a host of taxes and fees (see below). You will, however, get participation trophies too.

Don’t be deceived by analyses in which you start investing at the peak and invest throughout the ebbs and flows. These are calming words valid for millennials and Gen Zers. If you are a boomer with >80% of your lifetime savings already banked, however, there is little cost averaging in your future. Full return analyses in which dividends are included are less scary (Figure 7) but almost never account for the massive erosional costs discussed below.

Figure 7. Inflation-adjusted total return with dividend reinvestment by Mike Lebowitz uncorrected for fees and taxes.

“First law of finance: In the long run, returns must revert to the average.”

~Jason Zweig (@jasonzweigwsj), columnist at the Wall Street Journal, in 1997

You can keep your support lines and technical indicators. You can keep your crash fears too; they are rare technical events. All I care about are valuations. It has been said that "record-high equity valuations don't mean poor returns are imminent, only inevitable." The big risk is buying poor assets during good times. Although 2007–09 was painful, the 2007 market wasn’t even an equity bubble but rather a real estate and credit bubble caused by the Fed keeping rates too low for too long. The Mullahs of Macro's response to the collapse was to keep rates way lower for way longer. Paradoxically, it seems both moronic and, for now, effective, but is it? Or are we in another bubble? Before answering these questions, let’s take a quick peek at what one can expect out of equities ignoring valuations.

“Anyone who says stocks are guaranteed to outperform bonds or cash is an ignoramus.”

~Benjamin Graham, mentor of Warren Buffett and author of The Intelligent Investor

Last year, I obsessed over why stocks persistently return several percent more than U.S. treasuries and concluded it must be the awesome power of the State—rules forcing government debt into portfolios of compliant victims. My back-of-the-envelope calculations suggested that equities would sustainably provide 4–5% inflation-adjusted returns—not 7–8%—over many cycles spanning many decades. Headline-grabbing nominal returns must be corrected for fees, taxes on real and inflated gains, disasters (full-cycle, not partial-cycle, analysis), survivorship bias within indices, and demographics (1.4% growth in pie sharers). With that bug still buzzing, the Baader–Meinhof phenomenonref 47—the tendency to notice things only after the initial awakening—ushered in some new confirmation bias.

A stupendous paper by retired economist Edward McQuarrie shows how claims of 6.6% inflation-adjusted returns over the long term—100–200 years—are profoundly deceptive because they hide nasty periods of many decades in which returns are disastrous.ref 48 McQuarrie does not account for taxes, fees, and demographics, all of which will conspire to bring that 6.6% much lower; others have attempted such corrections.ref 49 Mark Spitznagle takes 2% more off reported headline indices because of highly “non-ergodic” compounding.ref 50 In an article from 1999, Marty Zweig noted that “funds charge annual expenses of 1 percent or so; then it costs them another 1.5 percent to 2 percent to buy and sell their stocks each year.”ref 51 I assumed 1% total. He also said the oft-stated 9–11% compounded returns is “guano” and that small caps sustainably beating large caps is “a crock.” Rob Arnott, eight-time Graham and Dodd Award winner managing over $200 billion and said by Howard Marks to be “one of the real thinkers in our field,” calculates a sustainable 3.1% annual inflation-, tax-, and fee-adjusted return.ref 52 Graham-Buffett-Zweig, in the latest Intelligent Investor (see “Books”), put the long-term gains at 4% before taxes and fees. It would appear, therefore, that folks claiming much higher returns have carried out incomplete analyses or are serving up the surf ’n’ turf combo platter (fishy analysis slathered with bullshit).

“I love equities, I'm not a weirdo, and I don’t live in a bomb shelter. But in a very real sense, the compounding of stock returns over long periods is a fraud. It really is. No one has ever gotten those returns.”

~Ted Aronson, January 1999, Aronson and Partners

You may have noticed that none of these analyses assume corrections for valuations. Changes in valuations can offer up an additional +4% compounded gains above the norm, providing a tailwind pushing investors up the Wall of Worry to the valuation summit during a secular bull market. Shrinking valuations can hit investors with  gale-force –4% compounded losses, representing a headwind as investors take the express elevator to the gates of hell pistol whipping themselves the whole way during the secular bear market. Thus, valuations matter a lot. According to Buffett's iconic 1999 must-read article,ref 53 multi-decade periods of collapsing valuations correlate with secular rises in interest rates, whereas the coveted valuation expansions are fueled by secular drops in interest rates. Thus, interest rates matter a lot too. Once rates have plumbed the lows or highs, you are at a turning point. Market extremes occur when it becomes “too expensive in the short-term to play the long-term.” Cliff Asness seems to contest this model by noting that falling rates do not justify high valuations,ref 54 but he notes that “to pay higher prices as a result of lower interest rates to avoid a very painful outcome requires that interest rates remain low indefinitely.” I infer that Asness and Buffett agree.

“Exponentially rapidly rising or falling markets usually go farther than you think, but they do not correct by going sideways.”

~Bob Farrell, former Merrill Lynch legend

Let's ponder what some of the contenders for the Wall Street Fat Bear Championship have to say. Many focus on the awkward evidence suggesting the ’roid rage of ’09–present was largely a growth in valuations and profit margins. The market über-bears all use essentially the same assumptions: (1) normal growth in GDP and no catastrophic events (no world wars), (2) regression to the mean, a force of nature, will do its thing while largely ignoring the inevitable regression of valuations through the mean, and (3) investors will hold for 7 or 10 years. They include corrections for inflation, but none include corrections for taxes and fees. Note that using longer durations (up to 20 years) allows assumed 3% GDP growth to cosmetically mask the bad optics of negative compounding while investors consume 50% of the approximately 40-year investing life expectancy.

  • Rob Arnott's estimated +3.1% return does not include valuation changes. Regression from current valuation to historic norms predicts –3% compounded losses over a decade.ref 55

  • Jeremy Grantham sees a precipitous drop of –48% or, if spread over 7 years with standard GDP growth, a drop of –5% compounded losses over the next 7 years (a 30% correction with positive GDP growth overlaid).ref 56 His most sanitized version points to small positive annualized returns over the next 20 years.

  • John Hussman sees a –57% loss in the Nasdaq, which is somewhat less than his expected losses in the S&P 500 (–64%), Russell 2000 (-68%), and Dow (–69%) over this cycle.ref 57 He also sees dead people.

  • Robert Shiller cautions that he is not predicting major calamity for the market but rather a much lower level of returns, in the 2.6% annual range over the next 10 years.ref 58 But this estimate appears uncorrected for anything except mean-regressing valuations. Any correction would be “probably not as bad as 1929, but it could be disruptive."

  • Goldman’s “bear market indicator” suggests –3% per annum prospective total returns for 5 years, placing it in the optimistic camp.ref 59

  • Mike Lebowitz of 720Global projects a drag of –7% per annum on capital gains over the next 10 years, leaving GDP growth and dividends to mitigate the damage.ref 60

“According to the Buffett yardstick, stocks are currently priced to deliver an annualized return of –3% over the next decade including dividends. Compare this to the 3% yield on the 10-year Treasury note and you’re looking at a –6% differential.”

~Jesse Felder (@jessefelder), former hedge fund manager and author of The Felder Report

“I expect the S&P 500 to lose approximately two-thirds of its value over the completion of this market cycle.”

~John Hussman

There are a gazillion valuation metrics. On the optimistic end you have peak idiocy and fibbing when price-to-earnings (P/E) ratios are quoted using non-GAAP forward earnings. Since markets are forward looking, why not five-year forward earnings? Why not ten? These are just Wall Streeters and corporate chieftains looking for bonuses. Let’s look at the ones that make the bears so fearful. What you’ll notice is that all metrics are normalized by dividing something (usually price) by something else (a metric of value) to give you a number that, unless you have good reason to think otherwise, should flop around some historic mean without trending up or down. Many will show that the last time we touched the historic mean was in ’09, and it stayed marginally below it for about 15 minutes. The last time we emerged from a protracted stay below the historic mean—we should reside below the mean half the time if my sixth grade math hasn’t failed me—was many years earlier (the early 90s). Bear in mind the latest edition of The Intelligent Investor confirmed that stocks were still overvalued after the 2000–2003 bear market, suggesting they had more correcting to do. As we shall see, the 2009 low was, by historical standards, near the historical mean, and the run from ’09 to ’18 was largely about elevating valuations. Regression through the means will take you into the dark mind of John Hussman. As I bang through some graphical measures of valuation, don’t lose sight of the fact that a 2× overvaluation requires a 50% correction to the mean and a 100% gain to recover. A 75% correction requires a 300% rally to recover. If you keep this arithmetic straight, it starts to get a bit ugly.

“The price of the market is 'highly dubious' right now . . . the next recession will be frightening.”

~Paul Tudor Jones, former hedge fund legend

The most deceptive and quite viral plot of the year (below) makes it look like you should never sell. Stocks almost always go up and a lot more than down. This little artifact derives from the non-linearity of the downside—100% down means you’re broke and need infinite returns to get even. The more conventional subsequent plot shows problems, but the normalization to the mean is obscured just like McQuarrie discusses (see above).

“We are at the top of the valuation range by any measure except for interest rates.”

~Stan Druckenmiller, former chairman and president of Duquesne Capital, compounding 30% returns over 34 years

The Shiller P/E with 10-year smoothing of earnings and analogous Crestmont P/E show >2× overvaluation relative to historic norms. Some say these will get tame looking as ’08–’09 earnings roll off the back end. Others did the mathref 61 and say the effect will be marginal because 10 years is a decent sample size. . . .

“If the Fed keeps on tightening, or if inflation breaks out and bondholders take fright, this latest and perhaps greatest of bubbles will also come to burst.”

~Edward Chancellor, author of Devil Take the Hindmostref 62

Doug Short’s composite valuation metric is parked at >100% overvaluation...

“It is a source of some concern that asset valuations are so high.”

~Janet Yellen, former chair of the FOMC, as the door is hitting her in the ass

Tobin’s Q, essentially a measure of price-to-book value, is approximately 2× the mean, sitting at a level commensurate with only the highest peaks and exceeded only by the 2000 bubble. The market cap-to-GDP (Buffett) indicator for the Wilshire 5000 is in the 99th percentile and sets a new world record. . . .

“Equities are currently more overpriced on dependable valuation measures, such as total market value to GDP and on a replacement cost basis (Tobin’s Q), than at any time save for the 2000 dot-com bubble. American corporations have also been borrowing like there is no tomorrow.”

~Edward Chancellor

Price-to-revenues and price-to-sales reached all-time highs. . . .

“A 40% crash looks justifiable . . . effectively a retracement to prior technical support levels, the S&P 500 highs of 2007 and 2000."

~Scott Minerd (@ScottMinerd), CIO at Guggenheim Partners

Price-to-PEG and price-to-EBITDA (earnings with all bad stuff excluded) have exceeded the 2000 high-water marks. . . .

“Equity exposure today on U.S. personal balance sheets has only been exceeded once before and that was in the late-1990s tech craze. I just don’t get it. But if you’re still long U.S. equities, please have a different reason than this drivel about this being a hated and under-owned asset class.”

~David “Rosie” Rosenberg

Corporate profit margins are soaring and said to be notoriously mean regressing. Hussman’s valuation model is a profit-margin-adjusted CAPE. Crudely speaking, if mean reversion occurs for both the profit margins and the CAPE, we are looking at a >60% correction. . . .

“Every market cycle in history has taken the most reliable valuation measures we identify (those best correlated with actual subsequent S&P 500 market returns) to less than half of current levels.”

~John Hussman

The number of stocks trading above 10× revenues for both the S&P and the Russell 2000 are at extremes. These are the same levels that Sun Microsystem CEO, Scott McNealy, was prompted to say about his investors, "What were they thinking?”

“The biggest market disasters happen when both leverage and securitization get mixed up with the same clever scheme.”

~Ben Hunt (@EpsilonTheory), former hedge fund manager and founder of Epsilon Theory

Price-to-corporate profits-GDP ratio (analogous to Hussman) suggests that Hussman is an optimist. The ratio of financial assets to real assets indicates a pronounced financialization of the indices. . . .

“The S&P 500 is trading at about a 93% premium to the long-run median. Falling to median therefore involves a 48% fall.”

~Jeremy Grantham, founder of Grantham, Mayo, van Otterloo & Co. (GMO) asset managers

Household equity ownership versus disposable personal income seems like good news until it mean reverts. Hours of work needed to purchase the S&P is also extreme. . . .

“Assuming you have the requisite capital and nerve, the big and relatively easy money in investing is made when prices are low, pessimism is widespread, and investors are fleeing from risk . . . this is not such a time.”

~Howard Marks, Oaktree Capital Management

Financial sector assets as a percent of GDP and margin debt versus GDP illustrate the financialization of the economy and the role of margin debt to achieve it. . . .

“There are two bubbles. We have a stock market bubble and a bond market bubble. At the end of the day, the bond bubble will be the big issue.”

~Alan Greenspan, former chair of the FOMC, January 2018

Some of these graphics come from the Big Brokerages who make tons of money marketing stocks and pension accounts. Figure 8 shows a table that nicely summarizes valuation metrics. They look awfully tame—so much so that you should just keep buying the dips.

Figure 8. Sanford Bernstein’s valuation models.

“And although I read recently that bull markets don’t die of old age or collapse of their own weight, I think sometimes they do.”

~Howard Marks

David Rosenberg estimates that >13 million worker bees have entered the finance industry since the ’09 bottom.ref 63 They have never actually been through a “bear market cycle. The boomers have; the next will be their third. They could get pretty skittish. For now, they are all-in for the ride.

Bloomberg’s Alix Steel: “Is there a magic-hedge that would help you if you owned the S&P 500?”

Mark Spitznagel: “Own less of it.”

On the off chance there are young ’uns reading this, I have altogether different advice. Save your asses off. Pick an asset allocation that smells right: I would think 60:40 or even 70:30 equities-to-fixed income sounds good. Allocate at that level. At the end of each year, don’t try to rebalance your portfolio immediately: Selling winners and buying losers is psychologically too hard. Simply change your allocation to bring it back to your set proportion. If bonds outperform, allocate to stocks. Make allocation changes once a year. The boomers’ risks are not your risks.

“The lapse of time during which a given event has not happened is . . . alleged as a reason why the event should never happen, even when the lapse of time is precisely the added condition which makes the event imminent.”

~George Eliot in Silas Marner

Broken Markets

JP Morgan’s top quant warns next crisis to have flash crashes and social unrest not seen in 50 years

~Headline, CNBC

“Stocks could surge 19% this year because investors are the right kind of cautious.”

~Bank of America Merrill Lynch

“When reward is at its pinnacle, risk is near at hand.”

~John Bogle, Vanguard and creator of index funds

“We are in the throes of a burgeoning financial bubble. If I had a choice between holding a U.S. Treasury bond or a hot burning coal in my hand, I would choose the coal.”

~Paul Tudor Jones, founder of Tudor Investment Management

Central banks dumped $20 trillion of backstop into the markets over the last decade; what do you expect to happen? I honestly can’t say because nothing like this has ever happened before. Unlike the mortgage crisis, which many of us saw coming from years back, I don't know anybody who knows anybody who saw this level of central bank intervention—the Bernanke Put—adopted by every central bank. It is instructive to simply look at what did happen.

“The recent divergence in the performance of U.S. equities versus the rest of the world is unprecedented in history. . . . This has never happened before . . . this is a market condition that will not persist.”

~Marko Kolanovic, JPM

Not even King Canute will be able to hold back the next bear when it’s time. Somebody calls in a bomb scare, panic starts, cashless (cushionless) exchange-traded funds (ETFs) sell immediately, and leveraged speculators are right behind. The markets are narrowing, with many domestic equities and most global markets considerably off their highs. As I am typing, tremors are undeniable. When they start shooting the generals—selling the increasingly rare market leaders—which they did in the early spring and again starting in September, it’s time to get nervous. We are also in a rate-hiking cycle, and history shows that the Fed will continue pulling on that trigger until they blow somebody’s head off.

@StockCats: How do they get these trendlines so perfect?
@RampCapitalLLC: Because we all draw the same ones.

Frothy Markets. The markets have been riding bareback—condom-free—for a decade now, and bull markets do die of old age—platitudes and an interesting and oddly Bayesian analysis by Larry Summers aside.ref 64 We went a decade off the ’09 lows without a single 20% correction. How could investors not buy into the euphoria? The fact that this run has been supported by an annualized 2% GDP growth doesn’t matter when shares are rising. Hedge funds shorting and snorting trying to time the top—good luck with that one—keep getting squeezed (like in May). When legends like David Einhorn lose for several years in a row and massively this year (–28% year to date), what is the message? Are these former geniuses now garden-variety idiots for doubting one of the greatest runs in history? They should have watched this hilarious and must-see commercial for “Hindsight Capital.”ref 65

“The market is cyclical, and given the extreme anomaly, reversion to the mean should happen sooner rather than later; we just can’t say when.”

~David Einhorn, founder of Greenlight Capital

“It has been one giant short-squeeze market.”

~Jim Chanos (@WallStCynic), Kynikos Associates (short seller)

The euphoria creates the fear of missing out (FOMO), causing a wave of articles explaining what a dumbass you are for not jumping on board. History shows the big gamblers during the bull—the twenty-somethings—get hurt the most at the inevitable conclusion, but these guys have never read the dusty archives so cannot fathom the chapter about to be written about them. Some random top-calling headlines:

"Stock Market Bears Are the Dumbest Thing on Wall Street"

~TheStreet.com

"Value’s for chumps as market puts momentum ETFs into overdrive"

~Bloomberg

"Are you missing out on the great market melt-up?"

~Bloomberg

"The stock market never goes down anymore"

~Bloomberg

"Market trends: bull run could last 20 years, optimists say"

~USA Today

"Stop freaking out about the Dow"

~@CNBC

What about all those corporate profits? Only the old guys remember the 1960s when 71% of IPOs paid a dividend. (Those senile old coots probably don’t either.) Some profits reported this year may be legit, albeit floated on huge mean-regressing profit margins and from tech companies that tend to have higher profit margins (for now, at least.) Margins are also riding the wave of cheap capital and stagnant wages. Regression of margins to historic means could stem from rising rates (check) and wage inflation (check). The huge profit repatriations from offshore are also blurring our beer goggles.

“We have intentionally constructed Berkshire in a manner that will allow it to comfortably withstand economic discontinuities, including such extremes as extended market closures.”

~Warren Buffett, 2017 annual report

What is stalling this day of reckoning besides recency bias observed at all market tops? Passive investing keeps a wall of money bidding up—not flowing into—markets. (Money doesn't “flow,” contrary to what 99% of pundits say.) The Swiss National Bank keeps putting bids under shares with freshly printed Swiss francs, which is insanely anathema to the concept of free markets.ref 66 The numbers don’t seem that large, but share prices are determined at the margins and every little bid helps. The storyline behind this particular bull run—central banks and their gargantuan interventions have our backs covered in perpetuity—is the most pathetic and insane bubble narrative in history, but it is now deeply ingrained in the market’s psyche. The late-cycle tax cuts and repatriations from abroad have probably stalled Armageddon (although to argue this money was sitting dormant, not influencing asset prices, is putty-headed). At the end of November, Jerome Powell blinked. The Powell Put was born when our new Fed chair kowtowed to nervous markets (or Trump).

“Interest rates are already doing damage; people just haven’t noticed. Leverage in the U.S. is grotesque for this stage of the cycle. At the moment, you’ve got peak leverage at peak prices. It’s not like you have to dig deep to find a problem.”

~Andrew Lapthorne, head quant at Société Générale (SocGen)

Buybacks. Share buybacks are hailed as a tax-friendly way to return profits to investors. They broke records this year and were often used to goose share prices the way announced stock splits did in the late 90s. Some say that the share buybacks are hoarding capital from the economy.ref 67 In defense of buybacks, Cliff Asness cogently notes that this argument is nuts.ref 68 It’s not like the money was sitting dormant. However, the claims that repatriation of overseas profits this year would boost the economy by facilitating construction of factories and jobs in the US are equally nuts. They already had access to capital and weren’t doing that. Some would like to get those repatriated profits as worker compensation. Indeed, that, too, was already possible and not happening. You won’t be getting ponies for Christmas either.

“Market sell-off is about 80 percent over and will be reversed by share buybacks.”

~JPM analyst, October 17, 2018

Buybacks are like stock splits: What they giveth in share reduction, they taketh back in shrunken balance sheets. Efficient markets would recognize the trade-off. The companies are merely pair-trading their diversified investment portfolio for their own shares. This is not irrational, but it certainly depends on which is a better value. They may be making the mistake that employees make by keeping their 401Ks bloated with shares of their employers. Robert Shiller recently called share buybacks “smoke and mirrors.” There is even a legislative push to ban them again. (They were legalized in 1982.)ref 69

Here are my gripes about the buybacks.

  • The huge tax breaks that facilitated buybacks mean that taxpayers—whether present or future—funded the share buybacks.

  • The notion that buybacks “return profits to investors” is a ruse. It’s not like you can reinvest them in better opportunities like beer, hookers, and shares of Netflix.

  • The executives are conflicted; they win if share buybacks support option prices and lose if money escapes their containment field as dividends.

  • Comparing share counts before and after the buybacks often show a shocking lack of share count reductions because they are being used to offset options issuance to executives. That’s not exactly returning capital to investors.ref 70

  • Share buybacks maximize at market tops (Figure 9), suggesting that the conflict is causing the buybacks to be dumb money (buying high). Oracle, for example, spent $15 billion buying back shares at $18 per share that they had allocated as options at $3 per share. Steve Eisman says Oracle will be issuing equity in 2019 (sell low).ref 71 In 2017, Deutsch Bank authorized buybacks and is now insolvent.

“Do these idiots ever do buybacks during the panic bottoms, when it actually makes more sense? Of course not.”

~Mr. Skin, anonymous market kingpin posting at Fleckenstein Capital

Figure 9. Share buybacks.

And here is the Big Unknown. Even if all share buybacks used only real cash flow and actually reduced share counts, the gains in price owing to share count reduction should be predictable with recourse to 5th-grade math: they should be zero. Yeah. That's right: zero. It is impossible, however, to know what effects a perpetual bid under corporate shares will have on price, particularly given non-linear amplifications in market-cap-weighted ETFs. When a truck driver in Peoria pays one cent more for a share of Apple than the previous bid, the market cap just rose $50 million. Price is determined at the margins. Years ago, Kodak jumped $2 on a 200-share trade—the last trade of the day—prompting the SEC to pretend to care. What is Apple’s buyback program doing? You cannot say, but it is surely price positive and could be massively so.

“Whenever we have forced selling to take place, the buyers disappear and the sellers have to sell no matter what. And corporate buybacks are not going to be enough.”

~Matt Maley, Miller Tabak & Co.

How about that wave of debt-based buybacks—not the debt that was incurred waiting for the Great Repatriation, but real debt (leverage)? Analysts at SocGen showed that all net debt issuance in the twenty-first century has been used to pay for stock buybacks.ref 72 That’s just fraud—a covert leveraged buyout by the creditor. But, as Jesse Felder notes, “When you have captive buyers [passive investors] who are entirely price insensitive, there is really nothing to stop you from leveraging your balance sheet.” How do I wrestle with the fact that Warren Buffett says he might buy back shares? As I’ve said on many occasions, watch what he does; The Orifice of Omaha is a hoser of a higher order.

“The fact that something is able to be sold legally, or the fact that there’s a market for it, can be very different from the fact that it can always be sold at a price that’s intrinsically fair or close to the last price at which it sold.”

~Howard Marks

“The S&P 500 is the only major market to have defied gravity, lifted by the financialization of America’s economy, whereby artificially cheap interest rates fueled stock buybacks, and desperate pensions turbocharged a leveraged private equity boom. With the Fed now reversing course, will we not have a chance to buy stocks materially cheaper?"

~Kevin PetersCIO of One River Asset Management

Let’s look at some of the silly, idiosyncratic events that happen when investors lose their minds:

  • As noted below (see “Bitcoin”), companies doubled their market caps by adding blockchain to their name or issuing a cryptocurrency.ref 73

  • An 18-year-old launched a hedge fund from his bedroom in suburban New Jersey.ref 74

  • Equities ran 300+% off the lows while the GDP tracked the Great Depression, compounding at 2% per year.

  • Value investing strategies have performed in the bottom 1 percentile since 1990.ref 75

  • The S&P ran 14 months in a row without a monthly loss.ref 76

  • Boeing rose 250% in two years.

  • Blue Apron IPOed at $10 a little over a year ago; it’s now at $1.23 and nobody has been indicted.

  • Tilray, a cannabis company reporting $28 million in sales, doubled in value in three trading days and rose tenfold in 2 months to a market cap of $20 billion before cutting in half.ref 77 As Scott McNealy would say, “What were they smoking?”

  • Solid Biosciences has no revenues and disclosed that one of its clinical trials was put on hold before its IPO in January.ref 78 The company sported a $1 billion market cap.

  • Domino’s Pizza added 35% to a 20-fold, 10-year run aided by a debt-funded buyback program.ref 79

  • Yulong Eco-Materials, a tiny Chinese manufacturer of eco-friendly building products, rallied 950% in one day after the company acquired a gemstone for $50 million.ref 80 The company claims the 17.9 kilogram Millennium Sapphire is worth up to $500 million, although the price suggests it’s worth . . . $50 million.

  • World Wrestling Entertainment (WWE) tripled in the first 9 months of 2018, sporting a trailing P/E of >100.ref 81

  • 60% of corporate debt issued by companies in the Russell 2000 is rated as “junk.”ref 82

  • GM pays its investors a dividend yield of 4.1% with a negative cash flow.ref 83

  • Uber has never turned a profit, but it’s about to go public at $120 billion.ref 84

Nike. Let’s take a peek at Nike. What’s not to like? It’s chart is totally parabolic, rising 20-fold in as many years. It got there, in part, aided by massive share buybacks. It’s sitting at a lofty trailing P/E of 100 on increased competition and faltering sales; regress that to 20 and you get an 80% loss. That would sting. Its edgy ads—Colin Kaepernick in particular—got elevated to meme status and prompted one sheriff to make all perps where Nike shirts for their mug shots.ref 85 Most disturbing, Nike is part of the “footwear index”—yes, there is a footwear index —which has risen >1300% in <20 years (Figure 10). Did we just discover the merits of shoes in the third millennium? Of course, after the company pioneered the Air Mercury line (Figure 11), the share price never looked back.

Figure 10. Shoe index.

Figure 11. A 2000-year-old Nike Air Mercury dug out of a Roman excavation.

“The market value of Elon Musk’s firm overtook BMW’s even though the profitable Bavarian luxury carmaker produced 30 times as many cars last year as the loss-making Tesla. . . . With so much dumb money about, one of Silicon Valley’s new mantras is ‘spray and pray’.”

~Edward Chancellor

Tesla. The newest entry to the automotive industry has a market cap larger than Honda’s and is headed by Elon Musk, the modern era’s Leonardo da Vinci or Thomas Edison. Why not jump on this can’t-fail opportunity? Again, there are niggling little details. Tesla’s shares took off in 2013 when the company announced the Model S. Musk is burning cash in the billions, except for the most recent and highly suspect quarter when earnings appeared just as new funding was needed (Figure 12).ref 86 Tesla began hemorrhaging senior executives right before the suspect earnings report.ref 87 The cash burn prompted Tesla to ask suppliers to give back some of their money,ref 88 rendering customer security deposits a little less secure. Tesla is supposedly making state-of-the-art cars in the desert in what are tents,ref 89 affording them an analyst-pleasing high sales-to-tent ratio. (I hasten to add that P. T. Barnum made some serious coin in tents.) Tesla had a fire at one of its factories.ref 90 What? No flame retardant on the tents? The Tesla Model 3 had a first-pass yield—the percent of cars requiring no additional work—of 14% during the last week of June compared with an industry norm of 80%. The tent-constructed cars, after making it through a rigorous inspection, began to spontaneously lose bumpers,ref 91 lock owners out of their cars,ref 92 and, on bad days, blow up.ref 93 Tesla owners are rumored to be fabricating unavailable parts to fix their own cars.ref 94 Note to Elon: hire those guys. Musk seems to have cut a few corners, like terminating “brake tests.”ref 95 The company also forgot to tell investors that the DEA (not the SEC) was investigating alleged meth and cocaine sales running through its Nevada Gigafactory.ref 96

“Tesla is the perfect metaphor for where the U.S. economy is at: a company stuffed with debt plus government subsidies, unable to deliver the wished-for miracle product—affordable electric cars—whirling around the drain into bankruptcy."

~James Kunstler, Kunstlercast

Figure 12. Cash burn.

Musk showed evidence of brain cell burn along the way, causing some to suspect that he was popping too much Ambien, downing too many mushroom pizzas, or going heavy on the poppy seed bagels at the Nevada Gigafactory. Before-and-after videosref 97 make the new-era Musk look more like Dave Chappelle's homeless character with the white stash. He started harassing analysts on conference calls for their “boring, boneheaded questions” about, oh, useless crap like “inventories.”ref 98 Harassment of the shorts included forcing an insider posting as “Montana Skeptic” (Lawrence Fosse) to shut down his Twitter feed by complaining to Fosse’s bosses.ref 99 Elon sent one of his detractors, David Einhorn, a pair of “shorts” to mock him. Late night (early morning) Tweets include gems like jokes about being bankrupt and insolvent,ref 100 which prompted fast response from the SEC (just kidding). He routinely taunted the SEC’s inability to reign him in.ref 101

“Musk is at it again. He’s doubling down on his pedophile comment.”

~James Chanos, Kynikos Associates

“You don't think it’s strange he hasn’t sued me?"

~Elon Musk tweet, prompting a lawsuit for the “pedophile” comment

“Despite intense efforts to raise money, including a last-ditch mass sale of Easter Eggs, we are sad to report that Tesla has gone completely and totally bankrupt. So bankrupt, you can't believe it.”

~Elon Musk tweet

“When you’re massive negative free cash flow, your 7-year bonds are trading $86 bid, and you need debt capital markets financing . . . you don’t joke about bankruptcy.”

~David Tamberrino, Goldman Sachs, on his “sell” recommendation

The fateful moment came when Musk announced that he was considering taking Tesla private at $420 per share, well above the asking price, causing a gargantuan wad of money to change hands in the short squeeze:

“I think the Thomas Edison of our age has come off the rails. ‘Funding secured’ means he has the money lined up, or he’s guilty of market manipulation.”

~Scott Galloway, author of The Four

“Funding secured” reached meme status, and the SEC did wake up this time. Elon and Tesla scrambled to find somebody to pretend like they were the ones tendering the offer (to no avail), eventually settling with the SEC for a $20 million fine and the requisite temporary demotion of Musk from CEO to CBW (Chief Bottle Washer).ref 102Of course, that triggered another massive short squeeze,ref 103 yet again hurting those betting against Musk. Charlie Gasparino says Tesla could be bracing for “billions of dollars in potential liability from private lawsuits," from both market longs, shorts, and, of course, cave-dwelling pedophiles. The street hasn’t yet figured out how to price Tesla’s shares (Figure 13). I think Tesla will eventually be auctioned off for parts on the courthouse steps. Of course, all this chaos has had a huge deleterious effect on its current share price (Figure 14).

“He claimed there is a specific source of funding, so that better be true. He also claimed that there is a specific amount available for funding, so that has to be true; otherwise even if it’s not manipulation it would be fraud.”

~Harvey Pitt, former SEC chairman

Figure 13. Chick fight over a few decimal points.

Figure 14. Tesla share price.

The VIX. I obsessed about the VIX—the so-called “volatility index”—last year.ref 104 It was important as both a reflection of and a cause of market frothiness. You could short the VIX at will—a one-decision trade—and make a lot of money, they said. Everybody extolled the virtues of shorting the VIX—“selling vol”—using vehicles like the XIV (clever anagram) or SVXY. There was historical precedence: Folks at LTCM loved shorting vol.ref 105

“References to exceptionally high ‘risk-adjusted returns’ leave me wondering: How do you adjust for risk on the vol trade?”

David Collum, YIR 2017

“Should I kill myself?”

~Online investor after losing $4 million on XIV

“People say congratulations, you called the short-vol trade. No, nothing has happened yet. This is just the appetizer for the unwind that is about to come. I think this is what people should be really afraid of . . . it will be quite disorderly and ugly.”

~Chris Cole, getting credit for calling the vol implosion

There were an estimated $2 trillion vol shorts last year. Seemed like that game had to end, but when? On February 5th, 45 minutes after the markets closed on a 15% one-day loss, the VIX short trade collapsed (Figure 15). We are not talking “crushed” or a “crash ’n’ burn.” It went to zero in fifteen minutes. Credit Suisse “terminated” the XIV trading vehicle.ref 106 TradeStation clients were sent an email terminating “futures trading” and told that margin accounts were “subject to immediate liquidation.”ref 107 Nomura shut its trading down.ref 108A number of funds blew up.ref 109 The speculation was that trading firms would collapse, but that did not materialize. Chris Cole had described in lurid detail how the VIX and $2 trillion of implicit and explicit vol bets could blow up about a week before it blew up.ref 110

Figure 15. Collapse of the XIV, a VIX short ETF.

Who lost? Various pensions proved to be the vol sellers, including University of Hawaii and the Illinois pension funds.ref 111 Harvard got out in time. Are they lucky, connected, or just “wicked smaht”? Who won? That’s harder to say because not all wish to take credit. A small hedge fund made 8,600% on a wildly improbable bet the XIV would go to zero.ref 112 Discussions of serious market manipulations surfaced,ref 113 suggesting that VIX shorts got spread over the five boroughs like Fredo. And when the dust settled, there was Goldman, sitting like the fat bastard at Donner Pass, chewing a toothpick with a $200 million profit.ref 114 Goldman had predicted the problem, almost like they knew something. Oddly enough, soon after vol shorters became full-time gene pool cleaners, the SVXY vol shorting vehicle was resurrected and is attracting a new batch of suckers who can't resist touching the stove too.

End of Cycle. The free market has caught up to a few hooligans. After 100 years, the iconic Sears is now a carcass being picked over by its creditors. Far more shocking, General Electric, the dominant industrial super power is –80% off its 2016 high and –88% off its 2000 all-time high (requiring an 700% gain to return), hitting levels not seen since 1994. It has been removed from the Dow and replaced with Walgreens,ref 115 which is sitting at its all-time high with the same market cap as GE. For those keeping score, GE bought back its own shares all the way down, which probably explains why its pension fund is the third largest holder of GE shares.ref 116 The $170 billion dollars of GE debt (depends on how you count) could be one of GE's toaster ovens being tossed into the pool and may be what spooked Powell into backing away from an overtly hawkish stance—"the birth of the Powell Putref 117" (which, as of December 19th, is said to have died).

“General Electric is the most admired company for the sixth time in the past decade.”

~Forbes, 2006

For the most part, the markets have made conservative investors—what we call Cassandras, Chicken Littles, Grumpy Old Men, and Nouveau impoverished—look like fools. Has the top reared its ugly head this year with the entertainment just beginning? If not, when?

JPM's Kolanovic says that the next meltdown in stock prices could cause the next financial crisis and has coined the name "Great Liquidity Crisis" to describe the phenomenon. Charles Hugh Smith suggests that 10 years of reckless behavior will “unleash a non-linear avalanche of reversions to the mean and rapid unwinding of extremes.” I think he's saying it will be fast. Rates are rising, the cycle that was never fundamentally impressive (or even sound) in the first place is getting very long in the tooth, markets seem awfully jumpy, and the algo bus fueled by unprecedentedly easy monetary policy that drove us to the summit may have no brakes for the trip down.

“The bulls don’t seem to acknowledge the artificial nature of this bull market in risk assets in general—no other cycle had such interference from central bank incursions and support by their balance sheet expansion. . . . The tax cuts have helped buy the bulls a little bit of time, but history shows that monetary policy is far more powerful and exerts its influence with lags that are typically long, variable, and insidious.”

~David “Rosie” Rosenberg

They say that nobody rings a bell at the top or bottom, but some would argue that is untrue. If you believe that valuations are ridiculous, the journey could be fast and hair-raising. Please do not blame hiking rates for a rout. The Fed laid the ground work over decades. And, by the way, if you think that you can hide from a washout by staying in the lower deciles of valuation, dream on. Hussman showed that the pain will be severe in all 10 valuation deciles.ref 118 When valuations plumb the lows, half the equities will be valued even lower. How about emerging markets? They seem cheap. Yes, but they will get cheaper. On the bright side, maybe I’m just wrong.

“The complex world financial system has so detached itself from underlying economic reality that it simply cannot continue without a catastrophic discontinuity.”

~Tony Deden

FAANGs

“When wireless is perfectly applied the whole earth will be a huge brain. We shall be able to communicate with one another instantly, irrespective of distance.”

~Nikola Tesla, 1926

One couldn't possibly miss the influence of the five FAANGs—Facebook, Apple, Amazon, Netflix, and Google—on collective global equity markets and, in turn, the perceived Wealth of Nations. The lowest interest rates since the Pharaohs walked the earth juiced world equity markets with hot money drawn to inflating assets. Non-linear gains owing to market-cap-dependent passive investing put the FAANGs on a tear (Figure 16). The euphoria has been palpable; the Bank of Montreal launched a triple-levered FANG ETF.ref 119 (Ding! Ding! Ding!) While the S&P rallied >200% off the 2009 lows, the FAANGs put up >600% gains, giving them a market cap greater than the UK’s FTSE index. At one point, Amazon alone accounted for >30% of the S&P 500’s gains for the year while putting 70% on its market cap in 165 trading days.ref 120 Market pundits breathlessly watched Apple and Amazon race to be the first company to reach a trillion-dollar market cap (willfully blind to PetroChina, which reached that high-water mark in ’07).ref 12 Somebody was bidding them up like they were signed copies of the Bible. A photo finish gave the win to Apple on September 2nd followed by Amazon two days later.ref 122 Am I the only one who finds this too coincidental? Does it seem odd that September 4th was also the high-water mark for Amazon?

Figure 16. FAANG index as of mid-2018.

Meanwhile, everything is not perfect in cyberspace. Insiders were locking in profits with record share sales.ref 123I also question whether these five companies are equipped to drive economies of the twenty-first century. Can the FAANGs create wealth like Standard Oil, General Motors, U.S. Steel, and General Electric did in the twentieth century? Will the FAANGs create wealth tangible enough to provide the needs of pensioners, feed millions, and sustain the American Empire? Most have valuation and balance sheet issues that certainly would leave value investors wondering if their IQ tests came back negative.

“If the DOJ had not moved in on Microsoft in the late 90s and warned them to stop killing small firms such as Netscape in the crib, we would not have Google, we would have Bing.”

~Scott Galloway

Meanwhile, all but Netflix are facing political and regulatory pressures that could prove catastrophic. The selective censoring of social media users based on political biases is now epidemic proportions and undeniable. Twitter's algorithms are so dumb that they censored their own CEO, Jack Dorsey (@jack) briefly.ref 124 I suspect that it won’t be long before First Amendment cases against Facebook, Google, or Twitter will be taken to the Supreme Court.ref 125

“I think that this certain situation is so dire and has become so large that probably some well-crafted regulation is necessary.”

~Tim Cook, Apple CEO, on the Facebook scandals

“God only knows what it’s doing to our children’s brains.”

~Sean Parker, former president of Facebook on the influence of Facebookref 126

Facebook. Here we have a trailing P/E in the 20s and no debt, making Facebook seem reasonable. My own concern is that it has a trendiness like a teenage clothing chain. Scandals with Cambridge Analytica have given it a serious black eye,ref 127–129 starting an anti-Facebook movement endorsed by Jan Koum, billionaire founder of WhatsApp, when he announced, “It is time to #deletefacebook.”ref 130 Half of millennials are said to have removed the Facebook app from their phones.ref 131 Whether Facebook dropped the millennials' phones from Facebook's apps is an altogether different question. Its usage has been cut in half from its peak owing to censoring, mounting evidence that it is Deep-State personified, and its triggering of dopamine responses like crack cocaine.

Mark Zuckerberg is being drawn and quartered by those who want to be protected from fake news—news that is not in somebody’s political interest—and those who abhor censorship as a crackdown on free speech. Zuckerberg himself—that True Blood “Suckerberg” look—and his antics creepier than a Boston Dynamics robot. Facebook is now positioning to manage data for the healthcareref 132 and banking industries.ref 133 If either is allowed, the term Orwellian will elevate to new levels. On the bright side, the Zuckerberg presidential run has returned to the netherworld from whence it came. Facebook looks like a long-term sell to me.

“Mark doesn’t care about publishers but is giving me a lot of leeway and concessions to make these changes. We will help you revitalize journalism . . . in a few years the reverse looks like I’ll be holding hands with your dying business like in a hospice.”

~Campbell Brown, head of news partnerships at Facebook

“They don't need to identify suckers anymore; Facebook does it for them.”

~Analyst on Facebook’s program to assist fake product ads

Amazon. Of the five FAANGs, this is the 500-pound gorilla. Amazon has essentially no earnings (P/E > 200) and operating margins below 2%, but its business model appears to be (a) pay no taxes, and (b) buy or destroy allcompetitors.ref 134 Once brick-and-mortar competitors have taken the caravan to the light, don’t be surprised if Amazon brings back brick-and-mortar under new management.

Figure 17. Amazon revenue versus profit.

“I can’t explain the valuation of big tech companies. . . . [T]o justify the multiple that Amazon trades at today, the company would have to be worth 25% of the US economy five years from now.”

~Sam Zell, commercial real estate god

Some would call Sam’s quote a prediction, not a valuation warning. Amazon’s risk is regulatory and antitrust also. It is priced as a monopoly. Should sovereign states (possibly in Europe) decide Amazon is too ruthless and try to break it up, the company will be hobbled for years.ref 135 Amazon would become profitless pieces (and some profitable pieces) that do not enjoy monopolistic power. Who decides it is a monopoly? Some politically motivated judge looking over his shoulder at an angry mob that’s given up fighting Walmart and Occupying Wall Street.

“There is nothing conservative about big corporations; they are the backbone of the left.”

~Tucker Carlson, journalist

Amazon’s image got bruised by its deal with the U.S. Postal Service for shipping rates that put the USPS in the red.ref 136 Arguments are being made that government subsidies such as food stamps to underpaid employees in general (and Amazon’s employees in particular) are really just government subsidies to defer Amazon’s salary costs.ref 137 In an effort to mitigate a backlash about poor treatment of employees, Amazon offered raises and then, rather inexplicably, announced they would be paid for by removing bonuses.ref 138 Amazon hastily reintroduced a new cash bonus of $1,500–$3,000 for employment milestones of 5, 10, 15, and 20 years. If all 500,000 employees hit all benchmarks, it will cost Amazon a couple billion dollars in total. If higher pay starts shrinking that 2% profit margin, Bezos will automate even more. Of course, an employee may be at risk of being laid off in years 4, 9, 14, and 19.

We went full oligopoly when a triumvirate of three profound monopolists—Berkshire Hathaway, Amazon, and JPMorgan Chase—proposed to partner up to convert the healthcare system into “an independent company that is free from profit-making incentives and constraints.”ref 139 No offense, but if you buy that “free” part you’re an imbecile. The Nation didn’t and took them to task.ref 140 The article also did a nice job of beating Buffett with the ugly stick, which I have tried to do a few times myself.ref 141 Amazon is also deeply embroiled in the privacy battles, as their hot new product, Alexa, records conversations within your home and sends the key data to advertisers.ref 142 A camera that follows you around the houseref 143 is being called “the Eye of Sauron.”

Amazon announced two new corporate headquarters, one in Long Island City.ref 144 Whether the deal cut by Cuomo sold NY state’s souls to the devil remains to be determined. The placement right next to Cornell’s new tech campus gets my selfish juices flowing.

Apple. I love Apple products but am getting closer to bailing on them. Scott Galloway, author of The Four, says Apple is successfully branding itself as an elite product line like Cartier. Maybe so but only those who bought Apple shares at the bottom can afford the 20–25% price hikes.ref 145 Paying $1,000 for a phone, $1,500 for a basic MacBook Air, and $2,000 for a MacBook Pro or iMac seems egregious. The $400 Apple watch—the Cartier of the digital world—is competing with the $25 watch that I get at Target. Apple’s revenue growth rate has slowed to an average of less than 4% annually over the past 3 years.ref 146 Jesse Felder notes that Apple’s stock trades at its highest ever price-to-free cash flow ratio while the company’s 5-year average revenue growth is the lowest in its history.ref

“So excited for the Apple Watch. For centuries, we’ve checked the time by looking at our phones. Having it on your wrist? Genius.”

~Ellen DeGeneres, talk show host

At least the company hasn’t saturated the marketplace with innovative new products. Bill Fleckenstein reminds us the iPhone 6, the latest product to dazzle the world, just had its sixth birthday! They grow up so fast. Tech analyst Fred Hickey calls Apple’s new iPhone rollout “disastrous”. Price cuts in Japan after only a month and collapsing sales in China are ominous. Buybacks are said to be keeping the shares afloat—or were until the swoon of >20% and moving faster than I can type. Apple is selling fewer phones than a few years back,ref 147which is reflected in inventory numbers. What is the company’s response to drooping iPhone sales numbers? Stop reporting sales numbers!ref 148 Seems like those 20–25% price hikes on all products are working their magic on demand. Maybe Apple’s cloud presence will save it, but the cloud also offers arbitrage opportunities (narrowing profit margins). Apple seems like a money-printing machine now, but the law of large sizes alone puts it at risk of, at best, going nowhere. In a wonderful video, Steve Jobs explains how once you have a monopoly, new products don’t help you, only better marketing. Soon, marketing people are running the company and what made it great is gone.ref 149 Indeed, what made it great is gone. They miss you, Steve.

Netflix. A trailing P/E of >200, a price-to-revenue ratio of 10, a high cash burn rate for its new content,ref 150 a commitment of another $18 billion for more new content (some parked off balance sheet) earning the moniker “Debtflix (Figure 18),”ref 151 and a share price that reached 70% above its 200-day moving average put Netflix at risk. Disney is pulling its content from Netflix in 2019.ref 152 A Netflix spokesperson noted, “we expect to be free-cash-flow negative for several more years (Figure 18)."ref 153 Fixed income investors had auto-callable debt with a huge 20% yield, but the notes were recalled, leaving investors with a net loss owing to 2.7% in fees.ref 154 Well, the bankers did OK. Future debt issuance could get dicey.

Figure 18. Netflix cash flow and debt.

“Google and others are suppressing voices of Conservatives and hiding information and news that is good. They are controlling what we can & cannot see. This is a very serious situation-will be addressed!”

~Donald J. Trump, President of the United States

Google. The share price of Google is up a tame 600% from the ’08 lows. With control of 90% of the search market, further penetration will have to come from other sources. Scott Galloway sees antitrust activity ramping up, although it seems to me like a weaker case than the one against Amazon.ref 155 Google is accused of biasing search results toward advertisers that pay more, which may pose an optics problem but is also how capitalism works. Leaked emails showed that Google helped Hillary with biased search results,ref 156 although not enough apparently. Its participation in deep-state filtering including ham-fisted if not downright abusive attacks on right-wing YouTube sites could lead to fines (a sarcastic BFD) or antitrust activity (a real BFD). Strong ties with the NSA are consistent with the widely held belief that all social media companies offer back doors to the Deep State.ref 157 (If you are confused as to why I keep referring to the Deep State pejoratively, you've got some catching up to do.)ref 158 To get dominance in China, Google appears to be signing off on a platform that allows totalitarian-state-level censorship (code-named Dragonfly).ref 159 Squeals from within the Google employee echo chamber urged Google to drop its military-funded drone program. As a compromise, it dropped its 17-year-old guiding catch phrase, “Don't Be Evil,”ref 160 replacing it with “Be Evil.” A $5 billion fine was a wrist slap.ref 161 Tangible constraints on them may be less benign.

Brand blemishing from firing James Damore last year got another smudge when a post-election video showed the high command at Google self-righteously spewing political views as truths and nothing but the truths.ref 162The former head of public relations says that Google suffers from serious truth issues.ref 163

“Give us a hundred years and us billionaires will show what wealth disparity looks like.”

~Sean Parker, former president of Facebook

As I type, the markets are having their way with the FAANGs—a “FAANG bang.” Maybe it’s just more jiggles en route to $2 trillion market caps for all...or maybe not.

Gold

“You very rarely, if ever, hear a serious discussion of the role of gold in the system going forward. I don’t see any appetite within that community to revisit that issue.”

~William White, formerly at the Bank for International Settlements

“The major gold-producing nations are tired of an international gold price that is determined in a synthetic trading environment having little to do with the physical gold market.”

~Sergey Shvetsov, deputy governor of the Bank of Russia

“If gold is a relic of history, why do central banks and the IMF still hold over $1T of gold? If it’s meaningless, why is everybody still holding it?”

~Alan Greenspan, May 2018

Gold has been boring for years, lurking in what a friend calls “the Collum range . . . oh, about $1,200." (Figure 19). It will be tested during the next downturn and consequent stimulus effort, but until then I’ve largely stopped reading articles about why gold will tank or soar. If it hedged against monetary idiocy, I would be living on my own Island in the Caribbean. Occasionally, however, I stumble across a nugget. Gold dropped linearly from April to August (Figure 20). Maybe that's normal or maybe Bernie Madoff whistleblower Harry Markopolos is right: Linearity in finance is fraud. (A 21-day linear drop in silver was even more awesome.) Hedge funds went net short,ref 164 suggesting correlation if not causation, possibly fueling the brief dip below $1,200. Evidence of horseplay appeared in the form of 260,000 futures contracts—$34 billion notional value—monkey-hammering gold in 4 hours in June.ref 165 Nobody even blinks at these anymore, especially not the regulators. Of course, a couple of gold-rigging charges were made—one guy even admitted that it had been happening at the industrial scale for years—but they were disposable traders and got acquitted anyway.ref 166 Canada’s Scotiabank will pay $800,000 to settle charges of “spoofing” (fake bidding).ref 167 Wow. $800,000. HSBC has been caught four times rigging the price of gold, promising four times to never do it again.ref 168 For those interested in buying allocated gold, the Texas Bullion Exchange has opened its vaults.ref 169 You get the convenience of a debit card while still enjoying the projectile-vomit-inducing price fluctuations of gold. There are others such as the Tocqueville Bullion Reserve.ref 170

Figure 18. Ten-year gold price.

Figure 19. Linear drops in gold.

“You can feel the dejection among hard core gold owners. They’re finally starting to ask themselves why there don't seem to be any kind of market conditions in which gold *works* as an investment or hedge.”

~Mark Dow (@mark_dow), hedge fund manager and gold bear

The debate about the future of gold in the global monetary system rages on among the 10 people who care. Craig Hemke (TF Metals Report) was early to notice an apparent pegging of the yuan to gold (Figure 20).ref 171Could be true or just goldbug pareidolia; regardless, it seemed to end this fall. Canada sold every last ounce of sovereign gold by 2016,ref 172 putting their holdings below those at the Bank of Dave. China, Russia, Poland, Hungary, Pakistan, Egypt, and Mongolia kept accruing the Bar-B-Qued relic.ref 173 Hungary cranked its inventories 10-fold with an affiliated repatriation from foreign vaults.ref 174 Turkey decided its gold was safer at the Istanbul Exchange than in JPM's vaults in New York.ref 175 Rumors that Russia and China have outlined plans to create a 100% gold-backed currency system to replace the U.S. dollar as the world’s dominant currency are wild speculation and provocative (Figure 21).ref 176 They certainly trust gold more than the dollar-denominated global banking cartel.

Figure 20. Yuan-gold peg and gold in U.S. dollars.

Figure 21. Russian and Chinese gold acquisition.

You really can’t put a value on gold (or eat it), but there are technical indicators suggestive of future price movements. The so-called speculators—the dumb money, whatever that means—went net short for the first time since the 2001 bottom, while the banks—the smart money (?)—went net long for the first time in history. We are parked at an all-time high of >500 claims against each ounce of gold at the COMEX vaults,ref 177 which could leave some wondering who Madoff with their gold.

“In recent years, bullion inventories have fallen materially, and last summer Charlie and I concluded that a higher price would be needed to establish equilibrium between supply and demand.”

~Warren Buffett, on silver, 1997

“We have a very similar situation in gold . . . it appears that a higher price is needed to establish equilibrium between supply and demand. . . . This won’t matter till it matters. Whenever it does, it will likely be too late to do anything about it.”

~Jesse Felder

For the gold-is-real-money crowd, the market value of all above-ground gold as a percentage of U.S. financial assets currently stands at 3.4%, which is well below the historic peaks of approximately 16% and not too far from the historic lows of approximately 2%.ref 178 In the spirit of bear markets die of boredom, Vanguard Gold Fund dropped “gold” from its name at the 2001 bottom and dropped the fund altogether this year.

In the world of human interest that even non-goldbugs can appreciate, the Rooskies dropped 3 tons of gold all over the runway when taking off at the Yakutsk Airport.ref 179 “Risk” players know that nothing good happens in Yakutsk. An amphora containing hundreds of fifth-century gold coins was found in excavations in Italy, while a Spanish galleon containing an estimated $17 billion in gold may have been located.ref 180

"Gold could be in a prolonged tailspin."

~Barron’s headline

Silver got pummeled a bit but, fortunately, nobody owns any (except me). The industrial demand keeps my relatively small position intact. Solar now consumes about 10% of annual silver production,ref 181 and silver is found in non-recoverable form in every electronic device. The gold–silver ratio has soared from 16:1 by weight in the ground to 80:1 by price in the market.ref 182 The notion that it should somehow price in proportion to supply is hotly debated, although the consumption of silver but not gold would logically give silver the relative boost in my opinion. JPM is said to control over 50% of the COMEX silver inventories—new-era Bunker Hunts or simply their clients’ silver.ref 183 For now, I watch with bemusement.

“The question as to whether the Fed can engineer yet another cycle (as it was able to in 2009) or whether the coming crash will be the end of the Supercycle will determine whether gold (and the miners) go up a lot or whether they rise to a terrifying degree.”

~Daniel Oliver, founder and managing director of Myrmikan Capital

Bitcoin: Tales from the Crypt

“Don’t put any money into bitcoin that you can’t afford to lose. But I don’t think we should ban it—the green bills in your pocket don’t have an intrinsic value, either.”

~Sheila Bair, former chair of the U.S. Federal Deposit Insurance Corporation

“Cryptocurrencies do not fulfill any of the three purposes of money. They are neither a good means of payment, nor a good unit of account, nor are they suitable as a store of value. They fail dramatically on each of these counts.”

~Agustín Carstens, general manager of the Bank for International Settlements

In the battle of gold versus cryptos—the Bugs versus the Crypts—I am in the bug camp, but I am sympathetic and respectful of the cryptophiles. Against the current monetary regime, the enemy of my enemy is my friend.

”Millennials are afraid stocks are too risky, so they’re investing in bitcoin.”

~MarketWatch

The strongest case I can make for cryptos is karmic: I don’t own any. It’s still the Wild West, but that’s not to say this sector can’t make doubters look like boobs going forward. Some speculate that the loss in volatility—the onset of boredom—will be their demise, but I completely disagree. If they are to become currencies, they mustcalm the hell down. That plateau in the $6K zone in Figure 22, therefore, seemed “highly constructive”—until the bottom fell out. Shaking youthful day traders from the “space” is also constructive. Start with George . . .

Figure 22. Bitcoin price.

From Figure 22 we see that the cryptocurrencies got pegged this year as investors spit the bit. The trip from sublime to supine did not take long. After bitcoin was driven above $20,000 in late December 2017 (on its trek to $1,000,000, of course) it has now pulled back to about $3,200, which I believe is below the estimated $8,000 to mining it.ref 184 (It is said that crypto mining uses more energy per year than Ireland does.ref 185) The founder of the cryptocurrency called Ripple became richer than Zuckerbergref 186 before a little market inefficiency got cleaned up by handing Ripple a 90% drop in two days.ref 187 (Now if only we could get some market efficiency on FAANGs.)

Dogecoin, invented as a spoof four years ago,ref 188 hit a market cap of $2 billion in January, eventually pulling back 90%.ref 189 It seems indisputable that the vast majority of cryptos will find strong technical support at zero. KuCoin, with a market cap of <$50,000, can’t be long for this world. Obviously the beatings took some of the piss and vinegar from Cryptomania, but The Big Three—Bitcoin (BTC), Ethereum (ETH), and XRP—retain a combined market cap of $80 billion at the time of this writing, and there are more than 2,000 cryptos listed at CoinMarketCap.com.ref 190 Since its inception, the crypto space has taken beatings that would make Whitey Bulger blush (or die), yet they have shown remarkable anti-fragility.

“If authorities do not act preemptively, cryptocurrencies could become more interconnected with the main financial system and become a threat to financial stability. . . . Accordingly, authorities are edging closer and closer to clamping down to contain the risks related to cryptocurrencies. . . . Cryptocurrencies are, in a nutshell, a bubble, a Ponzi scheme, and an environmental disaster.”

