news site RSS Email Alerts


[Entertainment] Best-Sellers-Books-USAToday Best-Sellers-Books-USAToday Published:2/27/2020 1:39:35 PM
[Markets] The Economic Cataclysm Ahead The Economic Cataclysm Ahead

Authored by Charles Hugh Smith via OfTwoMinds blog,

The economic storm hasn't passed; the false calm is only the eye of the financial hurricane.

To understand the economic cataclysm ahead, do the math. Those expecting the Covid-19 pandemic to leave the U.S. economy untouched are implicitly making these preposterously unlikely claims:

1. China will resume full pre-pandemic production and shipping within the next two weeks.

2. Chinese consumers will resume borrowing and spending at pre-pandemic rates in a few weeks.

3. Every factory and every worker in China will resume full pre-pandemic production without any permanent closures or disruptions.

4. Corporate America's just-in-time inventories will magically expand to cover weeks or months of supply chain disruption.

5. Not a single one of the thousands of people who flew direct from Wuhan to the U.S. in January is an asymptomatic carrier of the coronavirus who escaped detection at the airport.

6. Not a single one of the thousands of people who flew from China to the U.S. in February is an asymptomatic carrier of the coronavirus.

7. Not a single one of the thousands of people who are in self-quarantine broke the quarantine to go to Safeway for milk and eggs.

8. Not a single person who came down with Covid-19 after arriving in the U.S. feared being deported so they did not go to a hospital and are therefore unknown to authorities.

9. Even though U.S. officials have only tested a relative handful of the thousands of people who came from Covid-19 hotspots in China, they caught every single asymptomatic carrier.

10. Not a single asymptomatic carrier caught a flight from China to Southeast Asia and then promptly boarded a flight for the U.S.

I could go on but you get the picture: an extremely contagious pathogen that is spread by carriers who don't know they have the virus to people who then infect others in a rapidly expanding circle has been completely controlled by U.S. authorities who haven't tested or even tracked tens of thousands of potential carriers in the U.S.

These same authorities are quick to claim the risk of Covid-19 spreading in the U.S. is low even as the 14 infected people they put on a plane ended up infecting 25 passengers on the flight. These same authorities tried to transfer quarantined people to a rundown facility in Costa Mesa CA that was not suitable for quarantine, forcing the city to file a lawsuit to stop the transfer.

Do these actions instill unwavering confidence in the official U.S. response? You must be joking.

Do the math, people. The coronavirus is already in the U.S. but authorities have no way to track it due to its spread by asymptomatic carriers. People who don't even know they have the virus are flying to intermediate airports outside China and then catching flights to the U.S.

None of the known characteristics of the virus support the confidence being projected by authorities. The tests are not reliable, few are being tested, carriers can't be detected because they don't have any symptoms, the virus is highly contagious, thousands of potential carriers continue to arrive in the U.S., etc. etc. etc.

The network of global travel remains intact. Removing a few nodes (Wuhan, etc.) does not reduce the entire network's connectedness that enables the rapid and invisible spread of the virus.

Second, what authorities call over-reaction is simply prudent risk management. As I noted yesterday in How Many Cases of Covid-19 Will It Take For You to Decide Not to Frequent Public Places?, when an abstract pandemic becomes real, shelves are emptied and streets are deserted.

It doesn't take thousands of cases to trigger a dramatic reduction in the willingness to mix with crowds of strangers. A relative handful of cases is enough to be consequential.

Many of the new jobs created in the U.S. economy over the past decade are in the food and beverage services sector, the sector that is immediately impacted when people decide to lower their risk by staying home rather than going out to crowded restaurants, theaters, bars, etc.

Many of these establishments are hanging on by a thread due to soaring rents, taxes, fees, healthcare and wages. Many of the employees are also hanging on by a thread, only making rent if they collect big tips.

Central banks can borrow money into existence but they can't replace lost income. A significant percentage of America's food and beverage establishments are financially precarious, and their exhausted owners are burned out by the stresses of keeping their business afloat as costs continue rising. The initial financial hit as people reduce their public exposure will be more than enough to cause many to close their doors forever.

As small businesses fold, local tax revenues crater, triggering fiscal crises in local government budgets dependent on ever-higher tax and fee revenues.

A significant percentage of America's borrowers are financially precarious, one paycheck or unexpected expense away from defaulting on student loans, subprime auto loans, credit card payments, etc.

A significant percentage of America's corporations are financially precarious, dependent on expanding debt and rising cash flow to service their expanding debt load. Any hit to their revenues will trigger defaults that will then unleash second-order effects in the global financial system.

The global economy is so dependent on speculative euphoria, leverage and debt that any external shock will tip it over the cliff. The U.S. economy is far more precarious than advertised as well.

The economic storm hasn't passed; the false calm is only the eye of the financial hurricane.

My COVID-19 Pandemic Posts

*  *  *

My recent books:

Audiobook edition now available:
Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World ($13)
(Kindle $6.95, print $11.95) Read the first section for free (PDF).