~Agustín Carstens, BIS

There are, however, some serious problems that pose existential risks. The authorities—every developed sovereign state and central bank in the world—have oligopolies on creating money and taxing money flows. If they can’t assimilate the Crypto Collective into the Borg Collective, they will try to destroy it. Crypto "hodlers" (hang on for dear lifers) stand defiantly (Figure 23), but it would scare the bejesus out of me. My Texas Hold ’em all-in bet would be on the awesome power of the State.

Figure 23. Tommy Lee lowering his expectations, predicting a 250% rally in Bitcoin in the last two months of 2018.

The State will try to tame Bitcoin before just crushing the crypto bastards garishly. Given that ignoring the cryptos wasn’t working, we witnessed subtle efforts to mainstream them. First, the banks had to stop the use of credit card purchases of cryptos for obvious reasons: the crypto collapse would (and did) cause people to default on their credit cards.ref 191 Banks then began introducing new crypto products—crypto futures, brownies, and vapes. This set the stage for the Commodity Futures Trading Commission (CFTC) to ride into Dodge City to get control.ref 192 During the routs this year, there were some huge buyers stepping in to provide what appeared to be J.P. Morgan-esque support. We’re talking $500 million purchases.ref 193 However, a federal judge ruled that cryptocurrencies are "commodities”ref 194 and, unlike all other markets on the planet where manipulation runs unchecked, the authorities promised to mete out some jail sentences. The SEC is “probing investment advisers for potential misconduct involving cryptocurrencies, signaling a new direction in its oversight of this emerging market.”ref 195 Ominously, Google announced a ban on all crypto and initial coin offering (ICO) advertising. This is the power of the State using Google as a stalking horse. (I capitalize state to get you to say, "Oooooh" and shake with fear.)

The IRS declared the gazillions of crypto transactions are merely gazillions of taxable events creating gazillions of miles of red tape and gazillions of new criminals, tipping risk–reward calculations decidedly toward risk.ref 196Can you imagine if every time you bought a product with dollars it became a line item on your tax return? (Of course not: the dollar purchasing power monotonically drops.) How about all those cool toys, houses, and Lamborghinis bought with liquidated Bitcoins? They've got the goods and huge capital gains tax bills.ref 197Could be worse, as Saxo Bank has pointed out: Some particularly resilient consumers purchased the toys on credit, comforted by the cushion of Bitcoins priced at $2,000 apiece.ref 198 They’ve now got the toys, debts, and crypto cushions that are more like donuts.

Claims that hackers from Russia were interfering in the crypto markets means the crypto space is a national security concern.ref 199 The NSA is now tracking the cryptos—they always were, silly—which means the whole privacy thingie is hooey.ref 200 (Hooey is Russian slang for horseshit.) It is also the rallying cry for more State intervention.

What would a mania be without human folly, self-inflicted wounds, and some serious humor? North American Bitcoin Conference organizers in Miami stopped accepting bitcoin payments for conference tickets owing to network fees and congestion.ref 201 A long position in bitcoin futures in Hong Kong’s OKEx crypto exchange processed a $416 million trade.ref 202 The exchange was “unable to cover the trader’s shortfall as Bitcoin’s price slumped.” Rob Arnott says bitcoin futures are 10–20× leveraged,ref 203 which accounts for the big moves both ways. CNBC had a guest whose firm offered a 100× leveraged bitcoin product.ref 204 I’m guessing they are now untraceable in the blockchain (like Lawnmower Man). A company called Proof of Weak Hands Coin, referring to themselves as “a Ponzi scheme” on Twitter complete with a pyramid avatar, raised $800,000.ref 205 Hackers promptly drained its funds. Another Ponzi scheme was so bad that the Russians shut it down, but it has resurfaced and is thriving in the Heart of Darkness (Africa).ref 206 A video promo for BitConnect was produced Gangnam style—some serious sleaze on display.ref 207 BitConnect turned out to be a Ponzi scheme and, unlike the other Ponzi schemes offered by Wall Street, actually collapsed.ref 208 There is no BitConnect without Bitcon. The miracle of creative destruction is on full display as Uber scooped up the influx of new drivers.

Legitimate (albeit pathetic) companies added “blockchain” to their names, causing their market caps to soar.ref 209 Eastman Kodak announced a crypto coin, causing shares to take off in flash. “Long Island Iced Tea” became “Long Island Blockchain." Smith Corona changed its name to Smith Coinola and did an ICO. (OK, I made that one up.) After a brief spike, the Kool-Aid swillers gave it all back, of course.ref 210 There are, however, emerging legitimate uses of blockchain. The LegalFling app, for example, records consensual sex agreements (blockchain keys to the chastity belts).ref 211 As Jim Rickards said, “Have fun, kids.” Here's some funny satire.ref 212

Real Estate

“There is a tsunami of supply comin’ down the road. If someone on this panel can tell me where the demand is gonna come from to meet that supply, then we got something to talk about.”

~Sam Zell

Seems like a truism to me that as rates drop, real estate prices will rise—and vice versa. It’s not shocking that big real estate bubbles occurred in the 1920s and 2000s during periods of loosening policies. And, of course, rates being too damned low for too damned long should goose prices too damned high, but I don’t sense that buyers and lenders have completely lost their minds this time. With mortgage rates at a 7-year high and rising (Figure 24), we will soon find out.

Figure 24. Thirty-year mortgage rates.

Some think we will have another crippling real estate bust. My canaries in the coal mine are the single-family rentals. As Joe and Jane Six-pack drove away from the burbs in ’09 watching their former abode shrink in the rearview mirror, the rest of you witnessed the absurdity of rising home prices in the face of falling occupancy (Figure 25). Nobody slipped you acid. The private equity guys jumped in to buy the houses at steep discounts and then drove the prices higher.ref 213 Mind you, single-family rentals are a terrible business that works only when the paper-thin capitalization rates (profit margins) are amplified by leverage—cheap money—relying on low interest rates. The obvious risks are, of course, rising interest rates. That risk didn’t stop Cerberus from increasing its portfolio with a $500 million expansion of FirstKey Homes.ref 214 I suspect, however, that the boom (and Cerberus) may die as rising interest rates and commensurate falling cap rates cause the private equity guys to decide the game is over and start liquidating their large shadow inventory to flood the real estate market. For now, however, we are witnessing more froth than fragility. For those interested, that image in Figure 25 in which two normally correlated prices diverge is called “alligator jaws.” There are a lot of 2018 charts from all over the financial universe that look like that. Alligator jaws are known to slam shut without much warning. It is not a subtle metaphor.

Figure 25. Home ownership rate versus price.

The enthusiasm for housing did get a bit manic, with a third of U.S. homebuyers (or should I say buyers of U.S. homes) bidding sight unseen.ref 215 A five-story Manhattan townhouse sold for a new record of $37.2 million—quadruple what the buyers had paid in 2012.ref 216 Credit unions are once again offering 0% down for mortgages up to $2.5 million.ref 217 I saw a show this morning describing how a divorced couple who had a house-flipping show during the last bubble have gotten past their hatred and contempt to restart the show. (Ding! Ding! Ding!) Real estate analyst Mark Hanson lays out city-by-city plots showing serious froth (Figure 26). These numbers are not inflation corrected.ref 218

Figure 26. Mark Hanson analysis.

Despite surveys showing a willingness of the majority of California residents to at least consider leaving the state,ref 219 the California housing market is on fire! (OK, that was tasteless.) As we witness a net population exodus from The (shit-stained)ref 220 Streets of San Francisco for the first time ever,ref 221 the cost of a median single-family dwelling in San Francisco rose to $1.6 million (Figure 27).ref 222 An 804-square-foot house in nearby Palo Alto sold for $100K in 2003 and $5.3 million in 2018.ref 223 A 900-square-foot bungalow near downtown Palo Alto listed for $2.6 million,ref 224 below the median listing in Palo Alto of $3 million.ref 225

Figure 27. San Francisco housing and their feces reports.

Evidence of housing market softening, however, is very real. Shares of homebuilders have been getting crushed (losses of 29–55%) in an economy said to be booming.ref 226 According to prominent economist Lakshman Achuthan, the national home price index was contracting by mid-year.ref 227 I—a friggin' chemist—saw the subprime and banking crisis as far back as 2002. ref 228 Bank and credit analyst Chris Whalen reminds us that the bust was clear by 2005.ref 229 He now says “nothing changed since 2008, but as in 2006, we have convinced ourselves that everything is just fine.” Total real estate sales in Manhattan fell 11% year over year.ref 230 Offers are coming in well below asking prices.ref 231 The drop was attributed to an acute oversupply of luxury units as foreign buyers sat on their hands, rising material costs of construction, and changes in tax deductibility of mortgage payments.ref 232 This latter point is important: If you can only deduct $10,000 per year of your state taxes on your Federal return, the prices of higher-end housing will necessarily adjust downward.

Canada never really experienced a bust when the U.S. did. It seems like they have rolling booms and busts as hot money moves from city to city. While the British Columbia median prices rose 9.2% year over year, the once-hot Vancouver housing market dropped over 40%.ref 233 The two biggest Canadian banks cranked up lending rates right before 50% of all Canadian mortgages were poised to reset.ref 234 Stay tuned. Toronto buyers were feeling their oats, as people were flipping their pre-sale houses—tripling the money on their down payments before the sale even closes.ref 235,236 The down payments were acting like levered options. That game may have ended. A 3,500-square-foot lot with a 650-square-foot house sold for only $1.1 million because it is too close to a highway.ref 237 The Carlyle Group is committing a $225 million senior secured loan to Canadian homebuilder Empire Communities.ref 239 Timing seems sketchy, eh? This turn-key, ready-for-occupancy gem in Vancouver is listed for $4 million:

Figure 28. Vancouver handy-man's dream.

The price of a house in London has increased fourfold in 20 years.ref 240 It appears as though Brexit, political upheaval, and mounting consumer debt may finally be causing the formerly red-hot London market to drop precipitously.ref 241,242 Spain’s housing bubble seems to have burst too.ref 243 China’s cap rates are in the razor-thin 1–3% range. Down in the Woop Woop of Australia, the credit bubble and housing boom seems be a bit of a boomerang, leaving homeowners a bit crikey and stonkered. Australian house prices are down 14% from their peaks and may not even be halfway to the lows,ref ref 244 which would pose way more systemic challenges than 30–45% drops in equities.

Another housing bust will call for more government intervention. It will be as feckless as the last:

Pensions

“If you were going to look for what’s the possible real crack in the financial architecture for the next crisis, rather than looking in the rearview mirror, pension funds would be on our list.”

~David Hunt, CEO of $1.2 trillion asset manager PGIM

“But if you look at these state pension funds, they’re a mess. These bills have got to be paid. . . . [A] good rate of return today of 2.5% to 3.5% doesn’t do the job. A big fear to me is who the hell in their right frame of mind would be buying bonds now?”

~Ken Langone, former CEO of Home Depot, on quantitative easing (QE)

"U.S. pension fund collapse isn't a distant prospect. It could come in 5 years"

~Bloomberg headline

"Why your pension is doomed"

~Wall Street Journal headline

"42% of Americans are at risk of retiring broke"

~CNBC headline

In ancient Rome, Augustus set up a military pension fund using the equivalent of $500 million of his own money and put ex-military trustees in charge. It got pilfered.ref 245 We have pilfered essentially every modern-day pension plan as well. Underfunded pensions are a form of leverage, and the pensioners are the creditors. Looming defaults will be devastating. Headlines focus on the risk posed by Social Security that, in conjunction with Medicare, is leveraged $50 trillionref 246 backed by a tax base racking up >$1 trillion (6–7%) annual deficits. The state, municipal, and corporate pension plans and private retirement accounts (401Ks and IRAs) are where the real bodies are buried. More than 100 million working-age Americans who should be progressing toward a stable retirement have saved precisely zero.ref 247 As you read the anecdotes below, keep in mind that pension holes are based on aggressive assumptions of 7–8% returns. The only safe bet is that those rates of return are not safe bets. The targeted balances—the balances the pros say you will need to retire comfortably—in personally funded accounts are pathologically understated.ref 248 If we really are in the Mother of All Bubbles (MOAB), what happens if it bursts?

The states’ unfunded pension liabilities have grown sixfold since 2003, and are now exceeding $1.4 trillion with the pedal to the metal. State pension costs are swallowing >25% of general revenues. The underfunding is estimated to eventually impose a surcharge to each household ranging from $30,000 for Tennessee to $180,000 for Alaska.ref 249 Kentucky has 16% of the funding needed, becoming the topic of a Frontline episode that made officials there look like a bunch of gullible hicks.ref 250 California's CalPERS is funded to <70%, with every private citizen in California owing >$100,000.ref 251 Illinois owes >$100 billion to its pension funds—six times the annual state revenue—and the liabilities are on track to double every 6 years (11% compounded).ref 252 It is said that if the Illinois state government put 50% of state revenue toward debt, pensions, and retiree healthcare, it will reach full funding in 30 years.ref 253 The state could raise taxes, but the Fighting Illini (tax payers) are already ranked #1 in the nation. Go team! New Jersey has $80 billion socked away to pay for $280 billion of future liabilities.ref 254 (The funding ratio fell from 93% in 2003 to approximately 30% in a dozen years.) Michigan, Pennsylvania, Florida, Ohio, Oregon, Colorado, Kentucky, and Rhode Island are said to not have the biggest actuarial problems but are at risk of running out of cash first.ref 255 I’m not even sure what that means. For 28 states, accrued liabilities have grown by 50% since 2003, way faster than their statewide GDPs.

Figure 29. Six states with problematic pension–GDP gaps.

What are states to do? The California Supreme Court will decide whether pensions can be cut on government employees.ref 256 I’m gonna guess no. The Illinois Supreme Court blocked state pension reforms in 2015, consistent with the idea that you cannot selectively screw one class of creditor.ref 257 CalPERS voted to increase the amount cities must pay, leading cities to foreshadow Chapter 9 bankruptcies.ref 258 Governor Jerry Brown wanted to crank up gas taxes by 40%, which could move him markedly closer to retirement.ref 259 Illinois wants to borrow $100 billion to speculate on equities.ref 260 That ought to help its already junk-level credit rating. The League of California Cities urged CalPERS officials to think “out of the box” to improve on their already aggressive 7% presumed annualized returns.ref 261 Short the VIX, dudes! It’s a one-decision trade. The state will be “totally bankrupt by 2021–2022.”ref 262 Between 2006 and 2017, Kentucky’s bond portfolio has grown from <1% junk bonds to 53% junk.ref 263

Reaching for yield is never a good idea, despite being forced at gunpoint by the Fed. Connecticut is broke: It may hock (sell) $2 billion worth of its buildings and lease them back at 7.5%.ref 264 Meanwhile the Fed has designed a bailout of the insolvent PBGC (Pension Benefit Guarantee Corporation)—a bailout mechanism in its own right—but one that does not cover state pensions.ref 265 My suspicion is that the Fed will loan the states money knowing full well it will never be paid back.

Figure 30. Total state pension deficits (dated data but trending).

The local (municipal) plans aren’t doing much better. New Orleans firefighters can expect 10 cents on the dollar based on their 10% funding level.ref 266 Wilkes Barre’s police and firemen’s pensions are <50% funded.ref 267Courts ruled that they couldn’t stick the pensioners. Next up: Chapter 9 restructuring, which is the legally correct solution. Cops and firemen in the tiny burg of Central Falls, Rhode Island, agreed to forfeit >50% of their pensions to escape insolvency.ref 268 New York, Philly, LA, Houston, and Phoenix all have $20,000–$30,000 per-capita pension IOUs coming due.ref 269 The murder capital of the country, Chicago, has a pension funded to 30%.ref 270 While the equity markets tripled from 2009 to 2018, Chicago’s liabilities more than doubled. Each Chicagoan is on the hook for more than $50,000 in pension debts and >$100,000 in total debts—not to mention the bar tab from the state.ref 271 Chicago’s problems are a little vague because Chicago’s and Moody’s bean counters disagree by a factor of two owing to different actuarial assumptions. Rahm Emanuel is taking a lifeboat—retiring...on a good pension—to distance himself from the Titanic problems. Before leaving, however, he wanted to borrow $10 billion to dump into the equity markets, but that got put on hold.ref 272 Maybe Illinois will lend you the money, Rahm. Similar strategies sent Detroit, Stockton, and San Bernardino into insolvency.ref 273

Figure 31. Municipal pension deficits versus tax revenue for 10 major cities.

There are countless reasons why we’re in this mess, but let’s just look at a bulleted list of waste that illustrates part of the problem, while retaining a comedic touch.

  • The head of the Oregon Health & Science University retired on a $913,000 per year benefit, while the poor University of Oregon’s retired football coach of 15 years only gets only $560K per year.ref 274 There are 2,000 Oregonians who get more than $100,000 per year.ref 275

  • The pooper scoopers who are charged with cleaning up shit off the streets in San Francisco make $184,000 per year.ref 276

  • The mayor of Ithaca, Svante Myric, is proposing that the city provide “free” child care. (I know Svante: He is a young man who I think will run for president someday. His platform will likely include some freebies.)

  • Illinois has been generous. The top 10 pensioners are each expected to pull an estimated $8–10 million from the state pension plan before they die (unless they visit Chicago). One gets over $400,000 per year as the superintendent of a school district with 1,200 kids.ref 277

  • Illinois taxpayers will be on the hook for more than 20,000 six-figure annual pensions for educators. Their pension benefits have compounded at 9% annually for nearly 30 years.ref 278

  • More than half the states have grown their pension promises at >5% annually since 2003.ref 279

One could make the argument that some of that is odious debt—debt incurred by somebody else (usually sovereign leaders) that is so odious that you say, “Screw it: I'm not paying.”ref 280 I believe, however, that the courts are unlikely to consider odiousness at lower levels.

Self-directed retirement plans—so-called defined contribution plans—are in brutal shape. Data from the Saint Louis Fed (Figure 32) show that the median retiree has almost nothing ($1,100),ref 281 and the highly indebted boomers with little time left to correct the error in their ways are altogether unready for retirement. The rallying cry that 80 is the new 50 ignores the harsh reality that 50% of retirements are forced by personal circumstances to retire,ref 282 and folks who do seek post-retirement employment—that's not retirement—take a 25% pay cut.ref 283 Most people have not been adequately trained to be their own human resource specialists.

Figure 32. Median retirement account and median boomer accounts.

On the bright side, the millennials are getting the memo early enough to act. The challenge is that the message seems to be either “Don't worry; be happy” or “Don’t bother.” Surveys show that even those with retirement accounts seem to have saved little. Those same millennials, not known for letting reality encroach on their world, want to retire, on average, at 56 years old.ref 284 Time to cut back on the bottled water, pumpkin spice lattes, and, for that matter, any form of food. It’s time to stop being a bunch of dingleberries, put your phones down, and pay attention.

On that latter point, there is a new group called FIRE—“financial independence, retire early.”ref 285 Members of the group want to work hard, cut costs, and then retire in their 30s and 40s to travel the world:

"How to retire in your 30s with $1 million in the bank"

~New York Times headline

“Nothing was wrong with the job—it was a great company, good money, six figures. I was 26 and I said, ‘Why am I going to spend my 20s sitting at a desk?’”

~Mason, 29-year-old retiree

There are over 400,000 subscribers to FIRE on Reddit,ref 286,287 sharing tips like “how to survive a Minnesota winter without shoes, gloves, or coats.” Suze Orman blew out both ovaries noting, “I hate it. I hate it. I hate it. I hate it.”ref 288 This group will be positioned perfectly for the Great Attitude Adjustment (GAA).

Well at least we have the corporate pensions to fall back on, but they are underfunded as well (Figure 33). Corporations could always top off their pensions if they diverted funds from share buybacks and other forms of financial engineering. Ironically, that would cut into the multi-sigma profit margins, crush share prices, and, ironically, shrink everybody’s pensions plans. That’s swell. Pension coffers should be bloated with FAANG-based returns as we near the end of this investment cycle. They obviously are not.

Figure 33. Corporate pension shortfalls.

The aforementioned PBGC bailout plan does not cover the state-funded (or should we say state-unfunded) plans. There are discussions of using Puerto Rico as a beta test to introduce Chapter 9 legislation to allow for state bankruptcies, which are currently not allowed under the federal bankruptcy code.ref 289 Bankruptcy laws are designed for precisely when available assets are insufficient to cover liabilities. Private defined-contribution pensioners—the IRA/401K crowd—are gonna be investing doggie style and playing a lot of Dialing for Dollars.

Debt

“It is incumbent on every generation to pay its own debts as it goes. A principle which if acted on, would save one-half the wars of the world.”

~Thomas Jefferson

You have a debt problem when you have more debt than the capacity to pay it off. It arises from consumptive debt that is non-self-extinguishing. As far back as David Ricardo in the nineteenth century, we have known that debt-financed spending is not constructive to GDP. The debt problem goes global when the collective promises of sovereign states to their masses cannot be satisfied by future output. Not everybody can live the metaphorical American Dream no matter what global leaders have promised. There is a paradox in that you can save at the local level—personal, municipal, state, and even national—by having others outside your defined group owe you future goods and services (albeit accounted for using units of currency). You cannot, however, save globally. Because sovereign-level debt problems are PAYGO (pay-as-you-go) plans by definition, we’ve been trapped by compensation mechanisms that have increasingly relied on unfulfillable promises in the future rather than payment in the present. Now we find ourselves in a putative global asset boom—one that I find to be a sandcastle built by central bank largesse—while concurrently having debt problems. In the U.S., for example, average household net worth is soaring while the median family needs credit for basic needs and has squat for retirement savings.

“The great bond bull market began waaay back in 1982—36 years. And as governments were able to keep financing at lower and lower rates, they kept promising more and more.”

~Capitalist Exploits on the social justice movement

In the following sections I treat debt and savings as two sides of the same coin while somewhat arbitrarily separating corporate, personal, and sovereign debt problems from a looming global pension crisis and, for that matter, problems in the real estate market. I suspect that the Fed's pathological aversion to letting the economy sink or swim on its own may stem from its PTSD-levels of fear of the next recession, which—I hasten to add—is as inevitable as death and taxes. The Wall Street Journal worries that we will burn a decade recovering from the next recession. I worry that they are optimists.

All this debt has accumulated with a tailwind of relentlessly falling interest rates from a 36-year secular bull market in bonds. The blowoff phase of the bond bull is a decade of rates wrestled to 5,000-year lows by central bankers. Now we are in a rising-rate environment. The gyrations across global markets are just the trailer. If the secular bear market in bonds goes wheels up—if rates begin a multi-decade upward march because of our modern-era guns-and-butter policy—many of us may not be around to see resolution.

?Corporate Debt

“This time around, the big bubble is the extreme leverage on the corporate balance sheet, where the chart of debt-to-GDP looks a lot like the mortgage debt-to-GDP in 2007.”

~David "Rosie" Rosenberg

“Corporate debt has soared, but most of it has been used for financial engineering. . . . Who knows how many corporate zombies are out there because free money is keeping them alive?. . . Competition is a better tool than price control for protecting consumers. That applies to Amazon and the bond market.”

~Stan Druckenmiller

It is clear that this is a very different corporate bond market, and history-based financial models will most likely be found wanting.”

~Louis Gave, cofounder of GaveKal

The corporate debt market is a complicated story because huge amounts of debt to financially engineer pump ’n’ dump schemes with share buybacks were waiting to be extinguished by repatriated savings (tax amnesty) from overseas. Assessing corporate leverage—debt net offsetting cash and other assets—is more important than usual. That said, from my perspective up in the nosebleed section, loose monetary policy managed to create a mountain of corporate debt, which is unsurprising to everybody but central bankers. Whocouldanode? The 54 AAA-rated companies in the S&P before the crisis have been reduced to only two because of leverage.ref 290Many—myself included—believe that the corporate bond market will be Ground Zero of the next crisis. In case I haven’t said it enough times, we are in a rising rate environment: The fuse has been lit. Net leverage normalized to EBITDA (earnings before interest, taxes, depreciation, and amortization) has doubled in only a few years. Tighter banking regulations acted like Prohibition, opening the door to hooligans, hedge funds, and other non-bank grifters with their own leverage. There is a so-called shadow banking systemref 291 that is so enormous, complex, and hidden from the light of day for us Philistines. Here’s a trick question: Who do they borrow from? These corporate-focused lenders will scamper away in a heartbeat in a downturn. The retail investor will see bids for corporate paper (debt) buried in their portfolios disappear, and it could happen in a matter of days, hours, or minutes.

Mario Draghi’s European corporate-bond-buying binge sent some corporate bonds into negative interest rates—companies were being paid to borrow—and the Bank of Japan has now joined in.ref 292 The global bond binge caused the premium spreads—the extra interest paid for buying total garbage like commercial-mortgage-backed securities versus AAA bonds—to reach lows not seen since early 2007.ref 293 Those spreads are now widening. Companies are citing higher interest expenses chewing into earnings, which will amplify the credit spreads. Over $2.5 trillion—50% of the investment-grade corporate debt market—is rated just one notch above junk.ref 294Exchange-traded notes (ETNs) based on corporate debt are unsecured, subordinated debt that trades daily. A day will come when they don’t trade. The volume of covenant-lite corporate bonds—bonds with lower levels of constraints than the stuff we call garbageref 295—has soared and poses a huge risk because of (not despite) the fuzzy name. U.S. firms sold $9.2 trillion in bonds since 2013, a non-trivial $3.5 trillion being used for share buybacks ($850 billion in 2018).

Is this really a systemic problem? I think so. As I am writing, GE and Deutsche Bank are gasping their last breaths—debt rattles—while doing laps around the drain. GE has $170 billion in debt owing to years of financial engineering.ref 296 Its productive assets will live on in the hands of new owners, but current holders of its debt and equities will be dealt with severely. Deutsche Bank is so huge that it seems likely to be nationalized. Rumors of a merger with Commerzbank just surfaced in what seems like one of those '08-esque shotgun weddings.ref 297Companies like GM and IBM are not far behind. These are Mothra-sized butterflies flapping their wings.

“The debt load for U.S. corporations has reached a record $6.3 trillion, according to S&P Global. The good news is U.S. companies also have a record $2.1 trillion in cash to service that debt.”

~CNBC headline

What CNBC seems to have missed is that borrowing money (the $2.1 trillion part) to pay the interest on the $6.3 trillion is a Ponzi scheme,ref 292 and I’m not speaking metaphorically or hyperbolically. Individual companies that don't have the cash flow to make interest payments are called zombies, implying that they are dead but somehow still stumbling around the planet posing existential risks to the living. Of course, they are rare, right? Well, 20% of the Russell 2000 index and 14% of the S&P 500 are zombies.ref 299 Passive index investors own the shares of these gems and, if not, are financially linked to clowns called “counterparties" who own them. The problem is, as noted by the Bank for International Settlements (BIS), zombies do not come back to life.ref 300Unlike real zombies in which all you need to do is tie the recently departed's shoelaces together, these Walking Dead require the free market metes out shots to their heads.

The beginning of what looks like a serious bond bear is hammering risk-parity funds—bond funds that used leverage to seek the risk of equities.ref 301 Congrats, guys: You found it! And then there is the “leveraged loan market,” in which companies too weak to access the junk bond market go and borrow from a guy named Vinnie. These are the payday lenders for corporations. Retail investors with this crap in their retirement accounts will be toe-tagged and bagged.

“The selloff in GE is not an isolated event. More investment-grade credits to follow. The slide and collapse in investment grade debt has begun.”

~Scott Minerd, CIO at Guggenheim Partners

Let’s finish by taking a special look at GE’s debt. In 2002, I predicted that GE was headed for trouble in an email to a friend at Goldman.ref 302 Years of financial engineering finally worked their magic.ref 303 GE survived ’08–’09 with a lot of help from the authorities but appears to be on life support now. It is getting crushed by debt estimated at $40–$170 billion depending on who is doing the bean counting. The confusion is probably caused by off-balance-sheet debt . . . just like Enron. A bunch of GE debt is still investment grade, but it is “trading like junk,” which means we’re waiting for the rating agencies to read them last rites. To avoid bankruptcy, GE eliminated its quarterly dividend, causing double-notch bond rating downgrades.ref 304 The debt burden owing to a Hail Mary strategy of borrowing heavily for M&A (mergers and acquisitions) is probably now too high. GE is said to be “locked out of the commercial paper market,”ref 305 which means it’s time to call Vinnie. A default is said to be “unthinkable,” posing systemic risks as well as sentimental risks owing to a fall of an American Icon. On that note, Sebastian Mallaby gave us a "Crisis for Dummies" description of how cascading failures happen.ref 306

Personal Debt

“How do you make poor people feel wealthy when wages are stagnant? You give them cheap loans.”

~Vincent Daniel in The Big Short

According to a Federal Reserve study, Americans have $1 trillion of credit-card debt, $1.5 trillion of student debt (Figure 34), $1.5 trillion of auto loans, and $13.5 trillion in mortgage debt.ref 307 So many zeroes: What the hell does that even mean? We can manage the mind warp by bringing it down to the family level. The average household has $140,000 in total debt.ref 308 This number does not included unfunded liabilities at the municipal, state, and federal levels. The student debt is disturbing in that 40% of it is held by senior citizens and who are defaulting with troubling frequency (37%),ref 309 and the boomers now owe more than the millennials: “Thanks, Mom and Dad. I’ll swing by on my way to Fort Lauderdale this spring.” There are 101 individuals with over $1 million of student debt, and one dentist owes >$2 million.ref 310 The $100,000 student debt club has 2.5 million members. Owed mortgage debt is almost 5× the yearly salaries of the owners.ref 311 Credit card debt has climbed back to its 2008 peak,ref 312 but the average interest rose 3% to a lofty average 15.5%. Consumers are paying $100 billion a year in interest payments with their disposable income. One could argue that if you have credit card debt, you have no disposable income.

Figure 34. Student debt or monetary policy?

Consumer debt is growing at 2× the rate of salaries (Figure 35) while 100 million Americans have no job to make such a comparison. The auto debt market continues to show stress fractures. Approximately 30% of trade-ins are in functional default (worth less than the loan balance.)ref 313 Trading in a beater for an improved newer model is a bad decision. An estimated $280 billion of subprime auto loans are defaulting, stressing the smaller subprime lenders.ref 314 A heavily cited stat this year was that 40% of Americans do not have enough money to cover an unexpected $400 expense without borrowing the money or selling something they own, and 60% can’t cover a $1,000 tab.ref 315 This is not a moral judgment, just the facts.

Figure 35. Household debt normalized to disposable income.

It’s hard to know whether the consumers are feeling the stress. The millennials are certainly in a rush to retire with <$20K saved (see “Pensions”).ref 316 Another survey showed that 41% of them spent more money on coffee than on investing in retirement last year.ref 317 No problem: There is a Congressional bill that would allow students to pay student loans with future Social Security money.ref 318 You get just deserts only after you eat your seed corn. Whoever hatched that plan should take some of that bank lobby money they obviously accepted and get professional help.

For every debtor there is a creditor. A global debt problem is less about some crazy form of owing too much but rather counterparty risk—the risk that debtors can’t pay. Good news: Somebody owes you $500,000. Bad news: It's your teenage son.

“Twenty years ago there was $40 trillion of debt in the world; today there is $250 trillion worth of debt in the world.”

~David Stockman, former Reagan economic advisor and Blackstone Group

“$20 trillion got to $21 trillion in 186 days: That is blistering. . . . Donald is pro-Warfare State, pro-welfare state and has just slashed Uncle Sam’s tax take to 16.6% of GDP—the lowest rate since 1950.”

~David Stockman

Sovereign Debt

“The only question is whether we are able to look reality in the eye and face what is coming in an orderly fashion, or whether it will be disorderly. Debt jubilees have been going on for 5,000 years, as far back as the Sumerians.”

~William White

The markets most important to the functioning of capitalism—the credit markets in which lenders and borrowers haggle to determine the cost of money—are damaged. Central banks have subverted price discovery, sending bizarre signals to market participants. I asked the Twittersphere what interest rate they would demand to buy a 30-year Treasury that they were required to hold for 30 years—no selling, trading, or hedging. The answer was telling:

Figure 36. Twitter poll about the term premiumref 319 that investors would require for 30-year treasuries.

It would appear that 30-year bonds are priced wrong because somebody will be holding these assets for 30 years. My personal answer is comfortably above 7%. The interest payments on U.S. debt rose by 14% over the last year owing to increased principal payments on inflation-protected securities ("just the TIPS"),ref 320 continued generalized debt growth motoring along at 6–7%,ref 321 and overall higher rates. We will add well over $1 trillion of debt before the year is over.ref 322 Stanley Druckenmiller submits that the next recession will usher in a $2 trillion deficit. Many say we should have issued century bonds—100-year treasuries—when interest rates were low. I disagree profoundly: Forcibly jamming rates low, eliciting fixed-income investors to do unnatural things with barnyard animals just to get income, and then stiffing your counterparties with such abominations would be bad karma. In any event, that ship may have sailed because sovereign holders of treasuries such as Japan, Russia, and China are now sellers.ref 323 We are on a path to our Minsky Moment at which debt overruns our capacity to make payments. We will just inflate it away, right? Maybe not. You create inflation by creating money, and you create money by creating debt. It makes me scratch my head.

“People who confidently think they know the consequences—none of whom predicted this—know what’s going to happen next? Again, witch doctors. How many in this room would have predicted negative interest rates in Europe?”

~Charlie Munger, Berkshire Hathaway

Global debt rose from 276% of global GDP in 2007, wallowed through the Great Recession, came out the other side topping 327% of global GDP, and continues to expand at >10% per annum.ref 324 Simon Black notes that while the economy grew 36%, the debt grew 123%.ref 325 The IMF blames the growth on a prolonged period of low interest rates—those foisted on us by central banks—for nearly a decade.ref 326 By early 2018, sovereign debt returning negative nominal interest rates—absurdities that should never exist in a functioning bond market—topped $10 trillion.

Figure 37. Negative interest rates on sovereign debt.

“If 2.60% is broken on the upside—if yields move higher than 2.60%—a secular bear bond market has begun.”

~Bill Gross, the former Bond King (2017) on the 10-year yield

“If we take out 3 percent . . . it’s bye-bye bond bull market. Rest in peace.”

~Jeff Gundlach, the new Bond King (2017) on the 10-year yield

Figure 38. Ten-year treasury yields.

Bank of America’s Michael Hartnett says, “the lowest interest rates in 5,000 years have guaranteed a melt-up trade in risk assets,” which explains the 600% wilding of the FAANGs off the ’09 lows. The rising-rate environment means that resolution and redemption—dead bodies—may start floating to the surface. JPM reported that the global bond yield curve inverted in June (Figure 39), which will trigger, sequentially, the following: (a) “yield curve deniers” will declare such inversions irrelevant, and (b) a potentially bone-crushing recession will arrive. There is also a big debt rollover coming in 2019–2028 (Figure 40). I've added the iconic plot of mortgage resets foreshadowing the ’08–’09 crisis just in case anybody else sees parallels.

Figure 39. Global bond yield curve turning negative.

Figure 40. Debt rollover, 2019–2028, versus mortgage resets, 2007–2012.

“Consider for a second that for the first time in 18 years (!), U.S. 10-year yields are trading at a premium (10 bps) to Australian comparables! The long bond at 3.21% is 6 bps above Italian 30-year yields. . . . America is an AAA credit, and Italy is BBB.”

~David “Rosie” Rosenberg

Europe seemed relatively quiet. Brexit looms, but I refuse to spend any more time reading about the carnage that will happen and patiently wait to see what does happen. The idiocy of central bankers is reflected by negative yields on Spanish sovereign debt, 10-year Swiss debt returning 0%, bonds maturing in 2055 returning 0.5%, emerging-market junk-bond yields that are now below U.S. junk-bond yields, and a Greek 10-year yield below that of the U.S. 10-year yield. Negative yields on Italian debt concurrent with the country’s budget imploding finally triggered a VIX-like response (Figure 41). Mario Andretti would be in awe of the acceleration on that price discovery. Meanwhile, the covenants underlying much of this sovereign debt are said to be weak.ref 327

Figure 41. Italian bond massacre.

“China is rewriting the economic history books because they have embarked on a view that they can simply borrow twice the amount of output growth as the growth in GDP.”

~Jim Chanos, Kynikos (on Real Vision)

The out-of-body experiences are found in the emerging markets. Emerging-market debt tripled during the last 8 years.ref 328 China’s bond market is opaque but said by many to be a profound risk to global markets. According to S&P, China’s local governments have $5.8 trillion of off-balance-sheet debt, representing “an iceberg with Titanic credit risks.”ref 329 Jim Chanos, who is a galaxy-class short seller, says that the Chinese are building two to three times the number of apartments that demand can absorb. Outstanding loans are growing by >10% year over year.

“My thesis is that over the next decade we will endure increasingly damaging debt crises that culminate in a coordinated global default—“The Great Reset,” as I call it. There are limits in how much leverage the world can handle and I think we are already beyond them. And that is before we have a global recession. The only question now is how we will manage the collapse.”

~John Mauldin, founder of Mauldin Economics

Japan doesn’t even have a bond market; it was nationalized by the Bank of Japan to the point that there are days in which not a single bond trades.ref 330 A market with a single buyer is called a "monopsony" (brought to you by Snapple.) Japan already spends a quarter of its tax revenue just to service its debt even though rates are ridiculously low.ref 331 If interest rates in Japan rose to 1% (not exactly usury), the nation’s annual debt service would literally exceed all government tax revenue. When what few private bondholders left sell causing rates to flicker higher, the BOJ intervenes (three times in a single week), buying up all the bonds.

Argentina defaults on its debt every 15 years on average.ref 332 In 2017 the country issued 100-year bonds—century bonds or what I call “Beanie Bonds”—that were oversubscribed by some of the biggest names in U.S. finance: Fidelity, BlackRock, Lazard Asset Management, and who knows how many multinational banks (Figure 42).ref 333 Gillian Tett of the Financial Times noted that these bonds “may end up being the government bond market equivalent of the Pets.com IPO during the 2001 tech boom—the sign of a bubble peak.”ref 334

Figure 42. Purchasers of Argentine century bonds.

It took less than 1 year for Argentina to functionally default.ref 335 Of course, its GoFundMe campaign secured $50 billion from the IMF to prevent global market turmoil by paying off its creditors.ref 336 Jim Rickards thinks the whole affair was a “backdoor way for China to lighten up on dollars. Yeah, it’s complicated.” That is outside my wheelhouse. What I do know is that it is never the country being bailed but rather the seemingly moronic creditors . . . which is not moronic if the creditors know bailouts are preordained. The IMF launders money from a number of countries to pay for such bailouts, but the primary sponsor is the United States—the U.S. taxpayer. Meanwhile, a 25% inflation rate and interest rates soaring to 40% are frying Argentina’s empanadas whether the country defaults or not.

“China reminded us that the tale of synchronized growth was false and that what we have been seeing in recent years has been synchronized growth of debt.”

~Daniel Lacalle, eighth-ranked “economic influencer” in the world!ref 337

I suspect that when the cost of money resets—when price discovery rears its fugly head—many of these assets will cease to exist. What’s left will likely have new owners.

Inflation and Deflation

“I just don’t see much inflation pressure.”

~James Bullard, president of the St. Louis Federal Reserve

“If I had to bet my life on higher or lower inflation, I’d bet a lot higher.”

~Warren Buffett

“We know how to deal with inflation. We don’t know how to deal with deflation in this country.”

~Gary Cohn, former CIO of Goldman Sachs and former chief economic advisor to President Donald Trump

“My generation gave former tenured economics professors discretionary authority to fabricate money and to fix interest rates. We put the cart of asset prices before the horse of enterprise. We entertained the fantasy that high asset prices made for prosperity, rather than the other way around. We actually worked to foster inflation, which we called ‘price stability.’ . . . We seem to have miscalculated.”

~James Grant, talking to our future selves and grandchildren, 2014

The Fed claims that a small amount of inflation is good and then wavers as to how much is optimal. Never mind that luminaries like Paul Volcker have denounced such thinking as delusional. I asked financial Twitter for the best arguments supporting the Fed’s ideas and got a host of answers, all of which had chards of truth and none of which made complete sense. The debate drew in big fish and little fry.

Some claimed that inflation is needed to coerce people to invest as though profit motive isn’t enough. Others said consumers will retrench if they know products are going to get cheaper, contrary to data on tech gadgetry and common sense aside. William White, formerly of the BIS, previously noted that “the widely held assumption that consumers and corporate investors will extrapolate from past price declines and hold off on making purchases as a result of deflation has essentially no empirical support behind it.”ref 338 Other Tweeters pointed to the dreaded deflation that has been MIA for almost a century. Of course, the reason deflation is so dreaded is that for it to appear against the headwinds of our inherently inflationary banking system means that central bankers already did way too much—they screwed the pooch.

Governments embrace inflation because they like to squander money they don’t have to buy votes and, as Milton Friedman said, "Inflation is taxation without legislation." They also like the covert tax of inflation, and love taxing nominal gains that are illusory.

“I hate the word deflation because it is only a symptom of the problem. It’s not the reason we have the problems we have today.”

~Richard Koo, chief economist at Nomura Research Institute, talking about Japan

Some chimed in that the psychological impacts of wage cuts are so devastating that they are better masked by positive nominal gains. Others believe paying somebody in debased money is better than laying them off; it is a sticky wage argument. The Wall Street Journal had made such an assertion:

“Higher inflation could have other benefits. It could help economies adjust after a downturn by lessening the need for outright wage cuts, because rising prices will erode wages anyway.”

~Wall Street Journal

The ultimate foolishness is that a Committee of Elders—the Fed—thinks it is better equipped than the Wisdom of Crowds—the free markets—at setting the price of capital. Its members appear to me to be just a bunch of fools making shit up based on hopelessly flawed Gaussian models claiming to be “data dependent.” It is odd that nobody in the mainstream seems to think that when deflationary pressures appear, maybe the markets are telling us that we need a dollop of deflation.

The article in the Wall Street Journal that enthusiastically endorsed inflation I found problematic and Tom McClellan found support for this monetary creationism inexcusable.ref 339 He attacked the Fed for trying to keep too many ligma balls in the air at one time:

The mystery of this most recent decade is that creating vast sums of new reserves in central banks—an estimated $20 trillion—did not generate high or even hyper-inflation (yet). I’m a goldbug; I thought inflation was coming. Ben Bernanke blamed the “savings glut” of our trading partners, which seems to be just looking for a scapegoat. Mervyn King (see “Books”), however, did a nice job of explaining that if our trading partners let trade imbalances chase financial assets rather than goods and services, you get a lousy economy and inflation in the financial assets. That’s exactly what we got. Of course, those who speculate in those financial assets love that kind of inflation until it unwinds (oftentimes violently).

“I’ve never bought into that.”

~William White, on the “savings glut” thesis

Just as deflation is demonized by the Fed, inflation is demonized by the blogosphere. Somebody called it the “the date rape drug of taxes.” Bloggers squealing about the dollar losing 97% of its purchasing since 1913, however, often forget that there are compensating mechanisms along the way in the form of nominal pay raises and nominal asset appreciations. David Andolfatto, vice president of the St. Louis Federal Reserve and who seems to function as an outreach coordinator for the Fed, addresses this in a thoughtful blog, noting that you are 97% poorer only if you took your 1913 dollars and stuffed them in a mattress.ref 340 Ironically, if they were in uncirculated condition, you would enjoy nominal gains of up to 200-fold in the numismatic marketplace. Andolfatto also makes the curious argument that high interest rates are anti-inflationary by stepping on the economy (check) but pro-inflationary by jamming gobs of interest into the system. Wait. What? That idea is new to me and creates a bit of a monetary paradox, but I keep thinking about it.

Michael Hartnett of Bank of America, noting 700 rate cuts and $14 trillion asset purchases by central banks since the Great Recession, sees parallels of 2018 and 1966.ref 341 Millennial chart monkeys will likely not appreciate that the years after 1966 witnessed virulent inflation, horrific real (inflation-adjusted) returns on financial assets, and an economic malaise that lasted until the early 1980s. The shift in preference from equities to hard assets and high-interest-rate bonds—notice I didn’t say “flow” into or out of anything, which is risible nonsense—caused severe turbulence. It was a terrible time to invest for most.

Official reports of inflation are starting to creep up, although by no means outside the Fed’s highly fluid comfort range. Anecdotal reports, however, are painting a more serious picture. The CEO of Sherwin-Williams said that “raw material inflation has been unrelenting and accelerating.”ref 342 Eric Cinnamond listens to hundreds of microcap investor conference calls each quarter and says that CEOs are all complaining of cost pressures.ref 343Companies like Caterpillar report that price increases are not keeping up with rising production costs.ref 344 The CEO of Lincoln Electric claims that “We’re in a very rapidly increasing inflationary environment.”ref 345

"J.B. Hunt says 10% raises are the antidote to the truck-driver shortage"

~Bloomberg headline

The tariffs discussed in the “Economy” section are causing companies to arbitrarily implement 15–25% price hikes anticipating raw material or finished goods costs emanating from China.ref 346 (I can’t help but wonder, admittedly with a low probability weighting, if the tariffs aren’t part of a covert bilateral agreement.) The wage pressures seem real. Teachers across America have been walking out of school classrooms to attend rallies in protest for higher salaries and improved classroom resources.ref 347 Jobs are going unfilled. Wage inflation scares macro bean counters. BIS economists suggest that a global shrinkage of the working-age population is causing inflation to trend up (more money chasing, fewer workers).ref 348 Paul Tudor Jones sees Fed chair Powell as George Custer, sandwiched between a mountain of debt on one side and inflationary pressures on the other.ref 349 He thinks Powell needs to hike rates pronto to curb margin debt in the markets and facilitate a more efficient allocation of capital.

“Volatility collapsed after the crisis because of central bank manipulation. That game’s over. With inflation pressures now building, we will look back on this low-volatility period as a five standard-deviation event that won’t be repeated.”

~Paul Tudor Jones

By now most have read about the distortions of substitution and hedonic adjustment foisted on us by the Boskin Commissionref 350 and unfoisted by John Williams.ref 351 I've already taken a bat to the MIT Billion Prices Project—I think there is an Achilles’ heel in it—and won’t return to it.ref 352 We also know that products that don’t last should be priced per unit function: They are not. Figure 43, showing the cost of various goods and services, blanketed the internet this year. Do you really think you can buy a TV for 4% of what you paid in 1990? Sure it’s a better TV (or at least a cooler TV), but you are not walking out of Best buy with an $8 TV even on Black Friday. Have prices of cars really not moved in 20 years? A Ford F150 cost $17,000 in 2007 and $40,000 in 2017. Yes, it now has a backup camera and anti-lock brakes, but it costs more than twice as much to move firewood, display our gun collections, and wield MAGA bumper stickers. Try Googling rents or single-family home prices: Are they really up only 61% since 1995? I am calling bullshit on this chart. It was undoubtedly created by hedonic-adjusting tools (economists).

“Americans are getting stronger. Twenty years ago it took two people to carry $10 worth of groceries; today a five-year-old could do it.”

~Henny Youngman, comedian

Figure 43. Hedonically adjusted prices.

I take a swipe at hidden inflation every year. The durable goods we buy have a programmed and accelerated senescence that borders on progeria. Your kids’ toys are cheaper, but do they last more than a few minutes? A toaster that cannot be repaired when it breaks is expensive, especially when it breaks fast. The quality reduction can be profound too. Processed food uses animal and vegetable parts that were previously fed to pigs. Food scientists have rendered them palatable through very clever tricks like adding buttloads of salt and sugar (or high-fructose corn syrup). The meat in Dinty Moore stew is disgusting. Cracker Jacks no longer are made from popcorn. Your appliances are shiny with lots of buttons that you never use, and they don’t last. Shrinkflation has been around for eons. Coke cut its 1.75-liter bottle to a 1.5-liter bottle and then raised the price. At some point, the company will offer a really large bottle (1.75 liters) for an even higher price. I still haven’t figured out how to account for laptops, iPads, iPhones, and internet service. For what you get, they are amazingly cheap. As a part of a family’s budget, however, they pose existential financial risk. How do you account for amazing technology that you must own—even the Mennonites own them—but that you cannot buy without a HELOC? Check out Figure 44. Try a little mental math on how much a paycheck could buy you in 1938.

Figure 44. Cost versus quality.

And here is a curious little anecdote:

1932 gold ounce = $20.67

1932 Yale University tuition, room, and board = $1,056 (51 ounces of gold)

2018 gold ounce = $1,225

2018 Yale University tuition, room, and board = $65,000 (53 ounces of gold)

Banks

“With mortgage applications declining, executives have a choice to make: Should underwriting standards be lowered? When volume becomes the defining metric for how loan officers and mortgage companies get paid, then loan quality deteriorates.”

~Chris Whalen, Whalen Global Advisors

“Your problem is that you are trying to understand it as an economic story. Once you think of it as a crime story, you’ll get it.”

~Insider to Matt Taibbi when writing about the subprime crisis

We’re told that the post-crisis banking rules were tightened to make the banks safe again, and now we are about to unwind these protections with the poorly named “Economic Growth, Regulatory Relief, and Consumer Protection Act” that would return the banks to their birthright as gigantic hedge funds.ref 353 A 1982 declassified memorandum included Jack Anderson, a journalist, discussing the upcoming collapse of the banking system and the CIA’s risk assessment.ref 354 There were crises of course; the late 80s savings and loan crisis may have been what was spooking the spooks. Do the bankers never learn? Are they doomed to loop around this infinite Mobius strip? In a sense, yes. This year’s winner of the Nobel Prize in economics, Paul Romer, and some famous guy named Akerlof, wrote a 1994 paper titled, “Looting: The Economic Underworld of Bankruptcy for Profit.”ref 355 They describe how the inefficiency of the boom–bust cycle is exploited by the banks during both phases. During the boom, the bankers make huge fees and pay themselves handsomely because, well, they are wonderful stewards of capitalism. During the bust, profits stem from looting the system, cloaked by the chaos and pandemonium of bailouts. The bankers then pay themselves handsomely because they are wonderful stewards of crony capitalism too.

Recall in ’09 when huge bonuses were defended to keep talent around long enough to save the world from the Apocalypse caused by all this talent. Banking is like Danegeld—payments to the Vikings to stop them from looting and spreading their DNA around the Isle of Britannia. Soon the Danes wanted more money and hot chicks. I suspect we have finished the boom half of the cycle again and are now looking for the raping and pillaging phase to commence. What will trigger the next crisis? Bank analyst Chris Whalen already sees lenders bracing for problems and reducing staff in their consumer and mortgage lending businesses.ref 356 Eyes are on the European banking sector getting its market caps deracinated. One of the popular risk measures—the Libor–OIS marginref 457—is vibrating like the puddle in Jurassic Park.

“The Senate just voted to increase the chances your money will be used to bail out big banks again.”

~Elizabeth Warren (@SenWarren), insert politically incorrect Indian joke here

Despite regulatory constraints, the banks have managed to insert leverage into every orifice imaginable while moving the risks away from themselves or so they say. Bank loans to non-bank financial firms have increased sixfold since 2010.ref 358 Big banks are not making lots of subprime auto loans but rather lending to subprime loan bundlers who have jammed a record $345 billion of subprime loans.ref 359 In a crisis, the autoloans default first, and then the bundlers hit a bridge abutment. Hmmm . . . who is on the hook now? Increasingly popular and dubious loans to unsuspecting, near destitute, and likely to be transitory homeowners are called “non-qualified mortgages.”ref 360 Truth in advertising. That particular form of high-risk lending doubled in a year and is said to be on track to double again next year.ref 361 The direct risks posed by notional derivatives, which have grown 50% to $1 quadrillion since ’07, are watched nervously.

“Getting a lot of calls about DB today. Where to begin? A hedge fund in drag that pretends to be a bank. . . . Earth [to] Merkel."

~Chris Whalen

Bearing down on a few specifics, the systemically important financial institutions (SIFIs) are all wobbling in synch—precessing—while their credit default swaps (CDSs) have arisen from their slumber.ref 362 Deutsche Bank (DB), for example, is five times the size of the former Lehman when it brought the system to its knees. DB also has the largest derivatives book on the planet. Of special interest, it is trading like Lehman, having lost 94% off its ’07 high (Figure 45). An 80% drop in earnings in 1 year suggests that the bank is insolvent and headed for nationalization. DB fired 10,000 employees (10% of its workers), a drop in the bucket.ref 363 I think it’s time it changed its name to Deutsche Blockchain.

Figure 45. Deutsche Bank.

“The best thing that could happen to society is the bankruptcy of Goldman Sachs.”

~Nassim Taleb, author of bestsellers (see “Books”) and former Goldman trader

Banking is supposed to be boring, but there were a few humorous moments this year. Goldman got caught stealing billions from the 1 Malaysian Development Bank (1MDB),ref 364 but who cares about the impoverished Malaysians? That’s a rhetorical question: Other sovereign wealth fund managers seemed to care.ref 365 As Jimmy Carter said, “I guess you just can’t trust Goldman.” Danske Bank laundered over $200 billion according to whistleblowers.ref 366 That ought to generate a few fines and send a lot of business back to HSBC. Wells Fargo had a “glitch” that led to double dipping on some payments and even some accounts being emptied.ref 367 It got fined $2 billion for stealing from millions of customers. Since fines for committing felony on a gargantuan scale are considered a business expense, the bank will get a nice tax break.ref 368 It was downgraded by its bank brethren for having inadequate safeguards to prevent getting caught.ref 369 Once Wells emptied its coffers to pump shares with stock buybacks,ref 370 it had insufficient funds to keep 26,000 people on payroll.ref 371 On the bright side, the CEO got a 36% raise this year to ensure that he sticks around to clean up his mess.

Of course, Wells Fargo’s largest shareholder, Berkshire Hathaway, played activist and jumped in to bring some honor back to this once great institution. Yeah, right. Neither side of Warren Buffett’s mouth was available for comment, but the irrepressible Charlie Munger chimed in:

“Wells Fargo will end up better off for having made those mistakes. I think it’s time for regulators to let up on Wells Fargo. They’ve learned.”

~Charlie Munger

Yes, Charlie, we’ve all learned: Crime pays, and your bluntness is surpassed only by your ruthlessness. The miracle of modern medicine is that you can sleep at night. That Wells hasn’t been auctioned off for parts and its high command marched off to a gulag illustrates the efficacy of the Obama-era “No Banker Left Behind” (NBLB) program. Being owned by Berkshire is also a “protected class.” The most satisfaction customers will get comes in the form of checks to compensate them for their losses. I’ve gotten two such checks for settlements of class action suits. They both were <0.1% of my assets under management. You know what this means? I got screwed three times: (a) the brokerages slipped roofies to me Cosby-style and repeatedly jammed illegal hidden fees up my . . ., (b) the lawyers took half the settlement, and (c) the justice system settled for squat and didn’t hang any of the bankers with their genitalia stuffed in their mouths. Do I sound bitter?

Several academic papers concluded that Wall Street firms trade on inside information and that “changing the law to fix that may not even be feasible.”ref 372 (Academics actually get paid to come up with such epiphanies.) Bank of America (BofA) did not have a single day trading loss in the first quarter.ref 373 Seems like an improbable run in a straight game. BofA also got caught robbing safe deposit boxes again.ref 374 Recall that the state of California was emptying safe deposit boxes and selling the contents without even inventorying them first.ref 375BofA has also been freezing the accounts of people suspected of being illegal aliens, no doubt out of a deeply moral conviction and support for Trump’s immigration policies.ref 376 One of Morgan Stanley’s highly compensated bankers has been driving for Uber in his free time.ref 377 Any bets on who gets the >$100 billion Uber IPO? Finally, Jeffrey Skilling of Enron fame got out of prison.ref 378 The bankers who helped set up all the off-balance sheet scams have not been released because, well, they never got arrested.

The party isn’t rockin’ until somebody calls the cops or puts an eye out. Until then, the social IQ of the partygoers just keeps dropping. Although nothing is happening yet—the KRE banking index is comfortably 200+% off the ’09 lows and only –20% off its 2018 highs.ref 379 There are, however, stresses building within the banking system. SocGen analysts list four triggers: trade wars, significant market repricing, European policy uncertainty, and a hard Chinese downturn.ref 380 The FDIC monitors “assets of problem banks” and reported a 200% increase during the third quarter of 2018.ref 381 The four largest U.S. retail banks are witnessing consumer stress in the form of credit card losses.ref 382 Scott Minerd suggests that small hikes in lending rates will blow out the zombies (see “Corporate Debt”), causing a wave of defaults that are long overdue.ref 383 Minerd notes, “There are a lot of companies that are zombie companies that survived the last cycle. As these companies have their debt repriced by the market with rates going up, it’s going to be harder and harder (for them) to stay alive.” The credit system is surely at risk if corporate paper starts defaulting. Jesse Felder suggests that “a cottage industry has developed to explain what is behind the dramatic move in Libor.”ref 384 Something is stirring below the placid surface. (Cue the Jaws sound effects.) Europe in general and Italy in particular pose serious risks, as does China. Whalen Global Advisors claims that net interest income for all U.S. banks will be declining by early 2019 and that, “the superficial narrative parroted by Wall Street pundits that rising interest rates are good for banks and other leveraged investors will be shown to be complete nonsense.”ref 385 Cheap funding is over. “Banks in the U.S. are about to get caught in an interest rate squeeze of gigantic proportions,” causing shrinking profits and—wait for it—a recession! There will be 11 Wells Fargo employees who couldn’t care less because they won a half billion dollars in California’s Powerball.ref 386

“From the economy’s vantage point, instead of asking how the banks are to be saved ‘next time’, the question should be, how should we best let them go under.”

~Michael Hudson, Levy Economics Institute

The Fed

“You will never see another financial crisis in your lifetime.”

~Janet Yellen, spring 2018

"I do worry that we could have another financial crisis.?

~Janet Yellen, fall 2018

“The lower-for-longer approach promises, in effect, to allow the economy to boom. The FOMC needs to make a credible statement endorsing such an approach, ideally before the next downturn.”

~Janet Yellen

“We have undertaken to stabilize economic forces, to mitigate the effects of the crash and to shorten its destructive period. I believe, I can say with assurance that our joint undertaking has succeeded to a remarkable degree.”

~Herbert Hoover, 1930

“The Fed can change the way things look, but it cannot change what they are.”

~James Grant

“The last duty of a central banker is to tell the public the truth.”

~Alan Blinder, former U.S. Federal Reserve vice chairman

“For more than three decades, macroeconomics has gone backwards.”

~Paul Romer, winner of the 2018 Nobel Prize in economics

The Fed has been oversteering and overmedicating the economy since 1913. The Fed promptly spawned a credit bubble in the 1920s that led to the biggest crisis in our history and was, in my opinion, the primary cause of the Great Depression.ref 387 The emergence of Greenspan sent us through a series of micro-crises ultimately leading to the big one in 2008–09. (Actually, I think the Big One is coming, but that is conjecture.) Everybody agrees that Greenspan kept rates too low for too long, laying the groundwork for the crisis. In response, Bernanke and eventually all central bankers began coloring way outside the lines. What did he do? As Stan Druckenmiller puts it, “They tripled down on what caused the crisis, and [they] tripled down globally.”

“Data dependent Fed: average real GDP growth during QE was 2.2%. During no QE and the 5 rate hikes it’s averaged 2.1%.”

~@GreekFire23, smart guy—possibly in prison or Goldman (but certainly not both)

Now the central banking cartel has created what appears to be an epic bubble of equities, bonds, and pretty much anything denominated in dollars. Bernanke opened the tap; Yellen kept it open and went for a smoke. All central banks served up buckets of punch, and the global economy became a sloppy drunk. Jerome Powell was left with the job of getting everybody to the vomitorium and cleaning up the vomit. Some think he’ll blink and let the party resume, but don’t forget that in 2001, the Fed hiked rates 50 basis points—a monetary bitch slapping—with the Nasdaq already 40% off its 2000 highs. Let’s hope that as Jay moose-knuckles the rates higher he has a steady, consistent hand on the rudder:

“I think we are actually at a point of encouraging risk-taking, and that should give us pause. Investors really do understand now that we will be there to prevent serious losses . . . we look like we are blowing a fixed-income duration bubble right across the credit spectrum that will result in big losses when rates come up down the road. You can almost say that that is our strategy. I think there is a pretty good chance that you could have quite a dynamic response in the market.”

~Jerome Powell, chairman of the FOMC

“There’s no reason to think this cycle can’t continue for quite some time, effectively indefinitely.”
~Jerome Powell

“The US is on an unsustainable fiscal path; there’s no hiding from it.”

~Jerome Powell

“When it is time for us to sell [Fed assets], or even to stop buying, the response could be quite strong.”

~Jerome Powell, before becoming FOMC chair

As @GreekFire23 said—I can’t believe I just typed that—the average GDP growth during QE was only 2.2%. During the subsequent period witnessing multiple rate hikes GDP has averaged 2.1%. One might ask “What is it good for?” The answer could be “Absolutely nothing! Say it again!” Economists at the St. Louis Fed published a report card on the efficacy of QE and, shockingly, concluded that it was largely a bust.ref 388 The Fed made stone soup hoping that the free market would start bringing things to add substantial ingredients. While QE pushed up asset prices as intended, the economy limped along feebly. The Fed was trying to shove credit into a saturated credit market. This is how it plays out in my head:

Borrowers: “We would like to borrow some money.”

Savers: “OK. Here is what it will cost.” (Some haggling ensues.)

Savers: “We have a deal?”

Fed: “That price is too high. We know because we have PhDs! We’ll pound it lower.”

Borrowers: “Deal!”

Savers: “Dufuq?”

So how does QE actually work? In theory, banks can sell treasuries to get cash equivalents to be used as reserves for lending—treasuries are technically not considered reserves. Alas, that is a zero sum game because now cash is depleted elsewhere. When the Fed replaces long-maturity assets with short-maturity reserves via QE, no cash drains and the banks now have larger reserves against which they can lend more money with a 10- to 12-fold multiplier. Richard Koo noted that the 19-fold increase in reserves risked a 19-fold inflation and got . . . crickets.ref 389 Indeed, there was some lending, but arguably not lending conducive to economic growth (share buybacks, for example), and banks stored these reserves at the Fed in interest-bearing accounts more like an annuity to kick off a steady cash flow. The Fed economists who wrote the QE report seemed to question the practical consequences of QE and even the theoretical underpinnings:

“It is not clear that QE should have any effect and it might actually be detrimental to the efficiency of the financial system. . . . QE works much as conventional accommodative policy does—it lowers bond yields and increases spending, inflation, and aggregate output. But we should be skeptical of this interpretation.”

Frequent and willing sparring partner and vice president of the St. Louis Fed, David Andolfatto, often tells me that this cash-for-treasury swap is no big deal:

“I do not think QE facilitates credit creation. QE simply relabels the public debt as ‘interest-bearing reserves’ instead of ‘interest-bearing treasuries’.”

~David Andolfatto, vice President of St. Louis Federal Reserve

By the end of the ensuing debate, I find myself asking something like, “Then why did they do it?” I guess we will find out if it is no big deal in reverse, too, as they dehydrate the markets (drain liquidity) via quantitative tightening (QT). But I am ahead of myself.

Charles Gave notes, “purchasing government bonds from domestic banks, so flooding them with reserves, the Fed can engineer an increase in the U.S. monetary base." OK, but as Andolfatto would say, "so what?" Based on efforts in the U.S. and in Japan, where QE was big, or in Canada, where no QE is undertaken, the skeptics in St. Louis wondered whether there was any evidence that QE increases inflation or, more important, real GDP: “Evaluating the effects of monetary policy is difficult, even in the case of conventional interest rate policy. With unconventional monetary policy, the difficulty is magnified . . . perhaps the private sector can do a better job than the central bank in turning long-maturity debt into short-maturity debt.” We also got a report out of Deutsche Bank claiming that, with respect to “unconventional” monetary policies such as QE and negative interest rates, “the impact on the economy was negative.”ref 390 Prominent economist Daniel Lacalle concurs: Monetary stimulus does not work.ref 391

“In my view it failed, 100 percent. It caused the stock market to go up because people took all that liquidity and invested it in the stock market, but it did not cause the economy to grow even 10 basis points faster.”

~Steve Eisman on the effect of QE

One can only imagine what’s coming next and how we get out of this monetary lobster trap. Maybe QT will be a bust just like QE—no big deal. Oddly, Richard Koo claims he could find no papers whatsoever describing how to exit QE and submits that it might be quite a bitch—a Hotel California moment. Some say the Libor rate that determines corporate borrowing rates is already tightening ahead of the Fed. This is way above my pay grade, but the folks at BMO Capital Management seem seriously concerned.ref 392 They say a slow, methodical and putatively painless natural unwind by paying 2.5% on reserves will add $50 billion to our already bloated deficit every year. Why? Because it will deplete the cash flow from the Fed to the U.S. Treasury, which uses the cash flow to pay bills. Many don’t realize that the “FAST Act”, which authorized the U.S. government to plunder excess capital from the Federal Reserve, established a mechanism for the Fed to monetize Federal debt.ref 393

“Fed officials will be under enormous pressure to accommodate swelling federal deficits—even if it means pretending that the central bank is a source of revenue to the Treasury. The operative model of political economy here is Argentina in the 1970s.”

~Chris Whalen

“One of the characteristics of a struggling republic is the inability to separate its central bank's resources from the fiscal largesse of the federal government. Using central bank resources to avoid addressing funding of the government is a sure path to runaway inflation, economic decline, and periodic financial crisis.”

~David Kotok, co-founder of Cumberland Advisors

“Stop talking about ‘The Fed’. Talk about central banks. . . . Their balance sheets are the highest they've ever been.”

~Jim Bianco, founder of Bianco Research

Jim’s point is that everything you see the Fed doing is being done across the globe. The Bernanke QE model was implemented on industrial scales without even beta testing it. QT will be carried out with equal care and preparation.

“The success of our institution is really the result of the way all of us carry out our responsibilities. We approach every issue through a rigorous evaluation of the facts, theory, empirical analysis, and relevant research.”

~Janet Yellen

“Congress has taken away some of the tools that were crucial to us during the 2008 panic. It’s time to bring them back.”

~Bernanke, Paulson, Geithner

“Rubbish, they had all the tools necessary. They just never recognized beforehand that the economy was a massive credit bubble—just like it is now.”

~Albert Edwards, Societe General (SocGen), in response to the Bernank

Let’s finish with some quotes that give me pause and may give a few bloggers some quote porn.

“Although we work through financial markets, our goal is to help Main Street, not Wall Street.”

~Janet Yellen

“If the Fed can cause a 500-basis-point change in interest rates, it is absurd to wonder if monetary policy is important.”

~Paul Romer

“The Federal Reserve may have to press harder on the brakes at some point over the next few years. If that happens, the risk of a hard landing will increase.”

~Bill Dudley, former president of the New York Federal Reserve and former economist at Goldman Sachs

“Central bankers are like stupid magicians: They are as surprised as the audience when they pull a rabbit out of their hat that they just put there.”

~Sean Corrigan (@TrueSinews), Cantillon Consulting

"History suggests that if the Fed waits too long to remove accommodation at this stage in the economic cycle, excesses and imbalances begin to build, and the Fed ultimately has to play catch-up."

~Robert Kaplan, president of the Dallas Federal Reserve

“I see roughly equal odds that the U.S. economy’s performance will be somewhat stronger or somewhat less strong than we currently project.”

– Janet “Yogi” Yellen

“We’ve become so complacent about central bank policies that we’ve quietly tolerated a rise in financial asset prices to the point where even a little inflation would devastate portfolio returns.”

~Eric Peters, CIO of One River Asset Management

“We have been suppressing rates. If rates rise it’s a ticking time bomb.”

~Richard Fisher, former President of the Dallas Fed, speaking in 2015

“Everything we see about the near-term outlook is quite strong.”

~Ben Bernanke, July 2018

“The Fed has acknowledged no failures. All the experiments have been successful, every one: no failures, no negative side-effects, no perverse consequences, only diminishing returns.”

~Peter Fisher, former official at the New York Federal Reserve

“Try to publish an article critical of the Fed with an editor who works for the Fed.”

~J. K. Galbraith, Harvard University and author of The Great Crash, 1929

“Even when things happen in the economy that would otherwise have triggered inflationary episodes, they don’t today because financial markets trust the Fed to do the right thing to keep inflation under control.”

~James Bullard

The yield curve will soon be inverted
As many have clearly asserted
When everything tanks
The fault? ...central banks
Their policies? ...clearly perverted

~@TheLimerickKing

Human Achievement

“Opportunities don’t happen; you create them."

~Chris Grosser

We are now transitioning from economics and markets to the political and social events of 2018. As noted at the outset, I have over a hundred pages of quotes, notes, and anecdotes about Trump, Russian collusion, and the nefarious activities going on in the Deep State. It has grown progressively harder to wrap my brain around what I am actually witnessing. I can no longer write a chapter or two. I may be able to write a book, but certainly not in the months of November or December. It is what it is. I have focused on what catches my eye and what is achievable.

Random topics that come across my field of view that I capture are loosely defined as "Human Achievement". Who could forget the heroics in Thailand as cave divers saved the Thai soccer team?ref 394 Buddhist teachings by their coach helped them cope with stress and lower their oxygen intake for two weeks. Two heroic cave divers found them.ref 395 Divers from around the world suffering from toxic masculinity—no pussy hats or man buns on those guys—pulled them out. Meanwhile, Elon Musk was show boating with a useless submarine and calling one of the heroes a pedophileref 396 and then gets sued.ref 397

Although watching sports is too time consuming for me, I catch a lot on the fly. 2018 had some unlikely sports heroes. A 36-year-old accountant, Scott Foster, was called to play goalie for the Winnepeg Jets. The night before he was playing rec league for "Johnny's Icehouse" and probably did so the following weekend. On that one memorable night, however, he played 14 scoreless minutes in the Big League.ref 398 A 32-year old rookie got called up to play for the LA Lakers, came off the bench, and drained 19 points.ref 399 (It's not quite like those six three-pointers by the autistic kid,ref 400 but it's still amazing.) The winning Superbowl coach was coaching high school football nine years earlier.ref 401 (Trivia point: years ago, Cornell fired one of a long string of marginally successful football coaches. He was George Seiferth. You can't get talent into the Ivies.) The Boss of the sports world was an approximately 12-year-old fan who, when handed a game ball by the infielder, had the smarts to give it to a seriously hot chick sitting behind him... but not before switching it with the ball he bought from Dicks Sporting Goods.ref 402 That's metagame.

The PyongChang Olympics had six Cornell alums (mostly women's hockey).ref 403 In my opinion, women's hockey is as good to watch as men's hockey. Meanwhile, American Elizabeth Swaney achieved everybody's dream by competing for Hungary in the half pipe while being awful—seriously wretchedly bad.ref 404 She spotted a seam in the rules that qualified her for the Olympics by amassing top-30 finishes at international events. She traveled the world competing in all half-pipe competitions with fewer than 30 entrants.ref 405

Other bulletable achievements included:

  • Tiger won his first tournament since 2013. It's all about redemption.
  • Jordan Bohannan tied Chris Street's University of Iowa record for most consecutive free throws, 34, that had withstood two decades. Chris had died in a car accident 3 days after graduation. Bohannan, stepping up to the line to set a new record, looked at his brother in the stands, bonked it against the iron, and pointed to the sky: "It was not my record to have." Superheroes don't always wear capes. I am tearing while I type.ref 406
  • In March madness, #16 seeded UMBC beat #1 seed University of Virginia 74–54, busting every March Madness Bracket in the World.ref 407
  • Drexel came back from a 34-point deficit, setting a new comeback record for Division I basketball.ref 408
  • LA Tech football team lost 87 yards in a single play.ref 409
  • Watch this kid play catcher; you wouldn't notice if I didn't tell you he has only one arm.ref 410(hotlink) I hope he applies to Cornell.

"I think the question we have to ask ourselves is this: What is the right way to behave to honor our sport and to respect our opponents?"

~Martina Navratilova, returning Serena Williams' serve

And then there were the darker moments. Serena Williams reached hero status by delivering her latest kid and in the blink of an eye making it to the finals of the US Open Singles Championship.ref 411 In the final match, however, a serious shitfit at the line judge put a dark smudge on the game. The authorities kowtowed (which is a Chinese term that translates to "acted like pussies"), causing much of the glory to be taken away from the winner, Naomi Osaka.ref 412 It wasn't Williams' first outburst.ref 413

And for some more Bullets from the Dark Side:

  • Phil Michelson six putted (if you include the two-stroke penalty for whacking a moving ball) and then claimed (admitted) it was tactical to avoid an even worse outcome.ref 414 The Mets signed him because he could hit a moving ball.
  • USA Gymnastics admitted it had more coverups of pedophilia than the Catholic Church.ref 415
  • Khabib Nurmagomedov—Khabib for short and for obvious reasons—beat Conor McGregor in the UFC. (Khabibe literally wrestled grizzly bears as a kid,ref 416 so it was not a shock.) Risk was brought to a new level when a huge and arguably most dangerous sports brawl in history broke out.ref 417
  • A Russian curler was charged with doping using a well-tracked substance.ref 418 Something is fishy...so many questions.
  • Another female Russian Olympian donning a shirt stating, "I don't do doping" tested positive for doping.ref 419
  • Nigerian soccer star Emmanuel Eminike divorced Miss Nigeria 2013 to marry Miss Nigeria 2014.ref 420
  • The first zero-emissions solar-powered boat is said to be circumnavigating the globe this year.ref 412Correct me if I am wrong but one of Magellan's zero-emissions wind-powered boats made it around some time back. Contrary to popular opinion, Magellan did not.

"The art world is the biggest joke going. It’s a rest home for the overprivileged, the pretentious, and the weak."

~Banksy

Away from sports, Banksy punked the art world when, seconds after the auction gavel fell on one of his $1 million paintings, a mechanism hidden in the frame shredded it.ref 422 The art world punked him back by declaring the painting's value just doubled.ref 423 A guy jumped from 25,000 feet without a parachute and landed "safely" in a net.ref 424 Another got the coveted hat trick when, after having been mauled by a bear and bitten by a rattlesnake, he got attacked by a shark.ref 425 While astronomers recorded the first video from the surface of an asteroid,ref 426 others identified a new type of aurora and named it "Steve".ref 427 Watch this girl playing a concerto on the violin with a prosthetic arm connected from her collar bone.ref 428 That is toxic femininity! This woman piloting a passenger jet has the engine blow off the plane and blew a hole in the plane sucking a passenger out. She displayed nerves of steel.ref 429(hotlink)

If you dig long and hard, you eventually find the bottom of the barrel. A couple raised $400,000 for a homeless vet and just squandered it before the courts could intervene.ref 430 The author of "How to Murder Your Husband" was arrested for allegedly murdering her husband.ref 431 A man who thought he was possessed by crocodile hunter Steve Irwin was arrested for tranquilizing and raping alligators.ref 432

In the non-hominid division, Beadnose (Bear #409) displayed impressive salmon-sourced cellulite, toppling the reigning champ, Otis (Bear #480), in Alaska's 2018 Fat Bear Championship (Figure 46).ref 433 The Flying Dog Championship witnessed a new jumping world record of 31 feet.ref 434 I'd like to see Beadnose try that.

Figure 46. Beadnose Bear at top feeding weight.

Had to save two for last. Ten players and two coaches of the Humboldt Broncos Youth Hockey Team coming from Humboldt, Saskatchewan were killed in a bus crash.ref 435 They were dominant on the ice. GoFundMe raised a $15 million memorial fund,ref 436 but I don't know how that town of 5,578 inhabitants will recover. RIP boys. (I'm tearing again.) Keep it in perspective folks.

You know all those fires in Boston that lit simultaneously due to an over-pressurized gas line (without a peep from the news questioning terrorism)?ref 437 My son was at the "red dot" chatting with me on the phone when they started. Like I said, keep it perspective.

Nature

"I know what it means to know something, and it's hard."

~Richard Feynman, physicist

Every year nature takes a bat to us in predictable and not-so-predictable ways. I have long stayed away from the global warming (or climate change, whatever) debate just because it is too rancorous, and I have little to offer. I once told the Secretary of Energy I was agnostic. After cleaning snot off my glasses I explained that I had not put in the 10,000 hours needed to form an educated opinion. For that matter, few have. Thus, all my colleagues in science with relatively few exceptions will sign off on the notion of anthropomorphic global warming with what is a vote of confidence in their scientific brethren but inadequate self study, providing an overstated scientific consensus. Here's what I will say. There are highly credible scientists on both sides now, not just whackadoodles looking for ten minutes of fame. I was shocked when I started Googling some of the deniers on this list to find out they they are both prominent and disbelievers.ref 438 Let me be equally clear because I am a wuss and so you don't hang some PC label on my sorry butt:

If I had to bet a paycheck, I would bet anthropogenic global warming is real. If I had to bet ten paychecks, I would bet that we are going to do the experiment despite the best intentions of those who worry. Resource depletion is what scares me.   

Let me make one important point: you can't watch the weather or make any anecdotal observations and say, "See. I told you so. You guys are full of crap." You sound like an idiot to anybody who is not an idiot (unless you are being a snarky punk, which is fine). Hundreds of hurricanes have hit North America in the last century; nothing says the last 20 are anthropogenic. Snow in October and warm days in January mean nothing:

"This week in 1936, North Dakota was 121 degrees. This week in 1913, California was 134 degrees. This week in 1901, hundreds of New Yorkers died in the streets from the heat."

The warming trend, even if raging and eventually creates wind chill factors of 114 °F, is well inside the detection limits of simple human observation. With 365 days in a year, 100 years in a century, and more metrics of weather than pregnant teenagers, do you know how easy it is to break an all-time record? Those who claim to see patterns are being Fooled by Randomness. And the celebrities all know there is global warming. Remember when the star in TV medical drama "Quincy, M.E.", Jack Klugman, testified to Congress about health care? Most celebrities are idiots as are members of Congress. Why do you think they didn't study robotics or bioengineering? Only good science supported by good data analysis can tease signal from the noise. And what may prove to be the most ironic part of the global warming debate is that NASA scientists have found that a "big crack opened in the Earth's magnetic field and plasma started pouring in."ref 439 Meanwhile, a disturbing lack of sun spots and solar flares suggest an impending mini ice age is coming.ref 440 "Men plan, God laughs" or as Emily Litella would say, "Never mind."

Why don't I worry about climate change? It is for practical reasons. Humans are not proactive; they follow the Law of the Commons, also known as the Law of Selfish Bastards. Look how happy the French are after being told they will get to pay a nominal energy tax to stop global warming. There was some serious heat on the streets of gay ol' Paris. We are going to do the experiment.

We had lots of hurricanes this year, with Hurricane Michael being the headline grabber. As it wiped out Mexico Beach, Florida,ref 441 it appears to have whacked a handful of our stealth bombers inside a hanger.ref 442Although there is a nice tutorial on why not every stealth bomber can be moved on short notice,ref 443 it's less obvious why you would store billions of dollars worth of hardware in a hanger that was not hurricane proof. Moving on to Hurricane Florence and North Carolina, we find that only 3% of homeowners have flood insurance and those that do also have counterparty risk; the Federal program providing flood insurance is $20 billion in the hole.ref 444 On a funny note, Hurricane Florence appeared to be ravaging a reporter struggling to hold his ground against gale-force winds to get a story...until two guys strolled by in shorts:ref 445

Figure 47. Risking life and limb.

Of course, fooled by randomness applies to other events like activity on the Ring of Fire. For those not paying attention, we are not talking about a Bangkok-hot curry but rather the ring circumnavigating the Pacific Ocean loaded with volcanic and other geological events. Seems to be acting up a lot lately. This year's Hawaiian volcano reminded homeowners that their houses built on formerly red hot lava might get squeegeed away, and they may no longer own ocean front property. Where some see disaster others see opportunities: can you buy futures on land that is not yet above sea level? I also waited with bated breath for Paul Krugman to write about his "broken pineapple fallacy". The Yellowstone caldera—an ancient super volcano—keeps rising a lot and spewing reminders that rare events happen.ref 446 By the way, "Krakatoa" by Simon Winchester is a great book and offers a fascinating description of plate tectonics.

The anti-vaxxers may have a case, but the evidence against a number of claims is profound (convinced me). I have zero doubt that, all things considered, vaccinations save lives. In regions where anti-vaccination campaigns have gotten legs, we are starting to see epidemics reappearing for the first time in many years.ref 447Disturbingly, polio has reappeared in Venezuela.ref 448 I guess we didn't eradicate it after all. I'd be vaccinating against that one. The only thing that scared me as a kid were (a) my Dad's stink-eye, and (b) images of iron lungs and polio wards:

Contrary to popular opinion, scientists in Big Pharma would love to cure diseases; there is no conspiracy there. Popular opinion is also correct that marketing teams will try to get you to snarf down as much healthcare as theoretically possible. We continue to be seriously outnumbered in our battle against bacteria. I think those in the know are worried. Bacterial resistance to antibiotics is appearing before the drugs hit the marketplace. They are becoming non-cost effective to produce. At the street level, new flesh-eating bacterial infections of the genitals are somehow linked to best-selling diabetes drugs, causing the flesh around the genitals to literally rot away.ref 449 The CDC is now warning of an antibiotic-resistant strain of gonorrhea.ref 450 An oral cancer epidemic in men is linked to oral sex.ref 451 The message is clear: abstain. A mind-controlling parasite—yes, these things are precedented in biology and can have wildly cool effects on animal behavior—has been found in cat feces.ref 452If you are eating cat feces you now officially have shit for brains. On the bright side, the virus has been linked with an almost reckless entrepreneurial spirit (not joking). It has been identified and named Elon Muskovitis (joking).

Of course, Nature's wrath amplified by Man's poor judgment was on full display as fires ravaged California. I was in a house fire in high school; I jumped out of a second story window into –2 °F weather buck naked (but who hasn't done that a few times.) People are dying from watching TV shows about fires. You have seconds to get the hell out. When your neighborhood is on fire, get out. Pepperdine University made the call to leave all students on campus.ref 453 That could have been a tragedy of a higher order. Some criticize the administration for commandeering the resources of all firefighters in the area. Others criticize them for doing it on purpose to ensure the university was protected. It is an interesting hypothesis, but I cannot fathom that level of sociopathy, even at a university.

I watch people lamenting the loss of their house and memories and think, "You're alive, your belongings were tacky, and your memories are safe in the cloud. Get over it." It is altogether different, however, when your house, school, church, stores, and employer burn to a crisp like in the ironically named Paradise, California. You really do have nothing now. It's not Yemen, but it's bad. There are regions in California that got one inch of rain since May in a much more secular (multi-year) draught. It was only a matter of time. I have read that the 20th century was the wettest of the last ten centuries in the State of California. It seems possible that millions moved into a desert without realizing the consequences.

Humans are a durable lot; they do not take guff from Mother Nature without a fight. In a battle against the weather, Volkswagen shoots off "hail cannons" near their Mexican factory to prevent formation of car-damaging hail stones, denying Mexican farmers rain for their crops.ref 453 We managed to finally exterminate the last white rhino because, well, who needs another large mammal that doesn't even make good stew meat.ref 455 Round-up is suggested to not only be solving our weed problem, but also eradicating those damned bees.ref 456 I'm sure Monsanto will figure out how to pollinate everything at some nominal cost. We are winning the war against sea creatures by filling the oceans with remarkable heaps of single-use plastic, generating an enormous wad of crap called the Great Pacific Garbage Patch.ref 457  The Chinese are rumored to be planning condos or a military base. 

Middle East

“We’re going to take down seven countries in five years. We’re going to start with Iraq, then Syria, Lebanon, then Libya, Somalia, Sudan. We’re  going to come back and get Iran in five years.”

~Wesley Clark, Four-star general in 2002, quoting a peer

According to Ellen Brown, none of these countries is "listed among the 56-member banks of the Bank for International Settlements (BIS). That evidently puts them outside the long regulatory arm of the central bankers’ central bank in Switzerland. The most renegade of the lot could be Libya and Iraq, the two that have actually been attacked." And from an interview long, long ago...

Lesley Stahl: "We have heard that half a million children have died. I mean, that's more children than died in Hiroshima. And, you know, is the price worth it?"

Madeleine Albright: "I think this is a very hard choice, but the price — we think the price is worth it."

That 1996 60 Minutes exchange hasn't aged well.ref 458 In the sequel, we pick up the plotline in the same country by following the antics of Bush the Younger. Press secretary Ari Fleisher referred to it as "Operation Iraq Liberation",ref 459 somehow not seeing a problem with the acronym. I find our Middle East policy to be confounding except for one guiding principle: keep them all fighting. It is not really about oil but about war and banking. Following the collapse of the Soviet Union our multi-trillion-dollar defense industry needed a new foe. (Bombing Canada was a non-starter.) As we mow through conflict after conflict it all makes sense if you assume that our goal is to keep the Middle East in a perpetual state of war. Quadafi gets too strong? Kill him. Assad gets too strong, throw a false flag and bomb him. We also don't hesitate to remind those that we haven't bombed (yet) about the merits of the petrodollar: we agree to buy oil in dollars and, in return, they agree to fund our federal deficit and prop our asset markets with these dollars.

In case it isn't obvious, we don't really like democracies. As The Donald showed in 2016, we don't know how to control them. We are having issues with that will-of-the-people malarkey. They're tolerable for Europe but less developed regions—the shithole countries as the Donald is known to say—require focused targets for bribes and threats of death and dismemberment. Dictators are optimal—Shahs for example—but a small gaggle of warlords is manageable. Stephen Kinzer's Overthrow describes 13 explicit US-backed coups that overturned foreign leaders, including democratically elected ones.ref 460

Our adventures in the Middle East have cost us an estimated $6 trillion dollars. Some is salary paid to soldiers but most is going to companies as part of our No Defense Contractor Left Behind Program (NDCLBP). Take a look at the price chart of Boeing, Lockheed Martin, Halliburton, Raytheon, or any other defense contractor (Figure 48). They are well bid based on both past and future earnings. Trump promised to be the least militaristic president—a low bar—and then increased our military budget.

Figure 48. Share price of Boeing

The Saudi regime is ruthless. They fly planes into buildings, chuck gays out of windows, and behead people for non-violent crimes. Women are tortured who dare to drive a car, remove their hijabs, or have the audacity to get raped. If you are the wrong person in Saudi Arabia, Islamophobia is not even a theoretical construct because the fear is not irrational. You wanna see a hero in the flesh? She's Iranian (not Saudi), quite possibly dead, but now an iconic image of global feminism, a meme:

Figure 49. Principled when it's neither cool nor safe.

Meanwhile the Saudis are slaughtering Yemenis (Houthis specifically), risking starvation of as many as 18 million of them.ref 461 Let's go to CNN headquarters to get the latest on the global uproar:ref 462

Rand Paul: "We are refueling the Saudi bombers. So we are essentially part of the Saudi campaign. We are helping them choose targets. It is said that thousands of civilians have died in Yemen because of this. Yes, we need to have a debate over this."

Wolf Blitzer: "So for you this is a moral issue cause, as you know, there are a lot of jobs at stake certainly if a lot of these defense contractors stop selling war planes, other sophisticated equipment to Saudi Arabia. There’s going to be a significant loss of jobs and revenue in the United States. That’s secondary in your standpoint."

The stark truth of that must-see exchange slathered with latent sociopathy leaves me gagging on my vomit. The Pentagon insists we are minimizing civilian casualties when it's just infanticide masquerading as politics. "OK guys: let's keep it under 18 million if we can." US foreign policy is fostering this carnage by providing the Saudis with "the engines of death." You can blame Trump but don't you dare blame just Trump.

Enter one Washington Post journalist named Khashoggi. He gets suckered into an embassy, sliced into pieces, and fed to the camels.ref 463,464 The journalists kicked it into gear and denounced the horror.

"You gonna eat that?"

~Jeff Dahmer to Mohammed bin Salman

Here is my very unpopular take: It was a bit gruesome, but not by Saudi standards that we enthusiastically tolerate. He is also just one damned journalist. Let's put this in perspective: 18 million dying Yemenis versus One Dead Kashoggi (ODK). The world has gone collectively sociopathic on this one. You know why y'all care about some guy whose name you didn't even know six months ago and still can't spell? It is, in part, because Journalists Lives Matter (JLM), and psychopaths in high places are telling journalists to tell you what to worry about. Wake up or shut up. Let's get those priorities in order. And as happened before, Nassim and I have locked arms once again:

"A single journalist is a tragedy; ten thousand Yemenis is a statistic".

~Nassim Taleb channeling Joseph Stalin

Epilogue: The journalists are now starting to notice the carnage in Yemen. Alas, it was never about Khashoggi or Yemen. They are just chess moves.

Syria

“We’ll be coming out of Syria, like, very soon. Let the other people take care of it now.”

~Donald Trump

“A new confirmed chemical attack in Syria would pose a dilemma for President Trump, who … recently said he wants to get the United States out of Syria.”

~NYTimes

"Just so there's no confusion here, if the Syrian regime uses chemical weapons we will respond very stronglyand they really ought to think about this a long time."

~John Bolton

Three days after Trump's announced pull out there was a chlorine gas attack attributed to Assad. That is some serious bad luck. A leaked 2006 memo shows we have been trying to "election monitor" and destabilize Syria for quite some time.ref 435 For several years I have been writing about false flag attacks under the Obama administration trying to georelocate Assad's remains across the Levant. A Sputnik article predicted fake chlorine gas attacks were imminent.ref 466

Figure 50. 2014 Department of State tweet declaring "Mission Accomplished: "Heckuva a job Johnny!"

A disturbing trend is that those pulling off such scams are getting sloppy, relying increasingly on simply controlling the press coverage. There are, however, rogue pundits who refuse to play along. Seymour Hersh declared the chlorine attacks and anti-Syrian rhetoric to be a crock.ref 467 Tucker Carlson, as he so often does now, stepped out on a limb and gave a brilliant must-see diatribe denouncing the neocons for marching us toward a military conflict.ref 468  Pat Buchanan joined with the doubters.ref 469 And, of course, Russia’s Ambassador to the EU in Syria declared it was a complete farce, a hoax concocted by the ‘white helmets’ to justify US forces to bomb Assad.ref 470 I did an RT interview on the chlorine gas attacks as follow up to the Skripal poisonings (see "Nerve Gas Poisonings"). I was so brain dead trying to keep it all straight that I Freudian slipped into a Skripal poisoning plotline before the interviewer reeled me in.ref 471 German Chancellor Angela Merkel denounced the attacks as evidence we failed to eradicate Assad's chemical arsenal, but Germany refused to enter the fray.ref 472 British ambassador to the United Nations, Karen Pierce, blamed the Russians of course.ref 473 (She must have slipped plotlines too.)

Social media dismembered the story. You would have time to run from the house, admittedly coughing and feeling really crappy, maybe even dying later.ref 474 The stacks of bodies inside the house smelled wrong, and the notable absence of sick survivors was odd.ref 475 The bodies were in different states of decay, showed assorted traumas, and displayed blood accumulating in the wrong places. (I'm sure there are Middle Eastern startups that provide bodies on-demand—there is no shortage—but the quality control might be lacking.) Most tellingly, the same bodies were being recycled for different photos.ref 476 One kid claimed he was walking along the street (probably staring at his cell phone), grabbed without warning, and hosed down in front of camera-wielding observers capturing his ordeal.ref 477 An intrepid western reporter, Robert Fisk, actually went to the scene—I'm surprised too—and found nobody knew about the attacks.ref 478 That's a special kind of PTSD. The public seems to not buy into these stories. Mike Krieger of LibertyBlitz blog caught a Fox News Twitter poll asking whether people were for or against attacking Syria because of the chlorine gas attack.ref 479 With 49,000 votes tallied—a non-shabby sample size—69% did not support action. Within two hours, 140,000 pro war supporters joined in and supported the attacks (Figure 51). We are all getting duped.

  

Figure 51. Fox poll swinging wildly (h/t @LibertyBlitz)

Who are these "unarmed and impartial" good Samaritans—these caped crusaders—known as the "White Helmets" who clean up the messes caused by pro-Assad bad guys?ref 480 They are called the Syrian Self-Defense Group. Max Blumenthal, a journalist with considerable experience in the Middle East, calls them a "shadowy group" who also appear to be creating the messes (the arsonist-firefighter combo platter.)ref 481 White Helmeted caped crusaders by day, dark villain mad bombers by night. According to Max, the group is part of a well-funded larger organization called the United States Agency for International Development (USAID) that travels the globe intervening in places like Cuba and Venezuela. The Netherlands figured this out and pulled their support.ref 482

I repeat my original assertion: our interest in the Middle East is more about war than oil. Eisenhower nailed it in his farewell address.ref 483 It's about money and power—the military-industrial complex. I found this Creature from Jekyll Island-like documentary about banking and war to be entertaining.ref 484

Nerve Gas Poisonings

A former colonel in Russian military intelligence who turned MI6 agent and his daughter Yulia were found unconscious on a public bench in Salisbury, England. Headlines flashed that a novichok-class nerve agent put the Skripals into comas. They eventually recovered and were whisked away to a secret location for their safety.ref 485 This is just spy versus spy stuff at best, but Prime Minister Theresa May and the British authorities were quick to condemn the Rooskies:

"It is now clear that Mr. Skripal and his daughter were poisoned with a military-grade nerve agent of a type developed by Russia. This is part of a group of nerve agents known as novichok. Based on the positive identification of this chemical agent by world-leading experts at the Defense Science and Technology Laboratory at Porton Down, our knowledge that Russia has previously produced this agent and would still be capable of doing so."

~Theresa May, Prime Minister of the UK

This is a heap of Moose and Squirrel feces. "Hey. There's novichok in the mass spectrum; let's start World War III!" The authorities were lying their asses off. The hyperbolic language—"military grade" to distinguish it from the crap sold at Walmart—and the suggestion that only the Rooskies know how to make it is hogwash. These novichoks are some of the simplest organic molecules with biological activity.ref 486 They are no harder to synthesize than Tylenol, so I called them out:

Although that tweet got picked up later,ref 487 it was crickets at the time. As the international sabers began to rattle loudly, I took another Tweet at it:

"That Russia Tweet was a fkn DAISY CUTTER man you are controversial. I applaud it."

~Tony Greer, @TGMacro  

That "f*cking daisy cutter" did the trick. It was all over the international press that a Cornell chemist threw a flag. As a nouveau Roosky apologist I found myself on George Galloway, Russia Today (RT),ref 488 Stranahan and Nixon on Faultlines,ref 489 Scott Horton,ref 490 and a missed opportunity to hit Al Jazeera. I was warned by nervous Cornell authorities about the propaganda machine RT, to which I asked, "Worse than CNN?" It also brought Tweeters into my feed from intelligence organizations prompting me to STFU.

The UK authorities say that the incidents in Amesbury and Salisbury are linked, but Professor of Chemistry at Cornell University, Dave Collum, told RT that “it’s impossible to make a connection as there’s been no data presented” to the public to back those claims. He also reiterated that London’s statements of only Russia being capable of producing the novichok chemical were “totally false.” He described the nerve agent as “a simple compound,” which is actually just “three steps from commercially available materials." “I’ve put it on a final exam in my course… and they [the students] all got full credit. It was so easy, I knew none would lose credit because it’s like asking a bunch of bakers to make chocolate chip cookie recipe,” the US chemist said.

~RTref 491

The boys and girls at Britain's Porton Down—the nerve center of the UK chemical weapons program(me)—refused to finger the Rooskies,ref 492 causing the rhetoric to target motive:

"There is no doubt the nerve agent used in the attack was the military-grade nerve agent from the Novichok series. This has been confirmed by specialists, our specialists,...There is also no doubt that the Novichok was produced in Russia by the Russian state. Russia has investigated ways of delivering nerve agents likely for assassination purposes. Part of this programme has involved producing quantities of Novichok agents. The fact that the Novichok was produced in Russia and the fact that Russia has a history of state-sponsored assassinations and the fact that Russia has responded with the usual playbook of disinformation and denial left us with no choice but to conclude that this amounts to an unlawful use of force by the Russian state against the United Kingdom. All of the UK's actions have been fully consistent with our obligations under the Chemical Weapons Convention."

~Dr. Laurie Bristow, British Ambassador to Russia

Who had the skill and motivation? Russia and any country interested in making it look like Russia did. That narrows it down to pretty much every sovereign state in the World, including, in the vernacular, the "shitholes." According to a private communication from a physicist in Finland, novichoks appear to have been made by the US, Iran, UK, Canada, Czech Republic, France, Israel, Sweden, The Netherlands, and Germany. The head of the military laboratory said his lab had made 'novichok'-related chemicals for testing. His statement was called "unfortunate" by the country's Prime Minister, and then he got fired.ref 493

To test my theory that it was easy to make, I put a question on the final exam of my first-year graduate-level organic chemistry course:

Figure 52. 2018 Final exam in Chem 6660, Synthetic Organic Chemistry.

All got full credit except one kid who obviously will never cut it as a terrorist. It's worse than that: I think you could pour the four critical ingredients in a bucket simultaneously and end up with a punch that would flatten way more than just a bunch of fraternity brothers (at Yale). These nerve agents weren't state secrets: their structures were reported in an eight dollar bookref 494 (that apparently only the Russians can afford) or, if you are particularly tech savvy, Wikipedia.ref495

I wasn't standing alone in my doubt. Craig Murray, former UK ambassador to Uzbekistan, was screaming at the top of his lungs.ref 496 The Spiez Laboratory at the Swiss Federal Institute for NBC-Protection, a division of the Federal Office for Civil Protection, got a sample and claimed it wasn’t even a novichok that whacked the Skripals but rather a substance used by the United States, the United Kingdom, and other NATO states.ref 497 Seymour Hersh didn't buy it:ref 498 “When the intel community wants to say something they say it…High confidence effectively means that they don’t know." Famous British journalist, John Pilger, called the Skripal poisoning "total bolox" and wondered "Why do we journalists write down what governments tell us?"ref 499 (That's a trick question: they are made men and women, many of whom on payroll.) The Ron Paul Institute noted that the British claim of Russian assassinations "reads like another desperate repetition of the falsehoods and insults towards Russia issued by Theresa May’s lame-duck Government."ref 500 The most interesting theory is that the Skripals got shell-fish poisoning from a seafood restaurant they ate at that day.ref 501

The Rooskies blamed Porton Down, which is only eight miles from Salisbury and had recently cut 132 staff (motive), prompting their spokesperson to say, “There’s no way that anything like that would ever have come from us or leave the four walls of our facilities.”ref 502 The internet sleuths dug in. Nobody could understand how a contaminated door nob at the Skripals could fail to kill the Skripals—there is a non-lethal dose, of course, so that logic is wrongref 503—and why nobody else got sick.ref 504 Before long, Skripal was being connected to the Steele Dossier.ref 505 I am not joking. I dissed that idea until more evidence emerged.ref 506

"One should be mindful that the chemical components or precursors of A-232 or its binary version novichok-5 are ordinary organophosphates that can be made at commercial chemical companies that manufacture such products as fertilizers and pesticides."

~Ex-Soviet Scientistref 507

This ex-Soviet scientist who wrote "the book" on Soviet nerve agents was remarkably obtuse, seemingly playing both sides.ref 508 Go figure. One exchange was particularly entertaining:

Mirzayanov: It is obvious to me that Moscow hoped that no one would catch them.

Interviewer: But you published the formula for novichoks eight years ago.

Mirzayanov: I don’t know if the FSB [Russia's security group] saw my book.

As the story began to die down and people were left pondering the whereabouts of Yulia Skripal—maybe with that Vegas security guard?—it happened again. Another couple in Salisbury got poisoned supposedly by somebody filling her Chanel perfume dispenser with eau du novichok.ref 509 She died; he recovered. Theresa May was at it again:

“No other country has a combination of the capability, the intent, and the motive to carry out such an act.”

~ Prime Minister Theresa May on the Salisbury poisonings

“Mr Speaker, we are quite clear that Russia was responsible for this act. As I set out for the House in my statements earlier this month, our world-leading experts at the Defense Science and Technology Laboratory at Porton Down positively identified the chemical used for this act as a Novichok – a military-grade nerve agent of a type developed by the Soviet Union. We know that Russia has a record of conducting state-sponsored assassinations and that it views some former intelligence officers as legitimate targets for these assassinations. And we have information indicating that within the last decade, Russia has investigated ways of delivering nerve agents probably for assassination, and, as part of this programme, has produced and stockpiled small quantities of Novichoks.”

~Theresa May on the Salisbury poisonings

This time they rounded up a couple of Roosky assassins, but that story began to fall apart almost immediately. The two patsies were fingered by two officers who were said to have a "rare skill in memorizing faces."ref 510Hokey Smokes, Bullwinkle: now the are just lying like teenagers. The residue detected in the assassins' hotel room found two months later could not be detected the following day.ref 511 That's not how chemistry works, folks. As they separately walked down the jetway at the airport a camera caught them at the exact same position in the jetway with the exact same time stamp to the second (Figure 53).ref 512 If they were even a second apart, one picture would necessarily show two men. Camera's showed them walking around London far away from the crime scene minutes before the putative crime, walking in the wrong direction.ref 513 The camera angles were also wrong.ref 514 If this was a Russian hit, they have lost their groove; real assassins get the job done (bumper sticker). One disturbingly knowledgeable tweeter noted that serious assassins have an independent team do the reconnaissance.

Figure 53. Fake photos showing two spies at the same place at the same time.

So what is it all about? More sanctions. More Russophobia. More demonizing of Putin. The New Cold War. Theresa May’s Government imposed sanctions on Russia, including the expulsion of 23 diplomats.ref 515 While France refused to play along,ref 516 the US chummed the water:

"This attack on our Ally the United Kingdom put countless innocent lives at risk and resulted in serious injury to three people, including a police officer...To the Russian government, we say, when you attack our friend you will face serious consequences."

~US State Department's Official Statement

The Russians weren't happy:

"The Skripal poisoning was not an incident but a colossal international provocation… Any threat to take ‘punitive’ measures against Russia will meet with a response. The British side should be aware of that."

~Maria Zakharova, Russian Foreign Ministry Spokeswoman

“I simply don’t have any normal terms left to describe all this...expulsions won't go unanswered...I said that the United States took a very bad step by cutting what very little still remains in terms of Russian-American relations."

~Sergei Lavrov, Russian Foreign Minister

Rob Slane of Blogmire blog summed up the situation nicely:ref 517

"It’s all remarkably clever, and it seems to have been specifically designed to generate the impression to the uninitiated that investigators are simply making it up as they go along.”

Any Russian will tell you that when things look bleak, drink vodka. A Bristol distillery promptly offered a new product, "Novichok Edition." Staggering from withering criticism, they found themselves apologizing, as often happens when alcohol is involved.ref 518                                   

Kavanaugh versus Blasey Ford

“We now live in an age that risks a new form of sexual McCarthyism. . .  The best way of assuring that we don’t is to accord every person, regardless of his status, the kind of fundamental fairness we would expect for ourselves if we were accused.”

~Alan Dershowitz, Harvard University

At risk of life, limb, and all forms of appendages, although I punted the ball on a lot of political topics this year, I've got to write about the Kavanaugh hearings because I believe the casual observer missed most of the plot. Quick disclaimer: As a pro-choice atheist I probably have a few bones to pick with Kavanaugh’s politics. Highly respected journalist Ambrose Evans-Pritchard described his dealings with Kavanaugh in unflattering terms years back during the Vince Foster and Whitewater investigations.ref 519,520 (That just got weird fast.) Unfortunately, hearings that were supposed to vet his credentials to be a Supreme Court justice were reduced to one simple question: Is Brett Kavanaugh a drunken serial rapist? Kinda gives me pause.

The protests against Kavanaugh began the minute his nomination was announced. Protesters hired by companies like Crowds on Demand to “astroturf” any issueref 521,522 sifted through stacks of signs opposing all possible nominees to pull out the anti-Kavanaugh signs.ref 523 As the story goes, Christina Blasey Ford (CBF) contacted Senator Dianne Feinstein about a sexual assault by Kavanaugh when she was 15. The details were both sketchy and fluid, possibly because she had forgotten about the whole affair until 2012 counseling sessions dredged up suppressed memories.ref 524 Feinstein paid for a lie detector test and then sat on the story until the time was right to pounce. I suspect that CBF thought she could drop a quick grenade and move on to a new career as a decidedly elevated heroine of the progressive community. As so often happens, all bets are off once the first shots are fired. Her name was leaked, and the journalists were off and running.

Reinforcements showed up. A woman claimed Kavanaugh swaffled her in the face at Yale, but she was decidedly fuzzy on details and it was a bit late to swab her face for DNA.ref 525 Another showed up with the Lawyer of the Porn Stars, Michael Avenatti, claiming she witnessed a dozen Kavanaugh-sponsored gang rapes until she realized how self-incriminating that sounded.ref 526 In an odd coincidence, she had previously filed a sexual harassment suit against New York Life . . . using the attorneys representing CBF.ref 527 (Wait. It gets weirder.) She and Avenatti are now under investigation for bearing false witness.ref 528 A guy claimed he witnessed Kavanaugh rape a woman on a boat until the FBI entered the scene. He lost his bearings fast and found himself out on the gangplank.ref 529 A new Jane Doe sent an anonymous letter describing being raped by Kavanaugh in a car, but she’s now not-so-anonymously heading for an altogether different hearing after admitting it was a fib and that she had never met him but was pissed off.ref 530 NBC knew that at least one of his accusers was lying like a dog but ran with the story anyway.ref 531 I’m old enough to remember when NBC was staffed by respected journalists.

“We have already reviewed your client’s allegations. We focus on credible allegations. Please stop emailing me.”

~Mike Davis, U.S. Senate Committee on the Judiciary, to Michael Avenatti

Kavanaugh detractors asked inane rhetorical questions like, “Why would they lie?” You just can't fix stupid I guess. The anti-Kavanaugh #MeToo team submitted that all those accusers, no matter how non-credible when in isolation, couldn’t all be lying. Recall that over 100 people found syringes in their Pepsi cans.ref 532 Why would they lie? They were all convicted of fraud. The pundits seemed to forget that rapists are determined by 12 of their peers in courts of law. With the accusers’ stories getting scalded by the light of day as non-hyperbolically summarized by The Weekly Standard,ref 533 David French,ref 534 Byron York,ref 535 and others.ref 536 the future of the Supreme Court came down to just two people in an epic he said–she said battle in the Congressional Octagon.

“I only drank beer to excess one time in college. When? If I’m remembering right, it was from 1977 to 1981.”

~Andrew C. McCarthy, contributing editor of the National Review

“I do not believe that the temperament of Kavanaugh can be judged from this one, unique circumstance. He was accused, among other things, of leading a virtual rape gang in high school. That would leave most people rather ticked and angry.”

~Jonathan Turley, constitutional law scholar at George Washington University

Kavanaugh threw early punches trying to make the case in a pre-game interview that he was a choirboy, but nobody bought it. His yearbook showed an amazing résumé but included jargon-rich comments typical of young men, showing he might have been a hooligan at an all-boys prep school. Allusion to a girl dubbed “Renate Alumnius” mentioned by name only (except to those who do not know what that semi-colon thingie is) was inferred as evidence that she was a favorite among the boys—a slut in the vernacular—but she was also one of the 65 female signers of a letter of support saying they knew Kavanaugh and he was honorable.ref 537 Police records from New Haven showed that Kavanaugh may have chucked a glass of ice on somebody at a bar while at Yale.ref 538 That proto-ice bucket challenge was morphed into a violent-drunk plotline. CBF had a yearbook too that was scrubbed but retrieved by the WayBack Machine.ref 539 It is said to be salacious, but I didn't bother to look; it's not relevant.

During the hearings Kavanaugh threw what appeared to be tantrums. I think they were ill-advised in retrospect, but I have no doubt that they were advised, not just spontaneous outbursts. Many say his bahavior was unbecoming of a judicial nominee. Here's how I see: If I am being falsely accused of such heinous crimes, I would get so medieval that my next hearings would be in a court of law looking at serious time spent in a condo that locks from the outside.     

“There is something deeply unsettling in the scene of a United States senator going through the yearbook entries written by a teenage boy in High School as a material issue for a confirmation to the United States Supreme Court.”

~Jonathan Turley

In a matter of a few months, Kavanaugh had been reduced from the lofty position of Supreme Court nominee to mean, beer-guzzling gang rapist displaying violent mood swings. As to the accused assault of CBF, he pulled out a calendar showing that he was out of town when the alleged assault took placeref 540 and has acute CCHD (compulsive calendar hoarding disorder). The dog piling came from every direction and was astonishing. USA Today accused him of being a pedophile (Figure 54). The American Civil Liberties Union (ACLU) committed $1 million dollars to keep a Supreme Court nominee off the court. Wrap your brain around that irony. Kavanaugh’s current employer, Harvard University, managed to start a Title IX charge against him and implied that if he did not get confirmed, he would be unemployed.ref 541

Figure 54. Fair and balanced

The battle was fierce. Lindsey Graham put on a now-legendary tirade:ref 542

“This is the most unethical sham since I've been in politics. . . . Boy, y'all want power. Boy, I hope you never get it. I hope the American people can see through this sham, that you knew about it and you held it.”

~Lindsey Graham, US Senator from South Carolina

Oddly enough, the media immediately began omitting, “Boy, y’all want power. Boy, I hope you never get it.” I think it had a little too much truthiness.

The day of CBF's testimony finally arrived, and what a show! Rachel Mitchell, the questioner with 25 years’ experience prosecuting sex crimes, allowed the skanky old white guys with sordid pasts and taxpayer-funded slush funds to bribe their own victimsref 543 to sit back and watch. The PTSD that caused CBF to forget the entire event until it was resurrected by therapy in 2012 gave way to lurid details with “100% confidence.”ref 544 She described how she had a second door installed in her house out of feelings of insecurity from the decades-old event and leaving family members baffled at what was going on in her head. Even flying was said to be a horrifying experience. CBF described her lie detector test as a bewildering new experience. Mitchell followed up with an equally bewildering question as to whether CBF had ever helped anybody else take one.ref 545 WTF was that about? Hold that thought. Mitchell subsequently summarized her concerns in a letter,ref 546 concluding that CBF’s testimony did not pass Mitchell’s smell test (although the GOP did hire her.) The court of popular opinion had a few opinions of its own, expressed in thoughtful, measured tones:

The press referred to her testimony as emotional, gripping, compelling. She described the trauma of being thrown on a bed and barely escaping. So what is the problem here? Let’s just hang the bastard. I’m gonna open big: I don’t care what all the sycophantic virtue-signalizing pundits had to say, CBF was not credible. I know enormous numbers of women in academics. They all have gravitas. Teaching anywhere from 40 to >100 lectures a semester grooms stage presence and amplifies the gravitas. Her résumé shows that she is rather accomplished.ref 547 Although I could quibble over factual errors in what she said (and there were a quite a fewref 548) the problem was in the presentation. She spoke like a 9-year-old girl, a rather pathetic one at that. We all had childhood memories that were ruined by our childhood, and then we #moveon. I grew up with a drunk mother—a face-in-her-mashed-potatoes drunk mother. It groomed independence. Oh, now I can hear you saying, “But Dave, you privileged punk: You've never been sexually assaulted," and you would be wrong. When I was about 8 years old—even unresurrected memories get a little fuzzy in detail—my brother and I were molested by an eye doctor named Dr. McGraw who grabbed our nuts for an hour straight. “First or second? I’ll take neither, you goddamned perv!” If I had been a little older, I probably could have reshaped his Prince Albert with a ball-peen hammer. Instead, we told my dad, ate dinner (probably mashed potatoes), and sat down to an episode of Mr. Ed (“Willlburrrrrr”).

When a well-known voice actress called out CBF’s fake voice—her “fry”—on YouTube, the actress was promptly fired.ref 549 I tried to find footage of CBF lecturing and came up with a goose egg. I’m waiting for some to show up after the fact, showing her in her natural state. Some screen grabs of her RateMyProfessor.com evaluationsref 550 provided insight into her unedited and unflattering demeanor. For example:

“Prof. Ford is unprofessional, lacks appropriate filters, and I am honestly scared of her. She’s made comments both in class and in e-mails, if you cross her, you will be on her bad side. I fear to think of the poor clients that had to deal with her while she got her MSW and her LCSW. Absolutely the worst teacher I ever had.”

~RateMyProfessor.com from a furry screen grabref

Supporters cried, “Fake!” OK, but how would we know? The originals got scrubbed from the website (probably with help from the Googleheads.)ref 551 Be my guest: go check.

And when you thought it couldn’t get weirder, her friend of 10 years and boyfriend of 6 years said in a sworn affidavit that CBF never mentioned the assault and flew in planes (including some sketchy ones) many times without fear.ref 552 The new front door installed to alleviate her PTSD just so happened to allow her to illegally rent part of her $3 million house to affluent Google techies, and its timing failed to match her claims.ref 553 The question about helping others with a polygraph is the plot thickener. The boyfriend testified that he witnessed CBF coaching a friend on how to pass a polygraph test.ref 554 Pretty good for somebody who has never taken one. Must have worked, because that friend soon thereafter joined the FBI and stayed until soon after Trump’s win “triggered” her resignation. CBF’s decidedly shifting memories of the assault that had been suppressed until 2012 are curious given that she is a psychologist. By the way, what is her research specialty? Glad you asked: suppressed memories and how one can shape them and even create new ones.ref 555,556

Then it gets super weird. CBF is said to have CIA ties, FWIW.ref 557 Sounds like internet legend, but renowned pundit David Icke seemed to buy it.ref 558 Her parents also have been tied to the CIA.ref 559 Her FBI buddy and handler, Monica McLean,ref 560 worked for Preet Bharara,ref 561 a highly political former prosecutor. One of McLean’s superiors answered to Jim Margolin, who just so happened to be working the Michael Cohen case.ref 562 Another CBF handler during the hearings had also helped Anita Hill take on Clarence Thomas.ref 563 Politics is a very dirty business indeed. CBF’s brother has been tied to Fusion GPS,ref 564 the same clowns who faked the Trump–Russia collusion dossier. My head just exploded, destroying yet another keyboard.