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

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

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

*  *  *

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

Tyler Durden Thu, 02/27/2020 - 05:00
Published:2/27/2020 4:06:01 AM
[Entertainment] Washington Post paperback bestsellers A snapshot of popular books. Published:2/26/2020 9:29:55 AM
[Entertainment] Ben Lerner, Zadie Smith on list for Rathbones Folio Prize Works of fiction by Ben Lerner and Zadie Smith are among eight books contending for Britain’s Rathbones Folio Prize for literature Published:2/25/2020 2:26:23 PM
[Entertainment] Apple Books US Bestseller List - 02/23/20 - Paid Books Apple Books US Bestseller List - 02/23/20 - Paid Books Published:2/25/2020 11:06:35 AM
[Markets] How To Know If America Is Your Enemy How To Know If America Is Your Enemy

Authored by Eric Zuesse via The Strategic Culture Foundation,

If your country is friendly toward Russia, China, or Iran, then today’s American Government is probably applying subversion, economic sanctions, or maybe even planning a coup, or (if none of those will succeed) probably is war-gaming now for a possible military invasion and permanent military occupation, of your country.

These things have been done to Russia, Iran, China, Yugoslavia, Venezuela, Bolivia, Ecuador, Cuba, Ukraine, Georgia, Indonesia, Vietnam, Iraq, Libya, Syria, Lebanon, Yemen, and some other countries.

However, after the 9/11 attacks in America, the U.S. Government has added another system for selecting countries to immiserate, and those are mainly the countries that already suffer the most misery - some of them are countries that were listed above, but others (many others) are not, and are selected instead largely because they are already in misery, and also because America - that is, the Deep State which controls it, America’s hundreds of billionaires, who control international corporations and the press in America, and not just control the politicians who win public offices - wants to control the given target country in order to extract its natural resources or simply in order to place some of U.S. military bases there so as to be better able to invade other countries.

This relatively new category of America’s targeted enemies was invented, mainly, in 2003 and 2004, by Thomas P. M. Barnett, a Professor at the U.S. Naval College and columnist and writer for various popular magazines, as well as of best-selling books. His 2004 book The Pentagon’s New Map, presents that map, to show the areas, mainly around the Equator and including all of Central America; plus all of South America except Chile, Argentina, and Brazil; plus all of Africa except South Africa, all countries of which are supposedly not connected to globalization — i.e., they are Third World instead of First World — and he says that they are unstable and therefore need to be policed by the world’s policeman, which is the U.S. Government, to serve there as the judge, jury, and executioner, of anyone who lives there and who resists that judge, jury, and executioner. His key statement is on page 227,

“A country’s potential to warrant a U.S. military response is inversely related to its globalization connectivity.”

Here is the map, which shows which countries are supposedly high globalization connectivity and therefore inappropriate for America to sanction, coup, or invade and occupy; and which countries are supposedly low globalization connectivity and therefore appropriate for America to sanction, coup, or invade and occupy:

As can be seen there, the following countries are not to be policed by the U.S. Government: Canada, U.S., Mexico, Chile, Argentina, Brazil, UK, Greenland, Iceland, EU, Switzerland, Ukraine, Georgia, South Africa, Russia, Mongolia, China, India, Japan, South Korea, Australia, N.Z.

He calls those the “Globalized Functioning Core.”

All others are “the Non-Integrated Gap” countries, America’s virtual free-fire zones, to control so as to ‘prevent terrorism’.

Instead of international law being what the United Nations says it is, this “new map” theory says that international law in the “Non-Integrated Gap” countries should be what the U.S. Government says it is.

According to Barnett’s theory, as he expressed it in its original version in an Esquire magazine article titled “Why the Pentagon Changes Its Maps: And why we’ll keep going to war,” he listed these countries as “THE GAP” or third-world countries, “My list of real trouble for the world in the 1990s, today, and tomorrow, starting in our own backyard” (and these are listed here by the names that he gave to them): Haiti, Colombia, Brazil and Argentina, Former Yugoslavia, Congo and Rwanda/Burundi, Angola, South Africa, Israel-Palestine, Saudi Arabia, Iraq, Somalia, Iran, Afghanistan, Pakistan, North Korea, Indonesia. Then he listed “CORE MEMBERS I WORRY WE MAY LOSE:” China, Russia, India.

So, if you live in any of those countries, then Barnett, and the many U.S. generals who respect his theory, and the U.S. billionaires, who want the resources in those countries or else just want military bases there, view you as an enemy, not as a citizen of a sovereign foreign country. His Esquire article says, “it is always possible to fall off this bandwagon called globalization. And when you do, bloodshed will follow. If you are lucky, so will American troops.” He assumes that you need a “policeman” from America because what your own country provides is too primitive. And, “Conversely, if a country is largely functioning within globalization, we tend not to have to send our forces there to restore order or eradicate threats.”

On 22 August 2017, Thierry Meyssan at Voltairenet headlined “The US military project for the world” and gave his progressive critical interpretation of Barnett’s theory by placing it into the long-term evolution of U.S. geostrategy. On 26 September 2004, Razib Khan gave his admiring racist-fascist or ideologically nazi interpretation of it, under the headline “IQ And The Non-Integrating Gap”. He assumed there that lower-income countries are “lower IQ” and therefore need to be directed according to the master’s whip, not as sovereign countries.

The book’s publisher places online an informative excerpt from the work. under the headline “An Operating Theory of the World” and Barnett says there:

As the “vision guy,” my job was to generate and deliver a compelling brief that would mobilize the Defense Department toward generating the future fighting force demanded by the post-9/11 strategic environment. Over the next two years I gave that brief well over a hundred times to several thousand Defense Department officials. Through this intense give-and-take, my material grew far beyond my original inputs to include the insider logic driving all of the major policy decisions promulgated by the department’s senior leadership. Over time, senior military officials began citing the brief as a Rosetta stone for the Bush Administration’s new national security strategy.