Let’s wrap this up, ACLU claims aside, to make a case against somebody, you need data. Otherwise, it’s just a lynch mob. Just ask Tom Robinson. Some subset of the #MeToo movement doesn't agree with this, but they are wrong. It is a profound problem that sexual assaults often leave no evidentiary trail. I hasten to add that if you read Martha Stout’s The Sociopath Next Door,ref 565 you’ll learn that an estimated 1 in 25 people are said to be clinical sociopaths. Stir in dirty politics, and the odds of flawed testimony soar. You’re welcome to blindly take people at their word, but on issues of such polarizing importance, you would be a fool (or, worse, a virtue signaler). In short, I will not just believe you in the absence of evidence. That’s not how Western justice works.

The final chapter may be unfinished. The democrats took a beating for tactics that seemed evil even among independents.ref 566 Of course, they blamed Avenatti, not themselves.ref 567 After Stephen Colbert asked, “So how did our politics get so poisonous?” one of his staffers, Ariel Dumas, expressed the left’s horror at their failure and solace in their pyrrhic victory:

Oh dear Ariel. You are a hateful person. I hope I haven't offended you. I presume you already know this.

The political establishment has no further use for CBF. It did, however, leave her with a GoFundMe campaign, which kept the spigot cranked open even after everything quieted down, raising over $867,000 to pay off whatever bills and costs were incurred during the ordeal (which is none because the DNC picked up the entire tab).ref 568 I’m sure it helped her remember why she did it.

One could argue that the Kavanaugh story is one of redemption—a potentially precocious teen showing some questionable judgment. Whoopie Goldberg, Malcolm X, Nelson Mandela, and Tim Allen did. I’m willing to let the ambiguity of what Kavanaugh may or may not have done as a teenager be corrected by time as well.

A GoFundMe campaign also left Kavanaugh with >$500,000, which he promptly and certainly mandatorily donated to charity.ref 569 Kavanaugh is now a justice on the Supreme Court of the United States. Those on the left may try to impeach him.ref 570 If they fail, maybe they will take the case all the way to the Supreme Court. Pundits on Fox enjoyed the final victory by, no kidding, downing a couple of beers on air.ref 571 Lindsey Graham seems to have recovered, displaying what may be the smuggest look I have ever seen. That pedophilic eye doctor in need of a beating with a ball-peen hammer is probably dead, but his legend lives on in his nickname: Quick Draw McGraw.

Epilogue: A video of Kavanaugh and his wife celebrating with Trump brought up one last serious question: Does he beat his wife? Oh FFS! Women claiming to work with battered women, however, say they have seen the look a million times. I confess that I watched the damning footageref 572 it quite a few times and, while the narrative is a reach, I could be convinced. This one is gonna live rent-free in my head for awhile.

Political Correctness: Adult Division

“Political correctness is elevation of sensitivity over truth.”

~Bill Maher, comedian

The construct of political correctness finds its roots in 1930s communism, in which it was “a semi-humorous reminder that ‘the Party’s interest is to be treated as a reality that ranks above reality itself.’”ref 573 A national survey showed that 80% of American adults think that political correctness is a problem,ref 574 suggesting that a relatively minor 20% are highly educated virtue signalers. Technically, I am a doctor of philosophy, but I identify as a medical doctor and can write you a prescription for a new pair of gonads. Virtue signaling—saying things to impress those around you to show that you are thinking correctly—is said by Taleb to be like paying for indulgences. It is a form of lying that, according to late evolutionary biologist John Maynard Smith, is a way of getting laid. He called it the “sneaky fuckers strategy.”ref 575 But am I not also virtue signaling to the 80% when I pejoratively call the signalers a bunch of wankers? No, because I may be dead wrong but I’m not lying.

A malign interpretation of political correctness—PC for short—is how the politically far left and left-wing power structure exert control over the population. Don’t blame me: I got this little thesis from Malcolm X:ref 576

“If you study the structure of the negro community—economically, politically, civically, psychologically, and otherwise—it’s controlled by the white liberals who usually pose as the friend of the negro who actually differs from the white conservative. . . . I’m suspicious of whites who join negroes and always have to be in the lead. Who always have to be at the top. Who always have to be in negro organizations. Let them give some advice to negroes and stand on the sidelines. . . . [Negro leaders] are puppets who have been put in front of the negro community.”

~Malcolm X, Nation of Islam and civil rights activist

PC encompasses all sorts of oddities, including cultural appropriation and overt disdain for the hat trick of evil—white/heterosexual/male. The blunt but highly effective tool is to hang a repugnant-sounding label on your opponents—misogynist, racist, homophobe, or Canadian—which is guaranteed to send them scrambling for safe spaces (or Jonestown). If the label sticks, you’ve vanquished the bastards.

2018 may have been a turning point. One senses that pushback will not necessarily get you fired. (Keep your savings account topped off, just to be safe.) The Supreme Court ruled that wedding cake bakers do indeed have constitutional protections.ref 577 We saw the emergence of Jordan Peterson, a decidedly no-frills University of Toronto psychologist who cut his teeth opposing mandated PC speech.ref 578 All imaginable labels have been tattooed on Jordan’s ass, but the guy has thought deeply about his beliefs and is a worthy foe. In what became an epic must-see interview—a meme in the making—he eviscerated Cathy Newman.ref 579  Newman was so brutalized by his logic and her inability to brand him by shoving words in his mouth that she embarked on a post-debate victim march and enrolled herself in a concocted witness protection program.ref 580 No, Cathy: Your beating was painful but only metaphorical. The left’s hatred of Jordan helped sell millions of copies of his book that would have sold a few hundred copies to friends and family otherwise (see “Books”). As is so common nowadays—what kind of word is nowadays?— ideas pose a threat. We can’t have any of those! Peterson’s ideas took root so fast that his personal YouTube channel was closed down but then reinstated.ref 581 I watch his interviews like a coach watches game films to see how not to get beat by skullduggery. Cathy would have owned my sorry ass.

Let’s take a peek at the year’s PC Follies in the adult world using a bulleted list—Can I use the word bulleted?—revealing what the “batshit crazies” got into this year. You may find yourself checking the mirror for facial drooping and listening for slurred speech:

  • A rapist identified as a trans woman was incarcerated in a women’s prison, where she sexually assaulted four more women.ref 582
  • A survey claims that 50% of millennials are socialists and that 75% of those don’t know what it means.ref 583
  • The #MeToo movement has spread to corporate America, wherein men supposedly meet to “talk through their feelings, allowing themselves to grow more vulnerable, and, yes, to cry together.”ref 584 I’m tearing up just thinking about it (sob). Despite the fact that this is clearly hyperbolic crockery, some have expressed concerns that these are men’s-only groups.
  • A woman hired by Facebook to review content flagged as highly dubious has sued Facebook for being “exposed to highly toxic, unsafe, and injurious content” that caused PTSD.ref 585
  • A controversial release of a pedophile on bail got the perp’s decapitated corpse delivered to the judge’s front door.ref 586 That, by the way, is not PC.
  • Transgender women continue to do shockingly well in women’s sporting events, including a gold medal at the 2018 UCI Masters Track Cycling World Championships.ref 587 To all you moms and dads who drove your daughter to practices—to the moms in the must-see iconic P&G “Thanks, Mom” Olympic commercialref 588—just remember that everybody is a winner.
  • Columbus Day celebrations were canceled in Columbus, Ohio.ref 589
  • The pink pussy hat has been deemed offensive to transgender women and gender non-binary people who don’t have typical female genitalia (pussies) and to women of color, whose genitals are not always pink.ref 590
  • GOP candidate Ron DeSantis got slammed for telling voters not to “monkey it up” by voting for his gubernatorial opponent in Florida (who happens to be black).ref 591 The left went nuts, saying they have never heard of this phrase or, apparently, this thing we call Google. Obama showed his white-nationalist roots by saying he “monkeyed around” with something.ref 592
  • NASCAR’s Conor Daly lost sponsorship of Lilly Diabetes owing to a racially insensitive remark made by his father in the 1980s.ref 593
  • Silicon Valley elites are spending $20 per gallon on raw water—water that is fully untreated.ref 594 An old SNL spoof ad sold Swill, mineral water from Lake Erie.ref 595
  • The Miss America pageant is removing the bathing suit competition.ref 596 Major news outlets reporting the story invariably showed pictures of prior contestants in skimpy bathing suits. They are replacing this leg of the competition with a quantum mechanics exam and calling it the Cal Tech Admissions Pageant.
  • A Canadian restaurant manager booted a customer for wearing a MAGA hat. Customers choked down their bear-meat omelets and left irate.ref 597
  • A woman tried to hang her kid in the basement—we’ve all done that one—and struck a bicyclist and a car driven by a pregnant woman while being pursued. The judge gave her probation.ref 598 I must confess that she is statistically unlikely to repeat that again.
  • The new celebrity fashion trend is to get facials made from cloned baby foreskins.ref 599 The nickname "Dicknose" seems appropo although something more subtle like Smegyn would work.
  • People are squealing for the rights of sex dolls to not be abused.ref 600
  • The Brits, never bashful about asking somebody to hold their beers, are discussing whether to make misogyny a hate crime or just let the birds fend for themselves.ref 601 Some note that “everything in the UK has been criminalized except crime.”
  • Microsoft is warning customers using Office, Xbox, Skype, and other products that the company is prohibiting offensive language and inappropriate content. Can I use phrases like "totalitarian", "Stalinist", or even "rot in hell fascist pigs?"ref 602
  • The mayor of London tweeted that “there is never a reason to carry a knife. Anyone who does will be caught, and they will feel the full force of the law.”ref 603
  • A restaurant in Britain charges white customers £13 more than people of colour—it's spelled color, you plonkers—to challenge racial wealth disparity.ref 604 I would guess that the owners personally helped narrow the wealth gap.
  • The French had their hold-my-Chablis moment: They are considering a bill to make cat-calling of women a crime punishable with a €750 fine.ref 605
  • A Polish brewery, The Order of Yoni, produced a beer marketed as being brewed using vaginal secretions from two smoking-hot models.ref 606 Yoni is Sanskrit for vagina. (I’m not joking . . . and it’s not PC either.)
  • Students in Indonesia are making moonshine out of used Tampons.ref 607
  • Black Lives Matter and former NAACP kingpin Shaun King was exposed for having some very white parents.ref 608 Rumors of a romance with Rachel Dolezal remain unconfirmed.
  • #MeToo activist Asia Argento is said to have paid off a 17-year-old (underage) actor to shut him up about an affair. She now claims her underage love muffin assaulted her.ref 609
  • Rhode Island is pondering a one-time $20 fee to access porn sites or other “offensive material” online.ref 610 That really sucks.
  • High fashion’s latest trend is said to be male models wearing prosthetics to look pregnant and macho men wearing bras.ref 611 The marketing head at Target says they can’t keep them in stock.
  • Literature published by a California health information provider, in an effort to deal with modern gender issues, refers to the vagina as the “front hole.”ref 612 Those who hatched this idea are now called “A-holes.”
  • A Roanoke City social services worker was fired and escorted from the building for having a concealed carry permit.ref 613 Not the gun; just the permit.
  • Nurses in South Africa have to acknowledge their white privilege before treating aboriginal patients (or get their heads hacked off).ref 614
  • The BBC is reducing the salaries of some male journalists after criticism over unequal pay.ref 615 Can’t say I saw that one coming.
  • Craigslist shut down personal ads—“SWM looking for hot monkey love”—after Congress passed a bill on sex trafficking.ref 616
  • The Manchester Art Gallery took down pre-Raphaelite paintings of naked nymphs to appease the pervs who think other pervs can’t look at them as just art.ref 617
  • To fight obesity, the UK wants to legislate that pizzas shrink or lose their fattening toppings.ref 618 Are you guys trying to have a revolution?
  • I personally heard a rumor that an employee at one of the FAANGs got reprimanded by human relations for calling a tall colleague a “long drink of water." The correct greeting is, “Hey, Stretch!”
  • A judge meted out a 25-year sentence without parole for drunk driving in which nobody got hurt.ref 619 I imagine there was a chronic problem, but you get less for shooting your spouse. Something like house arrest with an ankle bracelet for tracking might have sufficed.
  • Team USA was criticized for cultural appropriation for having Native American motifs on their gloves at the Winter Olympics.ref 620 Lacrosse teams around the country are scrambling to figure out how to play without sticks.
  • The former head of the CDC grabbed the ass of a friend of 30 years at a party, apologized, and nine months later was arrested and fired.ref 621 The woman said she worried about hurting someone by coming forward . . . and then wrote an article in the New York Times.ref 622 It just so happens that he was up to his ass in the politically charged vaccine debate.
  • Swedish authorities pixelated the face in the photo of a man wanted for murder.ref 623

Anything called “The War on . . . " is likely to be a bad idea and ineffectual. The War on Big Gulp Sodas has given way to the War on Straws. Restaurant owners who hand out unsolicited straws in California are subject to $1,000 fines and 6 months in prison for each infraction.ref 624 The originator of the movement, Milo Cress, claimed that 500 million straws are handed out unnecessarily. Milo’s data comes from—wait for it—a phone survey of straw manufacturers he conducted in 2011 when he was just 9 years old.ref 625 The Raw Water lobby was unconcerned because it sells its products in plastic bottles. Some wonder if a plastic straw conviction will keep you from getting a gun permit.

Starbucks is remarkably progressive, but it discovered that the intolerant left eats its own. It got into a spat about whether several black customers were loitering.ref 626 It’s likely that mistakes were made. A corporate-wide policy change to tolerate all such loiterers has now converted Starbucks into a safe space for crackheads.ref 627The bathroom-dwelling coke-snorters will have to bring their own straws. Starbucks’s new inclusiveness training also warned employees not to “accidentally mistake scruffy-looking husbands for homeless men.” Finally, somebody defends me.

“Dumbass fucking white people marking up the internet with their opinions like dogs pissing on fire hydrants.”

~Sarah Jeong, journalist and New York Times editorial board

Journalist Sarah Jeong was brought onto the editorial board of the New York Times. The newspaper claims to have been fully cognizant of her polarizing tweets over the years. How polarizing? She supported killing cops, killing men, and being remorseful that she will reach the end or her life without having killed a single guy.ref 628,629,630,631,632 The defense that she was fighting trolls by illustrating troll tactics fell apart when the vile tweets just kept surfacing spanning years.ref 633 Vox noted that “a lot of people on the internet today [are] confusing the expressive way antiracists and minorities talk about ‘white people’ with actual race-based hatred, for some unfathomable reason.”ref 634 The Verge, where Jeong still worked, described any assertion of racism in Jeong’s tweets as “dishonest and outrageous.”ref 635 Slate, a publication just slightly left of Putin, came to her defense referring to the work of conservative trolls.ref 636 Of course, she was fired immediately and booted off Twitter. Just kidding. She kept her job and got verified on Twitter because we couldn’t possibly know whether it was her or just some generic hateful, foul-mouthed troll. She hit peak irony when old tweets trolling her current employer surfaced in vast numbers.ref 637

“After a bad day, some people come home and kick the furniture. I get on the Internet and make fun of The New York Times.”

~Sarah Jeong

I didn't write about media this year—I had plenty of material but not enough time—but I will say that with Constitution protections offered to journalists come Constitution-level responsibilities. So many of you really suck now. I am talking the bottom-of-the-barrel, "suck the chrome off a trailer hitch" levels of suck.

There is nothing more sanctimonious than Hollywood multi-millionaires shaking their Oscars and talking about oppression. I find it odd that every TV show and movie now includes profound violence and multiple scenes where a lead actor sweeps off the top surface of a desk or kitchen table, plops some starlet’s yoga-tightened ass down, and bangs her lights out. Aren’t they supposed to ask permission—“May I touch your breast?”—or is that rule negated when your paycheck is on the line? Let’s see what Hollywood was up to this year:

  • In the moon-landing movie First Man, actor Ryan Gosling refused to plant the American flag. 
  • The BBC faces backlash for its decision to cast able-bodied Charlie Heaton in its adaptation of The Elephant Man rather any one of dozens of seriously deformed men who decided their best option was to go to USC’s acting program.ref 638
  • Hollywood pulled Scarlett Johansson from the role of a transgender man in Rub and Tug because she is not a transgender man.ref 639 That’s why it’s called acting. Daniella Greenbaum defended casting her, but then quit at Business Insider when it pulled her column.ref 640 On the bright side, it was a principled call because they surely didn't boot Scarlett to pump up the box office proceeds.
  • Bill Cosby was found guilty of sexual assault. Good riddance.ref 641
  • ABC executives regret their “knee-jerk” decision to fire Roseanne Barr because of a few tweets (that I happen to think had no racial intent) after realizing that destroying its best show (and her career) was an expensive blunder.ref 642 Norm MacDonald defended Roseanne for saying the #MeToo movement has gone too far and then was promptly pulled from a Tonight Show appearance.ref 643
  • The Weinstein Company filed for bankruptcy, ending all non-disclosure agreements. This could get interesting.ref 644
  • Elijah Wood had spoken out boldly about pedophilia in Hollywood saying, “It was all organized. There are a lot of vipers in this industry, people who only have their own interests in mind. There is darkness in the underbelly . . . victims can’t speak as loudly as the people in power. That’s the tragedy of attempting to reveal what is happening to innocent people: They can be squashed.”ref 645 Elijah now declares no direct knowledge of pedophilia in Hollywood.ref 646 The pervs got to him. 
  • Having attained predator status as an alleged pedophile, Kevin Spacey got written out of the script of House of Cards.ref 647 His new movie, somewhat ironically named Billionaire Boys Club, which was already in the can, opened in eight theaters and made $287.ref 648 That is not a typo. It would have been less if the one guy who went and sat in the back pleasuring himself—let's call him just "Kevin"—also bought a large Coke and popcorn. (How do you know when it is bedtime in the Spacey house? When the big hand touches the little hand.)
  • The Academy Awards hit an all-time low Nielsen rating—a 24% drop year over year—because sanctimony doesn’t sell.ref 649 Remember the olden days when they would defend victims like Juanita Broaddrick? Me neither.
  • The new Jack Ryan series was “blasted” for pushing “masculine American heroism” and “white male entitlement.”ref 650
  • My wife dragged me off to see Mama Mia (the sequel). The four men in the theater that night were literally congratulating each other for falling on their swords. By movie's end, I wondered if Hollywood may start delivering us leading men—three in this case—lacking any semblance of masculinity.

PC loses its humorous component when it goes violent. Antifa seems to have taken over Portland, Oregon. I never expected to read about “The Battle of Portland.”ref 651 This liberal enclave seems to be unprotected by the police, who were told to stand down.ref 652 Antifa has now been declared “domestic terrorists” by the authorities.ref 653 Portland citizens cheered as a squad of police scrubbed the streets of Antifa rascals harassing passersby.ref 654 Antifa vandalized the Metropolitan Republican Club in New York City and sees no irony in talk about punching Nazis.ref 655 A professor of philosophy who cold-cocked an unsuspecting person is out on $200,000 bail.ref 656 Apparently, if you are a prominent republican, you are no longer eligible to dine in public because the intolerant left has the right to make you miserable. A rare unmasked Antifa thug screamed vile insults to the widow of a 9/11 victim (a fireman).ref 657 The assailant escaped harm by a razor-thin margin. The Unmasking Antifa Act of 2018 proposes laws prohibiting protesting with a mask.ref 658 I’m fence-sitting that one. An investigative journalist undercover probing Antifa appears to have been whacked shortly after he vowed to expose George Soros.ref 659

A friend of the family supported this no-rules approach to politics, prompting me to “lose my shit” and state, “You are declaring war. Do you realize that my team has all the fucking guns?” This prompted my wife to send me to the store on an errand.

There is a really ugly side to the gender battles that I had underestimated until now. Let’s open with a tweet that sat in my notes for months:

“Well, I don’t want to go up and talk to her, because I’m going to be called a rapist or something.”

~Henry Cavill, actor who plays Superman in the DC universe films

Mike Pence, darling of the left (not), noted his policy to never have dinner alone with a woman who is not his wife.ref 660 This got called the Pence Rule and led to some investigative journalism. What they discovered is that corporate America, in addition to all the misogynist white men, is heavily populated with men fearing that they will be accused of something without cause.ref 661 Some said that they won’t ride alone in an elevator with a female colleague. Others have age cutoffs, below which the women are avoided. This is truly horrifying—what economists might call a negative externality of higher order. Young women need access to mentoring and opportunity. Fear of association—call it a phobia if you wish—is profoundly destructive. One gent said that the solution is obvious: “Just don't be an asshole.”ref 662 He is trivializing this paradox (and virtue signaling). We are moving women and minorities into positions of power and authority. Society hasn’t completely worked out some of the details.

Political Correctness: Collegiate Division

“The wind of freedom blows.”

~Stanford University’s motto

“You can’t spend your whole life worrying about your mistakes. You fucked up! You trusted us.”

~Otter in Animal House

Many administrators, professors, and students are working their asses off to get it right, going about the business of scholarship and education. Parents hand us their kids and ask us to equip them with technical and social skills needed to become functional adults. They also ask us to keep them healthy and safe for their first road trip. Most exceed our expectations outside the control of their parents (at least before cell phones). Forget not that these students descended from mammoth hunters. The headlines you read and YouTube clips you see of faculty and students acting like assholes belie the thousands of success stories that would make you proud and that Make America Great. (OK. Maybe I’m pressing my luck now.) There is, however, a creeping Tyranny of the Few—noisy whack jobs—who can alter the tenor of campus life. When they start throwing their feces, all hell breaks loose. I would call it Tyranny of the Minority, but that might be misconstrued as some racist dig, and I would find myself in front of a tribunal or angry mob (which I file in the Department of Redundancy Department).

“The darkest part is not the rise of radicalism, but the passive acquiescence of the vast majority of faculty and students.”

~Lee Jussim, professor of psychology at Rutgers University

“When they come to you—your kids—and say, ‘I’d like to study critical race theory and intersectionality and bullshit 101 whiteness.’ Then you say, ‘Yeah, well, you are going to pay the $60,000 because I am not going to pay the money that I have amassed through my hard work for you to be polluted learning about nihilistic academic fields that are intellectual terrorism.”

~Gad Saad, professor at Concordia University

Universities suffer from a host of self-inflicted wounds. Surveys show that what was a 2:1 left-wing lean among some faculty now tips the scales at anywere from 10:1 to well over 50:1.ref 663 Some colleges are said to have no conservatives. (I suspect they are in closets.) The rallying cry is that faculty members are all left leaning because of their great intellects. There is a core group of academics (students and faculty) that seems to have an insatiable need to gripe about wide-ranging topics that have been codified as “grievance studies.”ref 664 If your kid’s major ends in the word “Studies,” you might want to peek at the curriculum. Actions that are so insignificant as to be called “microaggressions”—mathematically one-millionth of a normal aggression—are now campus horrors to be strangled in the crib. In a grand bargain to create the most inclusive communities, universities are dismantling freedom of association of like-minded students.ref 665 Removal of such self-assembled support groups—think fraternities, for example—is forcing students to suffer an odd crowded isolation. If you oppose this new order, be ready to be tagged with a pejorative label that ends in “–phobia,” “–archy,” or “–ist.” Society is also trying to remove all semblances of hierarchies as being unfair or not inclusive, ignoring the fact that they are biological and cultural evolution's mechanism to minimize conflicts.

“My daughter is looking for a summer job. She’s a millennial so she’s hoping to find part-time work as a CEO."

~Brian Kiley (@kileynoodles)

We as a nation measure our intellectual worth by numbers of college graduates. Of course, students and their parents are loading up on mountains of debt to spend four or more years to “find themselves.” The military or Peace Corps will do so more cost-effectively, and for a mere $150,000, I will personally find your kid and save you a lot of money. The proliferation of college experiences that leave students with little or no chance of discharging their debt after graduation has done irreparable damage to a generation. This is not hyperbole: irreparable damage. I suspect that replacing half of our college degrees with technical training would provide huge benefits. An elevator repair guy told me that after a five-year paid apprenticeship, he will make a six-digit salary. What does four or five income-free, debt-laden years in college guarantee you?

“Whereas the University of Chicago has traditionally sought to cultivate an intellectually robust and diverse student body by seeking out creative and unconventional thinkers, the introduction of a pre-professional business major would attract applicants who view their education primarily as a preparation for lucrative careers.”

~An activist’s letter, nailing it!

The Department of Education claims that administrative positions have grown at 10 times the rate of tenured faculty positions.ref 666 The University of Michigan currently employs a staff of 93 full-time diversity administrators.ref 667 More than 25% earn in excess of $100,000—as much as elevator repair techs. These soaring added costs are exacerbated by an arms race to provide better food, dorms, study and safe spaces, and gym facilities. Schools either upgrade or watch the talent head off to greener pastures. Jonathan Haidt and Greg Lukianoff (see "Books") say that colleges crossed the Rubicon when they began thinking of students as consumers, and we all know the consumer as King. The unwillingness of college administrators to stand up to precocious and, at times unruly, consumers has been called an “epidemic of cowardice.”

“Universities are becoming ungovernable.”

~Anonymous university president

Now let us wander through anecdotal disasters that occasionally visit college campuses—stories that should touch a wide range of emotions, including the fear somebody slipped you a roofie. Colleges and universities constitute the mothership of political correctness.  Let’s begin with just some seriously goofy shit. Bear in mind that some of these ideas get attributed to universities when they are more likely emanating from university-sanctioned organizations—student clubs—that are given the coveted right to free speech, which they promptly exploit to suppress free speech from others:

Standardized tests are being removed so that objective measures of skill and merit can be replaced with more subjective measures of things like, oh, ideological conformity.

  • A Michigan State University study concluded that Latinos who support meritocracy, hard work, and independence are perpetuating a bias problem.ref 668
  • A Clayton State University professor offered students extra credit to attend an event of the Democratic Party's gubernatorial candidate: The school intervened.ref 669
  • Gonzaga University hosted an “International Day of Tolerance,” urging students, particularly “white people,” to ask themselves, “Am I a tolerant person?” and “Do I stereotype people?”ref 670 There is a concept rich in irony.
  • The University of Colorado-Boulder has removed the term “illegal aliens” from its library catalog in favor of “more ethical subject headings” to foster an “inclusive atmosphere.”ref 671 I have thoughts on what else you could remove from where.
  • University of Texas treats masculinity as a “mental health issue,” empowering young men to “break the cycle.”ref 672 I'm guessing the Alamo is no longer in the curriculum.
  • Clapping has been banned at the University of Manchester student union to avoid triggering anxiety and improve accessibility. It has been replaced with “jazz hands.”ref 673

  • A Fresno State professor followed a series of dubious tweets—we've all done that— with one baiting people to call her. The phone number she posted was for a mental health hotline instead.ref 674 Bet that worked well for this high-function moron.
  • Students at law schools are being triggered by curricula covering entire branches of study. Lectures on rape law, for example, are popular targets.ref 675 These same activists are likely to speak out in support of rape victims, albeit in total ignorance.
  • Emotional support dogs are growing by leaps and bounds.ref 676 That’s cool; I have three Labrador retrievers, although I would not call them supportive.
  • George Washington University students launched a petition to change the school’s mascot from the Colonials to the Hippos because Colonials is too evocative of colonization and oppression.ref 677 Hippos are really fat: aren't you fat shaming and culturally appropriating hippos?
  • Princeton put on (packed on?) a “fat-positive dinner” to discuss “fat-positive programming for the spring semester.”ref 678 The university also offered a course to help students fight “fat phobia” through dance. I'm more than a few pounds heavy now, and my wife fat-shames the heck out of me.
  • “If someone calls you fuckin’ fat, they may be bullying you, but you might be fuckin’ fat.”
  • ~David Goggins, former Navy Seal
  • I did the math: The famous “Freshman 15”—the pounds gained from all-you-can-eat buffet-style dining—causes Cornell’s North Campus housing to gain 45,000 lbs. every fall semester. I wonder if building codes accounted for this.
  • Students at Lee University petitioned to disinvite Vice President Mike Pence, declaring that Pence’s political views are “at odds with Christian values.”ref 679 What would Jesus say?
  • A professor who teaches politics and global security at Virginia Tech tells us that fossil fuels are contributing to a warped sense of “masculine identity” and “authoritarianism” among men, coining the phrase “petro-masculinity” to describe what she sees as a convergence of “climate change, a threatened fossil fuel system, and an increasingly fragile Western hypermasculinity.”ref 680 Nailed it.
  • A group of UCLA students earning $13 an hour to promote diversity on campus started a “Toxic Masculinity Committee.”ref 681 I'm guessing that they don’t lift weights together.
  • A St. Mary’s College professor offered a term project instead of a real final exam on topics ranging from “environmental racism,” “the Green Movement in Africa,” and “eco-normativity in Western environmental campaigns.”ref 682
  • Mount Holyoke College, an all-women’s school, is discouraging calling female students “women” to promote a “gender neutral” classroom environment.ref 683
  • A Cornell student gave her senior thesis defense in her underwearref 684 because her professor—a progressive and widely respected female faculty member—suggested that what she was wearing in her practice talk was potentially inappropriate.ref 685 Yeah, well, I was Cornell’s first streaker, running through Bio 101 in the fall of 1972.

“I tell 18-year-olds, ‘Six years ago you were 12; what the hell do you know?’”

~Jordan Peterson, Professor of Psychology and author of 12 Rules for Life

  • A University of Wisconsin student filed a dreaded “bias report” after a peer hogged weights at the campus gym then yelled at him to back off.ref 686
  • A website entitled, “Make them scared UW,” run by University of Washington students, allows individuals to anonymously accuse people of sexual assault with no evidence.ref 687
  • A Marquette University student group is telling “white folks” to “stop calling the cops” when they feel threatened. “Hey, what do ya say you put down your dukes and give me a big hug?”ref 688
  • A math paper was withdrawn in an uproar because it tried to model the genetics of gender differences.ref 689 (There’s an “irrational number” joke in there somewhere.)
  • A paper suggesting that males have fat-tailed intelligence bell curves—they tend to occupy the extremes of the spectrum—created such a ruckus that the National Science Foundation wanted acknowledgement of support removed. The paper got retracted.ref 690
  • A professor at Wilfred Laurier University wrote a book with a chapter entitled, “When a Man’s Home is Not a Castle: Hegemonic Masculinity Among Men Experiencing Homelessness". The detailed description does not clarify the idiocy.ref 691
  • A professor who was charged and pleaded guilty to a work-unrelated domestic violence charge years earlier was written up in the school newspaper. A shitstorm ensued, and he killed himself.ref 692 Y’all have blood on your hands and maybe lucky he turned the gun on himself. There are good articles on “academic mobbing” and other neo-Stalinist behaviors.ref 693
  • A paper on gender dysphoria by a Brown University assistant professor drew so much attention that Brown distanced itself from the work. A dean at Harvard hammered the president of Brown for being a coward (my words).ref 694
  • The University of Minnesota is considering introducing a “Pronoun Rule.” Professors, staff, and students who use the wrong pronouns (he, she, ze) risk firing or expulsion.ref 695 Zat is nuts.
  • Food workers at NYU’s dining facility celebrated Black History Month with “racially insensitive” meals.ref 696 The employees are African-American. Seems like it ought to provide some cover. The real crime was that the girl—can I call a teenager a girl?—said she—can I say she?—was “ignored.” A woman scorned...

“[T]his modern-day trend of cultural appropriation of yoga is a continuation of white supremacy and colonialism, maintaining the pattern of white people consuming the stuff of culture that is convenient and portable, while ignoring the well-being and liberation of Indian people.”

~Shreena Gandhi, a religious studies professor at Michigan State

“Nothing could be more asinine than outrage against ‘cultural appropriation’.”

~Steven Pinker, professor at Harvard University

  • A psychology study by researchers at San Francisco State University claims that 25% of millennials have PTSD because of the 2016 elections.ref 697 Heterodox Academy says it is the Gen-Zers, not the millennials, that began disrupting campuses abruptly in 2014-ish.ref 698
  • Hofstra students want to remove a Thomas Jefferson statue (because he was such a douche).ref 699
  • The removal of a Civil War statue at North Carolina State by protestors took hours, but campus police did nothing. Turns out the protestors were outside agitators, not students.ref 700
  • Students at Baylor University will receive training in microaggressions.ref 701 This training includes “talking to the victim” and “educating the attacker.” Recall that complimenting a woman on her shoes is considered a microaggression, so maybe the term "attacker" and "victim" is just a wee bit hyperbolic.
  • Feminists at Yale University are lobbying the administration to force all-male fraternities to open recruitment to women while not pushing to integrate sororities.ref 702
  • University of Wisconsin-Stevens Point will be cutting programs to "recognize a growing preference among students for majors with clear career pathways".ref 703 Tenured faculty in Art, English, Geography, History, Philosophy, Political Science, and Sociology will be packing their bags. I'm speechless.

“I cultivate a cutting-edge approach to human geography through a theoretical edifice that foregrounds emerging thematic concerns within the discipline by incorporating both poststructuralist critique and a radical revival of anarchist philosophy.”

~Simon Springer, professor and anarchist-geographer at the University of Victoria

Hyper-active political correctness is not unique to the United States. Lecturers in Britain have been told “not to use words in capital letters in course assignments because it might ‘frighten students’.”ref 704 BOO! Made ya flinch. A journalism school’s staff have been told to mollycoddle students by “writing in helpful, warm tones, avoiding officious language and negative instructions."ref 705 The memo refers to “enhancing student understanding, engagement, and achievement” and listed frowned-upon words. A Dutch university mob protested the appearance of Jordan Peterson because of “his politically-incorrect worldview.”ref 706

Three academics totally punked the grievance studies community by writing a bunch of fake papers—getting a few published and another pile accepted—before they pulled back the curtain.ref 707 My favorite podcaster, Joe Rogan, interviewed two of the perpetrators, Peter Boghossian and James Lindsay (Helen Wilson was not present).ref 708 This is 2 hours of eye-watering hysteria. They describe fake papers about gendering dogs at dog parks and putting men on leashes. They used the search-and-replace command on Hitler’s Mein Kampf to replace “Jew” with “white male” and then wrote a paper using the new sentences. A paper titled, "Going in Through the Back Door" described the desensitization of heterosexual men to homophobia by inserting various objects into their butts. The referees’ suggestions, without fail, made the papers even nuttier. They learned to “problematize” the target thesis and use “word laundering” to take a normal word and give it special meaning. (If you like binge-watching stuff, try Joe Rogan's 1200 podcasts.)

“There is no such thing as black racism.”

~A professor at Florida Gulf Coast University

Psst. Professor. Come here. Closer...YOU'RE AN IDIOT! Goofy ideas begin to do damage by leaking into the curriculum. As told by one of my favorites, Campus Reform, Berkeley offers courses about white privilege to “confront uncomfortable conversations about privilege and positionality” and to “understand where white bodies have the responsibility to be in movements against white supremacy and in solidarity with marginalized peoples and groups of color."ref 709 Berkeley offers over 150 student-taught courses, which helps keep the lights on and is said to be “an excellent way of meeting the University’s minimum unit requirement." One can only imagine the course content. A course at Salisbury University in Maryland titled, “Pyramid of White Supremacy” teaches students about—I don’t know—maybe pyramids of white supremacy?ref 710

Those little twinges of bias can get rather specific. A gender studies professor at Northwestern University suggests we should be able to “hate men.”ref 711 I can sign off on a few. If you surmise that the professor is referring to women, you might be wrong. Self-loathing and virtue signaling is considered admirable among young men. A University of Maryland support group called “White Awake” was designed to help white students who may “sometimes feel uncomfortable and confused before, during, or after interactions with racial and ethnic minorities.”ref 712 Pressure caused the University to change the name to “Anti-Racism and Ally Building Group.” How about just “Race Baiting 101”?

One of the big stories is that Harvard is getting pounded in court for racism in its admissions.ref 713 When a school bends over backward to accept underrepresented kids, it necessarily excludes others. Society decided long ago that, in moderation, this is an acceptable price to pay. Apparently, those of Asian descent—what we call Asian Americans—are taking the brunt of it, and numbers showing the bias are compellingref 714 and drawing fire from the courts.ref 715 I once personally stepped on a rake by claiming just such a latent bias exists. I can't even fake the PC thingie I guess. Evidently, kids with Asian-sounding names were scoring rather poorly in the subjective categories involving personality. I think universities have the right to accept only Americans if they want, whether such a policy is advisable is an altogether different story. They do not, however, have the right to discriminate against those named Chang, Chen, Lee, or Park.

“The greatest threat to free speech is no longer governmental.”

~Bret Weinstein, former professor at Evergreen State College

“This is beyond free speech; this is disrespectful.”

~President of Fresno State University

Probably the largest and most consequential political shift is the move away from free speech. One survey showed that 50% of students would support a law making it illegal to say offensive things in public.ref 716 Another revealed that only 35% of female college students think free speech is more important than “diversity and inclusion.”ref 717 A Gallup poll showed that the majority of American college students support “disinviting” speakers they don’t like; 37% support shouting them down; and 10% support using violence to silence them.ref 718 Anti-abortion clubs have been banned because the ideas being discussed are considered subversive.

“Identity” politics—the decidedly left-wing idea that you subsume your identity to that of the group and, thus, necessarily forfeit independent thought—arrived on campuses with little warning around 2013–14. Scholars like Haidt and Lukianoff have burned a lot of ATP trying to understand from whence it came and why. I have a theory! Kids are influenced profoundly during their formative years—their Wonder Years. What book series totally dominated the childhoods of current college kids? That’s right: Harry Potter. Early in the first book, the little wand-wielding wizards are assigned a group for the rest of their stay at Hogwarts by a magic hat. Once assigned, they assume the behavioral norms of their group. May God have mercy on your soul if you become a Slytherin. This is the stuff of Harvard psychology PhD theses showing how quickly people form group identities. It’s the classic prisoner–guard experiment.ref 719 It’s what inspires normally sane people to sit in –20°F weather in Green Bay wearing a cheese hat while rooting for a team full of guys with whom they have absolutely noshared ideals or experiences. We are witnessing the Slytherins coming of age and arriving on campuses.

“Apparently, all that is required to throw a student out of school is that some other student claims to feel unsafe."

~Gregory Germain, professor of law

The Title IX program that began with normalizing college commitments to women’s sports has morphed into a commitment to women’s rights more generally. It’s a great idea on paper. In the hands of activist university administrators, however, it can be nightmarish.ref 720 On the heels of a tenure case at Cornell in which an unsubstantiated assertion arguably cost an assistant professor tenure according to the courts,ref 721 the young accuser—Jane Doe, of course—subsequently exacted retribution on one of the faculty member’s graduate students, slamming the brakes on his PhD defense by filing yet another Title IX complaint.ref 722 Two dozen Cornell law professors interceded, demanding that Cornell grant the student his PhD and stop the bullshit (my words, not theirs).ref 723 As I've said before, if you ever run into John Doe or Jane Roe, for heavens sake stay away. Nothing good can happen.

A decidedly progressive sociology professor at University of Michigan, after accusing a student of plagiarism, was accused of harassment.ref 724 In a world where accusations are so vague and difficult to sort fact from fiction, Oberlin has a 100% conviction rate.ref 725 That is what they used to call "a hangin' judge". The courts are routinely beating up universities and exacting large fines when due process drops below minimally acceptable levels. Courts are demanding universities up their games on due process, which is sorely lacking on some campuses. This long-overdue pushback against unchecked Title IX cases has the most militant supporters of the #MeToo movement angry. After years of sexual harassment and abuse at the hands of men, they feel that women’s evidence-free accusations should suffice. Nearly 100 students at the University of Southern California demanded a tenured professor be fired after he sent a reply-all email noting that “accusers sometimes lie.”ref 726Others hold the quaint view that trying to destroy somebody’s life is a problem regardless of the weapon of choice. Cases of demonstrably false accusations keep piling up in numbers not approaching legitimate accusations but sufficient to underscore the importance of due process.ref 727 Here is my bottom line: If you have no data you have no case, regardless of how heinous the crime. I repeat: It’s how our system works.

“Racism is a serious issue, and unfortunately what we found were many examples of students willing to use that charge in an attempt to get back at their peers in everyday squabbles.”

~Chris Rochester, director of communications at MacIver Institute

I chose not to describe dozens of grisly stories, including many false accusations, and instead finish by noting that progress toward normalcy is detectable. We are starting to have discussions about identity politics. The now legendary Evergreen State College appears to be going even further down the rabbit hole toward totalitarianism and headed for insolvency.ref 728 That’s probably a win. Nationally recognized progressives including Alan Dershowitz, Steven Pinker, John McWhorter, Bret Weinstein, Heather Heyling, and Jordan Peterson—collectively referred to as the “Intellectual Dark Web”ref 729—are now defending against leftist McCarthyism on college campuses. Betsy DeVos, secretary of education, is attempting to tighten up some of the details of Title IX (much to the horror of fuming progressives).ref 730 Nicholas Christakis, one of the controversial Yale professors who found himself in the middle of Social Justice Warfare by supporting the idea that Yale students are capable of choosing their own Halloween costumes, has been awarded one of Yale’s Sterling Professorships, the highest honor a faculty member can receive.ref 731 Right-wing activist group TPUSA has watchlists of left-wing professors. That would look like a telephone book and is very bad idea for a bunch of free-speech libertarian types.ref 732 Princeton University has become the second Ivy League school, after Yale, to face a federal Title IX investigation into allegations that some of its programs discriminate against male students.ref 733 This too shall pass.

“We’ve been paid to leave a burning building.”

~Heather Heyling, commenting on her and her husband Bret Weinstein’s severance packages to leave Evergreen State College

Political Correctness: Youth Division

“Prepare the child for the road, not the road for the child.”

~Jonathan Haidt, author of Coddling the American Mind

No generation is completely ready for the next one. Certainly the Greatest Generation was ill-prepared for the arrival of drug-addled boomers who trusted nobody over 30. The latest generation of young punks has discovered porn on their phones, rendering back issues of National Geographic obsolete. Cyberbullying is acute, especially for girls who seem to be more at risk and are more prone to destroying social structures without having to resort to formal violence according to Haidt and Lukianoff (see "Books").ref 734 (When you Google this you will get articles about the girls as victims without clear statements about girls as perpetrators.) The boys, taking cues from the Jackass series, impale themselves from skateboards, dive into bonfires, and eat Tide Pods (killing more than one of these Tide Podlers).ref 735 Procter & Gamble is making its Tide Pods even less appetizing, if you can imagine that.ref 736 The sport of snorting a condom and pulling it out of your mouth probably has a funny back story.ref 737 Efforts to test boundaries are now “hold my phone” moments. Although Darwin Awardees in Training are not new, one wonders how many fatalities uploaded to the cloud are caused by the iPhone.

What has changed, however, is what the boomers will do to protect the little dumplings, inadvertently doing more damage in the process. These protective measures range from sketchy to moronic. (Sorry: If the shoe fits wear it, pinhead.) Parents are now monitoring their kids’ calls, email, and phone messages. Phone apps now exist that make the kid check in, or the cops get called and the phone tracked.ref 738 “We found your kid, Mr. and Mrs. Stalin. Their battery had died. Would you like us to take them to the Gulag anyway?" What happened to “be home for dinner by six and don’t be late?” An Edmonton day care is requiring kids bring helmets to protect them on the playground.ref 739 Sugared drinks are being mandated by law to be removed from children’s meal menus at restaurants.ref 740 Several towns have made it unlawful for a 12-year-old to trick or treat,ref 741 presumably to protect the littler kids who are, without fail, now accompanied by dozens of adults. A fine of $25 or “up to 6 months in jail” seems a bit weird. "I’ll take the $25, your Honor." We check the kids’ candy to make sure there are no razor blades or poison, unaware that every documented case of such attempted infanticide has been traced to a family member. “Honey, I poisoned the kids.” In one county, 10- and 11-year-olds must have at least one parent “get to the choppers” (helicopter parent) when the kids are outside playing.ref 742 Disney’s Sleeping Beauty is finally drawing scorn for the scene in which Prince Charming ravages the sleeping girl with a non-consensual kiss.ref 743 Hey, Amnesty International: Don't you have bigger fish to fry?

Of course, once the kids hit high school, it’s time to give some slack to the leash. Yeah, right. One high school declared that oral presentations in class are an unreasonable burden for those with anxiety.ref 744 Jonathan Haidt notes that we have about 100 kidnappings per year—most by a pissed-off divorcee parent—while 10 kids per day are killed texting and driving. One Girl Scout got the clever idea of selling her cookies in front of a pot dispensary.ref 745 I suspect a boomer parent hatched that plan. She sold 312 boxes to the stoners. Girl Scouts of America declared it “not cool.”ref 746 The GSA administrators in the Colorado chapter, however, declared that it was "totally cool, Dudette."ref 747 One teacher decided that the term “Ma’am” was inappropriate in the current PC culture. When the kid just couldn’t shake this rural nicety, she made him write the word repeatedly (which seems kinda backward) and have his parents sign it.ref 748 The teacher also said that if she had had something, she “would have thrown it at him.” I can only imagine that parent–teacher conference. Schools are banning children from using the term best friend over fears that some really unlikeable, spoiled little douche may feel left out. This also ensures that kids will not form tight, lasting relationships. A teacher in Florida was fired for refusing to give students a grade of 50% even though the assignments were not turned in.ref 749 The school had an unstated “no zero” policy. Ironically, the school was run by a bunch of zeroes.  

Most of these are marginally harmful lobotomizations that may not leave scars (provided the kid doesn’t become a cutter). However, many child psychologists suggest that increasing academic problems in young boys stem from repeated chastisement for acting like, well, young boys. Schools are denouncing toxic masculinity in kindergarten.ref 750 Kids caught “sexting”—sending semi-lewd or lewd pictures via cellphone—are being charged with trafficking in child porn.ref 751 One elementary school passed around flyers denouncing “white privilege.”

The institutionalization of PC not only hurts the kids but also infringes on parents’ rights to add any post-genetic finishing touches and determine levels of risk. A mom was investigated for letting her 8-year-old walk the dog around the block. Another received a visit from the police because her kids were playing in the front yard “unsupervised.” She noted that, "For something like this to happen to me, there’s something really wrong." Ya think? Something like this once happened to my wife and I, and a woman from social services showed up. Once this sanctimonious piece of human detritus—Do I sound like I’m over it?—started citing the scriptures in a decidedly sanctimonious way, I told her that "I am fighting the urge to throw you out the door on your fucking head." My wife suggested my comments were counterproductive. I thought I showed great restraint.

Schools are throwing Common Core math at them, ensuring that they will all share a common denominator: total mathematical ignorance including not knowing what “common denominator” means. After dropping $400 million on its development, the Gates Foundation declared common core math a total failure.ref 752 It is still in use, lobotomizing children across the country. I suspect its deep-seated purpose was to forcibly engineer equal outcome at any cost. So much for inclusivity. Ian McEwan, an award-winning author, began to wonder about the system as a whole when after helping his son with an essay about his own novel his son received a C.ref 753

“If you breastfeed your sons, you are training them to be rapists when they grow up. You’re basically teaching them that they can touch a woman’s body whenever they want. If you oppose rape, stop breastfeeding boys!”

~Shaykha Alia (@AliaAbheed), activist, not joking

Schools are increasingly filled with boys, girls, and fence sitters. I must confess that sexual and gender ambiguities must be traumatic for kids who are already in traumatic periods of their lives. I watched my son for at least 5 years wondering if and when he would come out (even to his family). He waited till it was time. Nobody else gets to make that call. Let the parents ponder how to raise the kid in the most nurturing and constructive manner possible.

I even support parents who are serious loons doing stuff I think is sketchy because it’s not my kid. A new class of child called “theybies” are babies and kids raised gender neutrally, ensuring that they will consume copious quantities of mental health services later in life.ref 754 One woman fought gender norms by naming her son Vagina.ref 755 Middle school may get a little rough. Didn’t Johnny Cash write a song titled, "A Boy Named Vagina"? There are, however, some real consequences moving down to the younger age brackets. Pediatricians and psychologists are battling it out over gender dysphoria, what it means, and what to do about it. Scientists are using fMRI to study transgenderismref 756 (sounds good) to aid earlier "transition" (gettin’ a little sketchy), possibly as early as age 3.ref 757 Hold your horses there, Buckeroos: You might want to wait till they can talk and get through a whole day without Pull-Ups (gender-neutral colors, of course.) Some worry about “social and peer contagion” of the gender dysphoria;ref 758 this is not like some passing lesbian phase sophomore year in college. One judge removed a 17-year-old transgender teen from her parents because they refused to allow hormone treatments.ref 759 All of this reminds me of the Saturday Night Live skit with the doctor who delivered 4,000 girls in a row. Half needed only a minor postnatal surgical procedure. One thing is clear, if your son transitions to become a girl, get ready to pay more for toys and clothes.ref 760 Somehow the free market has figured out that there is a recessive X-linked gene for insensitivity to price. If, on the contrary, your daughter transitions to a boy, you will be able to afford college. Jazz hands!

When I was a kid we had one rule: Be home for dinner. I was riding my bike miles from home by age 8 and groping young girls (not like Brett Kavanaugh!) and hitchhiking with permission at 12, drinking without permissionat 13, smoking pot at 14, and dropping acid at 15. I started to study at 17, graduated from Cornell with a degree in genetics at 22, and got my PhD in chemistry at 25. (Yes folks: That is a 2.7-year PhD from Columbia and no post-doc, all with damaged chromosomes to boot.) Nobody broke my spirit by declaring me flawed. My peer group played copious quantities of only self-supervised sandlot sports until middle school. We laid out the field, made up the rules, refereed the games, and had some Lord-of-the-Flies moments. This peer group generated a three-time first-team All-American lacrosse player at Syracuse, the 12-year center for the Dallas Cowboys, and probably the only faculty member in the modern era to have been an assistant or head coach of two collegiate sports (me).

How about some solutions or suggestions, Dave? OK. Since you asked. First, read Jonathan Haidt’s and Greg Lukianoff's book, Coddling the American Mind (see “Books”). I sent it to one of Cornell’s deans, and he said it described the problems landing in his office to the letter. Let them go outside, get hurt, cause trouble, and pay some consequences. No broken bones or lost eyes? That was a good day. Stop depriving kids of constructive play by inserting vast numbers of résumé-boosting activities with oppressive levels of adult supervision. I’ve read college and graduate admissions applications for many years; most parents haven’t a clue about what really matters. Watch the movie Stand by Me or the often overlooked Tree of Life. That was my childhood. And don’t you dare say those were simpler times; that’s a load of garbage asserted by helicopter parents.

Others are also taking action. The French are talking about banning phones in school. At first I flinched, but I realized that they’re onto something.ref 761 A woman named Lenore Skenazy has started the free-range parenting movement, which supports the type of parenting that used to be considered normal.ref 762 I am also now an enthusiastic supporter of school choice. If you insist on indoctrinating kids, at least give the parents the choice of which gulag to ship them off to every morning. And on the more micro level, give families some choice: (a) common core math versus actual math; (b) learning how to write versus reading books like Waiting for Godot, and (c) secular or religious philosophical underpinning. Parents shouldn’t have to pay double for private schools at least in the more populated areas where multiple tracks and schools are already necessary; there would be no added cost. Finally, let the kids determine their peer groups—let’s call them “boys” and “girls”—and let them play separately without adults force-feeding inclusion. Are what we called “cooties” now microaggressions with “attackers” and “victims”? There will be plenty of time in the later years for coed binge drinking and teen pregnancies. If none of this makes sense, that’s OK, but may God have mercy on your soul, mofo.

Conclusion

Bad times create strong men.
Strong men create good times.
Good times create weak men.
Weak men create bad times.

It’s safe to say we have tough times ahead, because that has always been true. If equity markets regress to the mean while the 38-year-old bond bull market turns into a bear, we will witness some serious wealth destruction. I could be wrong, of course, but if the case for overvaluation in both equities and fixed incomes is sound, I remind you that gravity always wins. It is undefeated. China seems on the cusp of the first serious lesson about the downside of capitalism. The European Experiment of a super-sovereign world may falter when fill-in-the-blanxits start leaving. If the U.S. finally comes to terms with its debt problem through a mechanism I haven’t yet imagined, the 12-step program will not include excessive consumption on the back of more debt (hair of the dog). Boom–bust cycles are normal, but this one could be a bit too synchronous for comfort, and it follows a supernatural monetary policy.

“I think the next downturn is going to be a different kind of downturn. I think it will be more severe in terms of the social-political problems. It will be harder to handle. . . . It will have bigger international implications."

~Ray Dalio

“There is a numbness out there, there is an ambivalence out there that’s concerning. . . . When the next turn comes—and it will come—it’s likely to be more violent than it would otherwise be if we let some pressure off along the way.”

~Michael Corbat, Citigroup CEO

Here’s what is bugging me. There has been a growing malaise since the ’08–’09 crisis manifesting upheavals that seem correlated. I blame Obama and his Department of Justice in part. This is not because of his politics—they shockingly never bugged me that much, and I like the guy—but rather because he let the bad guys go by policy. They stitched up festering wounds that laid foundations for social upheaval (mixed metaphorically speaking). The Occupy Wall Street movement was toothless but a beta test. Now we have Antifa, which is a combination of dangerous people and gullible followers. Presumably there are right-wing analogs, but I find them harder to identify as coherent groups.

“Liberals claim to want to give a hearing to other points of view, and are then shocked and offended when they discover there are other points of view.”

~William F. Buckley, founder of The National Review

I think the reason that those on the left are so prominent on my radar right now is that they went berserk when Hillary—the first female presidential contender—got beaten by the most repugnant opponent they could imagine. You don’t have to look hard to see educated and intelligent people—they are not one and the same—saying some of the most vile things. From the left has spawned an intolerant liberal left. There seems to be a prevailing wisdom that if you know you have the moral high ground (who doesn’t think that?), there are no rules. You first label your opponent—white, male, conservative, heterosexual, neo-Nazi, fascist, insufficiently progressive, or all of the above—and then attack verbally and even physically. I reached out to a decidedly progressive faculty member who was being eviscerated unjustly—scorn, hate mail, the whole enchilada. I’ve done this many times simply to let them know they’re not alone. When I noted the irony that it was coming from the left, they responded:

“The harsh criticism on my role in the story (as reported by the media) is not coming from folks on the left, it’s coming from liberals. There’s a big difference, as you know.”

What a fascinating response. As I understood it, liberals were compassionate and tolerant, albeit a little rich in fanciful ideas. The graphic in Figure 55 shows that everything has changed.ref 763 As your political opponents move to the extreme, you move to the other extreme. We were OK in 2004, quite healthy actually. By 2017, however, we had polarized.

Figure 55. The growing political and social divide.

“War is when your government tells you who your enemy is, and revolution is when you discover it for yourselves.”

~Source unknown

When the riots in France started, they were reputed to be about an energy tax. You would be shocked at the number of journalists and bloggers trolling Twitter trying to find someone who could explain what was reallyhappening. Here is my answer: Government is like a fiat currency. Once faith in it is lost, you will witness cascading failures that are too complex to comprehend in detail. Arab Spring began when one highly flammable Tunisian lit himself on fire. As Billy Joel says, “We didn’t start the fire.” Avalanches, explosions, earthquakes, and fires all thwart serious efforts to model them. Metastable systems—systems displaced markedly from equilibrium waiting for the right spark or trigger—return to equilibrium unexpectedly, quickly, and often violently. Social movements start small (by definition) and unexpectedly, but they move quickly and can end violently. France has been down this path. Edmund Burke was one of the few who saw the social movement in late eighteenth-century France as the first rumblings of a murderous rebellion. The Rodney King–sparked LA riots started to spread; we got lucky when they burned out. When everyone is grumpy and some guy decides to light a car on fire, don’t be surprised when others join in. They all share a common denominator: they're PO’d.

“The collapse is fundamentally due to the unstable position; the instantaneous cause of the crash is secondary.”

Didier Sornette, Professor of Entreprenurial Risks, ETH Zurich

The solution is to have strong social institutions and social capital that unifies the populace. This gets to my criticism of the left, not the people but rather the leaders and power brokers denounced by Malcolm X (above). When you deem it your job and derive power from providing goods and services to the masses, self-governing and self-sufficient groups represent risk. It’s a turf war. Under the guise of inclusion, people are now being discouraged from self-assembly. Men and women as well as boys and girls are not allowed to have their own sports. The Boy Scouts of America, where fathers and sons congregated to train and civilize a new generation of responsible fathers, is no longer just fathers and their sons.

Fraternities are an interesting case study in social cohesion. They are on the lam from society. You house a few dozen 18- to 22-year-old men away from their parents for the first time. A few mishaps are a certainty. Statistically, if you select a few dozen men from a campus randomly, give them a Greek label, and monitor their behavior they will collectively look like a dumpster fire. I will admit there is also groupthink that amplifies behavior and drops average IQs to levels that can shock adults. They also represent legal bull’s-eyes for lawyers when things go bad. Some universities have replaced fraternities with communal living units. Why do other schools support this increasingly polarizing Greek communal system? First, the nouveau communal units are not as cohesive as those that are self-assembled. I have a data-less theory: If universities analyzed suicides on campuses—they are common on all campuses because of the risky age bracket—they would find that the suicide rate in fraternities is low. When things go poorly—a flunked exam or being dumped by a girlfriend—the dejected kid goes back to his fraternity and gets shitfaced with dozens of his friends. It is a support group unlike any others (except for maybe in the military). From these collectives of incorrigible crazies emerge future leaders, not only of corporate America but also of university alumni organizations. I am stunned by what the Bands of Losers I lived with turned into as they got older. During reunions, fraternities fill with old friends sharing common stories—stories that are common even if they didn’t overlap in college—while independents wander the campus looking at new buildings or don’t bother to return at all. Are these really organizations you want to dismantle?

Let’s swing our gaze elsewhere for a moment. I always viewed gentrification of dilapidated neighborhoods in big cities as a rebirth of sorts, a spontaneous urban renewal. Out with the old, in with the new. I recently stayed with a friend (Andy Huszar) in Harlem. My life expectancy would have been 5 minutes when I was in grad school. What a miracle. What I failed to realize, however, was that those dilapidated buildings were part of neighborhoods, not just dwellings. Neighborhoods are like Cheers where “everybody knows your name.” Gentrification forces people to find cheaper housing elsewhere. They will find it, of course, but they won’t find a community. You can hear the fabric tearing.

"We live in a society of decreasing circles. More and more of us know fewer and fewer of us. We live alone and eat by ourselves, often with a TV or computer rather than a human being for company."

~The American Conservative (@amconmag)

Now I will go where no rational man has gone before: religion! I have been a pro-choice atheist my whole life—just a pagan with a busy sword—and am unlikely to switch sides now. As a scientist, extreme Christian views on creation and evolution are never gonna make sense. Over the years, however, my thinking became more nuanced as an accumulated broader historical perspective caused cognitive dissonance to encroach. The Church in medieval Europe certainly has plenty of blotches on its record, but in a “World Lit Only by Fire,” the church brought order where there would have been only chaos. Vivid imagery of Hell that made medieval life look cushy by comparison kept the nobles from abusing the peasants. How about the Spanish Inquisition? Well, they were legally trained well above the norm of their time. A documentary on the massive "inquisitor archives" showed that the inquisitors executed fewer people over four centuries than the state of Texas offed over a far shorter span. There is also evidence that the inquisitors viewed religion as outside of their jurisdiction during some periods. Why the bad rap? Every time Spain got into a war, which was quite often, the opposing team would pull out horrific tales of the inquisitors to rally the troops. Also, the norms for the era were pretty damned bad anyway (see Pinker in "Books").

How about all the scientists that got oppressed by the Church? A little history of science shows that gets a little fuzzy too. Leonardo da Vinci carved up people in the basement like John Wayne Gacy without getting flack. When scientists discovered something new, the Church would often say, “God is even more grand than even werealized.” A savvy scientist would say, “You betcha, Pope.” The scientists who got into trouble may have lacked the self-control to avoid pushing the Church’s buttons. I know enough scientists like this to say that my thesis is in the realm of possibility.

“Defending rights against the encroachments of the government saves the common liberties of the country.”

~Alexis de Tocqueville, 18th century French diplomat, historian, and political scientist

When Alexis de Tocqueville came to America, he marveled at how much freedom Americans enjoyed and how religious they were. He also marveled at the lack of lawlessness (brawling aside, which he noted was way too consensual). The message was that our strong Constitution and limited laws gave us unprecedented freedom while religion gave us the will not to abuse it. You resisted stealing from your neighbor simply because it was wrong. You helped your neighbor because it was right. Charles Murray in Coming Apart (see "Books") paints in graphic detail how the last half-century has witnessed a stunningly abrupt replacement of morality for rules. What happens when we have lots of rules but nobody feels morally obliged to follow them?

From the left there is a relentless push to remove Christmas from schools, denounce those who support the American flag, control what is taught to children and where, emasculate men, move decisions from the local to the centralized national government through rules and regulations, take away our freedom of choice with whom to do business, confuse abstract feminism with women's rights, take away parents' rights to choose what is best for their children, and decide with whom we can affiliate and who we get to exclude. These institutions and ideas represent a critical social glue. Be careful what you take away.

Thus, I am an atheist living in a unique society that was built on strong moral values that find their roots, at least in part, in religious convictions that I do not share in their detail. I should be very careful, however, to not lose sight of the fact that I am reaping what I did not sow. I should have more faith in those who already have faith. I am now a cognitive dissident. And with that, my work here is done. You're welcome.

“Maybe our favorite quotations say more about us than about the stories and people we're quoting.”

~John Green (who?)

Acknowledgements

There are so many people from the world of finance and markets who patiently allow me to invade their space with inane comments and questions. Many are household names—real legends—even outside of the finance world. One year I tried to thank a ton and found out how many more I excluded. As The Donald would say, “I love all of you” (but Rudy, you are the best. I love ya, man.) That said, people do reach out, and I’m happy to chew some fat. My email is dbc6@cornell.edu. If I don’t answer an email, it’s either because MSFT Outlook has filtered yet more emails (thanking Steve Sinofsky, friend and former president of Microsoft under Ballmer, for that one) or because I just screwed up. And if I know you, I’ll cook you burgers on our deck overlooking Cayuga Lake if you come to Ithaca. Some of you already have standing offers. People, not places or experiences, are what fill my bucket list. And, by the way, send your kids to Cornell because it is a truly wonderful school. How wonderful? We have more departments in the top ten than any other school in the country . . . and “everybody knows your name.” I have no strings to pull, but I do understand the system if you want some advice.

There are always new additions. That’s Sean in the middle sleeping on Grandpa, Miles on the left, and Liam on the right in the photo on the left. Sean’s a boy until he’s old enough to decide for himself. In the right-hand photo is Claire, a rescue from a breeder. This picture is after we peeled 25 pounds off her. She identifies as a Lab, our third, although similarities to bear #409 (Beadnose) are inescapable.

Figure 56. Three punks in training and The Master (left) and “Claire” aka “Claire the Bear” aka “The Tank” aka “Butterball” and The Master of that too (right). 

Books

“Moses wrote one book. Then what did he do?”

~Sidney Morgenbesser, Columbia University philosopher

I would have read more books when I was younger if the ones they made us read didn't suck salty balls and if it were not for acute CLCS (chronic lip cramping syndrome). I was a typical boy on the lower end of the reading scale with a highly targeted curriculum:

As an adult, career and family have kept my reading list short (outside of volumes on chemistry). Enter the audiobook. Snobs say it’s not reading, to which I say, “Bite me." I use my ears; you use your eyes. Hellen Keller used her damn fingers. I can get through a dozen per year just commuting a 24-minute round trip to work. When my wife asks me to go to the store, it's like asking me to read for a few minutes. And even if the books are mediocre—I try to be selective—they just keep marching forward monotonously to the finish. I have failed to finish very few (no fading Post-its). I burn them to disk for $10 a pop via Amazon Prime so that my colleagues can mooch them. The books all profess to be non-fiction, although I have my doubts sometimes. Topics include history, markets, economics, science, psychology, anthropology, and college-level courses from the Teaching Company. I’m trying to get through American history through the eyes of presidential biographers (even with Chester Arthur in my sights). Simple treatises on complex topics (like Mervyn King’s latest below) show me how to formulate and articulate complex ideas simply.

The Fifth Risk by Michael Lewis

Those who hate books that are one-third book and two-thirds fluff should appreciate Michael Lewis for brevity. Lewis’s treatise blends several plotlines without bringing much of his typical comedic flare. The primary plotline is to hammer Donald Trump for his poor transition in taking over the federal government. Some of the loons Trump put in key staff positions do indeed seem to be inexcusable. I think Lewis does a credible job, although it seems a little light on awareness that (a) Trump had no clue that he would win, and (b) his transition team had support from neither political machine. The second, dominant plot is to describe some of the amazing things federal employees do that we haven’t a clue about. He does this well, although he again glosses over the estimated 2 million federal employees who are not brimming with skill and productivity. The book was informative.

https://www.amazon.com/The-Fifth-Risk/dp/B07GNTDQJQ/ref=sr_1_1?ie=UTF8&qid=1540764617&sr=8-1&keywords=The+fifth+risk

Coming Apart: The State of White America, 1960–2010 by Charles Murray

Stan Druckenmiller said that Charles Murray’s book “scared the hell out of me.” Murray, you may recall, is the putative alt-right whackadoodle who wrote The Bell Curve and was physically attacked at Middlebury College in 2017. I would be hard pressed to pigeonhole this book as leaning to the right. It is a great story about how the fabric of social structure is fraying badly. We’ve replaced morality and a sense of social cohesiveness with a far less effective rule- and law-based society. It’s an important book. (Jonah Goldberg admitted to me that his newest book channels Murray’s, albeit dripping with sarcasm. It’s on my list.)

https://www.amazon.com/Coming-Apart-State-America-1960-2010/dp/B007A5GPI4/ref=sr_1_1?ie=UTF8&qid=1540766157&sr=8-1&keywords=coming+apart

The Intimidation Game: How the Left Is Silencing Free Speech by Kimberley Strassel (@KimStrassel)

Kimberley Strassel is no friend of the left, so it’s not a surprise that she would focus on the evil deeds of only left-wing politicians. She does a credible job of laying out the political hijinks, which are decidedly disquieting. The emphasis is on how they use government and law as a weapon against the right. If one were to assume the right wing is equally guilty, you probably get an accurate view of how awful politics inside the Beltway has become. It was too lopsided for me to endorse it enthusiastically.

https://www.amazon.com/s/ref=nb_sb_ss_c_1_17?url=search-alias%3Daps&field-keywords=kimberly+strassel+intimidation+game&sprefix=kimberly+strassel%2Caps%2C899&crid=KTNBKEVY0EKG

Antifragile: Things That Gain from Disorder by Nassim Taleb (@nntaleb)

To the list of terms “fragile” (easily broken) and “robust” (hard to break), Nassim Taleb suggests the term “antifragile” (grows more durable under stress). The most obvious and intuitive example is the immune system. Taleb venomously attacks those he disrespects (economists), and his prose is an acquired taste. Many will find the vitriol too much. He makes interesting arguments about how our efforts to protect ideas, objects, people, and institutions inadvertently weaken them. He reinforces maxims like “stability breeds instability” or “that which does not kill us makes us stronger.”

https://www.amazon.com/Antifragile-Things-That-Disorder-Incerto/dp/0812979680/ref=sr_1_1?s=books&ie=UTF8&qid=1540766748&sr=8-1&keywords=nassim+taleb+antifragility

Skin in the Game: Hidden Asymmetries in Daily Life by Nassim Taleb (@nntaleb)

Nassim Taleb tees off on those in our world who get to call the shots and reap rewards but do not pay the price of failure. This heap of targets includes politicians, economists, and bankers. One of his strong supporters over at Amazon referred to Taleb as "rude and angry". Detractors hold a mirror up to him and ask if his disdain for advice givers isn’t some form of hypocrisy. As always, I enjoy reading his books, but bring a thick (antifragile) skin.

https://www.amazon.com/Skin-Game-Hidden-Asymmetries-Daily/dp/042528462X/ref=pd_sim_14_4?_encoding=UTF8&pd_rd_i=042528462X&pd_rd_r=3dd4538b-db03-11e8-8a27-e7c97784a407&pd_rd_w=H6BYO&pd_rd_wg=1XNLh&pf_rd_i=desktop-dp-sims&pf_rd_m=ATVPDKIKX0DER&pf_rd_p=18bb0b78-4200-49b9-ac91-f141d61a1780&pf_rd_r=00R3KDQCS3P0ZFCG8BQX&pf_rd_s=desktop-dp-sims&pf_rd_t=40701&psc=1&refRID=00R3KDQCS3P0ZFCG8BQX

The Four: The Hidden DNA of Amazon, Apple, Facebook, and Google by Scott Galloway (@profgalloway)

Scott Galloway is an entrepreneur, venture capitalist, and New York University professor. He knows his way around the tech world. In this book he critiques the FAANGs (ex-Netflix). Although it seems to be intended as a tell-all description of the dastardly deeds of these monopolistic, civil-liberty-encroaching companies, he cannot hide his awe. Clearly Amazon is at the top of his leaderboard as a completely mind bending and society-changing wielder of unchecked power. Apple is praised for marketing itself as a well-branded provider of elite products. (I was left unconvinced of its durability.) Facebook and Google draw fire for their powerful incursions into our daily lives. I am unconvinced that any of them are as durable as Galloway thinks. The backlash to their power may be surprising. I only wish I had this book 15 years ago; I would have made a killing as a true-believing investor.

https://www.amazon.com/Four-Hidden-Amazon-Facebook-Google/dp/0735213674/ref=sr_1_1_sspa?s=books&ie=UTF8&qid=1540768834&sr=1-1-spons&keywords=scott+galloway+the+four&psc=1

The Coddling of the American Mind: How Good Intentions and Bad Ideas Are Setting Up a Generation for Failure by Jonathan Haidt (@JonHaidt) and Greg Lukianoff

Jonathan Haidt and Greg Lukianoff are evolutionary psychologists at the vanguard of the fight to push back against political correctness and the strange form of social activism that appeared abruptly on campuses around 2014 (and, I hasten to add, graduate programs around 2018). He is openly liberal while claiming that he no longer recognizes what is called liberalism in this era. The book describes in lurid detail what is happening, how it happened, and its profound consequences. If you’re the parent of young children, you should read it before it’s too late for your kids. Great book. I sent it to one of our deans, and he said that what Haidt describes is what he deals with every day, and it has caused him to rethink his child-rearing tactics.

https://www.amazon.com/Coddling-American-Mind-Intentions-Generation/dp/B079P7PDWB/ref=sr_1_1?ie=UTF8&qid=1540769381&sr=1-1&keywords=coddling+the+american+mind

The Marshall Plan: Dawn of the Cold War by Benn Steil (@BennSteil)

I read this book twice, the first time in draft form while it was being written and the second in audiobook form after publication. Benn Steil is a bestselling author hailing from the Council on Foreign Relations (CFR) which gives him a remarkable view of the world and access to unparalleled human resources. After piecing together how John Maynard Keynes and Harry Dexter White negotiated the new global currency order in his bestselling, Battle of Bretton Woods, Steil charges into the task of probing the political machinations required to establish the global political order. He describes in scholarly detail (read: not for the faint of heart) how the Russians and the U.S. went headlong into the Cold War. The Marshall Plan to save Europe from imploding in the post-war era was politics on steroids—less humanitarian and more global positioning. The politics within the U.S. and Europe were as complex as any. What I still have not grasped, however, is why West Berlin, deeply embedded in the Eastern Bloc, was so important.

https://www.amazon.com/Marshall-Plan-Dawn-Cold-War/dp/B078F1H2SP/ref=sr_1_1?ie=UTF8&qid=1540769828&sr=1-1&keywords=the+marshall+plan

12 Rules for Life: An Antidote to Chaos by Jordan B. Peterson (@jordanbpeterson)

Jordan Peterson has had a growing presence in the culture wars. He came to prominence fighting a Canadian law that would mandate the use of pronouns for all the gender fence sitters. Peterson then rocketed to fame after a series of interviews with liberal attackers (notably Cathy Newman) in which he systematically dismembered their ideas. (I watch his interviews as though they were game films.) This book describes a series of guidelines on how to live your life and raise your children to avoid becoming insufferable with insufferable children. The lessons are sound. The book is a good read that would have died in obscurity if not for his rise to fame, which has led to millions of copies sold. Cathy Newman made him wealthy.

https://www.amazon.com/12-Rules-Life-Antidote-Chaos/dp/B0797Y87JC/ref=sr_1_1?ie=UTF8&qid=1540771653&sr=1-1&keywords=jordan+peterson+12+rules+for+life

The Undoing Project: A Friendship That Changed Our Minds by Michael Lewis

At some level, this book is a recycling of ideas of Michael Lewis’s Moneyball (the book, not the movie!) and Daniel Kahneman’s Thinking Fast and Slow, both of which are brilliant books. Lewis goes into considerable depth describing how Danny Kahneman and Amos Tversky worked as “the odd couple” for many years to create the ideas underlying Thinking Fast and Slow, which won Kahneman the pseudo Nobel Prize in economics. The Undoing Project is about the two men. In my opinion, this book will likely lose a lot of appeal for readers who are unfamiliar with Kahneman’s and Tversky’s work. Thus, read Thinking Fast and Slow and Moneyball first, then decide about The Undoing Project.

https://www.amazon.com/Undoing-Project-Friendship-Changed-Minds/dp/0393354776/ref=tmm_pap_swatch_0?_encoding=UTF8&qid=1544929043&sr=1-1

The Better Angels of Our Nature: Why Violence Has Declined by Steven Pinker (@sapinker)

Pinker wrote what could have been titled, The Comprehensive History of Violence. It covers all facets from crimes, brutal punishments, wars, domestic violence, you name it. Steven Pinker makes a strong case that we have become less violent over the centuries. He deals with those who point out atrocities of the twentieth century by invoking a per-capita metric and describing hugely violent periods that are largely unknown to most of us. The horrific stats on violence in the past are sobering, occassionally forcing me to take breaks during the more gruesome parts. To paraphrase Pinker, “I could have Adolf Hitler standing in front of me, and I would not have thought of doing that to him.” The book could have been shorter, but it certainly is enlightening and serious scholarship.

https://www.amazon.com/Better-Angels-Our-Nature-Violence/dp/0143122010/ref=sr_1_fkmr0_1?ie=UTF8&qid=1524771442&sr=8-1-fkmr0&keywords=steven+pinker+the+better+angels+among+us

Red Notice: A True Story of High Finance, Murder and One Man’s Fight for Justice by Bill Browder (@Billbrowder)

I ran across Bill Browder ever so briefly last year as I wrote about the Magnitsky case in which the U.S. put sanctions on Russia for torturing Sergei Magnitsky to death. This affair got tangled up in the Clinton–Russia dealings. Browder describes his efforts at dealing with Russian oligarchs as he was an early entrant to Russia after the fall of the Soviet empire. You can’t help but notice that Browder is very much like the oligarchs he describes, strip mining Russia of assets on sale in the post-empire chaos. After reading the book, I began to run into bloggers who view Browder in a much darker light and paint him as the true villain. I am altogether uncertain about where fact and fiction meet in this book.

https://www.amazon.com/Red-Notice-Finance-Murder-Justice/dp/B00T567KIA/ref=sr_1_1?ie=UTF8&qid=1540773044&sr=8-1&keywords=red+notice+by+bill+browder

The Selfish Gene by Richard Dawkins (@RichardDawkins)

This 1970s classic describes how evolution works at the gene level rather than the group level. (This book was a natural choice for me as a former genetics major with a fondness for evolution and various nature–nurture battles.) Dawkins’s gene-level evolution was pushed so strongly that it stifled contrary theories—group-level natural selection—to the point that it took decades for them to re-emerge and eventually usurp Dawkins’ model. The book is a little dated, but I enjoyed it. His most lasting legacy is the idea that humans pass along non-gene-level information (ideas) through cultural evolution. He called these ideas “memes.” And now you know the rest of the story.

https://www.amazon.com/Unknown-The-Selfish-Gene/dp/B004U8NB2M/ref=sr_1_1?ie=UTF8&qid=1540773425&sr=1-1&keywords=the+selfish+gene&dpID=51ovAOjmklL&preST=_SX342_QL70_&dpSrc=srch

The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition) by Benjamin Graham, Jason Zweig (@jasonzweigwsj), and Warren E. Buffett

This, folks, is the bible of investing. Graham was Warren Buffett’s mentor. This revised edition has updates from Zweig and Buffett, but it seems faithful to Graham’s original edition, which I read so many years ago that I had no idea of its importance and wisdom. Modern investors who read this will say either, “OMFG!” because they understand its importance or, “This thinking blows” because they’re still swilling new-era Kool-Aid. The book convinced me that I should probably never buy a common stock unless I am willing to throw a Hail Mary because I could not possibly do the analysis adequate enough to be called an “intelligent investor.” My best hope is to go for sectors. On the battle of stocks versus bonds, I was struck by the claim that people who think they will necessarily make more money in stocks than in bonds in the long run are “delusional.” Debunking this belief has been my white whale for a couple of years. I think the authors are correct, but the era of interventionist (arrogant) central banking has made their maxim seem wrong for a good long time. This book is a must read for those who think they are hotshot investors. Dismiss their wisdom at your peril.

https://www.amazon.com/Intelligent-Investor-Definitive-Investing-Essentials/dp/0060555661/ref=tmm_pap_title_0?_encoding=UTF8&qid=1540773969&sr=1-1

The End of Alchemy: Money, Banking, and the Future of the Global Economy by Mervyn King

Mervyn King's view of the financial crisis and monetary policy on both sides of the crisis is either precious—he is the former head of the Bank of England—or garbage, because he is one of “them.” Maybe he’s just trying to salvage his legacy, but King is remarkably critical of central banking and monetary policy. He knows that consumption is unsustainably high, and it cannot be solved with stimulus. That game is over. The level of the book is low—I think I could have written much if not all of it—but this level of “honesty” from one of the global elite is shocking. They way he articulates ideas with clarity makes the book highly entertaining.

https://www.amazon.com/End-Alchemy-Banking-Future-Economy/dp/B01GQNTC8K/ref=sr_1_1?ie=UTF8&qid=1540775043&sr=1-1&keywords=mervyn+king

Hoover: An Extraordinary Life in Extraordinary Times by Kenneth Whyte

I’m attempting to complete a history of the United States through the eyes of presidential biographers. Hoover was a natural given that he was POTUS during an economically disastrous four-year term. There are many myths propagated by Hoover owing to this little bit of bad timing that came to a head with Roosevelt beating him like a rented mule in the 1932 election. In a nutshell, Hoover was extraordinarily qualified as a businessman and, when called to service, a focused and highly competent civil servant. The guy got the job done. He has been vilified because of a largely erroneous role played during the Great Depression and because Roosevelt was a dick. Hoover saw it coming, spotted the metastability of the credit and stock markets, and sweated the details. He did everything in his power to mitigate the damage, stopping short of big-government solutions. He also didn’t pander to the masses for love or votes, which carried with it a high price politically. I was left with the sense that Hoover was one of the greats.

https://www.amazon.com/Hoover-Extraordinary-Life-Times-ebook/dp/B01MZAAX0M/ref=sr_1_1?s=digital-text&ie=UTF8&qid=1543698108&sr=1-1&keywords=herbert+hoover+biography

Sapiens: A Brief History of Humankind by Yuval Noah Harari and Derek Perkins

I mowed through two books by Yuval Noah Harari and Derek Perkins that seem to ponder the meaning of life. Sapiens got the bulk of the press. The book wanders through the cultural evolution that led from hunter-gatherers to what we are today. One of the more interesting concepts is that you would have trouble arguing life got better until we reached the era of modern medicine. We merely got better at packing more people into tight places. I have this odd paradox: I enjoyed wandering through the story but within a matter of months could not for the life of me tell you what it was about. Some books are sticky: The ideas stay with you. This one was not of those for me (a little like a pleasant dream that leaves your memory moments after waking). One Amazon reviewer possibly caught the spirit of my concerns noting, “Rather than being the interesting synthesis I’d hoped for, this turned out to be a series of disjointed bits touching on nearly every aspect of society.”

https://www.amazon.com/Sapiens-Brief-History-Humankind/dp/B0741F3M7C/ref=sr_1_3?ie=UTF8&qid=1543699009&sr=1-3&keywords=homo+deus

Homo Deus: A Brief History of Tomorrow by Yuval Noah Harari and Derek Perkins

As the sequel to Sapiens, it suffers from the same disconnected wandering through a stream-of-consciousness presentation of entertaining ideas. Once again, I enjoyed it like one might enjoy listening to a symphony, but in the end, the notes blur together. One hopes that part of this disappointing lack of stickiness is merely how the human mind indexes information. Maybe the ideas are in in my skull—part of my cultural DNA—but only retrievable when a cue from the environment resurrects them, allowing me to molest somebody with my globality.

https://www.amazon.com/dp/B01BBQ33VE/ref=dp-kindle-redirect?_encoding=UTF8&btkr=1

The Oxford Dictionary of Allusions by Andrew Delahunty

An allusion is “an expression designed to call something to mind without mentioning it explicitly; an indirect or passing reference.” There you have it. I worked my way through a book of allusions for fun. Most aren’t that good, but I hit a couple of gems. The book is not for Philistines. (Did you catch that allusion?)

https://www.amazon.com/Oxford-Dictionary-Allusions-Andrew-Delahunty/dp/0198600313

The Myth of Capitalism: Monopolies and the Death of Competition by Jonathan Tepper

I read only a handful of draft chapters while this book was being written. Based on that foreshadowing, I suspect the overall message—oligopolies, not just monopolies, are destroying capitalism—will be a compelling story. I'll let you know a year from now.

https://www.amazon.com/Myth-Capitalism-Monopolies-Death-Competition/dp/1119548195/ref=sr_1_cc_1?s=aps&ie=UTF8&qid=1543701902&sr=1-1-catcorr&keywords=jonathan+tepper

The whole beast can be downloaded as a single PDF Here...

Published:12/22/2018 11:12:05 AM
[Markets] Out Of Control: Baltimore On The Verge Of Hitting Homicides Record

Baltimore is on the verge of implosion. The city is an opioid hell-hole that has the most extensive wealth inequality in the country. Its millennial base is fleeing the city, headed to the suburbs to escape the out of control murders.

Baltimore struggles to curb violent crime as the city's total homicides are expected to breach 300 in the coming days.

As of Tuesday, there have been 297 murders this year, said The Baltimore Sun.

The city had fewer than 300 homicides per year from 2000 to 2014. 

However, the number of murders climbed in 2015 to 342, amid the 2015 Baltimore Riots, which civil unrest destroyed 285 to 350 businesses, 150 vehicle fires, 60 structure fires, and 27 drugstores looted. 

The out of control homicides points to the need for more tools in the approach to curbing violent crime.

Mayor Catherine Pugh strengthened the city's safe streets program, in which reformed criminals act as intermediaries in disputes to prevent widespread violence.

“What we’re experiencing on the streets of our city is about territorializing different parts of the city: if I’m going to sell drugs over here then you can’t come over here. If you come over here I’m going to shoot you here and then the next thing you know my sister my daughter my father my mother,” said Mayor Pugh. “Somebody gets caught up in the crossfire.”

The mayor has repeatedly said in 2018 that crime is down. Meanwhile, the total number of murders are about to breach 300 - near record levels (342 homicides in 2017).

“We’ve got to teach folks that life is valuable. These folks don’t get up off the ground and get to live another day or to have another conversation with their daughter their father their mother their sister their cousin – they don’t get to do that,” Pugh said.

Recent crime statistics published by the FBI placed Baltimore's homicide rate last year well above trend of any other large American city, making it an anomaly in the national crime landscape for US cities with populations over 500,000 people. 

The 342 homicides last year resulted in the highest homicide rate in the country (56 per 100,000 people), according to the FBI. 

As the next economic downturn is immient, police chiefs not just in Baltimore, but the rest of the country are worrying that the next recession could fuel a crime wave that could be overwhelming. 

Published:12/21/2018 7:07:46 PM
[Markets] Former Baltimore Top Cop Pleads Guilty To Tax Fraud 

Former Baltimore Police Commissioner Darryl De Sousa has pleaded guilty in federal court Tuesday that "he willfully neglected to file income tax returns and falsely claimed deductions to slash the amount he owed to the Internal Revenue Service," said The Baltimore Sun.

De Sousa, 54, resigned as the city's top cop in May, after failing to file his federal taxes for 2013, 2014 and 2015. He faces up to three years in jail and a $300,000 fine when he is sentenced in late March 2019.

“You do agree you’re guilty of these three offenses?” U.S. District Judge Catherine Blake asked him on Tuesday. 

“Yes, your honor,” De Sousa said.

He joined the Baltimore Police Department in 1998, and in January 1999, submitted a W-4 to the city of Baltimore incorrectly claiming nine adjustments for state and federal taxes. This "substantially reduced" the amount of taxes withheld from his salary, according to the U.S. Attorney's Office for the District of Maryland.

In addition, when he filed his state and federal income taxes for 2008 through 2012, he claimed deductions he was not eligible for. This included "unreimbursed employee expenses when he had no such expenses, mortgage interest deductions and deductions for local property taxes when he did not have a mortgage or own any real property, and business losses when he did not operate any businesses," according to the state's attorney's office.

De Sousa's long history of alleged tax fraud continued through 2011, 2012, and 2014, when he neglected to file tax returns or pay any penalties or interest for filing late. During those years, he did file fraudulent claims for unreimbursed employee expenses and charitable donations, according to the state's attorney's office.

Under his plea agreement, De Sousa must pay the federal government and the state of Maryland a total of $60,645.

Before his deceitful tax scheme was uncovered, De Sousa was named the Baltimore top cop in January after Mayor Catherine Pugh fired his predecessor, Kevin Davis. He served less than four months before stepping down on May 15. Gary Tuggle has served as interim commissioner since.

In a May 2018 statement released via Twitter, De Sousa took responsibility for tax fraud:

“I fully admit to failing to file my personal Federal and State taxes for 2013, 2014 and 2015. I did file my 2016 taxes and received an extension for my 2017 taxes. I have been working to satisfy the filing requirements and, to that end, have been working with a registered tax advisor.

To be clear, I have paid Federal, state and local taxes regularly through the salary withholding process.

While there is no excuse for my failure to fulfil my obligations as a citizen and public official, my only explanation is that I failed to sufficiently prioritize my personal affairs. Naturally, this is a source of embarrassment for me and I deeply regret any embarrassment it has caused the Police Department and the City of Baltimore. I accept full responsibility for this mistake and am committed to resolving this situation as quickly as possible.”

De Sousa's case has added to the instability in the Baltimore Police Department. The department has had four commissioners since the 2015 Baltimore Riots. The city is drowning in homicides with a homicide rate that is the highest in the country, according to recent FBI data.

In November, Mayor Catherine Pugh named Fort Worth Police Chief Joel Fitzgerald as a possible candidate to become the city's next top cop. The city council is expected to vote in early 2019 on his nomination.

Published:12/20/2018 8:34:50 PM
[Politics] Judge Sullivan's John Sirica Moment The most riveting report on the sentencing hearing for General Michael Flynn is the op-ed piece by Michael Ledeen that runs in the Wall Street Journal under the headline "The Real Story of the Flynn Hearing." Mr. Ledeen, who recently co-authored a book with the general, does not believe his friend lied to the FBI and shouldn't have pled guilty. He suggests the judge might nurse the same opinion. Mr. Ledeen, one of the most farsighted of America's foreign policy analysts, was in the court... Published:12/20/2018 8:54:07 AM
[FBI] James Comey, Crooked Cop (John Hinderaker) James Comey testified before the House Judiciary and Oversight and Reform committees yesterday. He was his usual smarmy, partisan, dishonest self. A couple of tweets by Congressmen who witnessed his testimony sum it up: Yes, this is the real transcript of my exchange with Jim Comey. No, I didn’t make this up. pic.twitter.com/bRc4U2Tda4 — John Ratcliffe (@RepRatcliffe) December 19, 2018 And this: 1/24/17: FBI interviews Gen. Flynn. 3 days later: Published:12/19/2018 9:55:38 PM
[Politics] Sen. Lankford: Flynn Should Not Have Lied to White House, FBI Sen. James Lankford said former national security adviser Michael Flynn should have been honest with the White House and the FBI. Published:12/19/2018 1:39:26 PM
[Congress] James Comey, cont’d (Scott Johnson) Former FBI Director James Comey appeared on Monday for a second day of testimony before the House Judiciary and Oversight Committees. The 173-page transcript was made public yesterday afternoon. I have embedded it below. I noted Comey’s first day of testimony last week in “Comey doesn’t know and can’t recall.” I made a related point in “A Comey contradiction.” The 2016 presidential election produced an unexpected outcome. In its aftermath Published:12/19/2018 6:42:32 AM
[Markets] Here's What Newly-Diagnosed Amnesiac James Comey "Did Not Recall" On Day 2 Of Testimony

Former FBI Director James Comey appeared December 17th, 2018, for a second round of questions by a joint House committee oversight probe into the DOJ and FBI conduct during the 2016 presidential election and incoming Trump administration.

The Joint House Committee just released the transcript online (full pdf below).

Director Blue blog's Doug Ross read through most of the septic backflow so you don't need to. You're welcome:

1. Double Standard: Obama vs. Trump

Trey Gowdy grilled Comey on his vastly different handling of comments by Trump and Obama. When Trump asked Comey whether he could see his way clear to easing up on Flynn, Comey memorialized the conversation in a memo and distributed it to his leadership team, including Andrew McCabe and James Baker.

However, when President Obama on 60 Minutes publicly exonerated Hillary Clinton's mishandling of classified information -- setting the stage for true obstruction of justice -- Comey did nothing. He never talked to the president about potential obstruction, he never memorialized his observations, and he didn't leak anything to the press. These were all things he did with Trump.

He might call it a "higher loyalty", but it looks to us peons like a true double-standard. Democrats get Wall Street Bankster treatment, while the rabble get tossed in the slammer.

2. According to Comey, Flynn had no right to counsel

This is interesting:

Mr. Gowdy. Did Mr. Flynn have the right to have counsel present during that interview?

Mr. Comey. No.

Oooooooookay.

3. Comey confirmed McCabe called Flynn to initiate "entrapment"; contradicts himself on counsel

And:

Mr. Gowdy. Why not advise General Flynn of the consequences of making false statements to the FBI?

Mr. Comey. ...the Deputy Director [McCabe] called him, told him what the subject matter was, told him he was welcome to have a representative from White House Counsel there...

So Comey is saying that Flynn didn't have the right to counsel (item 2), and then states that he does have the right to a White House counsel attending the meeting.

The lies are getting harder and harder to keep straight with this egregious individual.

4. Comey lied about McCabe's conversation with Flynn

When asked whether McCabe was trying to set Flynn up by asserting no counsel was needed in the interview, Comey claimed he was unaware of that critical fact. But McCabe, in a written memo, asserted that he told Flynn, "[i]f you have a lawyer present, we'll need to involve the Department of Justice".

In other words, McCabe was trying to ensure Flynn had no counsel present during the interview.

5. Comey still falls back on the Logan Act scam to justify his actions

Yes, the Logan Act. When former secretary of state John Kerry meets with various Mullahs while President Trump is unwinding the disastrous Iran deal, there's no crime there!

But let Flynn, a member of the Trump transition team, have a perfectly legitimate conversation with a Russian diplomat, we get:

Mr. Comey. And I hesitate only with "wrong." I think a Department of Justice prosecutor might say, on its face, it was problematic under the Logan Act because of private citizens negotiating and all that business.

What a lying sack of gumbo. At the time, Flynn was not a private citizen. He was a member of the incoming administration, and had anyone bothered to prosecute prior transitions for similar "crimes", the entire Obama and Clinton posses would be breaking rocks at Leavenworth.

6. Comey Throws James Clapper Under the Bus

When asked by Jim Jordan about his private meeting with the President to brief him on a very tiny portion of the "salacious and unverified" (Comey's words under oath) dossier, Comey claimed ODNI James Clapper had orchestrated the entire fiasco.

Mr. Comey. ...ultimately, it was Clapper's call. I agreed -- we agreed that it made sense for me to do it and to do it privately, separately. So I don't want to make it sound like I was ordered to do it.

He wasn't ordered to do it, but it was Clapper's call.

Oooooooookay.

7. Jordan Torches Comey Over His Dossier Comments

I'll just leave this here. Comey may need to put some ice on that.

Mr. Jordan. So that's what I'm not understanding, is you felt this was so important that it required a private session with you and the President-elect, you only spoke of the salacious part of the dossier, but yet you also say there's no way any good reporter would print this. But you felt it was still critical that you had to talk to the President-elect about it. And I would argue you created the very news hook that you said you were concerned about...

...it's so inflammatory that reporters would 'get killed' for reporting it, why was it so important to tell the President? Particularly when you weren't going to tell him the rest of the dossier -- about the rest of the dossier?

8. Comey Concealed Critical National Security Concerns About Flynn From the President

This is quite unbelievable: in a private dinner with the president, Comey neglected to mention that just three days earlier he had directed the interview of Trump's ostensible National Security Advisor.

Mr. Comey. ...at no time during the dinner was there a reference, allusion, mention by either of
us about the FBI having contact with General Flynn or being interested in General Flynn investigatively.

Mr. Jordan. That was what I wanted to know. So this is not just referring to the President didn't bring it up. You didn't bring it up either.

Mr. Comey. Correct, neither of us brought it up or alluded to it.

Mr. Jordan. Why not? He's talking about General Flynn. You had just interviewed him 3 days earlier and discovered that he was lying to the Vice President, knew he was lying to the Vice President, and, based on what we've heard of late, that he lied tyour agents. Why not tell his boss, why not tell the head of the executive branch, why not tell the President of the United States, "Hey, your National Security Advisor just lied to us 3 days ago"?

Mr. Comey. Because we had an open investigation, and there would be no reason or a need to tell the President about it.

Mr. Jordan. Really?

Mr. Comey. Really.

Mr. Jordan. You wouldn't tell the President of the United States that his National Security Advisor wasn't being square with the FBI? ... I mean, but this is not just any investigation, it seems to me, Director. This is a top advisor to the Commander in Chief. And you guys, based on what we've heard, felt that he wasn't being honest with the Vice President and wasn't honest with two of your agents. And just 3 days later, you're meeting with the President, and, oh, by the way, the conversation is about General Flynn. And you don't tell the President anything?

Mr. Comey. I did not.

Mr. Meadows. So, Director Comey, let me make sure I understand this. You were so concerned that Michael Flynn may have lied or did lie to the Vice President of the United States, but that once you got that confirmed, that he had told a falsehood, you didn't believe that it was appropriate to tell the President of the United States that there was no national security risk where you would actually convey that to the President of the United States? Is that your testimony?

Mr. Comey. That is correct. We had an --

The more we learn, the dirtier a cop Comey ends up appearing.

9. Gowdy Destroys the Double Standard of Clinton vs. Flynn

Check this out:

Mr. Gowdy. ...we are going to contrast the decision to not allow Michael Flynn to have an attorney, or discourage him from having one, with allowing some other folks the Bureau interviewed to have multiple attorneys in the room, including fact witnesses. Can you see the dichotomy there, or is that an unreasonable comparison?

Mr. Comey. I'm not going to comment on that. I remember you asking me questions about that last week. I'm happy to answer them again.

Mr. Gowdy. You will not say whether or not it is an unreasonable comparison to compare allowing multiple attorneys, who are also fact witnesses, to be present during an interview but discouraging another person from having counsel present?

Mr. Comey. I'm not going to answer that in a vacuum...

10. Comey May Have Been Involved With the Infamous Tarmac Meeting

Another interesting vignette, this time from John Ratcliffe:

Mr. Ratcliffe. Okay. So it would appear from this that there had been some type of briefing the day before, with reference to yesterday, June 27, 2016, where you had requested a copy of emails between President Obama and Hillary Clinton.

Mr. Comey. I see that it says that.

Mr. Ratcliffe. ...The significance of that is, as we talked about last time, June 27th of 2016 was also the date that Attorney General Lynch and former President Bill Clinton met on a tarmac in Phoenix, Arizona. Do you recall whether or not this briefing was held at the FBI because of that tarmac meeting, or was it just happened to be a coincidence that it was held on that day? Mr. Comey. It would have to have been a coincidence. I don't remember a meeting in response to the tarmac meeting.

Muh don't know!

11. Comey confirms Obama knew Hillary Clinton was using a compromised, insecure email server

Well, spank me on the fanny and call me Nancy!

Mr. Ratcliffe. ...Hillary Rodham Clinton and President Obama were communicating via email through an unsecure, unclassified server?

Mr. Comey. Yes, they were between her Clinton email.com account and his -- I don't know where his account, his unclassified account, was maintained. So I'm sorry. So, yes, here were communications unclassified between two accounts, hers and then his cover account.

Mr. Ratcliffe. ...Did your review of these emails or the content of these emails impact your decision to edit out a reference to President Obama in your July 5th, 2016, press conference remarks?

If Trump had done 1/1,000,000th of this crap, he'd be -- yes -- breaking rocks in Leavenworth right now.

But there's no double-standard, rabble! Just keep buying iPhones and playing Call of Duty!

...Aaaaaaaaand I'm spent.

Okay, done for now.

But let's recap the activities of Dr. "Higher Loyalty" Comey:

  • Did not investigate the felony leak to the press of the conversation between the Russian Ambassador and Flynn.

  • Did not advise Congress of the "investigation" into Trump-Russia collusion as required by statute.

  • Lied to the FISA court -- another felony -- about Carter Page being "an agent of a foreign power".

  • Wrote an exoneration memo for Hillary Clinton before more than a dozen witnesses, including Clinton herself, had been interviewed.

But, no, there's no double-standard for the aggressiveness of law enforcement when it comes to Democrats like Clinton and Obama.

Hat tip: BadBlue Uncensored News.

*  *  *

Published:12/18/2018 9:31:59 PM
[Politics] ‘I’m not hiding my disgust, my disdain’: Veteran judge upends hopes of Trump allies as he spotlights Flynn’s misdeeds Supporters of former national security adviser Michael Flynn thought the independent-minded jurist would reveal overreach by special counsel Robert S. Mueller III and the FBI. Published:12/18/2018 7:31:43 PM
[Government] James Comey Refuses To Say Whether He Leaked Classified Information

Fired FBI Director James Comey dodged a question about whether he leaked classified information in order to launch Mueller’s Special Counsel investigation. James Comey: “I’m not going to talk about something like that…” For an attorney, he seems too stupid to keep his own mouth shut. Comey believes he can do whatever he wants and laugh ...

The post James Comey Refuses To Say Whether He Leaked Classified Information appeared first on Godfather Politics.

Published:12/18/2018 6:03:29 PM
[Government] James Comey Refuses To Say Whether He Leaked Classified Information

Fired FBI Director James Comey dodged a question about whether he leaked classified information in order to launch Mueller’s Special Counsel investigation. James Comey: “I’m not going to talk about something like that…” For an attorney, he seems too stupid to keep his own mouth shut. Comey believes he can do whatever he wants and laugh ...

The post James Comey Refuses To Say Whether He Leaked Classified Information appeared first on Godfather Politics.

Published:12/18/2018 6:03:29 PM
[World] Prosecutor Says Flynn Judge Can Sentence Him Longer For Lying, Turkey

Former prosecutor Bob Bianchi said Tuesday that Judge Emmet Sullivan can sentence Gen. Michael Flynn [Ret.] to more than the expected probationary punishment he is considering after the war hero pleaded guilty to lying to the FBI.

Published:12/18/2018 4:01:36 PM
[Politics] BREAKING: Republicans release full transcript of closed-door Comey meeting — and you can read it HERE House Republicans just released the transcript of their closed-door hearing with former FBI Director James Comey. It’s very long, to the tune of about 173 pages, so I haven’t had a chance . . . Published:12/18/2018 3:42:43 PM
[Politics] BREAKING: Republicans release full transcript of closed-door Comey meeting — and you can read it HERE House Republicans just released the transcript of their closed-door hearing with former FBI Director James Comey. It’s very long, to the tune of about 173 pages, so I haven’t had a chance . . . Published:12/18/2018 3:42:43 PM
[Uncategorized] Judge Blasts Trump Ex-Adviser Flynn, Delays Sentencing in Russia Probe

A U.S. judge fiercely criticized President Donald Trump’s former national security adviser Michael Flynn on Tuesday for lying to FBI agents in a probe into Russian interference in the 2016 election, and delayed sentencing until Flynn has finished helping prosecutors.

The post Judge Blasts Trump Ex-Adviser Flynn, Delays Sentencing in Russia Probe appeared first on Washington Free Beacon.

Published:12/18/2018 3:01:16 PM
[worldNews] Judge excoriates Trump ex-adviser Flynn, delays Russia probe sentencing A U.S. judge fiercely criticized President Donald Trump's former national security adviser Michael Flynn on Tuesday for lying to FBI agents in a probe into Russian interference in the 2016 election, and delayed sentencing him until Flynn has finished helping prosecutors.
Published:12/18/2018 3:01:16 PM
[Michael Flynn] Flynn hearing goes badly for Flynn; judge delays sentencing ruling (Paul Mirengoff) Michael Flynn’s sentencing hearing ended this morning without Flynn receiving a sentence. Judge Emmet Sullivan seemed inclined to sentence Flynn to jail time, notwithstanding the recommendation of the prosecutors that Flynn serve none. However, Sullivan agreed to hold off until he has time to consider the matter of Flynn’s lobbying for the Turkish government. As to charges of lying to the FBI, Flynn affirmed that he stands by his guilty Published:12/18/2018 2:00:59 PM
[] Clinton-Appointed Judge in Flynn Sentencing Hearing Accuses Him of Treason, Suggests He'll Sentence Him Beyond What the Plea Deal Calls for #TheResistance has a new hero. The Clinton-appointed judge, Emmett Sullivan, claimed that Flynn's suggestion that the FBI misled him (which it, you know, did) cast doubt on Flynn's acceptance of culpability. The not-so-veiled threat from the judge is that if... Published:12/18/2018 12:03:30 PM
[World] Sarah Sanders on Michael Flynn Sentencing: He Was Ambushed by Biased Comey FBI

White House Press Secretary slammed James Comey for remarks the former FBI director made after his testimony before House lawmakers on Monday.

Published:12/18/2018 10:29:55 AM
[US News] Rudy Giuliani deletes joke about James Comey with photo of Bashful the dwarf in ‘Snow White’

President Donald Trump’s personal lawyer, Rudy Giuliani, went after former FBI Director James Comey in a series of tweets this morning, calling him a “proven leaker of confidential FBI material” and suggesting that Comey “interfered more in election than anyone”: Comey proven leaker of confidential FBI material directed the violation of General Flynn’s right to […]

The post Rudy Giuliani deletes joke about James Comey with photo of Bashful the dwarf in ‘Snow White’ appeared first on twitchy.com.

Published:12/18/2018 9:30:09 AM
[Markets] Mike Flynn & The Deep State's Fatal Over-Reach

Authored by James Howard Kunstler via Kunstler.com,

Last Friday morning, we adjourned the blog in anticipation of Special Counsel Robert Mueller handing over certain FBI documents in the General Flynn matter demanded by DC District Federal Judge Emmett G. Sullivan no later than 3:00 p.m. that day. Guess what. Mr. Mueller’s errand boys did not hand over the required documents - original FBI 302 interrogation reports. Instead, they proffered a half-assed “interview” with one of the two agents who conducted the Flynn interrogation, Peter Strzok, attempting to recollect the 302 half a year after it was written. Of course, Mr. Strzok was notoriously fired from the Bureau in August for bouts of wild political fury on-the-job as FBI counter-intel chief during and after the 2016 election. (This was the second time he was fired; the first was when Robert Mueller discarded him from the SC team in 2017 as a legal liability.)

So, 3:00 p.m. Friday has come and gone. It appears that the FBI 302 docs have come and gone, too. Actually, we have reason to believe that nothing ever created on a computer connected to the internet can actually disappear entirely. Rather, the data gets sucked into the bottomless well of the NSA server-farm out in Utah. Most likely, the original 302s exist and Mr. Mueller is pretending he can’t find them. In effect, it appears that Mr. Mueller has responded by gently whispering “fuck you” to Judge Sullivan.

Interestingly, The New York Times didn’t even report the story (nor The WashPo, nor CNN, nor MSNBC). Since their “Russia Collusion” narrative is foundering, they can’t tolerate any suggestion that their Avenging Angel of Impeachment, Mr. Mueller, is less than the sanctified plain dealer he affects to be. Judge Sullivan kept his own counsel all weekend. The next scheduled chapter in the story is Gen. Flynn’s sentencing this Tuesday. It would be a surprise if the Judge does not observe that Mr. Mueller has acted in contempt of court. Ditto if the charge against Gen. Flynn is not thrown out. After all, the main articles of evidence against him apparently don’t exist.

And if it turns out that Mr. Mueller and his team are disgraced by their apparent bad faith behavior in the Flynn case, what then of all the other cases connected to Mueller one way or another: Manafort, Cohen, Papadopoulos? And the other matters still in question, such as the Trump Tower meeting with the Russian “Magnitsky” lawyer and Golden Golem Junior, the porn star payoffs… really everything he has touched. What if it all falls apart?

In theory, this punch-drunk country could take a turn back to the genuine rule-of-law instead of the medieval-cum-Bolshevik practices of Deep State style justice. This would entail the prosecution of the prosecutors themselves. Far from an historical aberration, this is often the outcome when authorities overstep the boundaries of common decency. Which is what has happened in the setting-up of General Flynn.

Readers may wonder: why am I so concerned with these shenanigans among the FBI, the DOJ and Intel Community when there is that other elephant in the room, viz: Mr. Trump, the Golden Golem of Greatness, the awkward, embarrassing, childish fellow dishonoring the Oval Office? Because the actions of his antagonists are much more dangerous to the public interest than the oafish president. Elected officials come and go, but when America chucks the rule of law on the old garbage barge, this will cease to be the land of the free and the home of the brave. It will be a land of cringing cravens waiting in terror for the iron fist to smack them down like bugs.

Today, Tuesday Dec 18, some of the questions raised here will be answered, and I’ll add an addendum afterward. But there are many other forces in play right now on a world scene that is each day becoming more fraught with intimations of upsetting the current order of things.

The West is enduring paroxysms of political uproar and disenchantment.

China is more opaque politically, but its financial disorder is plain to see.

And finally, there is the question of markets and banking, with their entwined fates heading in a bad direction.

Of his many blunders, the worst for his own political survival was Mr. Trump taking ownership of the “greatest economy ever.” Stocks, bonds, and commodities are all wobbling at once, and approaching the event horizon where there is no floor under the price of anything.

That will not make America great in the Trumpian sense, but it will be another opening for the long-awaited return of reality to a society where, for a long time, now, anything goes and nothing matters.

Published:12/18/2018 7:59:34 AM
[FBI] Flynn’s fate (8) (Scott Johnson) It turns out that the Special Counsel filed two redacted versions of the FBI 302 summarizing the Strzok/Pientka interview of Michael Flynn in the White House on January 24, 2017. The two 302s are identical in substance. I have embedded the Special Counsel’s filing cover letter and the 302s as redacted below via Scribd. The Special Counsel had originally filed the two 302s under seal with Judge Sullivan in response Published:12/18/2018 6:58:58 AM
[] The Morning Report - 12/18/18 Good morning kids. Tuesday, and we're dealing mostly with the continuation of the usual chazarei but in the lead is Mueller's compliance with Judge Emmet Sullivan's demand for the "302" forms pertaining to the FBI interviews conducted on Michael... Published:12/18/2018 6:58:57 AM
[Markets] "Outraged" Trump Claims 19,000 Missing Strzok Texts Would Have Exposed Mueller Probe "Hoax"

Mere hours before his former National Security Advisor, Michael Flynn, is expected to be sentenced for lying to the FBI  (and hours after Robert Mueller finally released a heavily redacted sentencing memo), an angry President Trump once again lashed out at the FBI on twitter over former Agent Peter Strzok and his former "FBI lover" Lisa Page, who deleted some 19,000 texts exchanged on their company phones that should have been collected during a Congressional investigation into the presence and influence of anti-Trump bias inside the bureau.

Trump raged that the "biggest outrage yet" in the "long, winding and highly conflicted" Mueller 'Witch Hunt' was the fact that some 19,000 text messages between Strzok and Page were "purposely & illegally deleted." Trump believes those messages, if recovered, would have explained the whole "hoax."

Trump has a point: On Thursday, the Justice Department's internal watchdog revealed that special counsel Robert Mueller's office scrubbed all of the data from FBI agent Peter Strzok's iPhone, while Page's phone had been scrubbed by a different department, according to a comprehensive report by the Office of the Inspector General released on Thursday.

Of the thousands of text messages between Strzok and Page that were recovered by the OIG, many indicating that both agents in charge of investigating Donald Trump absolutely hate him.

In August 2016, Strzok and Page discussed an "insurance policy" in the event that Trump won the election which many believe to be in reference to operation Crossfire Hurricane - the DOJ's counterintelligence investigation into Trump and his campaign.

"I want to believe the path you threw out for consideration in Andy's office - that there's no way he [Trump] gets elected - but I'm afraid we can't take that risk." wrote Strzok, adding "It's like a life insurance policy in the unlikely event you die before you're 40."

In the home stretch of the 2016 US election, Strzok is fuming at Trump - texting Page: " I am riled up. Trump is a f*cking idiot, is unable to provide a coherent answer." He then texts "I CAN'T PULL AWAY, WHAT THE F*CK HAPPENED TO OUR COUNTRY (redacted)??!?!," to which Page replies "I don't know. But we'll get it back."

So yeah, nothing suspicious about that. We totally understand how these comments might be considered accepted DOJ 'locker room talk', and in no way influenced the launch and early direction of the investigation that eventually expanded into 'Operation Crossfire Hurricane'.

Published:12/18/2018 6:28:11 AM
[worldNews] Former Trump adviser Flynn to be sentenced for lying to FBI A judge will decide on Tuesday whether former national security adviser Michael Flynn should be sent to prison for lying to the FBI in a case stemming from the investigation into possible collusion between President Donald Trump’s campaign team and Russia in the run-up to the 2016 election.
Published:12/17/2018 11:27:58 PM
[World] Victor Davis Hanson Rips Jim Comey for Comments on Fox, Trump

Historian and political scientist Victor Davis Hanson reacted to former FBI Director Jim Comey's statement to the press Monday, in which he denied taking unethical actions and also criticized Fox News and its viewers.

Published:12/17/2018 10:26:13 PM
[Markets] The New York Post: Mueller releases memo on Michael Flynn’s interview with FBI Michael Flynn said “I don’t remember” when asked by FBI agents about discussing sanctions with a Russian diplomat during Trump’s transition to office, according to a memo filed by Special Counsel Robert Mueller that gives new details about lies the former National Security Adviser told the feds.
Published:12/17/2018 9:55:42 PM
[FBI] Mueller makes public the Flynn 302 (Paul Mirengoff) Today, on the eve of Michael Flynn’s sentencing hearing, Judge Emmet Sullivan ordered Robert Mueller’s team to file publicly a redacted version of the interview notes (the “302”) that FBI Agent Joe Pientka prepared regarding the interview of Flynn that he and Peter Strzok conducted on January 24, 2017. Judge Sullivan stated, in relevant part: [T]he court finds that the January 24, 2017 FD 302, which was drafted immediately after Published:12/17/2018 9:55:42 PM
[Politics] O'Reilly to Newsmax TV: Feds May Charge Comey With Crime Former FBI director James Comey could soon be charged with a federal crime stemming from his interactions with President Donald Trump, Bill O'Reilly told Newsmax TV."I don't think anybody believes Comey now. When he said last week he didn't remember more than 200 times.... Published:12/17/2018 8:55:33 PM
[US News] Bombshell or nothing burger? FBI’s notes of interview with Michael Flynn released

It's pretty certain that Michael Flynn will walk free after tomorrow.

The post Bombshell or nothing burger? FBI’s notes of interview with Michael Flynn released appeared first on twitchy.com.

Published:12/17/2018 7:55:52 PM
[The Blog] Dershowitz on Mike Flynn: It’s not always a crime to lie to the FBI

This is true, but his reasoning as applied to Flynn is so dubious that it’s become chum for a feeding ...

The post Dershowitz on Mike Flynn: It’s not always a crime to lie to the FBI appeared first on Hot Air.

Published:12/17/2018 7:25:29 PM
[Markets] Mueller Finally Releases Heavily Redacted Key Flynn Memo On Eve Of Sentencing

Having initially snubbed Judge Emmet Sullivan's order to release the original 302 report from the Michael Flynn interrogation in January 2017, Special Counsel Robert Mueller has finally produced the heavily redacted document, just hours before sentencing is due to be handed down.

The memo  - in full below - details then-national security adviser Michael Flynn's interview with FBI agents Peter Strzok and Joe Pientka, and shows Flynn was repeatedly asked about his contacts with former Russian Ambassador Sergey Kislyak and in each instance, Flynn denied (or did not recall) any such conversations.

The agents had transcripts of Flynn's phone calls to Russian Ambassador Kislyak, thus showing Flynn to be lying.

Flynn pleaded guilty guilty last December to lying to the FBI agents about those conversations with Kislyak.

The redactions in the document seem oddly placed but otherwise, there is nothing remarkable about the content..

Aside from perhaps Flynn's incredulity at the media attention...

Flynn is set to be sentenced in that federal court on Tuesday.

Of course, as Christina Laila notes, the real crime is that Flynn was unmasked during his phone calls to Kislyak and his calls were illegally leaked by a senior Obama official to the Washington Post.

*  *  *

Full document below

Published:12/17/2018 6:56:03 PM
[Markets] Christopher Steele Admits He Was Hired To Help Hillary Challenge 2016 Election

Former UK spy Christopher Steele admitted in a London court that he was hired to help Hillary Clinton contest the results of the 2016 election in case Trump won, according to the Washington Times.  

Steele assembled an anti-Trump "dossier" of opposition research investigative firm Fusion GPS, which was in turn hired by DNC law firm Perkins Coie LLP. The document used "a senior Russian Foreign Ministry figure," and "a former top level intelligence officer still active in the Kremlin," according to Vanity FairIn other words, Hillary Clinton - through Steele and other intermediaries - was working with Russians against Donald Trump. 