The strategy remains in force, though there now is a return to focusing on the main enemies being Russia, China, and Iran. The “gap” countries are currently viewed not only according to the “gap” but also according to their relationships to Russia, China, and Iran.

Tyler Durden Mon, 02/24/2020 - 23:30
Published:2/24/2020 10:51:17 PM
[Markets] No, The Fed Won't "Save The Market" - Here's Why No, The Fed Won't "Save The Market" - Here's Why

Authored by Charles Hugh Smith via OfTwoMinds blog,

The greater the excesses, speculative euphoria and moral hazard, the greater the reversal.

A very convenient conviction is rising in the panicked financial netherworld that the Federal Reserve and its fellow dark lords will "save the market" from COVID-19 collapse. They won't. I already explained why in The Fed Has Created a Monster Bubble It Can No Longer Control (February 16, 2020) but it bears repeating.

Contrary to naive expectations, the Fed's primary job isn't inflating stock market and housing bubbles, though punters are forgiven for assuming that, given the Fed has inflated three gargantuan bubbles in a row, each of which burst (1999-2000, 2007-08 and now 2019-2020).

The Fed's real job is protecting the banking/financial sector from a richly deserved and long overdue implosion. Blowing speculative asset bubbles is a two-fer, enabling rapacious, parasitic financiers and banks to profit from debt-serfs borrowing and gambling in rigged casinos (take your pick: student loan casino, housing casino, stock market casino, commodities casino, currency casino, etc.).

Blowing guaranteed-to-burst bubbles also generates a bogus PR cover, the Fed's beloved "wealth effect," an idiots' delight belief that the greater the speculative bubble, the more tax donkeys and debt serfs will spend, spend, spend on defective junk and low-value services they don't need--in essence, speeding up the global supply chain from China et al. to the local landfill, all in service of Corporate America profits.

The Fed's secondary interest is maintaining some measure of control over the financial sector and the real-world economy it ruthlessly exploits. Just as the Fed gets panicky if interest rates start getting away from its control, the Fed also gets nervous when its speculative bubbles get away from it via infinite moral hazard:

When punters no longer care whether the Fed actually intervenes or not, so powerful is their faith in eventual Fed "saves," the Fed has lost control and that's not what the Fed wants.

The Covid-19 pandemic is a godsend to the world's central bank, the Fed. Recall that the Fed has a dual mandate: protecting U.S. financiers and banks and global financiers and banks. The Fed thus has the equivalent of Triffin's Paradox, the dual role of the U.S. dollar as a domestic currency and as a global reserve currency.

The two roles are not always compatible and conflicts may arise, requiring sacrifices to keep the entire overheated machine from coming apart.

To re-establish the essential linkage between punters' speculative greed and its actual interventions, the Fed must let the current euphoric faith in its "guarantee" to rescue infinite greed crash to Earth. As noted earlier, the Fed lords are foolish but not stupid. They understand speculative bubbles always pop, and so the Covid-19 pandemic is just the excuse they needed to let the air out of the current grossly unsustainable bubble.

"Buy-the-dip" punters are placing bets on the belief the Fed can't possibly let the current bubble pop. Oh yes they can and yes they will. All bubbles pop. That leaves the Fed with an unsavory choice: either be viewed as responsible for the bubble bursting or engineer some fall-guy to take the blame and give the Fed cover for its self-serving incompetence.

It's also instructive to note, as many have, that the Fed enters this global recession with very little policy ammo. Interest rates are so near zero already that a couple of rate cuts will do very little good in the real economy. As for buying Treasury bonds, this is also overblown; at the rate U.S. Treasury debt is rising, all the Fed will be doing is sopping up fiscal-deficit debt nobody else wants.

For all the brave bleatings of Fed luminaries about negative-interest rates being the "cure" to all that ails the precarious global economy, Japan and Europe have effectively proven that negative interest rates only further cripple the banking sector while doing essentially nothing to boost spending in the landfill economy.

All negative-interest rates accomplished was further boosting speculative bubbles and wealth inequality, which threatens to destabilize the social order--something the Fed cannot control.

Panicky punters expect the Fed to blow its wad on saving their hides, but what would that leave the Fed for the real recession that's just getting underway? Nothing. Would the Fed lords be so short-sighted and stupid to blow their last ammo just to save speculatively-insane punters from the inevitable bursting of a moral hazard-driven bubble? In a word, no.

As I suggested last week, When Bubbles Pop, Only the First Sellers Escape Being Bagholders (February 21, 2020). There is a great deal of recent history on how bubbles arise and burst that's worth studying. The Covid-19 pandemic promises to be much more consequential than the run-of-the-mill financial excesses of the past 20 years, but we already know one important thing: All bubbles pop.

We also know this: the greater the excesses, speculative euphoria and moral hazard, the greater the reversal.

My COVID-19 Pandemic Posts

*  *  *

My recent books:

Audiobook edition now available:
Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World ($13)
(Kindle $6.95, print $11.95) Read the first section for free (PDF).