He said the law firm Perkins Coie wanted to be in a position to contest the results based on evidence he unearthed on the Trump campaign conspiring with Moscow on election interference.

His scenario is contained in a sealed Aug. 2 declaration in a defamation law suit brought by three Russian bankers in London. The trio’s American attorneys filed his answers Tuesday in a libel lawsuit in Washington against the investigative firm Fusion GPS, which handled the former British intelligence officer.

In an answer to interrogatories, Mr. Steele wrote: “Fusion’s immediate client was law firm Perkins Coie. It engaged Fusion to obtain information necessary for Perkins Coie LLP to provide legal advice on the potential impact of Russian involvement on the legal validity of the outcome of the 2016 US Presidential election.

“Based on that advice, parties such as the Democratic National Committee and HFACC Inc. (also known as ‘Hillary for America’) could consider steps they would be legally entitled to take to challenge the validity of the outcome of that election.” -Washington Times

During the election, Clinton told voters that Donald Trump would "threaten democracy" if he didn't promise to accept the results of the 2016 election - after Trump suggested he might not accept the results of a "rigged" contest. 

Now listen to Hillary when she thought she was going to win the election:

Meanwhile Clinton was open to challenging the election more than ten months after her historic loss - if only there were a way. "There are scholars, academics, who have arguments that it would be, but I don’t think they’re on strong ground. But people are making those arguments. I just don’t think we have a mechanism," Clinton told NPR in September 2017. 

The dossier Steele produced was used as the basis for an FBI FISA surveillance warrant application to spy on members of the Trump campaign. Notably, the agency never told the FISA court that the dossier their application hinged on was paid for by the DNC and Clinton's campaign, although it did indicate that it was opposition research. 

The mainstream media used still-unverified key claims within the dossier to fuel a conspiracy theory that President Trump conspired with the Russian government to win the 2016 US election. 

Meanwhile, as we reported earlier Monday, FBI and CIA sources told a Pulitzer Prize-winning Washington Post reporter that they didn't believe a key claim contained in the "Steele Dossier," the document the Obama FBI relied on to obtain a surveillance warrant on a member of the Trump campaign.

The Post's Greg Miller told an audience at an October event that the FBI and CIA did not believe that former longtime Trump attorney Michael Cohen visited Prague during the 2016 election to pay off Russia-linked hackers who stole emails from key Democrats, reports the Daily Caller's Chuck Ross. 

"We’ve talked to sources at the FBI and the CIA and elsewhere — they don’t believe that ever happened," said Miller during the October event which aired Saturday on C-SPAN. 

We literally spent weeks and months trying to run down... there's an assertion in there that Michael Cohen went to Prague to settle payments that were needed at the end of the campaign. We sent reporters to every hotel in Prague, to all over the place trying to - just to try to figure out if he was ever there, and came away empty. -Greg Miller

Meanwhile, Trump is still living under the spectre of Russian collusion, while Hillary Clinton actually colluded Russians in her plan to challenge the 2016 election.

Published:12/17/2018 6:24:55 PM
[Markets] BBC Claim Putin Is Weaponizing Humor (Don't Laugh, That's Exactly What He Wants)

Authored by Caitlin Johnstone,

The BBC has published an article titled “How Putin’s Russia turned humour into a weapon” about the Kremlin’s latest addition to its horrifying deadly hybrid warfare arsenal: comedy.

The article is authored by Olga Robinson, whom the BBC, unhindered by any trace of self-awareness, has titled “Senior Journalist (Disinformation)”. Robinson demonstrates the qualifications and acumen which earned her that title by warning the BBC’s audience that the Kremlin has been using humor to dismiss and ridicule accusations that have been leveled against it by western governments, a “form of trolling” that she reports is designed to “deliberately lower the level of discussion”.

“Russia’s move towards using humour to influence its campaigns is a relatively recent phenomenon,” Robinson explains, without speculating as to why Russians might have suddenly begun laughing at their western accusers. She gives no consideration to the possibility that the tightly knit alliance of western nations who suddenly began hysterically shrieking about Russia two years ago have simply gotten much more ridiculous and easier to make fun of during that time.

Couldn’t possibly have anything to do with the emergence of a demented media environment wherein everything around the world from French protests to American culture wars to British discontent with the European Union gets blamed on Russia without any facts or evidence. Wherein BBC reporters now correct guests and caution them against voicing skepticism of anti-Russia narratives because the UK is in “an information war” with that nation. Wherein the same cable news Russiagate pundit can claim that both Rex Tillerson’s hiring and his later firing were the result of a Russian conspiracy to benefit the Kremlin. Wherein mainstream outlets can circulate blatantly false information about Julian Assange and unnamed “Russians” and then blame the falseness of that reporting on Russian disinformation. Wherein Pokemon Go, cutesy Facebook memes and $4,700 in Google ads are sincerely cited as methods by which Hillary Clinton’s $1.2 billion presidential campaign was outdone. Wherein conspiracy theories that Putin has infiltrated the highest levels of the US government have been blaring on mainstream headline news for two years with absolutely nothing to show for it to this day.

Nope, the only possibility is that the Kremlin suddenly figured out that humor is a thing.

The fact of the matter is that humorous lampooning of western establishment Russia narratives writes itself. The hypocrisy is so cartoonish, the emotions are so breathlessly over-the-top, the stories so riddled with plot holes and the agendas underlying them so glaringly obvious that they translate very easily into laughs. I myself recently authored a satire piece that a lot of people loved and which got picked up by numerous alternative media outlets, and all I did was write down all the various escalations this administration has made against Russia as though they were commands being given to Trump by Putin. It was extremely easy to write, and it was pretty damn funny if I do say so myself. And it didn’t take any Kremlin rubles or dezinformatsiya from St Petersburg to figure out how to write it.

“Ben Nimmo, an Atlantic Council researcher on Russian disinformation, told the BBC that attempts to create funny memes were part of the strategy as ‘disinformation for the information age’,” the article warns. Nimmo, ironically, is himself intimately involved with the British domestic disinformation firm Integrity Initiative, whose shady government-sponsored psyops against the Labour Party have sparked a national scandal that is likely far from reaching peak intensity.

“Most comedy programmes on Russian state television these days are anodyne affairs which either do not touch on political topics, or direct humour at the Kremlin’s perceived enemies abroad,” Robinson writes, which I found funny since I’d just recently read an excellent essay by Michael Tracey titled “Why has late night swapped laughs for lusting after Mueller?”

“If the late night ‘comedy’ of the Trump era has something resembling a ‘message,’ it’s that large segments of the nation’s liberal TV viewership are nervously tracking every Russia development with a passion that cannot be conducive to mental health – or for that matter, political efficacy,” Tracey writes, documenting numerous examples of the ways late night comedy now has audiences cheering for a US intelligence insider and Bush appointee instead of challenging power-serving media orthodoxies as programs like The Daily Show once did.

If you wanted the opposite of “anodyne affairs”, it would be comedians ridiculing the way all the establishment talking heads are manipulating their audiences into supporting the US intelligence community and FBI insiders. It would be excoriating the media environment in which unfathomably powerful world-dominating government agencies are subject to less scrutiny and criticism than a man trapped in an embassy who published inconvenient facts about those agencies. It certainly wouldn’t be the cast of Saturday Night Live singing “All I Want for Christmas Is You” to a framed portrait if Robert Mueller wearing a Santa hat. It doesn’t get much more anodyne than that.

Russia makes fun of western establishment narratives about it because those narratives are so incredibly easy to make fun of that they are essentially asking for it, and the nerdy way empire loyalists are suddenly crying victim about it is itself more comedy. When Guardian writer Carole Cadwalladr began insinuating that RT covering standard newsworthy people like Julian Assange and Nigel Farage was a conspiracy to “boost” those people for the advancement of Russian agendas instead of a news outlet doing the thing that news reporting is, RT rightly made fun of her for it. Cadwalladr reacted to RT’s mockery with a claim that she was a victim of “attacks”, instead of the recipient of perfectly justified ridicule for circulating an intensely moronic conspiracy theory.

Ah well. People are nuts and we’re hurtling toward a direct confrontation with a nuclear superpower. Sometimes there’s nothing else to do but laugh. As Wavy Gravy said, “Keep your sense of humor, my friend; if you don’t have a sense of humor it just isn’t funny anymore.”

*  *  *

That was fun. So, the best way to get around the internet censors and make sure you see the stuff I publish is to subscribe to the mailing list for my website, which will get you an email notification for everything I publish. My articles are entirely reader-supported, so if you enjoyed this piece please consider sharing it around, liking me on Facebook, following my antics on Twitterthrowing some money into my hat on Patreon or Paypalpurchasing some of my sweet new merchandisebuying my new book Rogue Nation: Psychonautical Adventures With Caitlin Johnstone, or my previous book Woke: A Field Guide for Utopia Preppers.

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Published:12/17/2018 5:54:28 PM
[The Blog] Italy: FBI helped us take down ISIS plot against the Vatican

Under the radar?

The post Italy: FBI helped us take down ISIS plot against the Vatican appeared first on Hot Air.

Published:12/17/2018 5:24:52 PM
[Markets] Comey Lashes Out At Trump, GOP Lawmakers; Refuses To Deny He Leaked Classified Info

Fired FBI Director James Comey - who put two pro-Clinton / anti-Trump FBI employees in charge of investigating both Clinton and Trump, lashed out at the president and GOP lawmakers on Monday, according to The Hill.

"So another day of Hillary Clinton’s emails and the Steele dossier," Comey quipped to reporters following six hours of closed-door testimony on Capitol Hill. "This while the President of the United States is lying about the FBI, attacking the FBI, and attacking the rule of law in this country. How does that make any sense?"

Comey also slammed GOP lawmakers for sitting on their hands. 

"Republicans used to understand that the actions of a president matter, the words of a president matter, the rule of law matters, and the truth matters. Where are those Republicans today," said Comey. "At some point, someone has to stand up and in the fear of Fox News and fear of their base, and fear of mean tweets, stand up for the values of this country and not slink away into retirement."

The former FBI Director also refused to deny that he leaked classified information after he was fired as FBI Director - an assertion made by President Trump in April after it was revealed that Comey released what he claimed were personal memos documenting conversations with then-president-elect Trump in which he says he felt pressured to end the investigation into former national security adviser Mike Flynn. 

Comey gave the memos to his friend and FBI employee Daniel Richman, a Columbia University professor, to be leaked to the New York Times in an effort to instigate the special counsel investigation.  

Developing...

Published:12/17/2018 3:55:10 PM
[World] James Comey Blasts Donald Trump, House Republicans After Capitol Hill Testimony

After testifying before House lawmakers on Monday, former FBI Director James Comey slammed President Trump and top Republicans for purportedly not being truthful.

Published:12/17/2018 3:25:01 PM
[The Blog] Video: ISIS sympathizer discussed various plots…with undercover FBI agent

"Yeah, I'd like to kill the students."

The post Video: ISIS sympathizer discussed various plots…with undercover FBI agent appeared first on Hot Air.

Published:12/17/2018 12:25:36 PM
[Markets] Nunes Demands 'Transparency Office' To Declassify Russia Documents

Frustrated outgoing House Intelligence Committee Chairman Devin Nunes (R-CA) has called for the creation of a 'transparency office' attached to the White House that would be dedicated to reviewing and declassifying information that should be in the public sphere, reports the Washington Examiner

"Our investigation is essentially over. We have everything that we need. What we're lacking now is that we're lacking the declassification by the president," Nunes told Fox News on Sunday while discussing his panel's investigation into the DOJ and FBI handling of the Russia probe. 

"For various reasons, the president or his staff doesn't want to do it. Therefore, I think it's important if the president doesn't want his hands on it, we have to have somebody, some office, that's going to look at all of these issues and all of these documents that need to be declassified," said Nunes. "I'm going to be working with my colleagues to work on and send some example over to the president of a transparency type of office, so that the Congress, the American people, others can put in requests of documents or issues that they want declassified. That way the president doesn't have to take this full burden on and the Congress has somewhere where we can go to try to avoid the swamp creatures from getting involved and ensuring that the American public is kept in the dark."

Nunes' suggestion comes on the heels of an aborted declassification order that Trump gave in September - changing his mind after Deputy Attorney General Rod Rosenstein, along with the UK and another "key ally," begged the President not to release documents. Trump folded, instead delegating the job to the DOJ Inspector General.

"We need to make sure that there's light. I always say that sunlight is the best disinfectant in Washington," said Nunes. "The more that we can get declassified, I think, the better. And I think an easy way to do it is to create an office that actually just works directly under the White House that specializes in evaluating this documentation and errs on the side of the more sunlight the better to make sure that everything we want declassified gets declassified."

Published:12/17/2018 11:25:36 AM
[World] Judge Jeanine Pirro: Michael Flynn Was 'Treated Differently' by FBI, Robert Mueller

Judge Jeanine Pirro said in her Opening Statement on "Justice" that retired Gen. Michael Flynn was "treated differently" by FBI investigators, culminating in his guilty plea for lying to agents.

Published:12/17/2018 9:52:13 AM
[World] Alan Dershowitz: FBI 'Absolutely' Tried to Trap Flynn, But Nobody Understands Why He Lied

Alan Dershowitz said there's no doubt that FBI agents deliberately tried to trap Michael Flynn making false statements, but there is still no explanation for why the former National Security Adviser lied to federal agents about a non-crime.

Published:12/17/2018 9:22:23 AM
[Markets] Key Events In The Coming Week: All Eyes On The Fed (And China)

This week is full of central bank meetings including the Fed, BOE and BOJ, and while most of them will deliver no change, all eyes will be on the Fed which will (almost certainly) hike again while making a technical adjustment to the IOER, but the far bigger question is whether the Fed will signal just two hikes in 2019, one fewer than previously.

As it's also a press conference meeting (the last before every FOMC has one) we will receive fresh economic projections. According to DB economists other than the recent volatility in risk assets, the current-quarter data should not provide a compelling reason for the Fed to completely rethink its growth and core inflation projections at this meeting. Even so, Deutsche Bank economists joined Goldman in revising down their call for the number of hikes next year from 4 to 3, and now have one last hike in the forecast for 2020. Elsewhere the BoJ and BoE should be quiet affairs which is possibly tempting fate.

Meanwhile, China will hold its 3-day economic policy-setting meeting where Chinese policymakers will have occasion to reaffirm their commitment to reform and the measured easing approach while potentially unveiling more fiscal stimulus. Investors will be looking to a speech by China's President Xi Jinping on Tuesday marking the 40th anniversary of China’s reforms and opening up. China - where the economy has been rapidly losing momentum - is also expected to hold its annual Central Economic Work Conference later this week, where key growth targets and policy goals for 2019 will be discussed. The top decision-making body of the Communist Party, the Politburo, said last week China will keep its economic growth within a reasonable range next year, striving to support jobs, trade and investment while pushing reforms and curbing risks. “It’s generally assumed that you will need to expand fiscal and monetary support to achieve those goals,” said Tokai Tokyo Research strategist Wang Shenshen.

In Europe, besides Brexit, the focus may well be the budget bills of France and Italy, whereas the various surveys are likely to show sliding confidence amid elevated political uncertainties. Today, the main data was euro area's final HICP inflation, which disappointed, printing at 1.9%, below the flash estimate of 2.0% even as core inflation printed in line at 1.0%.

As for the data highlights this week, DB's Jim Reid writes that in the US expect much of the focus to be on the November PCE report on Friday where the consensus is for a 0.0% mom and +0.2% mom headline and core reading respectively. A reminder that the healthcare component of the PPI report was strong last week, up +0.27% mom which points to upside risk for the core PCE print: "It would be ironic if inflation started to reignite after a softer quarter just as markets start to price out the Fed for 2019." Given how strong the US economy currently is it wouldn’t be a surprise to see such a scenario. Other notable data due in the US next week includes November housing starts and building permits tomorrow, November existing home sales on Wednesday and the final Q3 GDP revisions (no change from +3.5 qoq saar expected), and preliminary November durable and capital goods orders on Friday. Also in the US, today sees former FBI Director James Comey appearing for more closed-door questioning by House lawmakers. Staying with the US administration, the threat of a partial US government shutdown on Friday looms should President Trump fail to resolve funding for the wall along the Mexican border.

Key US data releases courtesy of Morgan Stanley:

  • Housing Starts (Tuesday, 8:30am): Housing starts and building permits should be weaker in November, driven in part by poor weather. Following a 1.5% gain in October, housing starts are set to decline over 4.2%, which would bring the annual rate to 1.18 million units. Building permits are also expected to come in softer.
  • Existing Home Sales (Wednesday, 10am): Existing home sales are expected to resume their decline in November after a brief respite in October, where sales rose 1.4% following six consecutive month-over-month declines. MS sees sales falling 1.3% to an annual rate of 5.15 million units.
  • Durable Goods (Friday, 8:30am): Durable goods manufacturing production rose by moderate 0.2% in the industrial production report for November, implying a similarly moderate gain in core durable goods orders. MS looks for durables goods orders excluding transportation to rise 0.3% in November,a decent gain after growth of 0.2% in October. The bank also expects overall durable goods measure rising 1.0% on the back of a stronger month of aircraft orders.
  • Personal Income and Spending (Friday, 10am): Income growth is expected to moderate slightly in November to a still robust pace of 0.4% after a 0.5% gain in October. Nominal personal spending, meanwhile, should slow in November to a pace of 0.3% after posting a large 0.6% gain in October. For the price indices, this month's CPI and PPI inputs point to November core PCE inflation of 0.18%M, raising the year-over-year rate to 1.9% from 1.8% (1.86% vs. 1.78%). Headline PCE inflation should rise 0.08%, lowering the year-overyear rate to 1.8% from 2.0% (1.83% vs. 1.98%)

And visually:

Meanwhile, in Europe we'll also get Germany's December IFO survey tomorrow, the UK's November inflation data dump on Wednesday, November retail sales on Thursday, and the final Q3 GDP revisions on Friday. Finally it's quiet in Asia with only Japan's November CPI report late on Thursday worth flagging.

Below is a daily summary of the key events in the week ahead from Deutsche Bank:

Summary of key events in the week ahead:

  • Monday: It's a quiet start to the week for data on Monday with the only releases of note in Europe being the UK’s CBI trends total orders along with the Euro Area October trade balance and final November CPI revisions. In the US, we get the December Empire manufacturing index and NAHB housing market index. Away from that, former FBI Director James Comey appears for a second day of closeddoor questioning from lawmakers.
  • Tuesday: It stays quiet into Tuesday with Germany's December IFO survey and November housing starts and building permits data in the US the only releases due. Late in the evening we'll get Japan's November trade balance. Elsewhere, ECB Vice President Guindos will participate in a panel discussion.
  • Wednesday: The main highlight on Wednesday is the outcome of the FOMC policy meeting and Fed Chair Powell's press conference. Prior to that, we get Germany's November PPI and the UK's November inflation data docket. In the US, we get the latest weekly MBA mortgage applications, Q3 current account balance and November existing home sales. Away from that the ECB's Hansson is also due to speak. Also worth flagging is the European Commission meeting to discuss Italy's budget and Chinese leaders beginning their three-day annual economic policy-setting meeting.
  • Thursday: The BoJ and the BoE monetary policy meetings are the two big highlights on Thursday. Data wise we get the Euro Area's October current account balance and the UK's November retail sales report. In the US we get the latest weekly initial jobless and continuing claims prints along with the December Philadelphia Fed PMI and November leading index. In Asia, we get Japan's November CPI in the evening.
  • Friday: It's a busy end to the week for data on Friday with the November PCE report and final Q3 GDP revisions in the US the highlights. Prior to that, we'll also get Euro Area December consumer confidence, the UK's final Q3 GDP revisions, Germany January consumer confidence and France's final Q3 GDP. In the US, we get preliminary November durable goods and capital goods orders, November personal income and real personal spending data, the final December University of Michigan survey results and the December Kansas City Fed manufacturing activity index. It's worth noting that Friday is also the day that a partial US government shutdown could kick in.

Finally, here is Goldman's preview of the week ahead together with consensus expectations: the key economic data releases this week are the durable goods and core PCE reports on Friday. In addition, the December FOMC statement will be released on Wednesday at 2:00 PM EST, followed by Chairman Powell’s press conference at 2:30 PM.

Monday, December 17

  • 08:30 AM Empire State manufacturing index, December (consensus +20.0, last +23.3)
  • 10:00 AM NAHB housing market index, December (consensus 60, last 60)

Tuesday, December 18

  • 08:30 AM Housing starts, November (GS -1.5%, consensus +0.2%, last +1.5%): Building permits, November (consensus +0.4%, last -0.4%): We estimate housing starts declined 1.5% in November after a small increase in October. We expect a moderate drag from winter weather that also appears to have weighed on November construction employment. Over the next few quarters, we expect higher interest rates and tax reform to continue to weigh on homebuilding.

Wednesday, December 19

  • 10:00 Existing Home Sales, November (GS +0.3%, consensus -0.4%, last +1.4%); We estimate existing home sales increased 0.3% in November after its first increase in six months in October, noting modest improvement in regional sales data. Existing home sales are an input into the brokers' commissions component of residential investment in the GDP report.
  • 02:00 PM FOMC statement, December 18-19 meeting: As discussed in our FOMC preview, we expect the FOMC to raise the target range for the funds rate by 25 basis points in the December meeting. In the post-meeting statement, we expect a dovish tilt to the language, reflecting a substantial tightening in financial conditions. We expect the growth characterization to be downgraded (to “solid” from strong”) and the funds rate guidance (“further gradual increases”) to be replaced with something less committal (“some further increases”). In the Summary of Economic Projections (SEP) we look for: (1) a downgrade to the median GDP growth projections; (2) a slight downgrade to the median NAIRU estimate; and (3) a new median policy path of 2 hikes in 2019, 1 hike in 2020, and no hikes in 2021 (down from 3-1-0 in the September SEP).

Thursday, December 20

  • 08:30 AM Philadelphia Fed manufacturing index, December (GS +14.0, consensus +15.0, last +12.9); We estimate the Philadelphia Fed manufacturing index increased 1.1pt to +14.0 in December. Other indicators of manufacturing activity such as the ISM manufacturing index have been fairly firm in recent weeks.
  • 08:30 AM Initial jobless claims, week ended December 15 (GS 220k, consensus 219k, last 206k); Continuing jobless claims, week ended December 8 (consensus 1,650k, last 1,661k): We estimate jobless claims increased by 14k to 220k in the week ended December 15, with some scope for mean reversion following a sharp 27k decline in the prior week.

Friday, December 21

  • 08:30 AM GDP (third), Q3 (GS +3.5%, consensus +3.5%, last +3.5%); Personal consumption, Q3 (GS +3.6%, consensus +3.6%, last +3.6%): We do not expect a revision in the third vintage of the Q3 GDP report (previously reported at +3.5% qoq saar), although we note some scope for upward revisions to business investment or inventories. We also forecast an unchanged reading for personal consumption (+3.6% qoq ar).
  • 08:30 AM Durable goods orders, November preliminary (GS flat, consensus +1.7%, last -4.3%); Durable goods orders ex-transportation, November preliminary (GS flat, consensus +0.3%, last +0.2%); Core capital goods orders, November preliminary (GS flat, consensus +0.2%, last flat); Core capital goods shipments, November preliminary (GS +0.1%, consensus +0.2%, last +0.3%): We expect durable goods orders to remain flat in the November report, given another month of soft commercial aircraft orders. Manufacturing production growth was below expectations in November, and we expect a drag on mining equipment orders from lower oil prices to weigh on core capital goods orders.
  • 08:30 AM Personal income, November (GS +0.3%, consensus +0.3%, last +0.5%); Personal spending, November (GS +0.4%, consensus +0.3%, last +0.6%); PCE price index, November (GS +0.05%, consensus flat, last +0.18%); Core PCE price index, November (GS +0.13%, consensus +0.2%, last +0.10%); PCE price index (yoy), November (GS +1.80%, consensus +1.8%, last +1.98%); Core PCE price index (yoy), November (GS +1.82%, consensus +1.9%, last +1.78%): Based on details in the PPI, CPI, and import price reports, we forecast that the core PCE price index rose 0.13% month-over-month in November, or 1.82% from a year ago. Additionally, we expect that the headline PCE price index increased 0.05% in November, or 1.80% from a year earlier. We expect a 0.3% increase in November personal income and a 0.4% gain in personal spending.
  • 10:00 AM University of Michigan consumer sentiment, December final (GS 97.4, consensus 97.5, last 97.5); We expect the University of Michigan consumer sentiment index to edge down 0.1pt from the preliminary estimate for December due to renewed stock market declines. The report’s measure of 5- to 10-year inflation expectations stood at 2.4% in the preliminary report for December.
  • 11:00AM Kansas City Fed manufacturing index, December (last +15)

Source: DB, MS, SocGen, Goldman

Published:12/17/2018 7:52:24 AM
[2016 Election] Flynn’s fate (7) (Scott Johnson) In “Flynn’s fate (6)” I posted the Special Counsel’s reply memorandum in the matter of Michael Flynn’s sentencing. Judge Sullivan had ordered the parties to file the FBI 302 and underlying notes of the the FBI’s interview with General Flynn. The attachments to the reply memorandum include neither. Where are they? Those documents are not included, but McCabe’s memo of his conversation scheduling the meeting with Flynn is included as Published:12/17/2018 7:23:29 AM
[Markets] "Over My Dead Body" Will Trump Meet With Mueller, Giuliani Says

Just days after former Trump attorney and notorious turncoat Michael Cohen launched his unofficial PR campaign to lighten his three-year prison sentence ahead of his self-surrender deadline, the Trump legal team's unofficial spokesman Rudy Giuliani made his triumphant return to the Sunday talk shows to defend the president against Cohen's claims that Trump directed him to organize payoffs to two women who had been threatening to go public with stories of affairs with the president.

During an appearance on Fox News, Chris Wallace didn't mince words. In his opening salvo, he asked Giuliani: "Did Mr. Trup direct Michael Cohen to pay off these two women or not?" Giuliani replied: "No...the president didn't know about this until some time into it, and he did find out about it an eventually reimburse him."

Furthermore "even if it were true, it's not a crime. The payment of money...has been covered in the Edward's case...even the FEC looked at those Edwards violations and determined they weren't violations."

And as for Cohen's claims that he committed the campaign finance violations out of "blind loyalty" to the president, Giuliani pointed out that Cohen's actions - including surreptitiously taping his conversations with the president - would seem to undercut these claims.

"Nonsense he was fiercely loyal to him. He lied to him...taped him...that's something I've never heard any lawyer ever do," Giuliani said.

Later in the interview, Wallace asked whether Trump would finally sit down with Robert Mueller's team of prosecutors for an in-person interview after turning in written responses to questions about allegations of Russian collusion. Though Giuliani had previously left open the possibility of an in-person interview, for the first time, Giuliani said he would never allow such a sit down to proceed.

"Over my dead body," Giuliani said.

During another Sunday show interview, Giuliani sounded less adamant about prohibiting Trump from sitting down with Mueller, citing an agreement with Mueller that left open the possibility of an in-person interview after written answers had been submitted. The questions answered by Trump only covered events during the campaign, and didn't address allegations of obstruction that arose after Trump took office.

"All I can tell you is the agreement contemplates our having discussions if there are any further follow-ups or questions, and there’s been no change in that agreement," Giuliani said. "And when it’s concluded, we’ll tell you."

Rebuffing Cohen's claim, made in an ABC interview last week, that prosecutors possess "substantial" evidence to back up Cohen's characterization of events, Giuliani described Cohen as a "serial liar" before joking that Mueller is currently investigating "several unpaid parking tickets form 1986."

"The only things left are parking tickets and jaywalking," Giuliani said.

Over the weekend, Trump stoked criticism of using "mobster-like" language in a tweet accusing the FBI of breaking into Cohen's office (when, in fact, agents had warrants to search Cohen's possessions).

If the pattern from the past few weeks holds, President Trump will issue some more scathing tweets about Cohen and Mueller this morning.

Published:12/17/2018 6:51:44 AM
[In The News] FBI And CIA Sources Say They Doubt Major Dossier Allegation

By Chuck Ross -

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A Pulitzer Prize-winning Washington Post reporter recently claimed CIA and FBI sources told the newspaper they do not believe the Steele dossier’s allegations about Michael Cohen are accurate. “We’ve talked to sources at the FBI and the CIA and elsewhere — they don’t believe that ever happened,” said Greg Miller, ...

FBI And CIA Sources Say They Doubt Major Dossier Allegation is original content from Conservative Daily News - Where Americans go for news, current events and commentary they can trust - Conservative News Website for U.S. News, Political Cartoons and more.

Published:12/16/2018 7:49:04 PM
[Politics] Andrew McCarthy Slams Trump For Claims About FBI Probe into Cohen Ex-federal prosecutor Andrew McCarthy slammed President Donald Trump on Sunday for his claims about the FBI investigation into his former personal lawyer Michael Cohen."Sir, in mobster lingo, a 'rat' is a witness who tells prosecutors real incriminating info. Perhaps a... Published:12/16/2018 7:18:57 PM
[Uncategorized] IG Report: Strzok, Page iPhones Wiped Clean, Thousands of Texts Destroyed Before IG Could Review Them An FBI officer on Mueller's team had reviewed Strzok's iPhone and reported "No substantive texts, notes or reminders” Published:12/16/2018 7:18:57 PM
[World] Alan Dershowitz: FBI Knew Truth Before Questioning Michael Flynn, Was 'Giving Him the Opportunity to Lie'

Alan Dershowitz said Saturday on "Justice With Judge Jeanine" that the FBI knew the truth before questioning former National Security Adviser Michael Flynn.

Published:12/16/2018 1:48:15 PM
[Politics] James Comey Rips Trump for 'Lying' About Cohen Raid Continuing his campaign to sow discord against President Donald Trump, fired FBI Director James Comey called on Republicans to "speak up" against the president "for the FBI, the rule of law, and the truth."Comey's latest salvo against his presidential nemesis came via... Published:12/16/2018 12:52:05 PM
[Politics] Trump: Michael Cohen Only Became a ‘Rat’ After FBI Did Something ‘Absolutely Unthinkable’

President Donald Trump said over Twitter on Sunday that his former personal attorney Michael Cohen only became a "rat" after the FBI did something "absolutely unthinkable." 

The post Trump: Michael Cohen Only Became a ‘Rat’ After FBI Did Something ‘Absolutely Unthinkable’ appeared first on Washington Free Beacon.

Published:12/16/2018 11:46:50 AM
[Robert Mueller] Will the Mueller Switch Project Collapse? (John Hinderaker) The sentencing of General Michael Flynn could turn out to be the Waterloo of the Mueller Switch Project. The feds never could have convicted Flynn of perjury or lying to government officials–they don’t even have a transcript of what he said to the FBI! As a criminal case, it was always a non-starter. The Justice Department initially had no intention of prosecuting. But then, after Robert Mueller took over the Published:12/16/2018 9:53:16 AM
[2016 Presidential Election] Redact this (Scott Johnson) On Friday night the FBI released a heavily redacted two-page summary that former FBI Director James Comey used to brief then President-elect Donald Trump in January 2017 regarding the so-called Steele Dossier on Trump’s ties to Russia. I have embedded the document below via Scribd. Politico procured the document released Friday night in a Freedom of Information Act lawsuit. Politico’s Josh Gerstein and Kyle Cheney report on the document here. Published:12/16/2018 8:17:48 AM
[Markets] Former FBI SSA Exposes McCabe & Mueller's "Unethtical, Target & Destroy Coercion" Tactics, Defends Flynn

Via SaraCarter.com,

Former FBI Supervisory Special Agent Robyn Gritz has asked SaraACarter.com to post her letter to Judge Emmet G. Sullivan in support of her friend and colleague retired Lt. Gen. Michael T. Flynn, who will be sentenced on Dec. 18. The Special Counsel’s Office has requested that Flynn not serve any jail time due to his cooperation with Robert Mueller’s office. Based on new information contained in a memorandum submitted to the court this week by Flynn’s attorney, Sullivan has ordered Mueller’s office to turn over all exculpatory evidence and government documents on Flynn’s case by mid-day Friday. Sullivan is also requesting any documentation regarding the first interviews conducted by former anti-Trump agent Peter Strzok and FBI Agent Joe Pientka -known by the FBI as 302s- which were found to be dated more than seven months after the interviews were conducted on Jan. 24, 2017, a violation of FBI policy, say current and former FBI officials familiar with the process. According to information contained in Flynn’s memorandum, the interviews were dated Aug. 22, 2017.

Read Gritz’s letter below... (emphasis added)

The Honorable  Emmet G. Sullivan. December 5, 2018   U.S. District Court for the District of Columbia

333 Constitution Avenue, N.W.

Washington D.C. 20001

Re: Sentencing of Lt. General Michael T. Flynn (Ret.)

Dear Judge Sullivan:

I am submitting my letter directly since Mike Flynn’s attorney has refused to submit it as well as letters submitted by other individuals. I feel you need to hear from someone who was an FBI Special Agent who not only worked with Mike, but also has personally witnessed and reported unethical & sometimes illegal tactics used to coerce targets of investigations externally and internally.

About Myself and FBI Career

For 16 years, I proudly served the American people as a Special Agent working diligently on significant terrorism cases which earned noteworthy results and fostered substantial interagency cooperation.  Prior to serving in the FBI I was a Juvenile Probation Officer in Camden, NJ.  Currently, I am a Senior Information Security Metrics and Reporting Analyst with Discover Financial Services in the Chicago Metro area.  I have recently been named as a Senior Fellow to the London Center for Policy Research.

While in the FBI, I served as a Special Agent, Supervisory Special Agent, Assistant Inspector, Unit Chief, and a Senior Liaison Officer to the CIA. I served on the NSC’s Hostage and Personnel Working Group and brought numerous Americans out of captivity and was part of the interagency team to codify policies outlining the whole of government approach to hostage cases.

In November 2007, I was selected over 26 other candidates to become the Supervisory Special Agent, CT Extraterritorial Squad; Washington Field Office (WFO) in Washington, DC.  At WFO, I led a squad of experts in extraterritorial evidence collection, overseas investigations, operational security during terrorist attacks/events, and overseas criminal investigations. I coordinated and managed numerous high profile investigations (Blackwater, Chuckie Taylor, Robert Levinson, and other pivotal cases) comprised of teams from US and foreign intelligence, military, and law enforcement agencies. I was commended for displaying comprehensive leadership performance under pressure, extensive teamwork skills, while conducting critical investigative analysis within and outside the FBI.

In December 2009, I was promoted to GS-15 Unit Chief (UC) of the Executive Strategy Unit, Weapons of Mass Destruction Directorate (WMDD).  While the UC, I codified the WMDD five-year strategic plan, formulated goals and objectives throughout the division, while translating the material into a directorate scorecard with cascading measurements reflecting functional and operational unit areas. This was the only time in Washington, DC when I did not work with of for McCabe.

From September to December 2010, I was selected as the FBI’s top candidate to represent the FBI, and the USG in a rigorous, intellectually stimulating; 12 week course for civilian government officials, military officers, and government academics at the George C. Marshall Center in Garmisch, Germany, Executive Program in Advanced Security Studies. The class was comprised of 141 participants from 43 countries.

I have received numerous recommendations and commendations for my professionalism, liaison and interpersonal ability and experienceAdditionally, I have been rated Excellent or Outstanding for my entire career, to include by Andrew McCabe when I was stationed at the Washington Field Office.  Further, other awards of note are: West Chester University 2005 Legacy of Leadership recipient, Honored with House of Representatives Citation for Exemplary record of Service, Leadership, and Achievements: Commonwealth of Pennsylvania, and Awarded with a framed Horn of Africa blood chit from the Department of Defense and Office of the DASD (POW/MPA/MIA) for my work in bringing Americans Out of captivity, “Patriot, Law Enforcement Warrior, and Friend.”

Length of Association with Flynn, McCabe, and Mueller

I met Michael Flynn in 2005, while working in the Counterterrorism Division (CTD) at FBI Headquarters (FBIHQ).

I met then Supervisory Special Agent Andrew McCabe, when he reported to CTD at FBIHQ, around the same time.  McCabe subsequently was the Assistant Section Chief over my unit, my Assistant Special Agent in Charge at the Washington Field Office, and the Assistant Director (AD) over CTD when I encountered the discrimination and McCabe spearheaded the retaliation personally (according to documentation) against me.

I have known both men for 12-13 years and worked directly with both throughout my career.  They are on the opposite spectrum of each other with regard to truthfulness, temperament, and ethics, both professionally and personally.

I regularly briefed former FBI Director and Special Prosecutor Mueller on controversial and complex cases and attended Deputies meetings at the White house with then Deputy Director Pistole. I got along with both and trusted both.  Watching what has been done to Mike and knowing someone on the 7th floor had to have notified Mueller of my situation (Pistole had retired), has been significantly distressing to me.

Lt.G. Michael T. Flynn:

Mike and I were counterparts on a DOJ-termed ground-breaking initiative which served as a model for future investigations, policies, legislation and FBI programs in the Terrorist Use of the Internet. For this multi-faceted and leading-edge joint operation, I was commended by Gen. Stanley McChrystal, Gen. Keith Alexander (NSA Director), and LtG. Michael Flynn as well as others for leading the FBI’s pivotal participation in this dynamic and innovative interagency operation. I received two The National Intelligence Meritorious Unit Citation (NIMUC) I for my role in this operation.  The NIMUC is an award of the National Intelligence Awards Program, for contributions to the United States Intelligence Community.

Mick Flynn has consistently and candidly been honest and straightforward with me since the day I met him in 2005. He has been a mentor and someone I trust to give me frank advice when I ask for his opinion.  His caring nature has shown through especially when he saw me being torn apart by the FBI and he felt compelled to write a letter in support of me.  He further took the extra step to comment on my character in an NPR article and interview exposing the wrongdoings in my case and others who have stood up for truth and against discrimination/retaliation.  Senator Grassley also commented on my behalf.  NPR characterized this action against me as a “warning shot” to individuals who stood up to individuals such as McCabe.

The day after I resigned from the FBI, while I was crying, Mike reached out and congratulated me on my early retirement. I really needed to hear that from someone I respected so much.  His support for the last 13 years has been unparalleled and extremely valuable in helping me get through the trauma of betrayal, unethical behavior, illegal activity executed against me and to rebuild my life. Additionally, his support has helped my family in dealing with their painful emotions regarding my situation. My parents wanted me to pass on to you that they are blessed that I have had a compassionate and supportive individual on my side throughout this trying time.

Mike has been a respected leader by his peers and by FBI Agents and Analysts who have interacted with him. I personally feel he is the finest leader I have ever worked with or for in my career. Our continued friendship and subsequent friendship with his family has helped all of us cope with the stress a situation like this puts on individuals and families.

It is so very painful to watch an American hero, and my friend, torn apart like this.  His family has had to endure what no family should have to. I know this because of the damaging effect my case had on my parent’s health, finances, and emotional well-being. Mike and I both had to sell our houses due to legal fees, endured smear campaigns (mostly by the same individual, McCabe). I ended up being deemed homeless by the Commonwealth of Pennsylvania, was on public assistance and endured extensive health and emotional damage due to the retaliation. Mike kept in touch and kept me motivated.  He has always reached out to help me with whatever he could.

The Process is the Punishment

Thomas Fitton of Judicial Watch commented to me that the “Process is the punishment.”  This is the most accurate description I have heard regarding the time Mike has gone through with this process and the year and a half I was ostracized and idled before I resigned.  This process is one which many FBI employees, current, retired and former, feel was brought to the FBI by Mueller and he subsequently brought this to the Special Prosecutor investigation. It also fostered the behavior among FBI “leadership” which we find ourselves shocked at when revealed on a daily basis. Is this the proper way to seek justice? I say no.  I swore to uphold the Constitution while protecting the civil rights of the American people. I believe many individuals involved in Mike’s case have lost their way and could care less about protection of due process, civil and legal rights of who they are targeting. Mike has had extensive punishment throughout this process. This process has punished him harder than anyone else could.

Andrew McCabe

I believe I have a unique inside view of the mannerisms surrounding Andrew McCabe, other FBI Executive Management and Former Director Mueller, as well as the unethical and coercive tactics they use, not to seek the truth, but to coerce pleas or admissions to end the pain, as I call it. They destroy lives for their own agendas instead of seeking the truth for the American people. Candor is something that should be encouraged and used by leadership to have necessary and continued improvement.  Under Mueller, it was seen as a threat and viciously opposed by those he pulled up in the chain of command.

I am explaining this because numerous Agents have expressed the need for you to know McCabe’s and Mueller’s pattern of “target and destroy” has been utilized on many others, without regard for policies and laws. I, myself, am a casualty of this reprehensible behavior and I have spoken to well over 150 other FBI individuals who are casualties as well.

I am the individual who filed the Hatch Act complaint against McCabe and provided significant evidentiary documents obtained via FOIA, open source, and information from current, former, and retired Special Agents. The Office of Special Counsel (OSC) asked why my filing of the complaint was delayed from the actual acts. I said I personally thought I was providing additional information to what should have been an automatic referral to OSC by FBI OPR. I was notified I was the only complainant. This illustrates not only a fatal flaw in OPR AD Candice Will not making the appropriate and crucial referral, but also shows the fear of those within the FBI to report individuals like McCabe for fear of retaliation.

While serving at the CIA, detailed by the FBI in January 2012, I was responsible for overseas investigations, as opposed to Continental United States-based (CONUS) cases. Unfortunately, during my assignment at the CIA, I encountered extensive discrimination by two FBI Special Agents and subsequently, in 2012, I filed an Equal Employment Opportunity (EEO) complaint.  Instead of addressing the issues, then CTD Assistant Director Andrew McCabe chose to authorize a retaliatory Office of Professional Responsibility (OPR) investigation against me, five days after my EEO contact. The OPR referral he signed was authored by the two individuals I had filed the EEO complaint against.  In his signed sworn statement, McCabe admitted he knew I had filed or was going to file the EEO.

Numerous members of my department at the CIA requested to be spoken with by CTD executive management, regarding my work ethic and accomplishments.  However, CTD, Inspection Division, and OPR disregarded the list of names and contact numbers I submitted.  This is an example of knowing you are being targeted and the truth is not being sought.

Although my time at this position was short, I was commended by my CIA direct supervisor for: “having already contributed more than your predecessor in the short time you have been here.” My predecessor had been assigned to the post for 18 months; I had been there four months.

In contrast and showing lack of candor, McCabe wrote on official documents the following statement, contradicting the actual direct supervisor I worked with daily:

“SA Gritz had to be removed from a prior position in an interagency environment, due to inappropriate communications and general performance issues”

This is one of many comments McCabe used to discredit my reputation and to ostracize me.  McCabe knew me as someone who told the truth, worked hard, got results, and   was always willing to be flexible when needed. He was also acutely aware of the excellent relationships I had formed in the USG interagency due to comments made by individuals from numerous agencies. Yet, he continued to make false statements on official documents. He has done this to numerous other very valuable FBI employees, destroying their careers and lives. He used similar tactics of lies against Flynn. It should be noted, McCabe was very aware of my professional association with Mike Flynn.

In July 5, 2012, I was involuntarily pulled back to CTD from the CIA. I was told McCabe made the decision. A year and a month later, I resigned from the job I absolutely loved and was good at.  All because of the lack of candor of numerous individuals within the FBI.

Unethical and dishonest investigative tactics

Throughout the last year, I have kept abreast of the revelations surrounding anything related to Mike’s case. I believe, from my years at the FBI and in exposing corruption and discrimination, the circumstances surrounding the targeting, investigation, leaking, and coercion of him to plea are all consistent with the unethical process I and many others have witnessed at the FBI. The charge which Mike Flynn plead to was the result of deception, intimidation, and bias/agenda. Simply, Mike is being branded a convicted felon due to an unethical and dishonest investigation by people who were malicious, vindictive, and corrupt. They wished to silence Mike, like they had once silenced me.

The American people have read the Strzok/Page text messages, the conflicting testimony and lack of candor statements of former Director Comey, the perceived overstepping of the reasonable scope of the Special Prosecutor’s investigation, the extensive unethical, untruthful, and outright illegal behavior of Andrew McCabe, to include slanderous statements against Flynn, and the facts found within FOIA released documents and Congressional testimony. As a former/retired Agent, I have combed through every piece of information regarding Mike’s case, as if I was combing through evidence in the hundreds of cases I have successfully handled while in the FBI.

The publicly reported Brady material alone, in this case, outweighs any statement given by any FBI Agent (we now know at least one FD-302 was changed), Special Prosecutor investigator report, and any other party still aggressively seeking that this case remain and be sentenced as a felony. Quite simply, I cannot see justice being served by branding LtG. Michael Flynn a convicted felon, when the truth is still being revealed while policies, ethics, and laws have been violated by those pursuing this case.

We now know all FBI employees involved in Mike Flynn’s case have either been fired, forced to resign or forced to retire because of their excessive lack of candor, punitive biases, leaking of information, and extensive cover-up of their deeds.

Summation

Michael Flynn has always displayed overwhelming candor and forthrightness.  One of the main individuals involved in his case is Andrew McCabe, who used similar tactics against me in my case, of which Mike Flynn defended me by penning a letter of character reference and is a witness.  Seeing McCabe was named as a Responding Management Official in my case, he should have recused himself with anything having to do with a character witness on my behalf against him and DOJ.

I’m told by numerous people, but have been unable to confirm, that McCabe was asked why he was so viciously going after Flynn; my name was mentioned. I do know, from experience with McCabe, he is a vindictive individual and I have no doubt Mike’s support of me fueled McCabe’s disdain and personally vindictive aggressive unethical activities in this case. It matches his behavior in my case.

Reliable fact-finding is essential to procedural due process and to the accuracy and uniformity of sentencing.  I’m unsure if the fact-finding in this case is reliable, nor do I think we currently have all the facts.

The punishment which LtG. Flynn has already endured this past year, due to the nature of the case, legal fees and reputation damage, is punishment enough.  He is a true patriot, a loving husband and father, a devoted grandfather, a trusted friend, and has a close knit family made up of compassionate and honest individuals. To be branded a felon, is a major hit to a hero who protected the American people for 33 years. I do not think society would benefit from Mike Flynn going to jail nor being branded as a convicted felon. Not knowing the sentencing guidelines for this charge but if there is any chance that the case can be downgraded to a misdemeanor, this would be an act of justice that numerous Americans need to see to stay hopeful for further justice.

Respectfully yours,

Robyn L. Gritz

Published:12/15/2018 8:42:59 PM
[Markets] Mueller Scrubbed Messages From Peter Strzok's iPhone; OIG Recovers 19,000 New "FBI Lovebird" Texts

The Justice Department's internal watchdog revealed on Thursday that special counsel Robert Mueller's office scrubbed all of the data from FBI agent Peter Strzok's iPhone, while his FBI mistress Lisa Page's phone had been scrubbed by a different department, according to a comprehensive report by the Office of the Inspector General (OIG) released on Thursday. 

After Strzok was kicked off the special counsel investigation following the discovery of anti-Trump text messages between he and Page, his Mueller's Records Officer scrubbed Strzok's iPhone after determining "it contained no substantive text messages," reports the Conservative Review's Jordan Schachtel. 

Mueller's team was unable to locate Page's iPhone, however the DOJ's Justice Management Division (JMD) similarly scrubbed her phone - resetting it to factory settings. 

Meanwhile, the OIG recovered approximately newly found 19,000 Strzok-Page texts from their Galaxy S5 phones. The messages span a "gap" in text messages between December 15, 2016 and May 17, 2017. 

OIG digital forensic examiners used forensic tools to recover thousands of text messages from these devices, including many outside the period of collection tool failure (December 15, 20 I 6 to May 17, 2017) and many that Strzok and Page had with persons other than each other. Approximately 9,311 text messages that were sent or received during the period of collection tool failure were recovered from Strzok's S5 phone, of which approximately 8,358 were sent to or received from Page. Approximately 10,760 text messages that were sent or received during the period of collection tool failure were recovered from Page's S5 phone, of which approximately 9,717 were sent to or received from Strzok. Thus, many of the text messages recovered from Strzok's S5 were also recovered from Page's S5. However, some of the Strzok-Page text messages were only recovered from Strzok's phone while others were only recovered from Page's phone. -OIG Report 

Thousands of text messages between Strzok and Page were recovered by the OIG, many indicating that both agents in charge of investigating Donald Trump absolutely hate him. 

In August 2016, Strzok and Page discussed an "insurance policy" in the event that Trump won the election which many believe to be in reference to operation Crossfire Hurricane - the DOJ's counterintelligence investigation into Trump and his campaign. 

"I want to believe the path you threw out for consideration in Andy's office - that there's no way he [Trump] gets elected - but I'm afraid we can't take that risk." wrote Strzok, adding "It's like a life insurance policy in the unlikely event you die before you're 40." 

In the home stretch of the 2016 US election, Strzok is fuming at Trump - texting Page: " I am riled up. Trump is a f*cking idiot, is unable to provide a coherent answer." He then texts "I CAN'T PULL AWAY, WHAT THE F*CK HAPPENED TO OUR COUNTRY (redacted)??!?!," to which Page replies "I don't know. But we'll get it back."

More than two years later, the anti-Trump FBI agents may not have gotten their country back - but the special counsel's office continues to cast a shadow of doubt Trump's legitimacy.

Published:12/15/2018 1:40:48 PM
[World] Jonathan Turley Rips James Comey for 92 Street Y Speech About Trump

Law Professor Jonathan Turley said ex-FBI Director Jim Comey's remarks about the Trump White House and the FBI interview of Gen. Michael Flynn is "the epitaph of his entire time" as director.

Published:12/14/2018 7:07:05 PM
[Politics] REVEALED: FBI 302s show agents didn’t believe Flynn was lying! The FBI 302 of Flynn’s interview has been released as the judge ordered, and it does validate the reporting we heard many months ago that the FBI agents who interviewed Flynn did . . . Published:12/14/2018 4:05:42 PM
[Politics] REVEALED: FBI 302s show agents didn’t believe Flynn was lying! The FBI 302 of Flynn’s interview has been released as the judge ordered, and it does validate the reporting we heard many months ago that the FBI agents who interviewed Flynn did . . . Published:12/14/2018 4:05:42 PM
[Markets] "Wokesterism" - Will The Donald 'Devil-Hunters' Be In The Dock In 2019?

Authored by James Howard Kunstler via Kunstler.com,

Sleepwalkers Awoke!

Andrew Sullivan called it “the Great Awokening” in a shrewd New York Magazine column this week. He refers, off course, to earlier episodes of American religious hysteria, namely the Great Awakening of the 1730s that featured the Rev. Jonathan Edwards raining sulfur and brimstone down on guilt-wracked New Englanders, and then the Second Awakening of the the early 1800s that spun off innumerable Protestant sects, cults, and utopian experiments. I like the term “Wokesterism” because the “ism” part acknowledges that the current hysteria makes a religion out of politics.

Sullivan’s theory is that Wokesterism is an improvised replacement for sclerotic American Christianity, to fill the vacuum of entropic meaninglessness that pervades life in the republic these days. He says:

And so we’re mistaken if we believe that the collapse of Christianity in America has led to a decline in religion. It has merely led to religious impulses being expressed by political cults. Like almost all new cultish impulses, they see no boundary between politics and their religion.

Wokesterism eerily mirrors many of the harsher practices of the most severe American Protestantism. It offers its own original sin, “white privilege,” from which there is neither redemption nor hope of redemption - like the old Presbyterian hell for babies who have come into this world drenched in sin. No amount of abject apology will avail for heretics to Wokesterism.

The principal aims of Wokesterism are coercion of others, persecution, and punishment of the guilty (the un-Woke). Most importantly, it requires the suspension of individual conscience in order to promote unthinking, robotic obedience and mob justice. That helps explain the disgraceful blindness of the Wokester Left, especially the educated elites who work in the news media, the computer tech sector, and other “creative class” vocations.

One thing that Sullivan leaves out is the necessity for the Devil. That role is filled by Mr. Trump. His sinister cargo of belief, countering the Wokefullness of unicorns and rainbows, is the dark theology of MAGA, and Mr. Trump’s followers are the imps, demons, incubi and succubi of deplorable fly-over land. Wokesters will spare no effort to vanquish all this wickedness, and even lying and cheating in the service of that end is considered fair play. Hence the arrant and epic dishonesty of The New York Times.

Interesting case in point: Yesterday’s developments in the General Flynn court case are not even present in this morning’s Times. I speak of the action on the bench of Federal Judge Emmet Sullivan. It’s been brought to his attention that the scurrilous entrapment of Gen. Flynn by Woke FBI managers entailed departures from normal, lawful procedure. Gen. Flynn was interrogated in January of 2017, and the FBI account of the interview was not written (supposedly) until August off that year. The reason that reports and memoranda must be written ASAP after an interview is for the obvious reason that much important fact may be forgotten or misremembered if not documented right away.

There is actually reason to believe that earlier versions of the report exist (or did exist), and they were trashed or buried when the main interrogator-of-Flynn, Peter Strzok, was cashiered from Robert Mueller’s team in July 2017. Judge Sullivan has demanded that the FBI produce those earlier docs by today (Friday) at 3:00 pm. It will be interesting to see if the FBI complies… or not. There is also a fair chance that Judge Sullivan will throw out Gen. Flynn’s conviction based on prosecutorial misconduct.

In the event, we could see the awesome downfall of the Archangel Mueller, and the unravelling of Wokester dreams of defeating the Devil via the Mueller inquisition. It will certainly be an embarrassment to the ardent Wokesters of the news media, who have shilled for this campaign for over two years. The General Flynn business is not the only thread unwinding in the giant tapestry of Wokester narrative. As in other epic persecutions, like the Jacobin Reign of Terror in 1790s France, and Mao Zedong’s Cultural Revolution of the 1960s, the tables are turning. The inquisitors, prosecutors, and executioners are going too face charges themselves, and harsh punishment is not out of the question.

The defeat of Wokesterism would be a very salutary outcome for a nation that has so badly lost its bearings to the worst of human instincts: religious persecution. It could be a fatal blow to the Democratic Party, which will have to find an alternative reason for its existence than Devil-and-Demon hunting. The Devil hunters themselves could be in the dock in 2019, answering for their actual crimes against American citizens and the public interest. Even the sainted Holy Mother of Wokesterism, the Archangel Hillary, may find herself wingless in a witness chair, answering how all that schwag from Russian banksters happened to end up in her foundation’s cookie jar.

Published:12/14/2018 2:05:35 PM
[FBI] Flynn’s fate (5) (Scott Johnson) In an interview with at the 92nd Street Y this past Sunday, Nicole Wallace asked former FBI Director James Comey how two FBI agents ended up meeting with National Security Advisor Michael Flynn in the Situation Room during the first week of the Trump administration — the meeting that resulted in Flynn’s plea to one count of false statements in the case that is pending before Judge Emmet Sullivan. Comey Published:12/14/2018 9:03:15 AM
[Markets] Clinton Foundation Whistleblowers Testify: "It Operated As An Unregistered Foreign Agent"

Via Sara Carter At saracarter.com

The Clinton Foundation operated as a foreign agent ‘early in its life’ and ‘throughout it’s existence’ and did not operate as a 501c3 charitable foundation as required, and is not entitled to its status as a nonprofit, alleged two highly qualified forensic investigators, accompanied by three other investigators, said in explosive testimony Thursday to the House Oversight and Government Reform Committee.

John Moynihan and Lawerence W. Doyle, both graduates of the Catholic Jesuit College of the Holy Cross and former expert forensic government investigators, gave their shocking testimony before congress based on a nearly two year investigation into the foundation’s work both nationally and internationally. They were assisted by three other highly trained experts in taxation law and financial forensic investigations. The forensic investigators stressed that they obtained all the documentation on the foundation legally and through Freedom of Information Request Acts from the IRS and other agencies.

Former Utah U.S. Attorney General John Huber, who resigned when he was appointed by former Department of Justice Attorney General Jeff Sessions to investigate the Clinton Foundation and the issues surrounding the approval to sell 20 percent of U.S. Uranium assets to Russia, declined to attend the hearing. Chairman Mark Meadows, R-NC, who oversaw the hearing stated that it was disappointment that Huber declined, leaving Congress in the dark regarding the DOJ’s investigation.

Investigations into the Clinton Foundation have always been plagued by politics but Moynihan wanted to make clear in his opening statement that this investigation was one of many his firm has conducted on nonprofits and had nothing to do with politics. 

Doyle and Moynihan have amassed 6,000 documents in their nearly two-year investigation through their private firm MDA Analytics LLC. The documents were turned over more than a year and a half ago to the IRS, according to John Solomon, who first published the report last week in The Hill.  

The investigation clearly demonstrates that the foundation was not a charitable organization per se, but in point of fact was a closely held family partnership,” said Doyle, who formerly worked on Wall Street and has been involved with finance for the last ten years conducting investigations. 

“As such it was governed in a fashion in which it sought in large measure to advance the personal interests of its principles as detailed within the financial analysis of this submission and further confirmed within the supporting documentation and evidence section.”

At the onset of the hearing, Moynihan wanted to make perfectly clear that the intention to look into the Clinton Foundation was not political but based on their work with the firm.

“At this point I’d like to answer two questions, who are we? We are apolitical,” Moynihan told the committee. “We have no party affiliation to this whatsoever, No one has financed us… we are forensic investigators that approached this effort in a nonpartisan profession, objective, and independent way…we follow facts, that’s all.”

“We have never been partisan,” he added, speaking on behalf of all five members of his group testifying to Congress. “We come from law enforcement and wall street where each of us has dedicated our entire lives and praised the rule of law doing the right thing pursuing facts. we follow facts. that’s all.”

“None of this is our opinion,” he went on state.

“I emphasize none of this is our opinion. These are not our facts. They are not your facts. They are the facts of the Clinton Foundation.”

He disclosed the reason his firm decided to take on the Clinton Foundation and the fact that they paid for the investigation out of their “own pockets.”

“Are you doing this for money,” said Moynihan to the committee. “Yes, this is how we make a living.”

Moynihan and Doyle swapped back and forth between there testimony and opening statement, making it clear they were working as a team. But the most shocking statements came from Moynihan’s statement as he read the laundry list of violations by the Clinton Foundation.

Moynihan stated “Foreign agent,” as he began to read from a long list of violations discovered during the course of their investigation.

The Clinton Foundation “began acting as an agent of foreign governments ‘early in its life’ and throughout its existence. As such, the foundation should’ve registered under FARA (Foreign Agents Registration Act),” he said. “Ultimately, the Foundation and its auditors conceded in formal submissions that it did operate as a (foreign) agent, therefore the foundation is not entitled to its 501c3 tax exempt privileges as outlined in IRS 170 (c)2.

Doyle, who was also outlining a litany of violations by the foundation, noted that currently there are approximately 1.75 million nonprofits in the United states that annually generate nearly 2 trillion dollars, which is 9 percent of the U.S. GDP.

Whose minding the store, looking out for the donors and minding the rule of law,” said Doyle.

“On that note, we followed the money so we made extensive spreadsheets of their revenues and expenses, we analyzed their income statements and we did a macro-review of all the donors, which its a very (jumbled) sort of foundation,” said Doyle. “Less than 1/10th of one-percent of the donors gave 80 percent of the money. So we follow the money.” 

Moynihan added that the foundation “did pursue programs and activities for which it had neither sought nor achieved permission to undertake.” 

Particularly, he noted the case of the Clinton Presidential Library in 2004. He noted that the foundation’s role before and after library was built was a misrepresentation to donors “of the approval organizational tax status to raise funds for the presidential library programs therein. In these pursuits the foundation failed the organizational and operational task 501c3 internal revenue code 7.25.3.” 

Additionally Doyle stated that the foundation’s intentional “misuse of donated public funds.” He stated that the foundation “falsely attested that it received funds and used them for charitable purposes which was in fact not the case. Rather the foundation pursued in an array of activities both domestically and abroad.” 

“Some may be deemed philanthropic, albeit unimproved, while other much larger in scope are properly characterized as profit oriented and taxable undertakings of private enterprise again failing the operational tests philanthropy referenced above,” Doyle said. 

Philip Hackney, a tax law professor at Louisiana State University, who is a former Exempt Organizations lawyer at the IRS, and Tom Fitton, president of the conservative government watchdog group Judicial Watch also testified at the hearing. Judicial Watch has been at the forefront of fighting the Clinton Foundation in court to access documents requested by FOIA. Hackney and Fitton testified during the first panel of the hearing.

Published:12/14/2018 8:04:39 AM
[2016 Presidential Election] Texts found (& lost) in a bottle (Scott Johnson) The Department of Justice Office of the Inspector General conducted an investigation of the gap in text messages during the period December 15, 2016, through May 17, 2017, from the cell phones assigned to famous FBI lovers Peter Strzok and Lisa Page. The Office of Inspector General Cyber Investigations Office was asked to attempt recovery of these missing text messages for the period in issue. The Inspector General has just Published:12/14/2018 7:32:47 AM
[Uncategorized] Judge Demands Interviews With Flynn After Sentencing Memo Raises Questions About the FBI’s Conduct The memo alleges FBI agents, including McCabe and Strzok, intentionally mislead Flynn during initial questioning Published:12/13/2018 7:31:12 PM
[Markets] New Jersey Declares War On Its Residents: Plans Door-To-Door Gun Confiscation Campaign

Authored by Mike Adams via NaturalNews.com,

A New Jersey law that makes it a felony to possess a gun magazine capable of holding over 10 rounds of ammunition is now active.

This wildly unconstitutional law instantly criminalizes hundreds of thousands of New Jersey citizens who legally acquired normal capacity firearms magazines - which include 17-round pistol magazines and 30-round rifle magazines - as tools of self-defense against the very same violent criminals that are protected by the Democrats who passed the gun magazine ban.

Now, the New Jersey State Police have told Breitbart News they won’t rule out “house-to-house enforcement” of the new magazine ban, meaning they plan to conduct house-to-house arrests and gun magazine confiscations. These Nazi-style anti-gun operations will, of course, be carried out at gunpoint, further underscoring the entire purpose of the Second Amendment and the need for citizens to arm themselves with 30-round magazines to defend against government tyranny.

Breitbart News contacted New Jersey State Police on Monday to ask how they planned to enforce the newly enacted ban, reports Breitbart.com.

“The NJ State Police refused to rule out house-to-house checks. Rather, they responded: ‘We do not discuss enforcement strategies.'”

The very reason citizens need 30-round magazines is because the government wants to use coercion and the threat of violence to take away their legally-acquired firearms and magazines. If citizens surrender 30-round magazines, the next step will be New Jersey banning all magazines, followed by the banning of all semi-automatic firearms. Almost overnight, citizens of New Jersey will find themselves living under an authoritarian regime of pure tyranny and lawlessness… with no means to defend themselves against the state, which will then have a monopoly on effective firearms.

This is a repeat of Nazi Germany, which disarmed the Jews before mass murdering six million of them. It’s so much easier to murder people, after all, when the government disarms them first. And anyone going along with the disarmament is signing their own death warrant.

The purpose of the magazine ban is to make sure citizens can’t shoot back when the authoritarian government comes to take ALL their guns

The entire purpose of the gun magazine ban, of course, is to make sure that innocent citizens are unable to shoot back when the government sends gun confiscation teamson door-to-door raids, gunning down citizens and taking their firearms by force. Anyone who knows history will immediately realize that New Jersey is walking down the path of Stalinist Russia or Hitler’s Germany, weaponizing the power of corrupt government to disarm the very people that government will later target for mass arrests and mass murder.

Have no illusions: The aim of all Leftists in government is the establish an authoritarian government regime that holds a monopoly over all firepower, ruling over disarmed citizens who are taxed to death, silenced by the tech giants and criminalized for seeking to defend their own nation against tyranny. This will be combined with open borders policies that flood the nation with violent criminal illegal aliens who will all be granted absolute legal immunity from their crimes, even while American citizens are arrested and imprisoned for merely exercising their Second Amendment rights.

As the Founding Fathers repeatedly noted, all citizens of America have a constitutional duty to resist unconstitutional, illegal “laws” that deprive them of their constitutional rights. Just because New Jersey passes a magazine ban doesn’t mean the New Jersey government has the rightful authority to assert such a restriction. The right to keep and bear arms implies the right to keep and bear the ammunition and magazines required for those arms to function. In passing the gun magazine ban, New Jersey lawmakers prove that they are lawless tyrants who have zero regard for the Bill of Rights, the right of self-defense or the safety of citizens in their own homes. It also underscores why such tyrants must be removed from power by the voters and prevented from destroying the civil rights of the people.

How much blood are New Jersey State Police willing to shed to establish their dictatorial regime of absolute power?

All this raises an important question: How much blood are New Jersey State Police officers willing to shed in order to establish absolute power over the (disarmed) citizens? And who, exactly, is suicidal enough to run these door-to-door confiscation raids, demanding citizens turn over the very hardware they need to defend themselves against New Jersey government tyrants?

It now appears that New Jersey State Police are gearing up to wage mass shootings of gun owners who resist the magazine ban. This will all be carried out, of course, in the name of “public safety.” Thus, the government will engage in mass shootings while claiming to be stopping mass shootings. Such is the new tyranny of the deranged, lawless Left which believes no citizen should have the right to defend themselves against the wave of violent illegal alien criminals those very same Leftists want to see flood across the open border and invade U.S. cities.

This is the new reality is living under the tyrannical rule of Democrats who despise America and are doing everything in their power to destroy the nation and criminalize its patriots. If you dare attempt to defend yourself with a 30-round magazine against a group of illegal alien human traffickers who all have their own 30-round magazines, suddenly you are the criminal while the illegal aliens receive “sanctuary” status. Yes, it’s beyond insane, but this is precisely what left-wing lunacy has delivered in America. Now in New Jersey, no citizen is allowed to defend herself against violence, even as the state becomes a tool of violence against the citizens. Don’t forget, either, that under Barack Obama, the entire deep state apparatus, including the FBI and DOJ, was weaponized to spy on the Trump campaign, frame campaign officials for “crimes” and violate the civil rights of Trump associates via FISA warrants which were achieved using astonishing levels of deception and abuse of government power.

The government is a weapon against the people of America, and right now it’s only President Trump holding back the full force of tyranny that seeks to eviscerate any last shred of both the First and Second Amendments.

We must all now realize that the New Jersey government is waging war against its own citizens while protecting illegal aliens from prosecution. Thus, the government of New Jersey has, without question, become the enemy of the People. It won’t be long, I’d imagine, before we see New Jersey resistance groups designating New Jersey lawmakers as “enemy combatants” who have declared war on the people of New Jersey.

No good can come of this

A state government that believes it can assert the power to criminally arrest its own citizens for possessing legally-acquired “normal capacity” magazines must also believe it has the power to confiscate all guns, too. Thus, it’s only a matter of time before New Jersey lawmakers decide that no citizen should be allowed to own any gun at all. When that day comes — and it isn’t far off — will the law-abiding citizens of New Jersey do what they’re told and turn in all their guns, too?

Every government will take more and more power until it is forced to stop. There is no such thing as a government that has “enough” power. Its bureaucrats are forever hungry for more power, and they will continue to strip power from the citizens for as long as they can get away with it. The rise of tyranny is an inescapable human vector — a concentration of power that only snowballs into increasingly dangerous levels of tyranny and authoritarianism. Only when citizens stand up and say “Enough!” will bureaucrats ever back down and be humbled.

New Jersey is marching down the path of Stalinist authoritarianism. Have no illusions that New Jersey State Police will carry 30-round magazines, not 10-round magazines. The entire point of this magazine confiscation program is to incrementally disarm the citizenry and make sure that when the NJ government launches its all-out war on pro-2A citizens, those citizens are at a severe disadvantage in terms of magazine capacity. It’s so much easier to win a war, after all, if you force your enemy to carry 10-round magazines. And from the point of view of New Jersey lawmakers, the people are their enemy. YOU are already an “enemy combatant” in the eyes of NJ Democrats.

Giving up your 30-round magazines, in other words, is tantamount to surrendering to tyranny. No lawful government would ever attempt to take away your rifle mags. The very fact that New Jersey is going down this path proves that NJ bureaucrats plan to do much more in the near future. Ultimately, they don’t want the citizens to have any means to defend themselves whatsoever.

First they came for the magazines, and we turned those in to comply with the law.

Then they came for the guns, and we turned those in, too, to comply with the law.

Then they came for me, and there was no one left to speak for me (and no means to defend myself against lawless tyranny).

Published:12/13/2018 7:31:12 PM
[Markets] Watch Live: Clinton And Uranium One Whistleblower's "Explosive" Testimony On Capitol Hill

Several whistleblowers along with Judicial Watch's Tom Fitton - all of whom have compiled a trove of information on the Clinton Foundation and/or Uranium One, are testifying before the House Oversight and Government Reform Committee today. 

In addition to Fitton, the panel will hear testimony from Philip Hackney, Associate Professor of Law at the University of Pittsburgh who spent five years at the Office of the Chief Counsel of the IRS in Washington D.C. 

Also testifying will be DM Income Advisors managing partner Lawrence W. Doyle, and JFM and Associates prinncipal John F. Moynihan. 

Rep. Mark Meadows (R-NC), Chairman of the House Freedom Caucus, told Fox News's Martha MacCallum on Monday night that the whistleblowers have "explosive" allegations to share.

Watch live at 2pm EST: 

As we noted on Tuesday based on reporting by The Hill's John Solomon, the whistleblowers - who are former federal criminal investigators, have allegged that the Clinton Foundation was "engaged in illegal activities and may be liable for millions of dollars in delinquent taxes and penalties." 

We may also hear about revalations of pay-for-play at Thursday's hearing - as the Obama State Department, headed at the time by Hillary Clinton, authorized $151 billion in Pentagon-brokered deals to 16 countries that donated to the Clinton Foundation - a 145% increase in completed sales to those nations over the same time frame during the Bush administration, according to IBTimes

Meanwhile, Solomon reported on Tuesday that one whistleblower who submitted 6,000 pages of evidence through a firm composed of former federal law enforcement investigators, MDA Analytics LLC., has provided evidence of potential tax crimes as well as a "culture of noncompliance."  

That submission made with the IRS, and eventually provided to the Justice Department in Washington and to the FBI in Little Rock, Arkansas, alleges there is "probable cause" to believe the Clinton Foundation broke federal tax law and possibly owes millions of dollars in tax penalties. That submission and its supporting evidence will be one focus of a GOP-led congressional hearing Thursday in the House.

The foundation strongly denies any wrongdoing. But it acknowledges its own internal legal reviews in 2008 and 2011 cited employee concerns ranging from quid pro quo promises to donors, to improper commingling of personal and charity business. -The Hill

We will update this article with highlights from Thursday's Congressional testimony. 

Published:12/13/2018 1:01:40 PM
[World] Judge Napolitano on Michael Flynn Alleging He Was Pressured by FBI Agents Not to Have Lawyer Present

Judge Andrew Napolitano said Michael Flynn's legal team's allegation that the FBI pushed Flynn not to bring a lawyer to his fateful Jan. 24, 2017 interview with agents at the White House is "not a defense to lying."

Published:12/13/2018 9:59:38 AM
[Media] TICK TOCK! Kimberley Strassel tweets new info about judge in Flynn’s case that could spell TROUBLE for FBI (Brit Hume assist)

Kimberley Strassel shared a tweet with breaking news about General Flynn’s case, breaking news that could spell big trouble for the FBI: BREAKING: The judge in the Flynn case–the no-nonsense Judge Emmet Sullivan–is now demanding referenced docs (McCabe memo, FBI 302) related to that infamous Jan 24, 2017 interview w/Flynn. Also has ordered gov to […]

The post TICK TOCK! Kimberley Strassel tweets new info about judge in Flynn’s case that could spell TROUBLE for FBI (Brit Hume assist) appeared first on twitchy.com.

Published:12/13/2018 9:59:37 AM
[2016 Presidential Election] A Comey contradiction (Scott Johnson) Reading the transcript of former FBI Director James Comey’s testimony to the House Judiciary and Oversight Committees last week, I formed the strong impression that Comey falls somewhat short of the straight shooter image by which he presents himself. He has learned how to play a G-man on television. The reality, however, departs from the image. I posted the transcript of Comey’s testimony last week in “Comey doesn’t know and Published:12/13/2018 9:27:49 AM
[Politics] GOOD NEWS? Federal judge wants to see notes on infamous FBI meeting with Flynn before sentencing It was reported late last night that the federal judge overseeing the sentencing for Michael Flynn now wants to see the FBI notes on Flynn before he sentences him: Strassel says this . . . Published:12/13/2018 8:59:27 AM
[Politics] GOOD NEWS? Federal judge wants to see notes on infamous FBI meeting with Flynn before sentencing It was reported late last night that the federal judge overseeing the sentencing for Michael Flynn now wants to see the FBI notes on Flynn before he sentences him: Strassel says this . . . Published:12/13/2018 8:59:27 AM
[Columnists] Comey Continues to Display His Lack of Credibility

Fired former FBI Director James Comey is at it again. Last week, Comey testified before members of the House Judiciary Committee and the House Oversight... Read More

The post Comey Continues to Display His Lack of Credibility appeared first on The Daily Signal.

Published:12/12/2018 11:25:46 PM
[In The News] Michael Flynn Judge Seeks Review Of Key FBI Notes Before Sentencing Decision |

By Chuck Ross -

Michael Flynn

The judge presiding over the Michael Flynn case is ordering a review of key FBI documents before deciding on a sentence for the former national security adviser. Judge Emmet Sullivan wants to review a memo put together on Jan. 24, 2017 by former FBI Deputy Director Andrew McCabe. He also ...

Michael Flynn Judge Seeks Review Of Key FBI Notes Before Sentencing Decision | is original content from Conservative Daily News - Where Americans go for news, current events and commentary they can trust.

Published:12/12/2018 9:53:39 PM
[World] Manafort, Cohen were prosecuted for tax matters that could have been resolved by civil settlement

Paul Manafort thought he was in the clear in the summer of 2014 after meeting with federal prosecutors and FBI agents about his Ukrainian income, bank records and income tax returns.

Michael Cohen was charged so quickly he never got a chance to meet with the Justice Department's Tax Division ... Published:12/12/2018 1:21:13 PM

[Politics] FBI Corruption Probe Indicts a Top Tallahassee Democrat

A federal investigation into top circles of Tallahassee politics has led to the indictment and arrest of one of Florida's most prominent Democrats.

The post FBI Corruption Probe Indicts a Top Tallahassee Democrat appeared first on Washington Free Beacon.

Published:12/12/2018 12:51:41 PM
[The Blog] Andrew McCabe told Michael Flynn the ‘quickest way’ to resolve FBI interview was not to involve the White House Counsel

"The agents did not provide General Flynn with a warning of the penalties for making a false statement..."

The post Andrew McCabe told Michael Flynn the ‘quickest way’ to resolve FBI interview was not to involve the White House Counsel appeared first on Hot Air.

Published:12/12/2018 12:21:18 PM
[Markets] Michael Cohen To Be Sentenced At 11AM In New York Court

Michael Cohen, former longtime personal lawyer for President Trump, has shown up to a New York courthouse where he will be sentenced on Wednesday for a laundry list of crimes - some of which implicate Trump in possible wrongdoing, but most of which have nothing to do with the president. 

Cohen, who went from claiming he would "take a bullet" for President Trump to stabbing his former boss in the back, faces sentencing on nine federal charges, including campaign finance violations based on a hush-money scheme to pay off two women who claimed to have had affairs with Trump, as well as making false statements to special counsel Robert Mueller. 

New York prosecutors have recommended that Judge William Pauley impose "a substantial term of imprisonment" on Cohen - which may be around five years. Cohen's attorneys, meanwhile, have asked Pauley for a sentence which avoids prison time - citing his cooperation with the Mueller probe and other investigations which began prior to his guilty plea last summer. Mueller said that Cohen had "gone to significant lengths to assist the Special Counsel's investigation," having met with Mueller's team seven times where he reportedly provided information useful to the Russia investigation. The special counsel's office has recommended that any sentence Cohen receives for lying to Congress should run concurrently with the charges brought by the Manhattan federal prosecutors. 

Cohen, 52, pleaded guilty in August to tax evasion, lying to banks and violating campaign finance laws - charges filed by the US Attorney's Office for the Southern District of New York. 

The campaign finance charges relate to his facilitation of two hush-money payments to porn star Stormy Daniels and Playboy model Karen McDougal shortly before the 2016 presidential election. Both women say they had sex with Trump in the prior decade. The White House has denied Trump had sex with either woman.

Prosecutors say the payments were made "in coordination with and at the direction of" Trump, who is called "Individual-1" in a sentencing recommendation filed last week.

Cohen's crimes were intended "to influence the election from the shadows," prosecutors wrote. -CNBC

In November Cohen also pleaded guilty to lying to Congress about the Trump Organization's ill-fated plans to develop a Trump Tower in Moscow - a project floated by Cohen and longtime FBI asset who had been in Trump's orbit for years, Felix Sater. Cohen claims he understated Trump's knowledge of the project. He also lied to Congress when he said that the Moscow project talks ended in early 2016, when in fact he and the Trump Organization had continued to pursue it as late as June 2016. 

On Wednesday, Stormy Daniels' lawyer, Michael Avenatti - who is in attendance at Cohen's sentencing, said in a Wednesday tweet that Cohen "thought we would just go away and he/Trump would get away with it. He thought he was smart and tough. He was neither. Today will prove that in spades."

We wonder how much Avenatti will pick up of the $293,000 in legal fees Stormy Daniels was ordered to pay Trump?

Published:12/12/2018 9:50:18 AM
[Markets] Total Setup? FBI Told Michael Flynn To Ditch Lawyer During Interview With Strzok

Andrew McCabe - the FBI's former Deputy Director, advised then-national security adviser Michael Flynn that he wouldn't need a lawyer present during a January 24, 2017 White House interview with two FBI agents, according to the Washington Examiner, citing a sentencing memo filed Tuesday by Flynn's attorneys. During a phone call with Flynn, McCabe suggested that if anyone else was in the meeting, the FBI would have to escalate things to involve the Justice Department. 

Citing McCabe's account, the sentencing memo says that shortly after noon on Jan. 24 — the fourth day of the new Trump administration — McCabe called Flynn on a secure phone in Flynn's West Wing office. The two men discussed business briefly and then McCabe said that he "felt that we needed to have two of our agents sit down" with Flynn to discuss Flynn's talks with Russian officials during the presidential transition.

McCabe, by his own account, urged Flynn to talk to the agents alone, without a lawyer present. "I explained that I thought the quickest way to get this done was to have a conversation between [Flynn] and the agents only," McCabe wrote. "I further stated that if LTG Flynn wished to include anyone else in the meeting, like the White House counsel for instance, that I would need to involve the Department of Justice. [Flynn] stated that this would not be necessary and agreed to meet with the agents without any additional participants." -Washington Examiner

One of the agents conducting the interview was disgraced counterintelligence agent Peter Strzok, whose text messages to his FBI mistress revealed that he harbored extreme animus towards President Trump - and ostensibly those in his orbit, which would include Flynn.  

According to the so-called "302 report" - a document FBI agents use to summarize interviews, the two agents were in Flynn's office within two hours of the phone call with McCabe, and said he was "relaxed and jocular," offering the agents "a little tour" of his section of the White House. 

"The agents did not provide Gen. Flynn with a warning of the penalties for making a false statement under 18 U.S.C. 1001 before, during, or after the interview," reads Flynn's memo. 

Also contained within the 302 report is an admission that McCabe and other FBI officials "decided the agents would not warn Flynn that it was a crime to lie during an FBI interview because they wanted Flynn to be relaxed, and they were concerned that giving the warnings might adversely affect the rapport."

As Byron York of the Examiner notes - the FBI agents had already seen transcripts of Flynn's wiretapped conversations with then-Russian ambassador Sergey Kislyak. "Before the interview, FBI officials had also decided that if 'Flynn said he did not remember something they knew he said, they would use the exact words Flynn used ... to try to refresh his recollection. If Flynn still would not confirm what he said ... they would not confront him or talk him through it," reads the 302 filing. 

That is all the sentencing document contains about the interview itself. In a footnote, Flynn's lawyers noted that the government did not object to the quotations from the FBI 302 report.

In one striking detail, footnotes in the Flynn memo say the 302 report cited was dated Aug. 22, 2017 — nearly seven months after the Flynn interview. It is not clear why the report would be written so long after the interview itself.

The brief excerpts from the 302 used in the Flynn defense memo will likely spur more requests from Congress to see the original FBI documents. Both House and Senate investigating committees have demanded that the Justice Department allow them to see the Flynn 302, but have so far been refused.

In the memo, Flynn's lawyers say that he made a "serious error in judgment" in the interview. Citing Flynn's distinguished 30-plus year record of service in the U.S. Army, they ask the judge to go along with special counsel Robert Mueller's recommendation that Flynn be spared any time in prison. -Washington Examiner

Following a recommendation from the special counsel that Flynn face no jail time due to the "substantial" assistance he reportedly provided to Mueller's team, the former national security adviser asked the court to do 200 hours of community service, according to the memo. "As the Government has made clear, his cooperation was not grudging or delayed," Flynn's attorneys Stephen Anthony and Robert Kelner wrote in the sentencing memo. "Rather, it preceded his guilty plea or any threatened indictment and began shortly after he was first contacted for assistance by the Special Counsel’s Office."

Federal sentencing guidelines call for Flynn to serve a sentence of up to six months in prison and pay up to a $9,500 fine. 

Flynn pleaded guilty to one count of lying to FBI agents about his contacts with Kislyak. 

"Even when circumstances later came to light that prompted extensive public debate about the investigation of General Flynn, including revelations that certain FBI officials involved in the January 24 interview of General Flynn were themselves being investigated for misconduct, General Flynn did not back away from accepting responsibility for his actions," states the memo.

Published:12/12/2018 8:50:12 AM
[US News] AMBUSHED? Sentencing memo sheds new light on what Andrew McCabe told Michael Flynn before FBI interview

Byron York has a new piece over at the Washington Examiner on the just-released sentencing memo for Michael Flynn that sheds new light on just what former FBI Deputy Director Andrew McCabe told the former national security adviser before his interview with two FBI agents: New: FBI recommended Michael Flynn not have lawyer present during […]

The post AMBUSHED? Sentencing memo sheds new light on what Andrew McCabe told Michael Flynn before FBI interview appeared first on twitchy.com.

Published:12/12/2018 8:24:18 AM
[Robert Mueller] Flynn’s fate (3) (Scott Johnson) The lawyers representing General Michael Flynn have filed a 13-page sentencing memorandum with the court. The memorandum is followed by 165 pages of exhibits testifying to Flynn’s merits, record and accomplishments. The document is accessible online in its entirety here. Byron York extracts the new information that is made public in the memorandum in “Memo: FBI recommended Michael Flynn not have lawyer present during interview, did not warn of false Published:12/12/2018 5:50:35 AM
[Markets] Hack Of 500 Million Marriott Guests Traced To Chinese Intelligence Services

First it was the North Korean hackers that were accused of somehow hacking into Sony's unbreakable firewall. Then, for a period of almost three years, not a single computer, voting booth, or nuclear power plant appeared to be safe from the Russian hacking scourge, which according to much of the US press, singlehandedly won the election for Trump.

Well, step aside Russians and make room for the Chinese hacker army, because according to the NYT citing two sources, the recent cyberattack on the Marriott hotel chain that collected passport information or other personal details of roughly 500 million guests was part of a Chinese intelligence-gathering effort that hacked health insurers, other hotels and the security clearance files of millions more Americans.

And just like in the Russian narrative, these were no ordinary hackers, but the kind that worked on behalf of the Ministry of State Security.

The latest discovery comes at a very opportunistic time: just as the Trump administration plans a series of actions targeting China’s trade, cyber and economic policies. As reported earlier, even as the trade war between the US and China is supposedly in a tenuous ceasefire, the DOJ is preparing to announce new indictments against Chinese hackers working for the intelligence and military services. The Trump administration also plans to declassify intelligence to reveal concerted efforts by Chinese agents, dating to 2014 or earlier, to build a database containing names of executives and American government officials with security clearances.

Finally, as we discussed yesterday when we commented that the real reason for the US-China trade war is the US desire to halt or at least delay China from manufacturing its own high-tech semiconductors, the NYT also adds that the Trump administration is considering an executive order intended to make it harder for Chinese companies to obtain critical telecommunications equipment.

The coordinated moves against Chinese hackers are expected to be announced within days, and stem from the growing concern within the administration that "the 90-day trade truce negotiated between President Trump and President Xi Jinping in Buenos Aires two weeks ago may do little to change China’s behavior — including coercing American companies to hand over valuable technology if they seek to enter the Chinese market, as well as the theft of industrial secrets on behalf of state-owned companies."

Meanwhile, the actual hack of Marriott’s Starwood chain, which was only revealed late last month after being discovered in September, is not expected to be part of the coming indictments.

But two of the government officials said it has added urgency to the administration’s crackdown, given that Marriott is the top hotel provider for United States government and military personnel.

The crackdown is in response to what has vexed the Trump administration as Russia China appears to have reverted over the past 18 months to the kind of cyber intrusions into American companies and government agencies that former President Barack Obama thought he had ended with a 2015 agreement with Mr. Xi.

And just like Russia, China has denied any knowledge.

Geng Shuang, a spokesman for the Chinese Ministry of Foreign Affairs, denied any knowledge of the Marriott hack. “China firmly opposes all forms of cyberattack and cracks down on it in accordance with the law,” he said. “If offered evidence, the relevant Chinese departments will carry out investigations according to the law.”

“China is one of the major victims of threats to cyber security including cyberhacking,” he said.

Logically, the risk with the coming sweeping accusations, is that while top administration officials insist that the trade talks are proceeding on a separate track, the broader crackdown on China could undermine Trump’s ability to reach an agreement with Xi as American charges against senior members of China’s intelligence services — in tandem with the targeting of high-profile technology executives, like Meng Wanzhou, the chief financial officer of the communications giant Huawei and daughter of its founder — risk hardening opposition in Beijing to negotiating with Mr. Trump.

Over the weekend, China was infuriated by the arrest of Meng, who was detained in Canada on suspicion of fraud involving violations of United States sanctions in Iran. She was granted bail of 10 million Canadian dollars, or $7.5 million, while awaiting extradition to the United States, a Canadian judge ruled on Tuesday.

In response, American business leaders have been bracing for retaliation from China, which has demanded the immediate release of Meng and accused both the United States and Canada of violating her human rights. On Tuesday, the International Crisis Group said that one of its employees, a former Canadian diplomat, had been detained in China. The disappearance of the former diplomat, Michael Kovrig, could further inflame tensions between China and Canada. “We are doing everything possible to secure additional information on Michael’s whereabouts as well as his prompt and safe release,” the group said in a statement on its website.

Late on Tuesday, in an interview with Reuters, Trump said that he would consider intervening in the Huawei case if it would help serve national security and help get a trade deal done with China. Such a move would essentially pit Trump against his own Justice Department, which coordinated with Canada to arrest Meng as she changed planes in Vancouver.

“If I think it’s good for what will be certainly the largest trade deal ever made — which is a very important thing — what’s good for national security — I would certainly intervene if I thought it was necessary,” Mr. Trump said.

Of course, now that cyberwarfare is the strawman to escalate any diplomatic feud, from the first revelation that the Marriott chain’s computer systems had been breached, there was widespread suspicion in both Washington and among cybersecurity firms that the hack was not a matter of commercial espionage, but part of a much broader spy campaign to amass Americans’ personal data; one in which Chinese crack hacker inexplicably left "fingerprints" confirming they were behind the attack.

Meanwhile, since the Marriott database contained not only credit card information but passport data, that particular intrusion would allegedly have given China access to confidential data belonging to hundreds of millions of Americans.  Specifically, according to the NYT, Chinese spies stole passport numbers for up to 327 million people — many of whom stayed at Sheraton Hotels, Westin and W Hotels and other Starwood brands. But Marriott has not said if it would pay to replace those passports, an undertaking that would cost tens of billions of dollars.

Lisa Monaco, the former White House homeland security adviser, noted at a conference last week that passport information would be particularly valuable in tracking who is crossing borders, what they look like, and other key data.

Why would China need this data?

James Lewis, a cybersecurity expert at the Center for Strategic Studies in Washington, said the Chinese have collected “huge pots of data” to feed a Ministry of State Security database seeking to identify American spies — and the Chinese people talking to them. “Big data is the new wave for counterintelligence,” Mr. Lewis said.

“It’s Big Data hoovering,” said Dmitri Alperovitch, the chief technology officer at CrowdStrike, who first highlighted Chinese hacking as a threat researcher in 2011 and who was also instrumental in launching the witch hunt targeting Russians in the summer of 2016, accusing them of hacking the DNC server which has yet to be investigated by the FBI. “This data is all going back to a data lake that can be used for counterintelligence, recruiting new assets, anti-corruption campaigns or future targeting of individuals or organizations.”

The effort to amass Americans’ personal information so alarmed government officials that in 2016 the Obama administration threatened to block a $14 billion bid by China’s Anbang Insurance Group to acquire Starwood Hotel & Resorts Worldwide, according to one former official familiar with the work of the Committee on Foreign Investments in the United States, a secretive government body that reviews foreign acquisitions. Eventually, the failed bid cleared the way for Marriott Hotels to acquire Starwood for $13.6 billion later that year, becoming the world’s largest hotel chain.

As it turned out, it was too late: Starwood’s data had already been stolen by Chinese state hackers, though the breach was not discovered until this past summer, and disclosed by Marriott on Nov. 30.

Ironically, while it is unclear that any kind of trade agreement reached with China by the Trump administration can address this kind of theft, the Chinese regard intrusions into hotel chain databases as a standard kind of espionage. So does the United States, which has often seized guest data from foreign hotels.

Separately, since 2012, analysts at the National Security Agency and its British counterpart, the G.C.H.Q., have watched with growing alarm as sophisticated Chinese hackers, based in the Chinese city of Tianjin, began switching targets from companies and government agencies in the defense, energy and aerospace sectors, to organizations that housed troves of Americans’ personal information.

At the time, one classified National Security Agency report noted that the hackers’ “exact affiliation with Chinese government entities is not known, but their activities indicate a probable intelligence requirement feed” from China’s Ministry of State Security, the country’s Communist-controlled civilian spy agency.

Of course, this is the same NSA which as Edward Snowden revealed several years ago, was just as busy spying on foreign targets as it was on America's own citizens.

Published:12/11/2018 10:17:49 PM
[Markets] Three Clinton Foundation Whistleblowers To Testify About Tax Fraud, Pay-For-Play

Following allegations of sloppy accounting, potential tax fraud and pay-to-play, the Clinton Foundation will be under a Congressional microscope this week after three whistleblowers have come forward and agreed to testify - one of whom secretly submitted 6,000 pages of documents to the IRS and FBI in August of 2017, and all three of whom have submitted various documents to Congressional investigators. 

Rep. Mark Meadows (R-NC), Chairman of the House Freedom Caucus, told Fox News's Martha MacCallum on Monday night that there are three whistleblowers who have spent the past two years investigating the Clinton Foundation, and have "explosive" allegations which they will share during Thursday testimony on Capitol Hill. 

MACCALLUM: OK. With regard to the investigation, which doesn’t get a lot of attention, into the Clinton foundation, the DOJ designated John Huber to look into this. They have 6,000 pages of evidence that they’ve gone through. The foundation raised $2.5 billion, and they’re looking into potential improprieties.

What’s next on this investigation?

MEADOWS: Well, I think for the American people, they want to bring some closure, not just a few sound bites, here or there, so we’re going to be having a hearing this week, not only covering over some of those 6,000 pages that you’re talking about, but hearing directly from three whistleblowers that have actually spent the majority of the last two years investigating this.

Some of the allegations they make are quite explosive, Martha. And as – we just look at the contributions. Now everybody’s focused on the contributions for the Clinton Foundation and what has happened just in the last year. But if you look at it, it had a very strong rise, the minute she was selected as secretary of state. It dipped down when she was no longer there.

And then rose again, when she decided to run for president. So there’s all kinds of allegations of pay-to-play and that kind of thing.

As we noted in late November, the Clinton Foundation has seen donations plummet approximately 90% over a three-year period between 2014 and 2017

While Hillary Clinton was Obama's Secretary of State, however, the State Department authorized $151 billion in Pentagon-brokered deals to 16 countries that donated to the Clinton Foundation - a 145% increase in completed sales to those nations over the same time frame during the Bush administration, according to IBTimes

Meanwhile, John Solomon of The Hill reported on Tuesday that one whistleblower who submitted 6,000 pages of evidence through a firm composed of former federal law enforcement investigators, MDA Analytics LLC., has provided evidence of potential tax crimes as well as a "culture of noncompliance."  

That submission made with the IRS, and eventually provided to the Justice Department in Washington and to the FBI in Little Rock, Arkansas, alleges there is "probable cause" to believe the Clinton Foundation broke federal tax law and possibly owes millions of dollars in tax penalties. That submission and its supporting evidence will be one focus of a GOP-led congressional hearing Thursday in the House.

The foundation strongly denies any wrongdoing. But it acknowledges its own internal legal reviews in 2008 and 2011 cited employee concerns ranging from quid pro quo promises to donors, to improper commingling of personal and charity business. -The Hill

In some instances the Clinton Foundation appears to have misled the IRS, or lied when filling out forms. For example, the Foundation retracted a bid to conduct fundraising in Utah after they refused to correct a filing error which state officials would not allow. 

When contacted for comments, the Clinton Foundation admitted their errors, but told Solomon they were akin to "minor traffic violations." 

Published:12/11/2018 9:17:48 PM
[World] Former FBI Official: Agents 'Infuriated' With Comey's Partisanship, Trump Attacks

A former top FBI official blasted former FBI Director James Comey for his new "partisan" attacks on President Trump, revealing that many rank-and-file agents are "infuriated" by his statements.

Published:12/11/2018 11:56:01 AM
[Media] He definitely KNEW: Mollie Hemingway DROPS Comey and his ‘forgetful’ testimony in a one-two FACT PUNCH

As Twitchy reported (thanks to Sharyl Attkisson), Comey seemed more than a tad bit forgetful during his testimony about a plethora of details, especially when it came to the FISA court and various investigations that were supposedly done while he was in charge of the FBI. Seems an odd thing to forget, doncha think? Comey […]

The post He definitely KNEW: Mollie Hemingway DROPS Comey and his ‘forgetful’ testimony in a one-two FACT PUNCH appeared first on twitchy.com.

Published:12/11/2018 8:44:58 AM
[FBI] Is it something he said? (6) (Scott Johnson) The Daily Caller News Foundation has asked the court to unseal the search warrant and related materials that authorized the November 19 FBI raid on the home of Clinton crime family whistleblower Nate Cain. As we noted in part 1 of this series, Richard Pollock originally reported the story for the Daily Caller. Now Pollock reports that the Office of Maryland United States Attorney Robert Hur has filed a formal Published:12/11/2018 6:45:34 AM
[Politics] Trump's Hope Lies in Reform At Justice The disclosures of the last few days are, though disguised, the crash in ignominy of the Robert Mueller putsch. But they are far from the end of the story. While the sire of the Mueller hit-squad assault, former FBI director James Comey, declared 245 times at last Friday's House Judiciary Committee hearing that he did not recall events that occurred in the last several years, the president's official enemies confessed that the best they could do to show collusion between Russia and the Tru... Published:12/10/2018 11:11:26 PM
[World] Newt Gingrich Blasts James Comey After Testimony Before House Judiciary, Oversight Committees

Former House Speaker Newt Gingrich reacted on Monday to former FBI Director James Comey's testimony before the House Judiciary and Oversight Committees.

Published:12/10/2018 10:44:04 PM
[Markets] Whitey Bulger's Lawyer Sues Federal Government For Wrongful Death, Negligence In Gangster's Killing

Since the former Boston mafia kingpin was brutally murdered inside his cell less than 48 hours after arriving at a new maximum security prison in West Virginia, Whitey Bulger and the circumstances that left him vulnerable to such a brutal assault have led to suspicions that his murder might have been unofficially sanctioned by the bureau of prisons and - maybe - the FBI itself.

Bulger

Bulger, as we noted at the time, was rumored to be cooperating with a new task force created by a Massachusetts Congressman to investigate corruption in the FBI's witness protection program. While the BOP and FBI have so far released few details about the circumstances that led to Bulger's transfer, more information could soon be forthcoming. Because Bulger's former attorney, Hank Brennan, is suing the federal government for wrongful death and negligence to try and learn more about why the frail gangster in failing health was sent to a new prison and mixed in with the general population.

Mr. Brennan says he is preparing to sue the government on behalf of Bulger’s estate for wrongful death and negligence to find out why authorities sent the frail, notorious gangster to the U.S. Penitentiary Hazelton in West Virginia, and put him in with the general population.

"It’s important for the family and the public to know why the prisons decided to wheel an 89-year-old man with a history of heart attacks into one of the most dangerous prisons in the country," said Mr. Brennan, who hasn’t publicly disclosed his final conversations with Bulger previously.

Mr. Brennan represented Bulger starting in 2011, when he was captured after evading arrest for 16 years. He helped defend the gangster at the 2013 trial in which Bulger was found guilty of presiding over a sprawling and lucrative web of murder, extortion, money-laundering and drug-dealing from the 1970s to the mid-1990s.

Brennan said it's important for the public to learn the truth about Bulger's death. Brennan pointed out several suspicious developments in the days before Bulger's death. For example, during his last conversation with Bulger, the aging gangster said he was being transferred for medical reasons. But the BOP told WSJ that Bulger was being transferred for making threats against prison staff.

"It’s important for the family and the public to know why the prisons decided to wheel an 89-year-old man with a history of heart attacks into one of the most dangerous prisons in the country," said Mr. Brennan, who hasn’t publicly disclosed his final conversations with Bulger previously.

[...]

A Bureau of Prisons spokesperson said that Bulger was transferred from the Florida prison because of a threat he made against a staff member, an allegation Mr. Brennan disputes, and that the transfer to Hazelton was made in accordance with the bureau’s policy. The spokesperson declined to comment on any medical issues or the threat of a lawsuit. The Bureau previously said that it had sent a team of experts to the Hazelton complex “to assess operational activities and correctional security practices and measures to determine any relevant facts that may have contributed to the incident."

And what's even more suspicious, Bulger's medical classification was changed to indicate that he needed less care - not more - before he was moved to Hazelton Prison in West Virginia, a facility with several violent murders in its recent history.

Prison records obtained by several media outlets show that Bulger’s medical classification was lowered to indicate that he needed less medical care before he was sent to the prison in West Virginia.

Whatever the truth behind Bulger's death is, Brennan might soon find out.

Published:12/10/2018 2:09:17 PM
[Politics] Rep. Gaetz: Comey's 'Amnesia Is Very Selective' in Hearing Rep. Matt Gaetz says former FBI Director James Comey has a selective memory when it comes President Donald Trump is concerned. Published:12/10/2018 11:08:26 AM
[World] Tom Fitton on James Comey Testimony, 'Professed Ignorance' on Russia Probe

Judicial Watch President Tom Fitton called out former FBI Director James Comey for responding “I don’t know” or “I don’t remember” to dozens of questions concerning key details in the Russia probe.

Published:12/10/2018 9:07:25 AM
[Markets] Nick Ayers Won't Be Next White House Chief Of Staff; Trump Considers Mark Meadows

In a surprising twist, veteran Republican operative Nick Ayers, currently the chief of staff to Vice President Mike Pence, won't be tapped to replace John Kelly as White House chief of staff when Kelly leaves the West Wing, a transition that President Trump confirmed by the end of the year, according to the Wall Street Journal.

WSJ said Ayers and Trump were unable to agree on a time frame for the job; Trump reportedly wanted a two-year commitment from Ayers, which he was unwilling to make due to "family concerns". The 36-year-old Ayers is the father of 6-year-old triplets. He is reportedly planning on leaving the Trump Administration at the end of this year, which means the chief of staff positions for the president and vice president could soon be vacant.

Mr. Ayers is currently chief of staff to Vice President Mike Pence. White House officials had recently described him as the front-runner for the position.

It was unclear on Sunday who would succeed John Kelly, Mr. Trump’s current chief of staff, who is leaving the job this month. White House officials familiar with the planning said it was unclear whether the next staff chief would come from inside or outside the administration.

Mr. Ayers has long planned to leave the administration at the end of the year.

Ayers is reportedly leaving the administration on good terms. He will join a Republican Political Action Committee where he can help the administration "from the outside," according to a source quoted by Axios.

 "Nick couldn't give POTUS a two-year commitment so he's going to help him on the outside instead," one of these sources told me. (This news was first reported by the Wall Street Journal.)

Ayers confirmed that he had taken himself out of the running in a tweet, adding that he would be leaving the White House at hte end of the year.

Ayers has long been said to be the leading candidate to replace Kelly; his deep connections with Republican legislators and other Republican operatives have been cited as a crucial advantage over Kelly, who reportedly struggled to make inroads on Capitol Hill after taking the chief of staff job during the summer of 2017.

Ayers is expected to run the pro-Trump outside group America First.

Ayers

Nick Ayers

In place of Ayers, Trump is considering tapping Freedom Caucus leader and North Carolina Congressman Mark Meadows, Axios reported.

Trump has asked confidants what they think about the idea of installing Rep. Mark Meadows, the chairman of the ultra-conservative House Freedom Caucus, as John Kelly's permanent replacement, according to these three sources.

Meadows has also long been rumored as a contender for the chief of staff job, though Ayers has typically been cited as Trump's preferred candidate.

Like Ayers, Meadows also has deep connections on Capitol Hill, which should aid his ability to carry out the chief of staff's responsibility of serving as a liaison with Congressional leaders. But still, as Axios cautions, nothing is set in stone. And Trump has yet to make a final decision.

Published:12/9/2018 4:04:12 PM
[World] Corey Lewandowski Blasts James Comey and Claim He Doesn't Know Mueller

Former Trump campaign manager Corey Lewandowski dismissed a recorded claim by ex-FBI Director Jim Comey that he is not personally close with special counsel Robert Mueller.

Published:12/9/2018 3:32:59 PM
[Markets] Key Words: Rubio warns pardoning Manafort would be ‘a mistake’ Sen. Marco Rubio warns President Trump that it would be “a mistake” to pardon Paul Manafort, who prosecutors say violated his plea deal by repeatedly lying to the FBI.
Published:12/9/2018 2:32:57 PM
[World] James Comey Came Across As Consistent, Compelling, Careful, Dem Krishnamoorthi Says

House Oversight Committee member Raja Krishnamoorthi said on "Sunday Morning Futures" that ex-FBI Director James Comey "came across as consistent, compelling and careful in his answers" to a joint committee's closed-door session with him this week.

Published:12/9/2018 1:02:47 PM
[39815361-2faf-5600-91db-1645657421d5] 'SNL' sketch asks what would happen if Donald Trump was black “Saturday Night Live” took a jab at the Trump administration as well as the FBI in a sketch from its Dec. 8 episode that simply posited the question: What if Donald Trump was black? Published:12/9/2018 12:32:39 PM
[World] James Comey Testimony: Truly Stunning He Said I Dont Know, Goodlatte Said

Outgoing House Judiciary Committee Chairman Bob Goodlatte said Sunday it was "truly stunning" to hear the former FBI director claim he doesn't know or "can't recall" answers to nearly 250 questions about the Trump-Russia probe and the Clinton email investigation.

Published:12/9/2018 12:05:05 PM
[Markets] Despite Comey's Struggle With Amnesia, Ex-FBI Director Confirms Dossier Totally Unverified

Former FBI Director James Comey didn't know a lot during Friday's congressional testimony - claiming hundreds of times (245 according to Trump) that he simply couldn't remember various things.

What Comey did remember, however, confirms that the FBI could not verify the dossier submitted by former UK spy Christopher Steele - which the agency used as the foundation of a spy warrant application to surveil the Trump campaign.

While Comey said the dossier came from "a reliable source with a track record, and it’s an important thing when you’re seeking a PC warrant," he also admitted that the FBI was unable to corroborate the document's claims

"But what I understand by verified is we then try to replicate the source information so that it becomes FBI investigation and our conclusions rather than a reliable source's," Comey said, adding "That’s what I understand it, the difference to be. And that work wasn’t completed by the time I left in May of 2017, to my knowledge."

The FBI is required to fully vet information they submit to FISA courts, which they of course did not do in their haste to deploy a counterintelligence dragnet on the Trump campaign during the final months of the 2016 US election. 

Steele, meanwhile, was fired by the FBI for leaking information to the press while the agency was using him as a source. To get around this, the FBI went through former #4 DOJ official Bruce Ohr - who was demoted twice for lying about his contacts with Steele. 

Ohr’s wife, Nellie Ohr, worked for the embattled research firm Fusion GPS on the Trump dossier. Fusion GPS hired Steele as part of their ongoing effort to investigate the Trump campaign and any ties with Russia. It was discovered in 2017 that Fusion GPS was being paid by the Hillary Clinton campaign and the Democratic National Committee through the campaign’s law firm Perkins Coie to investigate any alleged ties between Trump and Russia.

More importantly, the FBI used information from Steele, a foreign source who was openly antagonistic about Trump. In fact, Ohr told FBI officials that he “was desperate that Donald Trump not get elected and was passionate about him not being president,” as stated in the House Intelligence Committee investigation memo. -Sara Carter

Comey's confirmation echoes comments made in a string of emails quietly requested by House Republicans for declassification - as reported last week by The Hill's John Solomon. The emails - kept from Congressional investigators for over two years, "included then-FBI Director James Comey, key FBI investigators in the Russia probe and lawyers in the DOJ’s national security division," according to the report - and took place in early to mid-October of 2016, prior to the FBI successfully securing a FISA warrant to spy on Trump campaign adviser Carter Page. 

The email exchanges show the FBI was aware — before it secured the now-infamous warrant — that there were intelligence community concerns about the reliability of the main evidence used to support it: the Christopher Steele dossier.

The exchanges also indicate FBI officials were aware that Steele, the former MI6 British intelligence operative then working as a confidential human source for the bureau, had contacts with news media reporters before the FISA warrant was secured. -The Hill

And while Comey's sudden amnesia has gotten a wholesale pass from the MSM, he did tell Congressional investigators that he has no idea what the crime of "collusion" is.

House Oversight Chairman Trey Gowdy asked Comey Friday afternoon during a closed-door hearing, “Some of our friends in the media use the word ‘collusion’ from time to time. What is the crime of collusion?”

Comey responded, “What is the crime of collusion? I do not know. I’ve never heard the term ‘collusion’ used in the way it’s been used in our world over the last couple [sic] years before that.” He continued, “I don’t know of a crime that involves collusion. I think in terms of conspiracy or aiding and abetting.”

Gowdy later asked Comey what he thought the difference was between “collusion” and “conspiracy.”

I don’t know because I don’t know what collusion means. It’s a term I haven’t heard in my career in the Justice Department, so I don’t know,” said Comey. -Daily Caller

 What exactly is special counsel Robert Mueller investigating again?

Published:12/9/2018 11:01:30 AM
[Politics] Rubio: 'Terrible Mistake' If Trump Pardons Manafort Sen. Marco Rubio, R-Fla., warned Sunday it'd be "a terrible mistake" if President Donald Trump would pardon his former campaign chairman Paul Manafort in the wake of prosecutors' charges that he lied to the FBI and special counsel Robert Mueller. Published:12/9/2018 10:08:23 AM
[Politics] Trump Slams 'Leakin' James Comey on Twitter President Donald Trump blasted former FBI Director James Comey on Twitter Sunday, accusing him of lying to House lawmakers about the investigation into Russian interference."Leakin' James Comey must have set a record for who lied the most to Congress in one day. His Friday... Published:12/9/2018 8:30:54 AM
[eacf64d6-bf6f-5fc5-b0a5-31df3cbc8b8b] Jimmy Hoffa FBI files should be released now The U.S. government should order the immediate release –un-redacted and in full – of the FBI's secret files that the bureau has compiled on the Hoffa's case, and also order the re-testing of the blood evidence that Fox News found on the floorboards of the Detroit house where a major suspect told me that he murdered Hoffa. Published:12/9/2018 7:01:24 AM
[Politics] Comey: FBI Probe of Russia Initially Looked at 4 Americans The FBI's counterintelligence investigation into potential ties between the Trump campaign and Russia initially focused on four Americans and whether they were connected to Russian efforts to interfere in the 2016 presidential election, former FBI Director James Comey told... Published:12/9/2018 5:29:41 AM
[f347f6e7-a9a3-5e37-abe5-5135ad41fccb] Rep. Andy Biggs: I heard from Comey on Friday -- Here are the three most important takeaways As a member of the House Judiciary Committee, I was among those who interviewed fired FBI Director James Comey on Friday about Hillary’s Clinton’s email scandal and about the initial stages of the FBI investigation of allegations that the Trump presidential campaign colluded with Russia to win the 2016 presidential election. Published:12/8/2018 10:58:29 PM
[f347f6e7-a9a3-5e37-abe5-5135ad41fccb] Rep. Andy Biggs: I interviewed Comey on Friday -- Here are the three most important takeaways As a member of the House Judiciary Committee, I was among those who interviewed fired FBI Director James Comey on Friday about Hillary’s Clinton’s email scandal and about the initial stages of the FBI investigation of allegations that the Trump presidential campaign colluded with Russia to win the 2016 presidential election. Published:12/8/2018 9:58:31 PM
[Politics] Here it is! Comey closed-door testimony RELEASED!! Some details are coming out about the testimony that Comey gave to Congress, and it’s very very interesting.  Like for instance, the fact that the FBI’s counterintelligence investigation began with looking into . . . Published:12/8/2018 8:30:40 PM
[Politics] Here it is! Comey closed-door testimony RELEASED!! Some details are coming out about the testimony that Comey gave to Congress, and it’s very very interesting.  Like for instance, the fact that the FBI’s counterintelligence investigation began with looking into . . . Published:12/8/2018 8:30:40 PM
[Markets] Incoming House Judiciary Chair Planning To End Probe Into FBI, DOJ

During a break during former FBI Director James Comey's heated closed-door testimony on Capitol Hill on Friday, incoming House Judiciary Chairman Jerry Nadler confirmed to reporters what many had already suspected: That Nadler (and probably his fellow Democratic leaders) would put the kibosh on the House's investigation into alleged political bias at the highest levels of the FBI and DOJ as they launched an investigation into the Trump campaign - an investigation that eventually morphed into the Mueller probe.

While Democrats prepare to ramp up investigations into everything from Trump's "war on the media" to his involvement in his family business, Nadler told a group of reporters that he intends to end the House Judiciary Committee's involvement in the Congressional probe as soon as he takes the reins next year.

Nadler

Asked why he intends to end the committee's involvement in the probe, Nadler responded that "it was a waste of time to begin with" and a "distraction" from the real-wrong doing here - that is, lawbreaking committed by Republicans, according to the Hill.

"Yes, because it is a waste of time to start with," Nadler said in response to a question about whether he would end the probe. Nadler characterized the Republican investigation as a political sideshow that aims to distract from special counsel Robert Mueller's investigation into possible ties between the Trump campaign and Russia.

"The entire purpose of this investigation is to be a diversion of the real investigation, which is Mueller. There is no evidence of bias at the FBI and this other nonsense they are talking about," he continued.

If the House investigation into suspected FBI malfeasance is just a "sideshow", as Nadler claims, how would he explain the fact that the FBI knew the allegations contained in the Steele dossier - the linchpin of the FBI's FISA warrant application that kicked off the Russia probe in earnest - were bogus before applying for surveillance? Or the many conflicts of interest between senior FBI officials involved with the probe (Andrew McCabe, Bruce Ohr, Peter Strzok, and, yes, Comey himself) - or the fact that McCabe was fired following after the DOJ's inspector general confirmed that McCabe had lied under oath to try and conceal the fact that he told an FBI spokesman to leak a story about the FBI's investigation into the Clinton Foundation just days before the election. McCabe could still face criminal charges from his lies. But Congress's attempt to hold the FBI accountable is just a "distraction?"

But Nadler doesn't have the power to end the investigation - which also involves the House Intelligence Committee - just yet. And before he takes control, Republicans are hoping to interview a few more people, including former attorney general Loretta Lynch.

Nadler then practiced some deflection himself by changing the subject to Acting Attorney General Matthew Whitaker.

"The real question now is Whitaker, [who] is still the acting attorney general," Nadler said.

Nadler also said he has "lots of questions" for Whitaker, whom Democrats have branded as an illegitimate usurper who is conspiring to end the Mueller probe (despite taking zero steps to actually impede Mueller's investigation).

But what's wrong with a little deflection (so long as it serves your political purposes, that is)?

Published:12/8/2018 8:30:40 PM
[fa4a5cc3-41b8-53e1-9a5e-4f67a3481c60] Ex-FBI Assistant Director: Comey is a disgrace to the FBI, won't answer key questions on Clinton email scandal Unfortunately, the actions of James Comey and his inner circle has caused too many Americans to question the core values of the FBI as an institution. Published:12/8/2018 8:30:40 PM
[In The News] Lindsey Graham Says He Will ‘Get To The Bottom’ Of FISA Abuse As Senate Judiciary Chairman

By Chuck Ross -

Lindsey Graham slams democrats for unethical behavior -4

Lindsey Graham pledged Saturday to continue an investigation into the FBI’s alleged abuse of the federal surveillance court Graham is poised to take over as Senate Judiciary Committee, where he will have oversight of the FBI, Justice Department and federal court system Republicans have accused the FBI of mishandling the ...

Lindsey Graham Says He Will ‘Get To The Bottom’ Of FISA Abuse As Senate Judiciary Chairman is original content from Conservative Daily News - Where Americans go for news, current events and commentary they can trust.

Published:12/8/2018 6:57:30 PM
[2016 Presidential Election] Comey doesn’t know and can’t recall (Scott Johnson) Former FBI Director James Comey lies at the heart of the biggest scandal in American political history. He appeared before the House Judiciary and Oversight Committees yesterday to testify about it. FOX News reports on his testimony here. The committees released the partially redacted transcript this afternoon; I have posted it below. Comey seems to have picked up a trick or two from the kind of people he used to Published:12/8/2018 6:27:10 PM
[Crime] FBI Bucks Liberals and Refuses to Consider ‘Proud Boys’ an Extremist Group

The FBI has pulled against liberal orthodoxy and has officially ruled that the "Proud Boys" is not an "extremist" organization.