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

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

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

*  *  *

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

Tyler Durden Mon, 02/24/2020 - 17:10
Published:2/24/2020 4:22:48 PM
[Books] American Ingrate: Ilhan Omar (Scott Johnson) I met up with the Federalist’s Ben Weingarten in Minneapolis this past fall when he was in the process of finishing American Ingrate: Ilhan Omar and the Progressive Islamist Takeover of the Democratic Party. With a foreword by Andrew McCarthy, the book is published in paperback today by Bombardier Books; it is available on Amazon at the link. Ben sent me and a few other students of Omar a copy Published:2/24/2020 6:17:22 AM
[Markets] Schlichter Rages: You Bernie Suckers Are Going To Get Fooled Again Schlichter Rages: You Bernie Suckers Are Going To Get Fooled Again

Authored by Kurt Schlichter, op-ed via,

If you are dumb enough to slobber over a socialist then you’re already inclined toward being a hapless mark, so it should be no surprise that you Bernie dorks are about to get screwed over again by the Democratic Party.

Here’s how it’s going to go: Because you are stupid – you support a socialist, so you are presumptively stupid – you think that if you work really hard and win the votes the establishment creeps who own the Democratic Party are going to let you have a say. But, like last time, you won’t get a say. You’ll work real hard – maybe if you worked really hard at actual jobs you wouldn’t be half-wit socialists – and you’ll win the votes, and all your dreams will die as you end up with the nomination going to a malignant midget multi-zillionaire.

I don’t know exactly how they are going to do it – more convenient caucus kerfuffles, super-delegates, shenanigans at the convention – but there is no way your masters will ever let you win. Like I said, you’re socialists, and therefore stupid, so you will get cheated and you will end up having to vote for the Verne Troyer of American big-money politics.

And, like the obedient saps you are, you’ll do it.

Now, at this point, you probably have some complaints about this column. By complaining, you can temporarily distract from the indisputable fact that your own foolishness has put you in the position of being crushingly humiliated by the Democratic elite once again. Let me briefly address your whiny protests.

Yes, I say “socialist” like it’s a bad thing. This is because it’s a very bad thing. Like, to the tune of 100 million corpses bad thing. I’ve actually lived in the ruins of socialism and you, well, you had a man-bunned sociology TA tell you it was swell. And you believed him because you are a dupe. Be glad that I am assuming that you are stupid instead of the only other reason one would ever cavort with these blood-stained goblins: that you are evil.

But he’s a “democratic socialist,” you interject, because you are stupid. Would you feel fine with a “democratic Nazi?” Actually, you probably would, since Nazis are just a genre of socialist with white and black added to the color palette.

Then you’ll claim that the Box Boy won’t be the nominee, no, one of the other pouty posse will get it. Maybe Biden will. You totally want to vote for a guy who thinks his powder-diving, dancer-diddling loser son should totally be getting $83K a month. Man, if you got money like that you could move out of your parents’ place! Or maybe Audie Buttigieg – he seems plausible. No, I’m not laughing! And then there’s Big Chief Sanders Lite. Maybe she could get elected. Really, I’m not laughing. Okay, then Amy Klobuchar – no, I’m not laughing, I’m just scratching my head wondering why she is even still in. Face it. The only viable option besides Vermont Stalin is Scrooge McSuck.

And your next protest will be that Donald Trump is worse than Mini Mike. In fact, you’ll say, Trump is like Hitler combined with…well, Hitler is the only dictator you don’t like, so we’ll just stick with “He’s literally Hitler for real!” Again, you have been suckered. If you were actually raging against the machine rather than aspiring to be a cog in it, you would back him. Now, you may not like it, and you may be too dumb to see it, but Trump is the only disruptor of the establishment in this race. Short Stuff’s gnome-ination is designed to re-establish the establishment. And mark my words: you’ll help him do it.

Yeah, I bet Wall Street is quivering in its collective Guccis over the muffled pitter-patter of the tiny little footsteps of the approaching Bloomberg administration. Bloomberg is not just an eager supporter of the globalist vision but a leading advocate, the Dwarf King of Davos. Trump, not so much. But you’ve been told to hate Trump, and like obedient little ants, you hate him.

In fact, you hate Trump so much that you will vote for the polar opposite of your crusty commie hero even after your preference has been torn from your soft little hands yet again. If you wanted to burn down the system, Trump would be your man. But you don’t…not really. You just want some scraps, like getting out of your loans or making other people pay for your doctor and you’ll be happy. That’s why you’ll give your general election vote to the Stop ‘N Frisk Doughboy even as you assure yourself that the guy who got minority unemployment to record lows is the big, bad racist in this race.

You’ve been had. You’ll cry, but you’ll still go along with the scam as this all plays out.

Suddenly, the media will turn on the Bern in a coordinated attack. Oh wait, that’s happening. Then Frodo Moneybags will start buying off individuals and liberal groups. Oh wait, that’s happening too. Crusty has-been Sam Donaldson decided to show off his new blonde rug during his endorsement; so many more are coming. And I bet it’s not his cash but the power of Mikey’s ideas…okay, now I am laughing.

There will be more primary and caucus “surprises,” except the only people who will be surprised are you suckers. If it gets as far as the convention, your masters will adjourn to the un-smoke-filled rooms and decide for you who you will vote for. And you’ll whine and winge and ultimately obey like the good little suckers you are.

See, you bought into the idea that another four years of prosperity and peace under Donald Trump is much, much worse than reinstalling the party apparatus that has screwed you over in the last two cycles. You’ll ignore the economy, the lack of new wars, the trade rebalancing, and all the other stuff and instead focus on what your masters have commanded you to focus on: that Trump tweeted something mean. Oh, and Russians.

And here’s why you will let the Democrat puppetmasters succeed. It’s because you are stupid. Now, you could stop being stupid. You could refuse to play along. You could even insist Bernie run as a third-party candidate. I like that because it guarantees Trump II: Fossil-Fuel Generated Electric Boogaloo. But it would serve your interests too by forcing the party to recognize and respect you instead of assuming you’ll fall into line once again. But you won’t. You’re all talk and no revolution. Take off that Che t-shirt and put on one with Mini Mayor’s pouty little mug on it. He’s your man. You’re all Bloomberg Bros. Just give it time.

You’re saps, and you’ll take whatever you’re given and tell yourself you like it.

*  *  *

Speaking of what might happen if America’s urban dummies were foolish enough to elect an out socialist, check out my latest conservative thriller, Collapse, along with the other entries in the best-selling series, People’s RepublicIndian Country, and Wildfire.  America breaks in two as leftist foolishness, and evil, becomes unbearable. Action and liberal bashing ensue. Get them all, and also check out my Townhall VIP podcast, “Unredacted” every Monday as well as my new Hugh Hewitt-affiliated Salem podcast, “Fighting Words”!

Tyler Durden Sun, 02/23/2020 - 16:00
Published:2/23/2020 3:14:05 PM
[Markets] Where Have You Gone, Smedley Butler? The Last General To Criticize US Imperialism Where Have You Gone, Smedley Butler? The Last General To Criticize US Imperialism

Authored by Danny Sjursen via,

There once lived an odd little man - five feet nine inches tall and barely 140 pounds sopping wet - who rocked the lecture circuit and the nation itself. For all but a few activist insiders and scholars, U.S. Marine Corps Major General Smedley Darlington Butler is now lost to history. Yet more than a century ago, this strange contradiction of a man would become a national war hero, celebrated in pulp adventure novels, and then, 30 years later, as one of this country’s most prominent antiwar and anti-imperialist dissidents.

Raised in West Chester, Pennsylvania, and educated in Quaker (pacifist) schools, the son of an influential congressman, he would end up serving in nearly all of America’s “Banana Wars” from 1898 to 1931. Wounded in combat and a rare recipient of two Congressional Medals of Honor, he would retire as the youngest, most decorated major general in the Marines.

A teenage officer and a certified hero during an international intervention in the Chinese Boxer Rebellion of 1900, he would later become a constabulary leader of the Haitian gendarme, the police chief of Philadelphia (while on an approved absence from the military), and a proponent of Marine Corps football. In more standard fashion, he would serve in battle as well as in what might today be labeled peacekeepingcounterinsurgency, and advise-and-assist missions in Cuba, China, the Philippines, Panama, Nicaragua, Mexico, Haiti, France, and China (again). While he showed early signs of skepticism about some of those imperial campaigns or, as they were sardonically called by critics at the time, “Dollar Diplomacy” operations -- that is, military campaigns waged on behalf of U.S. corporate business interests -- until he retired he remained the prototypical loyal Marine.

But after retirement, Smedley Butler changed his tune. He began to blast the imperialist foreign policy and interventionist bullying in which he’d only recently played such a prominent part. Eventually, in 1935 during the Great Depression, in what became a classic passage in his memoir, which he titled “War Is a Racket,” he wrote:

“I spent thirty-three years and four months in active military service... And during that period, I spent most of my time being a high class muscle-man for Big Business, for Wall Street, and for the Bankers.”

Seemingly overnight, the famous war hero transformed himself into an equally acclaimed antiwar speaker and activist in a politically turbulent era. Those were, admittedly, uncommonly anti-interventionist years, in which veterans and politicians alike promoted what (for America, at least) had been fringe ideas. This was, after all, the height of what later pro-war interventionists would pejoratively label American “isolationism.”

Nonetheless, Butler was unique (for that moment and certainly for our own) in his unapologetic amenability to left-wing domestic politics and materialist critiques of American militarism. In the last years of his life, he would face increasing criticism from his former admirer, President Franklin D. Roosevelt, the military establishment, and the interventionist press. This was particularly true after Adolf Hitler’s Nazi Germany invaded Poland and later France. Given the severity of the Nazi threat to mankind, hindsight undoubtedly proved Butler’s virulent opposition to U.S. intervention in World War II wrong.

Nevertheless, the long-term erasure of his decade of antiwar and anti-imperialist activism and the assumption that all his assertions were irrelevant has proven historically deeply misguided. In the wake of America’s brief but bloody entry into the First World War, the skepticism of Butler (and a significant part of an entire generation of veterans) about intervention in a new European bloodbath should have been understandable. Above all, however, his critique of American militarism of an earlier imperial era in the Pacific and in Latin America remains prescient and all too timely today, especially coming as it did from one of the most decorated and high-ranking general officers of his time. (In the era of the never-ending war on terror, such a phenomenon is quite literally inconceivable.)