The post FBI Bucks Liberals and Refuses to Consider ‘Proud Boys’ an Extremist Group appeared first on Godfather Politics.

Published:12/8/2018 4:28:39 PM
[Crime] FBI Bucks Liberals and Refuses to Consider ‘Proud Boys’ an Extremist Group

The FBI has pulled against liberal orthodoxy and has officially ruled that the "Proud Boys" is not an "extremist" organization.

The post FBI Bucks Liberals and Refuses to Consider ‘Proud Boys’ an Extremist Group appeared first on Godfather Politics.

Published:12/8/2018 4:28:39 PM
[Markets] Scaramucci Talks QAnon, Stone Rails Against Uranium One "Russian Collusion" At MAGA Conference

MAGA conservatives assembled on Thursday for an interesting, yet thus far poorly attended new political conference, where political figures (both long and short lived) offered their opinions to a mostly empty room, according to Politico

Held at the Marriott Wardman Park in Woodley Park - home to the Conservative Political Action Conference (CPAC) for several years, the first-ever American Priority Conference featuring the likes of Roger Stone, Anthony Scaramucci, Stefan Molyneux and George Papadopoulos. 

Also there were social media commentators Mike Cernovich and Laura Loomer - who was recently banned from Twitter. 

Stone took the stage, condemning the "Russia collusion delusion," along with the Obama administration for spying on the Trump campaign - accusing the FBI of "planting faux-Russian collusion." 

Stone also defended himself against claims that he had advance knowledge of damaging emails released by WikiLeaks, while calling the Uranium One deal the "real Russian collusion." 

He also called the Obama-era Uranium One deal "the largest treasonous financial scandal in American history," adding "if people are looking for Russian collusion they merely need to look at Bill and Hillary Clinton and their acceptance of $145 million from the Russian energy company while the transfer of 20% of America's enriched uranium was on Hillary's desk for transfer to the Russians." 

(We would note that the deal was for 20% of uranium in the groundas opposed to enriched, and that the $145 million was donated to the Clinton Foundation by parties linked to the Uranium One deal - not from a Russian energy company). 

The Mooch talks Qanon

Also notable were comments from Anthony Scaramucci - the man who served such a brief stint as Trump's White House communications director that his last name is now a unit of measure for a very short period of time.

Scaramucci told a married couple from Virginia that the infamous internet conspiracy prognosticator known as "Qanon" has "been dead accurate about so many things," adding "When you find out who he is, you're not going to believe it." 

Despite being pushed off the official agenda, QAnon remained a fixation of many conference attendees. Even Trump’s former White House communications director praised the preposterous theory, which holds that special counsel Robert Mueller and Trump, working together in secret, have drawn up 50,000 sealed indictments of powerful pedophiles in order to thwart a deep state coup by Soros, the Clintons and former President Barack Obama.

At “coffee with Mooch” on Friday morning, the former White House communications director, seemingly unaware of the presence of a nearby reporter, spoke glowingly of the theory as a couple from Stafford, Va., showed him their “Q” paraphernalia. (Q is the otherwise anonymous author of the QAnon theory.) -Politico

Other speakers hailed from across the conservative spectrum:

On Monday, intellectual dark web philosopher Stefan Molyneux, who often sounds off on race and IQ, tweeted a sort of white identity origin myth, writing, “My ancestors were driven out of Africa and struggled to survive winter and hunger. ... Now the Africans say we are ‘privileged’ & thieves.”

This weekend, Molyneux shares a spot on the conference agenda with Scaramucci as well as former Trump campaign manager Corey Lewandowski, former deputy campaign manager David Bossie and Katrina Pierson, a senior adviser to Trump’s reelection campaign.

...

“You have conservatives who are acting like leftists,” said Laura Loomer, an American Priority speaker and social media provocateur, of CPAC’s organizers. “They care more about optics.”

Such banishments, Loomer, said, highlighted a need for “a less elitist form of CPAC.”

...

Just days after Loomer attracted worldwide attention by handcuffing herself to Twitter’s headquarters in protest of her banishment from the platform — a setback she has compared to the Holocaust — she spoke to a nearly empty room.  -Politico

Organizer Alex Philips addressed the low attendance, acknowledging that the event could have been better organized, and said that he plans to hold the conference for many years to come in Washington and other cities around the country. 

Published:12/8/2018 4:28:39 PM
[World] Democrat Jerry Nadler Says He Will End GOP-Led Probe Into FBI, DOJ

Rep. Jerrold Nadler (D-N.Y.), the incoming chairman of the House Judiciary Committee, said he will shut down Republican-led probes into the FBI and Justice Department's decision-making during the 2016 election.

Published:12/8/2018 11:30:29 AM
[2016 Election] Manafort’s noncooperation (Scott Johnson) The Special Counsel filed a 10-page memo yesterday supporting its determination that Paul Manafort has breached his cooperation agreement with the office. The heavily redacted document is posted below. The memo notes that the Special Counsel has separately filed supporting factual under seal. Manafort met with the prosecutors as well as the FBI on twelve occasions and testified twice to the grand jury. The Special Counsel asserts that Manafort has Published:12/8/2018 7:56:33 AM
[Politics] Comey DEFLECTS when asked directly about the Trump dossier – watch his answer Former FBI director James Comey addressed the media after speaking to Congress again, and when he was asked directly if he believed the Trump Dossier was trustworthy, he completely deflected.  Watch below: . . . Published:12/7/2018 7:52:04 PM
[Politics] Comey DEFLECTS when asked directly about the Trump dossier – watch his answer Former FBI director James Comey addressed the media after speaking to Congress again, and when he was asked directly if he believed the Trump Dossier was trustworthy, he completely deflected.  Watch below: . . . Published:12/7/2018 7:52:04 PM
[World] James Comey Closed Door Hearing: Former Assistant Director Blasts Him for Bias

Former FBI Assistant Director Chris Swecker said former Director James Comey "thoroughly discredited" himself and "broke every rule in the book."

Published:12/7/2018 4:51:39 PM
[Markets] Cohen To Get "Substantial Prison Time" For "Serious" Crimes Despite Cooperation With Mueller

It turns out that being a rat may not pay off after all.

Just a few days after Special Counsel Robert Mueller recommended as little as no prison time for Trump's former National Security Advisor, Michael Flynn, who pled guilty to lying to the FBI and had agreed to cooperate with the FBI, moments ago US prosecutors issued a statement in which they announced that Michael Cohen, who infamously flipped on the president (for whom Cohen once said he "would take a bullet") deserves "substantial prison time", despite his cooperation.

While Flynn pled guilty to just one count, whereas Cohen had pled guilty to 8 federal crimes, what is remarkable is that despite his allegedly extensive cooperation with the Special Counsel culminating in over 70 hours of testimony, prosecutors said that they do "not ask for special leniency for Cohen", calling his lies to Congress and the people "serious", and instead "respectfully requests that this Court impose a substantial term of imprisonment" one that reflects "a modest downward variance from the applicable Guidelines range" which is in the range of 51-63 months, and thus the Probation Department recommends "a sentence of 42 months' imprisonment."

Here are the key sections from the Preliminary Statement:

Cohen, an attorney and businessman, committed four distinct federal crimes over a period of several years. He was motivated to do so by personal greed, and repeatedly used his power and influence for deceptive ends. Now he seeks extraordinary leniency – a sentence of no jail time – based principally on his rose-colored view of the seriousness of the crimes; his claims to a sympathetic personal history; and his provision of certain information to law enforcement. But the crimes committed by Cohen were more serious than his submission allows and were marked by a pattern of deception that permeated his professional life (and was evidently hidden from the friends and family members who wrote on his behalf).

While prosecutors concede that Cohen did provide information to law enforcement, "including information that assisted the Special Counsel’s Office in ongoing matters" -which they agree is a factor to be considered by the Court, they add that "Cohen’s description of those efforts is overstated in some respects and incomplete in others."

And while the document notes that Cohen "should receive credit for his assistance in the SCO investigation," what is even more surprising is that "the credit given to Cohen should not approximate the credit a traditional cooperating witness would receive, "given Cohen’s affirmative decision not to become one."

"For these reasons, the Office respectfully requests that this Court impose a substantial term of imprisonment, one that reflects a modest downward variance from the applicable Guidelines range" which was defined as a range of 51 to 63 months’ imprisonment.

Still, prosecutors did say Cohen has taken "significant steps to mitigate his criminal conduct", although whether Cohen will be happy with the consequences - namely one very pissed off president - remains to be seen.

What is also notable from the late day filing, is that Federal Prosecutors for the first time also said that Cohen committed campaign finance crimes "in coordination with and at the direction of [Donald Trump, aka Individual-1]", to wit:

During the campaign, Cohen played a central role in two similar schemes to purchase the rights to stories – each from women who claimed to have had an affair with Individual-1 – so as to suppress the stories and thereby prevent them from influencing the election. With respect to both payments, Cohen acted with the intent to influence the 2016 presidential election. Cohen coordinated his actions with one or more members of the campaign, including through meetings and phone calls, about the fact, nature, and timing of the payments. In particular, and as Cohen himself has now admitted, with respect to both payments, he acted in coordination with and at the direction of Individual-1. As a result of Cohen’s actions, neither woman spoke to the press prior to the election

Meanwhile, in a separate sentencing filing released Friday, Mueller and his team refused to take a position on what amount of prison time Cohen should serve, but stated that "any sentence of incarceration" the court in New York recommends would be "appropriate."

Read the full pdf filing here.

Published:12/7/2018 4:20:02 PM
[Markets] Comey Frustrates House GOP During Closed Door Testimony

Former FBI Director James Comey frustrated GOP lawmakers on Friday, during his last testimony before the House Intelligence Committee before Democrats take over control of the panel in January, according to AP

Speaking to the press outside of the proceedings, House Republicans indicated to reporters that they were unhappy with Comey's answers and may attempt to bring him back another day. 

After the questioning was underway, some Republicans signaled they were unhappy with Comey’s level of cooperation. California Rep. Darrell Issa said Comey had two lawyers in the room, his personal lawyer and a lawyer from the Justice Department. He said the department lawyer repeatedly instructed Comey not to answer “a great many questions that are clearly items at the core of our investigation.”

Issa suggested the committee might bring Comey back because he wasn’t answering questions. Two other Republicans, Reps. Andy Biggs of Arizona and Mark Meadows of North Carolina, also suggested they might need a second session with Comey if they didn’t finish their interview by a late afternoon deadline. -AP

Democrats disagreed, with Rep. Raja Krishnamoorthi (IL) stating "He answered the questions he had to answer," though he also admitted "we got nowhere today." 

Other Democrats were upset that the Republicans on the Committee were distracting from the special counsel's Russia probe by asking questions about bias within the FBI when it came to investigating Donald Trump's alleged Russian ties as well as Hillary Clinton's use of a private email server. 

Democrats have said the investigations by the House Judiciary and Oversight and Government Reform committees are merely a way to distract from and undermine the special counsel’s Russia probe. Mueller took over the department’s investigation when he was appointed in May 2017.

...

Florida Rep. Ted Deutsch said the Republican majority “wishes to only ask questions still about Hillary Clinton’s emails, all to distract from the big news today, which is what’s happening in court.” -AP

Mueller is set to reveal more details regarding his Russia investigation in a Friday court deadline. According to Trump attorney Rudy Giuliani, Mueller believes that former Trump campaign manager Paul Manafort lied about Trump not knowing of the 2016 Trump Tower meeting. 

"This is a waste of time to start with," said Democratic Rep. Jerry Nadler (NY) regarding Comey's testimony. "The entire purpose of this investigation is to cast aspersions on the real investigation ... there is no evidence whatsoever of bias at the FBI or any of this other nonsense."

(Apparently Nadler missed the entire "F Trump"-themed trove of text messages discovered between lead FBI counterintelligence investigator Peter Strzok and his Trump-hating lover Lisa Page)

 

Published:12/7/2018 3:53:31 PM
[Politics] Legislators: Comey Meeting Waste of Time Former FBI Director James Comey’s testimony before House legislators turned out to be a “waste of time,” according to lawmakers. Published:12/7/2018 3:19:50 PM
[] COMEY REFUSING TO ANSWER CONGRESS' QUESTIONS Issa just said the same thing on FoxNews. #DEVELOPING: Representative Darrell Issa tells @OANN Former FBI Director James #Comey is not answering all of lawmakers' questions during his closed-door deposition with House Oversight and Judiciary committee members. #OANN— Jennifer Franco... Published:12/7/2018 1:19:46 PM
[Robert Mueller] Flynn’s fate (2) (Scott Johnson) Earlier this week in “Flynn’s fate” I noted the sentencing memo filed by the Mueller team in the case of former Trump national security advisor Michael Flynn earlier this year. I have embedded the sentencing memo below. In relevant part the case against Flynn is based on FBI interviews with him about his conversations (intercepted communications) with Russian ambassador Sergei Kislyak following Trump’s election. This is the entirety of the Published:12/7/2018 8:22:51 AM
[World] Trey Gowdy on Questions at Comey Hearing: Clinton Email & Trump-Russia Probes, FISA Abuse

Rep. Trey Gowdy joined Shannon Bream on "Fox News @ Night" to preview former FBI Director James Comey's Friday testimony before the House Judiciary Committee.

Published:12/7/2018 7:47:37 AM
[In The News] Nunes: FBI Officials Knew Of ‘Really Bad And Nefarious Activity’ By Christopher Steele And Associates

By Chuck Ross -

larger-15-FBI-Director-JamesComey-1

An FBI and Justice Department email chain shows that top government officials knew that dossier author Christopher Steele and his associates “were up to some really bad and nefarious activity,” House Intelligence Committee Chairman Devin Nunes said Thursday. In an interview on Fox News, Nunes claimed that the email constitutes ...

Nunes: FBI Officials Knew Of ‘Really Bad And Nefarious Activity’ By Christopher Steele And Associates is original content from Conservative Daily News - Where Americans go for news, current events and commentary they can trust.

Published:12/7/2018 6:48:44 AM
[Markets] In Furious Tweetstorm, Trump Slams FBI And "Lyin'" Comey Ahead Of Critical Moment In Russia Probe

With only hours to go before Special Counsel Robert Mueller is expected to file two key sentencing documents related to the Russia probe that would outline the possible punishments facing former Trump Campaign executive Paul Manafort and former Trump attorney (and admitted liar) Michael Cohen, President Trump embarked on what may be his widest-ranging tweet storm in months, criticizing the FBI's questionable handling of the Russia investigation and warned of a massive surge in illegal immigrant crossing at a "NON-WALLED" area in Arizona.

Trump

Trump also touted "smooth communications and good cooperation" with China over trade talks (ignoring Beijing's simmering outrage over the arrest of Huawei CFO).

Following his attempt to reassure stock traders, Trump moved on to one of his favorite topics: attacking the news media and pro-immigration Democrats for leaving the Arizona border vulnerable to infiltration. He also demanded that Democratic leaders Nancy Pelosi and Chuck Schumer agree to funding for his border wall (Trump is expected to meet with the two leaders next week).

As BI pointed out, Trump appeared to be referencing the border patrol's training exercise in Tucson, Arizona, where agents prepared "to deal with the potential of large crowds and assaultive behavior by caravan members, should a situation arise."

Moving on from immigration, Trump referenced a report about the FBI's decision to press ahead with its FISA warrants to spy on the Trump campaign despite knowing that its key piece of evidence - the infamous Steele Dossier - was "bogus". Musing about Mueller, Trump wondered whether the Special Counsel's many 'conflicts of interest', the 'vicious' record of his prosecutors and the "many contributions" made by the 17 Angry Democrats to the Clinton campaign would also be deserving of a mention.

The president also referenced a story  by Fox Business's Trish Reagan that quoted Roger Stone ally Jerome Corsi, who said the FBI and Mueller had demanded he lie to help aid their investigation and implicate the president and Stone.

With President Trump already firing off more tweets - even as the market remains on edge over what Trump will say, potentially unleashing another furious selloff - one imagines the stream-of-consciousness bursts will continue throughout Friday as Mueller releases his sentencing guidelines for Manafort and Cohen, and setting the stage for the final showdown with the president.

Published:12/7/2018 6:17:37 AM
[Markets] "I Know Where All The Bodies Are Buried": Clinton Foundation CFO Spills Beans To Investigators

The CFO of the Clinton Foundation, thinking he was "meeting an old professional acquaintance," admitted to investigators that the charity had widespread problems with governance, accounting and conflicts of interest, and that Bill Clinton has been commingling business and personal expenses for a long time, reports The Hill's John Solomon. 

Clinton Foundation CFO Andrew Kessel made the admissions to investigators from MDA Analytics LLC - a firm run by "accomplished ex-federal criminal investigators," who have been probing the Clinton Foundation for some time. 

Kessel told MDA "There is no controlling Bill Clinton. He does whatever he wants and runs up incredible expenses with foundation funds, according to MDA's account of the interview. "Bill Clinton mixes and matches his personal business with that of the foundation. Many people within the foundation have tried to caution him about this but he does not listen, and there really is no talking to him." 

MDA compiled Kessel's statements, as well as over 6,000 pages of evidence from a whistleblower they had been working with separately, and which they filed secretly over a year ago with the FBI and IRS. MDA has alleged that the Clinton Foundation engaged in illegal activities, and may owe millions in unpaid taxes and penalties.

In addition to the IRS, the firm’s partners have had contact with prosecutors in the main Justice Department in Washington and FBI agents in Little Rock, Ark. And last week, a federal prosecutor suddenly asked for documents from their private investigation.

...

The memo also claims Kessel confirmed to the private investigators that private lawyers reviewed the foundation’s practices — once in 2008 and the other in 2011 — and each found widespread problems with governance, accounting and conflicts of interest.

“I have addressed it before and, let me tell you, I know where all the bodies are buried in this place,” the memo alleges Kessel said.

...

The 48-page submission, dated Aug. 11, 2017, supports its claims with 95 exhibits, including internal legal reviews that the foundation conducted on itself in 2008 and 2011. -The Hill

"There is probable cause that the Clinton Foundation has run afoul of IRS rules regarding tax-exempt charitable organizations and has acted inconsistently with its stated purpose," MDA alleged in its memo, adding "The Foundation should be investigated for all of the above-mentioned improprieties. The tax rules, codes, statutes and the rule of law should and must be applied in this case."

Foundation officials confirmed that Kessel met with MDA investigators, but said that he "strongly denies that he said or suggested hat the Clinton Foundation or President Clinton engaged in inappropriate or illegal activities." 

"Mr. Kessel believed he was meeting an old professional acquaintance who was looking for business from the Foundation," the foundation added in a statement. 

MDA was specifically created to investigate 501c3 charities, and researched the Clinton Foundation at its own expense in the hope that the whistleblower submission they compiled might result in a government reward if the IRS was able to corroborate wrongdoing and recover tax dollars

The IRS sent multiple letters in 2017 and 2018 to MDA Analytics, confirming it had received the submission and it was “still open and under active investigation.” But, shortly before last month’s election, the agency sent a preliminary denial letter indicating it did not pursue the allegations for reasons that ranged from a lack of resources to possible expiration of the statute of limitations on some allegations.

I asked a half-dozen former federal investigators to review the submission and key evidence; all said the firm’s analysis of tax-exempt compliance issues would not be that useful to federal agencies that have their own legal experts for that. But they stressed the evidence of potential criminality was strong and warranted opening an FBI or IRS probe. -The Hill

According to retired FBI supervisory agent Jeffrey Danik, MDA's work is "a very good roadmap for investigation, adding "When you have the organization’s own lawyers using words like ‘quid pro quo,’ ‘conflicts of interest’ and ‘whistleblower protections,’ you have enough to get permission to start interviewing and asking questions." 

While some of the documents MDA submitted were marked as attorney-client privileged, Danik doesn't think that should be an issue for federal investigators - given that since special counsel Robert Mueller "got the OK to investigate Michael Cohen and his attorney-client communications with President Trump, I imagine that hurdle could be overcome under the crime-fraud exception." 

Meanwhile, next week a GOP Congressional subcommittee led by Rep. Mark Meadows (NC) will review the work of John Huber - the US attorney designated a year ago by then-Attorney General Jeff Sessions to investigate "all things Clinton." The hearing will establish how much money and resources Huber has dedicated, and whether we can expect to see any recommendations regarding Hillary Clinton's transfer of classified information from her insecure private server, along with the foundation's activities. 

To that end, a prosecutor working under Huber called MDA analytics last week and requested copies of their Clinton Foundation evidence, according to Solomon. 

A prosecutor working for Huber called MDA Analytics last week, seeking copies of their evidence, according to sources. The firm told the prosecutor that the FBI has possessed the evidence in its Little Rock office since early 2018, the sources said.

Some evidence that MDA investigators cited is public source, such as internal foundation reviews hacked in 2016 and given to WikiLeaks. Other materials were provided to the investigators by foreign governments that have done business with the charity, or by foundation insiders.

One of the nonpublic documents is an interview memo the MDA Analytics investigators penned after meeting with Kessel in late November 2016 at the Princeton Club in New York City. -The Hill

Kessel's inadvertent admissions, meanwhile, track closely with comments made in 2008 written by a private lawyer named Kumiki Gibson - who the Clinton Foundation hired to study its governance. Gibson flagged concerns over improper commingling of charitable and private business

"The work of the Foundation and the President are intertwined in a way that creates confusion at, and undermines the work of, the Foundation at virtually every level," he wrote, warning that such actions pose "reputational and legal challenges, and with confusion, inefficiencies and waste."

Specifically, the memo warned the foundation had not created policies and procedures “required by law” and that some of its leaders “appear to have interests that do not always align with those of the Foundation.”

It also raised the possibility of illegal activities, saying the foundation and its managers held an “anti-compliance attitude” and that there were lower-level employees who “begged” for whistleblower protections after witnessing “less than fully compliant behavior or even worse are asked to participate in or condone it.” -The Hill

Meanwhile, a 2011 review by the law firm Simpson Thatcher noted "material weaknesses" found by auditors in 2009 and 2010, such as a lack of board meetings and unsigned board minutes - and also found that some foundation employees "abuse expense privileges," while others had conflicts of interest. 

We look forward to hearing anything further from Solomon and The Hill on whatever Huber has been up to. 

Published:12/6/2018 11:17:51 PM
[World] Devin Nunes Says FBI Email Chain May Show FISA Abuse

Outgoing House Intelligence Committee Chairman Devin Nunes (R-Calif.) reacted to reports that a recently uncovered FBI email chain may show that the FISA warrant process was abused by officials seeking to collect intelligence on Trump associate Carter Page.

Published:12/6/2018 9:46:02 PM
[] How Did The FBI Get a Warrant for a Raid Against a... Whistleblower Protected by the Whistleblower Law? Did They Tell the Judge He Was a Whistleblower with Whistleblower Protections? Or Did They Forget to Mention That? The FBI forgot to mention that the unverified oppo file they got a FISA with had been paid for and put together by Trump's opponent in an election. The FBI has a lot of Ooopsies lately. Did they have another... Published:12/6/2018 5:44:41 PM
[Markets] The US Achieves Energy Independence, Becomes Net Oil Exporter For First Time

As we previewed last month using estimates from Bank of America, today the Energy Information Administration (EIA) officially confirmed that the United States became a net exporter of crude and refined products for the first time last week. This marks a departure from American dependence on foreign oil which the U.S. has relied upon for more than 75 years. According to U.S. data, crude shipments reached a record 3.2 million barrels last week with net exports turning just positive. 

As a result of the boom in shale production, OPEC has seen its influence decline, putting to bed its decades-long reign as one of the globe's massive geopolitical forces, and a key factor behind the petrodollar. The news comes just as OPEC is meeting in Vienna to agree on potential output cuts in order to support the price of oil.

Michael Lynch, president of Strategic Energy & Economic Research, told Bloomberg that the US is "becoming the dominant energy power in the world. But, because the change is gradual over time, I don’t think it’s going to cause a huge revolution, but you do have to think that OPEC is going to have to take that into account when they think about cutting."

Last week the U.S. sold 211,000 barrels a day of crude and refined products, compared to net imports of more than 2 million barrels per day on average so far this year. This number peaked at more than 12 million barrels back in 2005.

Oil analyst Joe McMonigle told Bloomberg: "Trump is making America great again. First president in modern time to get America to be energy independent, if only for one week." We previewed this critical inflection point last month when discussing America's imminent energy independence. We noted then that, helped by higher prices, total oil production had hit a record level in the US, reaching a combined 15.9 million b/d (crude oil and NGLs) in the past month and almost 2mn b/d above last year.

This number was broken down into 11.35mn b/d of crude oil and 4.57 mn b/d of natural gas liquids (NGLs). As a reference, the US will likely consume about 20.7mn b/d of oil and other liquid fuels in 2018. The surge in US and also Canadian output has pushed total North American crude production volumes above 20 mn b/d.

The larger-than-expected surge in North American oil volumes has come primarily from the Permian, Canada's oil sands, and more recently, the Gulf of Mexico.

In contrast to the fast growth experienced by its Northern neighbors, Mexican oil output continues to fall as the effects of the latest energy sector reform have yet to be translated into output.

We had also mentioned that the additional pipelines being built in the Texas Permian Basin were likely going to help solve a bottleneck of crude transportation that could put the United States in the position that it’s now in. From there, we noted that the bottleneck would likely move to the ports of Texas as oil would eventually go from "production hell" to "delivery hell" to "logistics hell".

Like in 2014, the biggest threat to Saudi Arabia remains the Texas oil patch. Producers in America have added significant volume over the last 12 months. In fact, just the added output this year is equivalent to the entire output of OPEC‘s Nigeria.

Undoubtedly the Saudis are acutely aware that the United States is gaining traction on becoming energy independent, especially specific to crude. As MBS continues to further his juggling act between the oil market, OPEC and world leaders, it looks as though the price of crude - as well as the Saudi government - may remain volatile for the new year to come.

 

 

Published:12/6/2018 2:43:41 PM
[Markets] Key Words: Fox News host Sean Hannity’s advice about cooperating with the FBI: Don’t Breathless Trump supporter Sean Hannity clearly has a real problem with how Robert Mueller is running his investigation into Russian collusion, and he’s got a message for those thinking about cooperating with the FBI:
Published:12/6/2018 1:14:04 PM
[World] Andy Biggs Previews James Comey Hearing Before House Judiciary Committee

Rep. Andy Biggs on Thursday previewed James Comey's upcoming testimony before the House Judiciary Committee, saying lawmakers want to get to the bottom of the former FBI director's numerous "inconsistencies."

Published:12/6/2018 12:43:56 PM
[World] [Paul Cassell] The Current Posture of the Crime Victims Rights Challenge to Jeffrey Epstein's Plea Deal

In a case I'm working on, Jeffrey Epstein's victims hope to set aside a non-prosecution agreement based on violations of their rights under the Crime Victims' Rights Act.

Recently the case of Jeffrey Epstein has been in the news, sparked by an impressive set of articles by the Miami Herald. In 2007, Epstein was accused of sexually molesting dozens of underage girls in Florida. In 2008, he reached a non-prosecution agreement (NPA) with the U.S. Attorney's Office for the Southern District of Florida, blocking prosecution of him for any federal sex offenses that he may have committed in exchange for his guilty plea to two low-level Florida crimes. Epstein ultimately spent about 13 months in jail, much of it on work release.

Meanwhile, in July 2008, Florida crime victims' attorney Brad Edwards and I challenged the NPA for two victims, arguing it was reached in violation of the Crime Victims Rights Act (CVRA). Because the matter continues to be litigated, I do not want to comment on the merits of the case. But the case has drawn considerable attention. For example, the case has already set an important precedent that victims' rights under the CVRA apply before charges are filed, as explained in this law review article. And as an example of more recent interest, yesterday Nebraska Senator Ben Sasse sent a letter to the Justice Department asking it to investigate its treatment of Jeffrey Epstein's victims. In light of this renewed interest in the case, a short blog post simply describing the legal posture of the crime victims' CVRA claims might be useful.

In July 2008, Edwards and I filed the lawsuit on behalf of two women whom the Justice Department has identified as having been sexually assasulted by Epstein when they were underage -- Jane Doe 1 and Jane Doe 2. The victims contend that the U.S. Attorney's Office for the Southern District of Florida executed the NPA while concealing what it was doing from Epstein's victims. The lawsuit has been through a number of twists and turns during the more than a decade it has been pending. But relevant to the current posture is that the victims' motion for summary judgment is pending. In that motion, the victims argue that the court should grant summary judgment on the issue of whether the U.S. Attorney's Office violated their rights under the CVRA by concealing the NPA from the victims. Here are some excerpts from the introduction to our 55-page motion:

In 2004, Congress enacted the CVRA because it found that in case after case "victims, and their families, were ignored, cast aside, and treated as non-participants in a critical event in their lives. They were kept in the dark by prosecutors too busy to care enough . . . and by a court system that simply did not have place for them." 150 CONG. REC. 7296 (2004) (statement ofSen. Feinstein). In passing the CVRA, Congress mandated a series of rights for crime victims. Sadly, several years later, when the Government began handling this case, it did precisely what Congress thought it had forbidden. The Government deliberately kept crime victims "in the dark" so that it could enter into a plea arrangement designed to prevent the victims from raising any objection. In doing so, the Government refused to afford victims the rights they had been promised by Congress—particularly "the right to reasonable, accurate, and timely notice of any public court proceeding," "the reasonable right to confer with the attorney for the Government in the case," and "the right to be treated with fairness and with respect for the victim's dignity and privacy."

The undisputed evidence begins in 2005, when the Palm Beach Police Department ("PBPD") had identified numerous girls as victims of Jeffrey Epstein's sexual crimes. In 2006, the PBPD turned the case over to federal authorities for further investigation. As early as March 15, 2007 and throughout the rest of the investigation, the United States Attorney's Office for the Southern District of Florida specifically identified several dozen girls whom it classified as "victims" under the CVRA. Once that identification was made, the Government was obligated to afford these victims certain rights under the CVRA—a fact of which the Government itself was well aware. Indeed, the Government provided notification to the girls that they were classified as "victims" under the CVRA.

But what the Government did not tell the victims lies at the heart of the case. It is undisputed that the Government did not tell the victims that, by May 2007, the Office hadprepared an 82-page prosecution memorandum and a 53-page indictment against Epstein and his co-conspirators. At that time, rather than confer with the victims about how to proceed, the Government began conferring about this issue exclusively with Epstein's counsel. Epstein's counsel contended that, despite abundant connection to interstate commerce, Epstein's sex trafficking was purely of local concern. By August 2007, federal prosecutors had disproven or rejected these defense arguments and notified the defense that all of the identified victims retained federal rights.

For example, during August 2007, Jane Doe 1, and other similarly situated victims, provided details to federal agents of the abuse that they endured at the hands of Epstein and his co-conspirators. In September 2007, without conferring with any of the victims, the Government and Epstein shifted gears and began working together to concoct a criminal charge for Epstein to plea to other than his sexual abuse of minors. As alternative charges, they discussed charging Epstein with: (1) various misdemeanors, (2) assaulting his co-conspirators and girlfriend, (3) using private investigators to chase and harass victims' families, (4) obstructions of grand jury subpoenas, or (5) his obstruction of the federal investigation when he instructed another coconspirator to lie to federal agents. Ultimately, however, none of those would work. Assistant U.S. Attorney ("AUSA") Marie Villafaña (the "line prosecutor") informed Epstein's counsel that she was getting pushback for creating a charge using one of the main co-conspirators as thevictim.6 Consequently, the Government and Epstein searched for another crime for Epstein to plead to, which could accompany a federal non-prosecution agreement (NPA). Incredibly, the offense to which Epstein and the Government ultimately agreed, labeled the minor victims "prostitutes."

The undisputed evidence clearly shows that by September 21, 2007, the line prosecutor had informed Palm Beach State Attorney Barry Krischer that a federal resolution had been reached by way of a NPA, yet the victims remained uninformed. On September 24, 2007, the NPA was signed, preventing prosecution of all federal crimes committed by Epstein and his coconspirators against the victims. After the signing of the NPA, the Government and Epstein's attorneys worked together to choose a lawyer to be paid by Epstein to represent Epstein's victims for the purpose of settling civil restitution claims. This too was all being done without the victims having any knowledge whatsoever. The correspondence between the Government and a candidate for that representative position as well as between the Government and Epstein's counsel reflects that the Government still had not yet disclosed the NPA to the victims, and was following the guidance of Epstein's counsel in making decisions with respect to the timing and substance of any communication to the victims.

For the next nine months, from the time the NPA was signed through the date of Epstein's state court plea in June of 2008, the Office—doing Epstein's bidding—assiduously concealed the NPA's existence from the victims. While this indulgent deal was incredible in its own right, even more extraordinary was how the victims were treated during the process. Ratherthan confer with the victims about the fact that resolution by NPA was ever being considered—or even tell them that it was already a signed deal—the Office and Epstein inserted a "confidentiality" provision into the agreement barring its disclosure to anyone, including the victims. There is no dispute that the Government did not inform the victims of the NPA or of the possibility of any such type of resolution. Consequently, there is no dispute that the Government did not afford the victims any rights before the signing of the NPA. . . .

In October 2007, after the NPA was signed, federal agents spoke with three of the more than 30 identified victims, including Jane Doe 1. The Government does not dispute that this contact only occurred after the signing of the NPA. Even more important, it is not disputed that this contact was: (1) made by the Federal Bureau of Investigation and not a "prosecutor for the Government," (2) that the FBI did not inform the victims of the NPA and certainly did not confer with the victims about the details of the NPA, and (3) that this contact only occurred with three of the more than 30 victims. Lastly, while the content of that conversation is contested, any stretched argument that the conversation satisfied CVRA requirements for Jane Doe 1 are belied by the timing of the conversation as well as the uncontested documentary evidence of the communications with the victims (including with Jane Doe 1) that followed that conversation.

Subsequent to the FBI's contact with three of Epstein's victims, the Government informed Epstein's attorneys that victim notification letters needed to be sent to all the victims pursuant to the CVRA. Rather than comply with this acknowledged requirement, Epstein's counsel convinced the Government that (contrary to standard Government practice) Epstein should be permitted to provide input into any message being delivered, and ultimately that the victims should not be told anything "until after Epstein pleas."

In January 2008, FBI agents again met with Jane Doe 1 and gathered additional details about Epstein's abuse as well as the direct sexual abuse by one of his co-conspirators, Nadia Marcinkova—who participated in the abuse of other victims as well. The Government then sent a victim notification letter to Jane Doe 1 informing her of her rights under the CVRA, that "this will be a long investigation," and to "be patient." Jane Doe 1 was sent a similar letter on June 7, 2008. Other victims were also sent these letters communicating that the Epstein case was an on-going active criminal investigation—not that the Government had already immunized Epstein for all federal crimes committed against each of the victims, through a NPA. These misleading letters were sent almost up until the date of Epstein's state court plea in late June 2008.

On June 30, 2008, Epstein pled guilty to state court charges. It is uncontested that the victims were not reasonably and accurately informed about that hearing—specifically, they were never told the hearing was part of a process that would extinguish any possibility of Epstein being prosecuted for the crimes he had committed against them in Florida. Even after the plea, the Government once again conferred with Epstein's attorneys to decide what to tell the victims.

As the Court is aware, this CVRA action was filed in July 2008 at a time when the victims mistakenly believed that the federal case remained open, and wanted to ensure that their rights under the CVRA were afforded before any possible federal disposition. At the emergency hearing on the Petition for Enforcement of Crime Victims' Rights Act, Jane Doe 1 and Jane Doe were in the courtroom to learn for the first time that the federal case had been resolved.

The undisputed facts show that for nine months, the Government and Epstein conspired to conceal the NPA from the victims to prevent them from voicing any objection, and to avoid the firestorm of controversy that would have arisen if it had become known that the Government was immunizing a politically-connected billionaire and all of his co-conspirators from prosecution of hundreds of federal sex crimes against minor girls. Such facts demonstrate clear violations of the CVRA's requirements that the Government afford victims the reasonable right to confer, the right to be treated with fairness, and the right to reasonable and accurate notice about court hearings. No genuine issue of material fact or law can exist on these points. The Court should accordingly grant summary judgment for the victims on the issue of the CVRA violations and then, in subsequent proceedings, turn to the issue of the proper remedy for those violations.

We filed the motion for summary judgment for Jane Doe 1 and Jane Doe 2 on February 10, 2016. The Government responded on June 6, 2017. Essentially the Government argued that it had no legal obligation to keep the victims' informed about what was happening. We replied in this reply brief on August 11, 2017. The government has also filed a cross-motion for summary judgment, which essentially reprises its arguments in our response to our motion.

Because the matter is pending before the Court, I won't add anything to what we have said in our pleadings. Obviously Edwards and I (recently joined by Florida attorney Jack Scarola) hope that the district court will grant our summary judgment motion, holding that this treatment of crime victims violates federal law.

Published:12/6/2018 12:18:35 PM
[Corruption] The FBI is FINALLY Getting Rid of Obama’s Corrupt Officials

One of the worst things Barack Obama did to our law enforcement community was to put in place a long list of left-wing ideologues in places of leadership.

The post The FBI is FINALLY Getting Rid of Obama’s Corrupt Officials appeared first on Godfather Politics.

Published:12/6/2018 11:12:30 AM
[Corruption] The FBI is FINALLY Getting Rid of Obama’s Corrupt Officials

One of the worst things Barack Obama did to our law enforcement community was to put in place a long list of left-wing ideologues in places of leadership.

The post The FBI is FINALLY Getting Rid of Obama’s Corrupt Officials appeared first on Godfather Politics.

Published:12/6/2018 11:12:30 AM
[FBI] Is it something he said? (5) (Scott Johnson) Until we get an answer to the question of what really went down last month when the FBI called on 16 agents to raid the home of Clinton crime family whistleblower Dennis Nathan Cain, I want to follow the story. Richard Pollock’s exclusive and meticulous November 29 Daily Caller story on the raid is posted here. Cain was then scheduled to appear on Sean Hannity’s FOX News show this past Published:12/6/2018 8:13:13 AM
[Politics] Mark Meadows says Mike Flynn’s cooperation with Mueller is GOOD NEWS for TRUMP! OK. So… try to follow on this. Mark Meadows says that having the former national security advisor for Trump admit to lying to the FBI and crack a deal with the evil . . . Published:12/5/2018 6:10:14 PM
[Politics] Mark Meadows says Mike Flynn’s cooperation with Mueller is GOOD NEWS for TRUMP! OK. So… try to follow on this. Mark Meadows says that having the former national security advisor for Trump admit to lying to the FBI and crack a deal with the evil . . . Published:12/5/2018 6:10:14 PM
[Politics] FBI denies listing ‘Proud Boys’ as extremist group Several weeks ago we ran a report that said the FBI had listed Gavin McInnes’ Proud Boys as an extremist group. However that now appears not to the be the case, according . . . Published:12/5/2018 3:07:11 PM
[Politics] FBI denies listing ‘Proud Boys’ as extremist group Several weeks ago we ran a report that said the FBI had listed Gavin McInnes’ Proud Boys as an extremist group. However that now appears not to the be the case, according . . . Published:12/5/2018 3:07:11 PM
[Politics] Sen. Grassley Demands Information About FBI Raid on Whistleblower Sen. Chuck Grassley is calling for more information about the FBI's raid on a former agency contractor who had given a watchdog documents claiming that federal officials failed to investigate possible criminal activity related to Hillary Clinton. Published:12/5/2018 7:08:23 AM
[Uncategorized] Mueller Claims Flynn Gave “First-Hand” Details About Trump Transition Team’s Contact With Russian Officials — But What Part of That is Illegal? Flynn lied to the FBI (a charge to which he pled guilty), but the same question remains -- what part of Mueller's latest "get" is illegal? Published:12/5/2018 6:08:54 AM
[In The News] Mueller Recommends No Jail Time For Michael Flynn, Who Provided ‘Substantial Assistance’ To Russia Probe

By Chuck Ross -

Special counsel Robert Mueller on Tuesday effectively recommended that Michael Flynn receive no prison time for lying to the FBI, citing the former national security advisor’s “substantial assistance” in the Russia probe and other Department of Justice (DOJ) cases. “Given the defendant’s substantial assistance and other considerations set forth below, ...

Mueller Recommends No Jail Time For Michael Flynn, Who Provided ‘Substantial Assistance’ To Russia Probe is original content from Conservative Daily News - Where Americans go for news, current events and commentary they can trust.

Published:12/4/2018 8:36:11 PM
[Markets] No Jail Time For Flynn; Mueller Says Former Trump Official Provided "Substantial" Assistance

Special counsel Robert Mueller has recommended no jail time for former National Security Adviser Michael Flynn, writing in a late Tuesday sentencing memorandum that Flynn provided "substantial" assistance to his investigation after taking part in 19 interviews related to Mueller's probe of the 2016 US election and any links between the Trump campaign and Russia, as well as Russian meddling. 

While there is no indication that Flynn threw Trump under the bus, Mueller's memorandum certainly suggests that the former Trump administration official provided the special counsel with information that they were pleased with. 

Or, in the alternative, the FBI altered their "302" interview records with Flynn to set him up, and this is how the Department of Justice has chosen to carefully disentangle themselves from the situation. 

To briefly review from a February report; Flynn and Russian Ambassador Sergey Kislyak had a phone conversation in late December, 2016. On its face, there was absolutely nothing wrong with an incoming National Security Advisor having a conversation with a Russian government official. Following the conversation, which was surveilled by the Obama administration and then leaked to the press

The first thing to remember is that it appears Flynn did nothing wrong in having those talks. As the incoming national security adviser, it was entirely reasonable that he discuss policy with representatives of other governments and Flynn was getting calls from all around the world. -Washington Examiner

What happened next is strange; on January 12, WaPo columnist David Ignatius reported that Flynn and Kislyak had talked - implying some type of malfeasance. Days later, on January 15, Vice President-elect Mike Pence denied that Flynn had discussed sanctions with the Russian ambassador. The on January 24, Obama holdover and acting Attorney General Sally Yates sent two FBI agents to interview Flynn without a lawyer present.  

Two days later, on January 26, Yates and a colleague visited the White House to tell White House counsel Don McGahn that Flynn may have violated the obscure logan act, and in fact discussed sanctions with Kislyak - possibly subjecting Flynn to blackmail.

Yates then explained to McGahn her theory that Flynn might be vulnerable to blackmail. The idea was that Flynn had discussed sanctions with Kislyak, which of course the Russians knew. And then if Flynn lied to Pence, and Pence made a public statement based on what Flynn had told him, then the Russians might be able to blackmail Flynn because they, the Russians, knew Flynn had not told the vice president the truth. -Washington Examiner

Meanwhile, on January 23, the Washington Post reported that they had "not found any evidence of wrongdoing or illicit ties to the Russian government," after having reviewed the leaked conversation

Interestingly, FBI investigators Peter Strzock and his partner who interviewed Flynn thought Flynn was telling the truth about his conversations with Kislyak, and that any inaccuracies in his answers were unintentional - according to accounts of a closed-door March 2017 briefing given to lawmakers by former FBI Director James Comey.

According to two sources familiar with the meetings, Comey told lawmakers that the FBI agents who interviewed Flynn did not believe that Flynn had lied to them, or that any inaccuracies in his answers were intentional. As a result, some of those in attendance came away with the impression that Flynn would not be charged with a crime pertaining to the January 24 interview. -Washington Examiner

Published:12/4/2018 8:02:28 PM
[Markets] Stockman To Trump - Tear Down That Deep State Wall...Of Secrecy

Authored by David Stockman via TargetLiberty.com,

When the Donald promised to "drain the swamp" during the 2016 election campaign, it did sound vaguely like an attack on Big Government, and at least a directional desire to shrink the state and let free market capitalism breathe.

After 22 months in office, however, the truth is patently obvious: The only Swamp that Donald Trump wants to drain is one filled with his political enemies and policy adversaries at any given moment in time. Even then, you have to consult his tweetstorm ledger to know exactly who the swamp creatures de jure actually are.

Still, the Donald's daily Twitter assaults on the Deep State are a wondrous thing. They surely do undermine public confidence in rogue institutions like the FBI, CIA and NSA, which profoundly threaten America's constitutional liberties and fiscal solvency.

Likewise, his frequently unhinged tweets also lather their congressional sponsors and beltway poo-bahs with well-deserved mud and opprobrium. And the Donald's increasingly acrimonious public feuding with Deep State criminals like James Comey and John Brennan is just what the doctor ordered.

The Deep State thrives and milks the public treasury so successfully in large part because the Imperial City's corps of permanent policy apparatchiks like Comey and Brennan (and thousands more) pretend to be performing god's work. So doing, they preen sanctimoniously to the adoration of their sycophants in the mainstream media, claiming to be above any governance or sanction from the unwashed electorate.

Attacking this rotten perversion of democracy, therefore, is the Donald's real calling. While he lacks both the temperament and ideas to solve the nation's metastasizing economic and social challenges and has no hope whatsoever to make MAGA, he is more than suited for his "Great Disrupter" mission.

That is, the existing order needs to be discredited and brought down first, and on that score his primitive economic populism will more than do its part. As we have previously explained, Trump's deadly combination of Fiscal Debauchery, Protectionism and Easy Money will eventually blow the nation's debt and bubble-ridden economy sky-high.

Likewise, his crude rendition of America First is not a blueprint for rebooting America's national security policy, but it is an existential threat to Empire First and the Deep State's usurpation of constitutional government. And even as the Donald lurches to and fro on Russia, Korea, the Middle East, NATO, globalism and so-called allies, the main job is getting done. That is, the War Party's self-appointed role as global policeman and the Indispensable Nation is getting thoroughly discredited.

In terms of the Donald's great mission of wrecking the Deep State, we would only take issue with him to this extent: Why in the world does he not understand that he is actually President and has a far more powerful weapon at his disposal than his Twitter account----56 million followers to the contrary notwithstanding?

To wit, he has the unquestioned constitutional power to both appoint and fire his own cabinet, sub-cabinet and upwards of 3,000 Schedule C policy jobs; and also to declassify anything lurking behind the Deep State's massive wall of unjustified secrecy if he deems it in the public interest.

Accordingly, Trump could have and should have fired Jeff Sessions long before he did and Rod Rosenstein even before that. After all, it is the spinelessness of the former and the Deep State treachery of the latter, that launched the hideous Mueller witch-hunt in the first place and that keeps it going from one absurdity to the next ridiculous over- reach.

Can there be anything more pitiful after 17 months of nothingburgers on the phony Russian collusion file than Mueller's list of indictments. These include:

  • 13 Russian college kids for essentially practicing English as a third language at a St Petersburg troll farm for $4 per hour;

  • 12 Russian intelligence operatives who might as well have been picked from the GRU phonebook;

  • Baby George Papadopoulos for mis-recalling an irrelevant date by two weeks;

  • Paul Manafort for standard Washington lobbyist crimes committed long before he met Trump;

  • Michael Cohen for shirking taxes and running Trump's bimbo silencing operation;

  • Michael Flynn for doing his job talking to the Russian Ambassador and confusing the confusable Mike Pence on what he said and didn't say about Obama's idiotic 11th hour Russian sanctions;

  • Rick Gates for helping Manafort shakedown the Ukrainian government and other oily Washington supplicants.;

  • Sam Patten, another Manafort operative who forget to register correctly as a foreign agent;

  • Richard Pinedo, a grifter who never met Trump and got caught selling forged bank accounts on-line to Russians for a couple bucks each;

  • Alex van der Zwaan, a Dutch lawyers who wrote a report for Manafort in 2012 and misreported to the FBI what he told Gates about it. That's all she wrote and it's about as pathetic as it gets. If nothing else, the fact that Mueller hasn't been guffawed out of town on account of this tommyrot is a measure of the degree to which the Imperial City has fallen prey to the Trump Derangement Syndrome.

The Brennan Report - The Foundational Document of the RussiaGate Witch-Hunt

Still, we have to wonder why Trump doesn't get the joke. Long ago he could have declassified everything related to the foundational RussiaGate document. That is, the January 6, 2017 report entitled, "Assessing Russian Activities And Intentions in Recent US Elections".

The report was nothing of the kind, of course, and is now well-understood to have been written by outgoing CIA director John Brennan and a hand-picked posse of politicized analysts from the CIA, FBI and NSA. It was essentially a political screed thinly disguised as the product of the professional intelligence community and was designed to discredit and sabotage the Trump presidency.

As presented to the President-elect and released to the public in declassified form, it is all gussied-up with caveats, implying that the real dirt is in the "highly classified" version of the report. Except that's just the typical Deep State hide-the-ball trick: When it can't prove its "assessments" and "judgments", it claims the evidence is top secret.

In the current case, the Imperial City is so red hot with Trump antipathy that any undisclosed smoking guns in the highly classified version would have leaked long ago. So the truth is, there is nothing more to the allegedly sinister Russian "influencing campaign" than the superficial blarney in the public version of the document.

And the latter boils down to ten pages of sweeping insinuations and airballs---plus a loony 9-page appendix which proves the totally public RT America cable TV network doesn't think much of the Washington's global meddling!

Indeed, we second the motion. In fact, when we first read this ballyhooed report our thought was that someone at the Onion had pilfered the CIA logo and published a side- splitting satire.

The 9-pager on RT America, which is presented as evidence of "Kremlin messaging", is so sophomoric and hackneyed that it could have been written by a summer intern at the CIA. It consists entirely of a sloppy catalogue of leftist and libertarian based dissent from mainstream policy that has been aired on RT America on such subversive topics as Occupy Wall Street, anti-fracking, police brutality, foreign interventionism and civil liberties.

Actually, your author has appeared dozens of times on RT America and advocated nearly every position cited by the CIA as evidence of nefarious Russian propaganda. And we thought it up all by ourselves!

So, yes, we do think US intervention in Syria was wrong; that Georgia was the aggressor when it invaded South Ossetia; that the American people have been disenfranchised and need to "take this government back"; that Washington runs a "surveillance state" where civil liberties are being ridden roughshod upon; that Wall Street is riven with "greed" and the "US national debt" is out of control; that the two-party system is a "sham "and that it doesn't represent the views of "one-third of the population" (at least!); and that most especially after killing millions in unnecessary wars Washington has "no moral right to teach the rest of the world".

So there you have it: Policy views on various topics that are embraced in some instances by both your libertarian editor and the left-wing Nation magazine; and which are held to be examples of Russian messaging---even alarming evidence of nefarious meddling in our electoral process.

Moreover, it turns out that RT America is not even in the top 95 cable channels according to published rankings, and may have an audience of less than 30,000 viewers per day, according to even the rabidly anti-Putin Daily Beast. Still, by the lights of John Brennan and his coterie of CIA hacks, that's apparently 30,000 too many citizens being exposed to anti-establishment opinion.

In that regard, we especially got a yuck from the following example of RT's nefarious attempt to influence American voters. Not only have we uttered these very same thoughts on RT America, but we also conveyed them on the Fox Business network and didn't even get censored!

Some of RT's hosts have compared the United States to Imperial Rome and have predicted that government corruption and 'corporate greed' will lead to US financial collapse."

Needless to say, if this is an example of the work being done by the US intelligence community with its $75 billion annual budget, they are giving the idea of pouring money down a rathole an altogether new definition.

In fact, does the juvenille fool who penned this drivel think Washington is purer than Caesar's wife? The report whines and slobbers about RT America's indirect support from the Russian government and an alleged $190 million subsidy from the Russian state.

Yet Washington spends upwards of $800 million per year on the U.S. Agency for Global Media, which is the parent organization of its own international propaganda arms: Voice of America, Radio Free Europe/Radio Liberty, Radio y Television Marti, Radio Free Asia and the Middle East Broadcast Networks.

And that's just the tip of the iceberg. It doesn't count, for example, the $170 million per year spent by the National Endowment for Democracy (NED) to subvert governments which Washington doesn't like. Indeed, the two sub-agencies of NED (one for the Dems and one for the GOP) were chaired by two of Washington's most blood-thirsty regime changers---Madeleine Albright and the late Senator John McWar of Arizona.

Unlike RT America, of course, these two cats caused the deaths of hundreds of thousands of innocent civilians who happened to be domiciled in places they deemed in need of that very special kind of "influencing" that is delivered from the business end of a Tomahawk cruise missile.

Beyond that, there is billions more of "agit prop" and NGO funding that is channeled through the CIA, DOD, the State Department, the Agency for International Development and many more----all designed to "influence opinion" in dozens of foreign countries where the people need to be advised of the correct line from Washington.

Yet the report's mendacious attack on the utterly irrelevant RT America is the stronger part of the document!

The main body of the document consists of 10 pages of bloviation which amount to this: The very distinct probability that Vlad Putin strongly dislikes Hillary Clinton, who did liken him to Adolph Hitler; and preferred Donald Trump, who was a wet-behind- the-ears real estate gambler from New York City, thereby still in possession of sufficient common sense to see that Russia is no threat to America and that rapprochement with Putin was in order.

Actually, it gets a lot richer. The US government did spend tens of millions covertly supporting the so-called "color revolutions" on Russia's doorstep, including the Rose Revolution in Georgia, the Orange Revolution in Ukraine, the Tulip Revolution in Kyrgyzstan, the Jeans Revolution in Belarus, the Grape Revolution in Moldova and, most especially, the so-called pro-democracy protests in Russia during 2011-2013 that were aimed at vilifying and discrediting Vladimir Putin.

Yet Imperial Washington wears absolute blinders with respect to this kind of bald-faced meddling in the internal politics of other sovereign nations. There is not an iota of connection between the safety and security of the American people domiciled between their ocean moats and whatever some two-bit dictator is doing in Belarus or the intrigues of the communist party in Moldova.

Soft Power Aggression---How The Imperial City Makes a Living

The explanation for this kind of soft-power aggression, therefore, is not national security: It's what Imperial Washington does for a living. That is, the billions of taxpayer money being pumped through the foreign policy agencies, NGOs, think tanks, advocacy organizations and sleazy lobbying operations like those of the Podesta brothers and Paul Manafort finance there own raison d'etre .

Published:12/4/2018 2:31:12 PM
[Markets] House GOP Suffer "Major" Hack During 2018 Midterms; FBI Alerted

Members of the House GOP suffered a "major" hack during the 2018 midterm election, exposing thousands of sensitive emails to an unknown intruder, according to Politico, which cites three senior party officials. 

The email accounts of four senior aides at the National Republican Congressional Committee were surveilled for several months, the party officials said. The intrusion was detected in April by an NRCC vendor, who alerted the committee and its cybersecurity contractor. An internal investigation was initiated and the FBI was alerted to the attack, said the officials, who requested anonymity to discuss the incident. -Politico

That said, the hack was concealed from senior House Republicans, including Speaker Paul Ryan (R-WI), Kevin McCarthy (R-CA) and Steve Scalise (R-LA) - who had no clue about the intrusion until Politico contacted the National Republican Congressional Committee (NRCC) with questions about the hack. 

Committee officials say they decided to withhold the information pending their own investigation, and thought that revealing the hack would compromise their efforts to uncover who did it. 

"We don't want to get into details about what was taken because it's an ongoing investigation," said one senior party official. "Let's say they had access to four active accounts. I think you can draw from that."

As the 2018 midterms unfolded, the hack became a major source of internal turmoil within the NRCC - which brought on D.C. law firm Covington and Burling and Mercury Public Affairs to manage the response to the hack. The two firms were paid hundreds of thousands of dollars by the GOP Committee, while NRCC chief legal counsel, Chris Winkleman, has spent hours of his time to addressing the issue. 

While party officials would not say when the hack began or who they think did it, they privately think it was a foreign agent due to the nature of the attack

"The NRCC can confirm that it was the victim of a cyber intrusion by an unknown entity. The cybersecurity of the Committee’s data is paramount, and upon learning of the intrusion, the NRCC immediately launched an internal investigation and notified the FBI, which is now investigating the matter," said Mercury VP Ian Prior - a former DOJ official and NRCC operative. 

"To protect the integrity of that investigation, the NRCC will offer no further comment on the incident," he added.

Party officials claim that none of the information obtained in the hack - namely thousands of emails from senior NRCC aides, has appeared in public, while there were no attempts to approach the NRCC or its leadership to threaten exposure of the data. That said, Politico notes that the hack and subsequent coverup "is likely to prove embarrassing at a time when Republicans are grappling with an election in which they lost 40 seats and control of the house." 

Rep. Tom Emmer (Minn.) will take over as NRCC chairman this cycle, a selection that was directly approved by McCarthy. Emmer is in the process of hiring his own senior aides for the committee, a normal procedure when a new chairman takes over a party committee. Emmer was first briefed on the hack on Monday evening.

Cybersecurity remains a pressing concern for politicians and political committees, heightened by the high-profile Russian hacking of the Democratic National Committee and Hillary Clinton campaign chief John Podesta during the 2016 election cycle. It’s not clear, however, what the NRCC could have done to avoid this intrusion.

The hack was first detected by an MSSP, a managed security services provider that monitors the NRCC’s network. The MSSP informed NRCC officials and they, in turn, alerted Crowdstrike, a well-known cybersecur