Smedley Butler’s Marine Corps and the military of his day was, in certain ways, a different sort of organization than today’s highly professionalized armed forces. History rarely repeats itself, not in a literal sense anyway. Still, there are some disturbing similarities between the careers of Butler and today’s generation of forever-war fighters. All of them served repeated tours of duty in (mostly) unsanctioned wars around the world. Butler’s conflicts may have stretched west from Haiti across the oceans to China, whereas today’s generals mostly lead missions from West Africa east to Central Asia, but both sets of conflicts seemed perpetual in their day and were motivated by barely concealed economic and imperial interests.

Nonetheless, whereas this country’s imperial campaigns of the first third of the twentieth century generated a Smedley Butler, the hyper-interventionism of the first decades of this century hasn't produced a single even faintly comparable figure. Not one. Zero. Zilch. Why that is matters and illustrates much about the U.S. military establishment and contemporary national culture, none of it particularly encouraging.

Why No Antiwar Generals

When Smedley Butler retired in 1931, he was one of three Marine Corps major generals holding a rank just below that of only the Marine commandant and the Army chief of staff. Today, with about 900 generals and admirals currently serving on active duty, including 24 major generals in the Marine Corps alone, and with scores of flag officers retiring annually, not a single one has offered genuine public opposition to almost 19 years worth of ill-advised, remarkably unsuccessful American wars. As for the most senior officers, the 40 four-star generals and admirals whose vocal antimilitarism might make the biggest splash, there are more of them today than there were even at the height of the Vietnam War, although the active military is now about half the size it was then. Adulated as many of them may be, however, not one qualifies as a public critic of today’s failing wars.

Instead, the principal patriotic dissent against those terror wars has come from retired colonels, lieutenant colonels, and occasionally more junior officers (like me), as well as enlisted service members. Not that there are many of us to speak of either. I consider it disturbing (and so should you) that I personally know just about every one of the retired military figures who has spoken out against America’s forever wars.

The big three are Secretary of State Colin Powell’s former chief of staff, retired Colonel Lawrence Wilkerson; Vietnam veteran and onetime West Point history instructor, retired Colonel Andrew Bacevich; and Iraq veteran and Afghan War whistleblower, retired Lieutenant Colonel Danny Davis. All three have proven to be genuine public servants, poignant voices, and -- on some level -- cherished personal mentors. For better or worse, however, none carry the potential clout of a retired senior theater commander or prominent four-star general offering the same critiques.

Something must account for veteran dissenters topping out at the level of colonel. Obviously, there are personal reasons why individual officers chose early retirement or didn’t make general or admiral. Still, the system for selecting flag officers should raise at least a few questions when it comes to the lack of antiwar voices among retired commanders. In fact, a selection committee of top generals and admirals is appointed each year to choose the next colonels to earn their first star. And perhaps you won’t be surprised to learn that, according to numerous reports, “the members of this board are inclined, if not explicitly motivated, to seek candidates in their own image -- officers whose careers look like theirs.” At a minimal level, such a system is hardly built to foster free thinkers, no less breed potential dissidents.

Consider it an irony of sorts that this system first received criticism in our era of forever wars when General David Petraeus, then commanding the highly publicized “surge” in Iraq, had to leave that theater of war in 2007 to serve as the chair of that selection committee. The reason: he wanted to ensure that a twice passed-over colonel, a protégé of his -- future Trump National Security Advisor H.R. McMaster -- earned his star.

Mainstream national security analysts reported on this affair at the time as if it were a major scandal, since most of them were convinced that Petraeus and his vaunted counterinsurgency or “COINdinista" protégés and their "new" war-fighting doctrine had the magic touch that would turn around the failing wars in Iraq and Afghanistan. In fact, Petraeus tried to apply those very tactics twice -- once in each country -- as did acolytes of his later, and you know the results of that.

But here’s the point: it took an eleventh-hour intervention by America’s most acclaimed general of that moment to get new stars handed out to prominent colonels who had, until then, been stonewalled by Cold War-bred flag officers because they were promoting different (but also strangely familiar) tactics in this country’s wars. Imagine, then, how likely it would be for such a leadership system to produce genuine dissenters with stars of any serious sort, no less a crew of future Smedley Butlers.

At the roots of this system lay the obsession of the American officer corps with “professionalization" after the Vietnam War debacle. This first manifested itself in a decision to ditch the citizen-soldier tradition, end the draft, and create an “all-volunteer force.” The elimination of conscription, as predicted by critics at the time, created an ever-growing civil-military divide, even as it increased public apathy regarding America’s wars by erasing whatever “skin in the game" most citizens had.

More than just helping to squelch civilian antiwar activism, though, the professionalization of the military, and of the officer corps in particular, ensured that any future Smedley Butlers would be left in the dust (or in retirement at the level of lieutenant colonel or colonel) by a system geared to producing faux warrior-monks. Typical of such figures is current chairman of the Joint Chiefs of Staff Army General Mark Milley. He may speak gruffly and look like a man with a head of his own, but typically he’s turned out to be just another yes-man for another war-power-hungry president.

One group of generals, however, reportedly now does have it out for President Trump -- but not because they’re opposed to endless war. Rather, they reportedly think that The Donald doesn't “listen enough to military advice” on, you know, how to wage war forever and a day.

What Would Smedley Butler Think Today?

In his years of retirement, Smedley Butler regularly focused on the economic component of America’s imperial war policies. He saw clearly that the conflicts he had fought in, the elections he had helped rig, the coups he had supported, and the constabularies he had formed and empowered in faraway lands had all served the interests of U.S. corporate investors. Though less overtly the case today, this still remains a reality in America’s post-9/11 conflicts, even on occasion embarrassingly so (as when the Iraqi ministry of oil was essentially the only public building protected by American troops as looters tore apart the Iraqi capital, Baghdad, in the post-invasion chaos of April 2003). Mostly, however, such influence plays out far more subtly than that, both abroad and here at home where those wars help maintain the record profits of the top weapons makers of the military-industrial complex.

That beast, first identified by President Dwight D. Eisenhower, is now on steroids as American commanders in retirement regularly move directly from the military onto the boards of the giant defense contractors, a reality which only contributes to the dearth of Butlers in the military retiree community. For all the corruption of his time, the Pentagon didn’t yet exist and the path from the military to, say, United Fruit Company, Standard Oil, or other typical corporate giants of that moment had yet to be normalized for retiring generals and admirals. Imagine what Butler would have had to say about the modern phenomenon of the “revolving door” in Washington.

Of course, he served in a very different moment, one in which military funding and troop levels were still contested in Congress. As a longtime critic of capitalist excesses who wrote for leftist publications and supported the Socialist Party candidate in the 1936 presidential elections, Butler would have found today’s nearly trillion-dollar annual defense budgets beyond belief. What the grizzled former Marine long ago identified as a treacherous nexus between warfare and capital “in which the profits are reckoned in dollars and the losses in lives” seems to have reached its natural end point in the twenty-first century. Case in point: the record (and still rising) “defense” spending of the present moment, including -- to please a president -- the creation of a whole new military service aimed at the full-scale militarization of space.

Sadly enough, in the age of Trump, as numerous polls demonstrate, the U.S. military is the only public institution Americans still truly trust. Under the circumstances, how useful it would be to have a high-ranking, highly decorated, charismatic retired general in the Butler mold galvanize an apathetic public around those forever wars of ours. Unfortunately, the likelihood of that is practically nil, given the military system of our moment.

Of course, Butler didn't exactly end his life triumphantly. In late May 1940, having lost 25 pounds due to illness and exhaustion -- and demonized as a leftist, isolationist crank but still maintaining a whirlwind speaking schedule -- he checked himself into the Philadelphia Navy Yard Hospital for a “rest.” He died there, probably of some sort of cancer, four weeks later. Working himself to death in his 10-year retirement and second career as a born-again antiwar activist, however, might just have constituted the very best service that the two-time Medal of Honor winner could have given the nation he loved to the very end.

Someone of his credibility, character, and candor is needed more than ever today. Unfortunately, this military generation is unlikely to produce such a figure. In retirement, Butler himself boldly confessed that, “like all the members of the military profession, I never had a thought of my own until I left the service. My mental faculties remained in suspended animation while I obeyed the orders of higher-ups. This is typical...”

Today, generals don’t seem to have a thought of their own even in retirement. And more’s the pity...

Tyler Durden Sat, 02/22/2020 - 23:30
Published:2/22/2020 10:39:16 PM
[Markets] Bizarro World: Retail Investors Are Now Crushing Hedge Funds Bizarro World: Retail Investors Are Now Crushing Hedge Funds

As if financial markets needed one more reason to boycott the "smart money" and stop paying 2 and 20 for the "privilege" of underperforming the free S&P500 for the 10th straight year - an S&P which is now actively managed by central banks who step in any time there is even a modest 5% drop in stock prices  - here it is: Retail investors are now crushing the smartest money on Wall Street.

Yesterday we reported that 2020 has started off dismally for equity hedge funds, whose short books and unwillingness to chase the rally crippled their YTD performance, which is at the very bottom of asset classes tracked by Goldman...

... yet it was the impressive outperformance of the most popular longs, also known as the Goldman Sachs Hedge Fund VIP basket of stocks...

... that has saved the day for hedge funds, whose performance would have been far worse had it not been for the handful of stocks owned by most hedge funds.

During the last few months, the most popular hedge fund positions have enjoyed one of their strongest rallies on record. Our Hedge Fund VIP basket, which tracks the most popular hedge fund long positions has returned 24% since the start of 4Q 2019, sharply outperforming both the S&P 500 (+14%) and our basket of the largest short positions. The basket’s return relative to its realized volatility and its outperformance versus the largest shorts each rank as the strongest in the basket’s history. The outperformance of VIPs has continued in early 2020 (+9% YTD), contributing to a 1% YTD return for the average hedge fund.

And not just hedge funds have piled into the same small group of mega cap stocks: as we pointed out yesterday, it was retail investors, i.e., the "dumb money" that saved the day for the "smartest guys in the room" as they scrambled  to buy the names most widely held by the hedge fund community.

Recall that the YTD period has been most notable because after a long absence, retail investors finally stormed back into the market with a bang, buying not just stocks, but call options - highly levered bets typically with a 1 week maturity  - on stocks at a time when nothing seemed like it could go down, in the process creating a self-reinforcing tidal wave of buying that has risen all boats, especially those owned by hedge funds.

To be sure, it wasn't just single-stocks as index and ETF options volumes have also soared to record highs...

... but yes, a handful of stocks were the biggest benficiaries.

Goldman confirmed as much, when Ben Snider and David Kostin said that "the most popular hedge fund stocks have also been bolstered by a surge in retail trading activity. The sharp increase in retail trading has lifted a basket of popular retail stocks by 14% YTD and 25% since the start of 4Q 2019."

Which brings us to the most remarkable chart we showed yesterday in our recap of the latest quarterly Goldman Hedge Fund Monitor: retail investors, i.e., the "dumb money" has now trounced the performance of hedge funds, incorrectly known as "the smart money" not only YTD, as the 50 most-popular stocks among retail investors rallied 13% so far in 2020, nearly double the 8.7% return for the hedge fund favorites but since the start of 2018.

It's not just the breadth of returns that has diverged between the two investor classes. Picking up on where we left off yesterday, Bloomberg writes on Saturday morning that retail investors have also been far better pickers of blockbuster stocks in 2020: "Only two of their popular holdings have gained at least 50%: Tesla Inc. and PG&E Corp. By contrast, individual investors scored seven such wins. Besides Tesla and PG&E, they reaped big pay-offs from Virgin Galactic Holdings Inc., Plug Power Inc., Sprint Corp., Vivint Solar Inc. and Beyond Meat Inc."

These, of course, as the berserker momo names that went parabolic as an army of retail investors staged a call buying spree in one momo name after another, orchestrated out of a peculiar source: the wallstreetbets section on reddit.

We also know the enabler, of course: the retail investing hordes have the Fed's QE4 which was launched in October 2019 to thank for the outperformance. It was then that hedge funds had hunkered down and turned short, when Powell instead of allowing the market to drop, injected hundreds of billions in liquidity into the market, bailing out not hedge funds - he did that back in September with the return of repo operations, but retail investors.

"Retail investors tend to buy what’s just done well, and in a market like we’ve been in the last several years, that’s worked very well," said Rich Weiss, CIO of multi-asset strategies at American Century Investments told Bloomberg, adding that "if that type of outperformance by the retail basket over the hedge fund basket would persist for another year or longer, that makes quite a statement, if not an indictment, on professional money managers."

Rich is right, but only partially: it would make an even bigger statement on the Federal Reserve, which now finds it imperative to intervene in the market to rescue all investors, not just a given wealthy subset.

But what is worse, is that this intervention by the Fed, and the tremendous outperformance of retail investors over hedge funds, will further bolster optimism among small investors, who are rushing back to the market with the conviction that they are investing geniuses further facilitated after some brokerages eliminated commissions on trades. According to the latest sentiment reading from the Conference Board, the share of respondents expecting stocks to rise in the next year advanced to 43.1% in January, the highest since October 2018.

Some additional observations on the two stocks baskets.

Among the 50 favorite stocks for both hedge funds and retail investors, 13 overlap, with tech giants - Apple Inc., Inc., Facebook Inc. and Microsoft Corp - at the top of both lists. That said, retail investors have gravitated more toward smaller companies, with sixteen of the top 50 picks having a market value of less than $10 billion, compared with six for hedge funds.

Ultimately it all really boils down to the far higher beta of the retail basket compared to the hedge fund VIPs: which means that while retail investors tend to win big, they also lose big when stocks tumble. As Bloomberg notes, seven of the top retail stocks have fallen at least 10% this year, including Chesapeake and Groupon. Meanwhile, all of the hedge funds’ top selections have fared better.

For those wondering, here is the full list of the Top 50 "VIP" hedge fund names as of Dec. 31...

... and the same list for retail investors.

And while it is certainly a novelty to see retail investors outperform hedge funds, we doubt this divergence will last long, especially once the Fed is forced to taper its QE4 in the coming months, at which point the retail panic will be a sight to behold, as will be the length of the list of those furious at Chair Powell.

Which is why the only thing that matters, in our view, is the list of Top 50 most shorted names. As discussed extensively here in the past, it is the 50 or so most shorted - or hated by hedge fund - names that has year after year been and a far better source of alpha (for those who buy them) as they have significantly outperformed the braoder market due to periodic and vicious short squeezes year after year...

... especially in this day and age when the link between fundamentals and asset prices has been terminally severed by central banks, something we described most recently in "Going Against The Wall Street Crowd Has Been The Most Profitable In 5 Years."

Tyler Durden Sat, 02/22/2020 - 16:50
Published:2/22/2020 4:06:36 PM
[Entertainment] US-Best-Sellers-Books-USAToday US-Best-Sellers-Books-USAToday Published:2/20/2020 12:25:36 PM
[Entertainment] Daniel Kehlmann’s ‘Tyll’ — a future Netflix series — follows a German jester navigating war-torn chaos The novel is part of a wave of books about the tumultuous 17th and early 18th centuries. Published:2/20/2020 11:22:57 AM
[Markets] Is This The Start Of The Factor Crash That Morgan Stanley Has Been Warning About Is This The Start Of The Factor Crash That Morgan Stanley Has Been Warning About

In the past few weeks, there has been much investor speculation whether the recent record crowding in factor investing would have an adverse impact on the broader market. As a reminder, just yesterday, JPM's Marko Kolanovic called the low-vol (i.e., "tech") factor a "bubble" which he compared to events during the dot com bubble to get a sense of the prevailing market exuberance:

For instance, the ratio of the S&P 500 technology to energy sector is now the same as during the tech bubble.

Commenting on the charts above, Kolanovic says is that "the bubble we are describing is expressed in equity factors (sector-neutral momentum and low volatility factors), however signs of this bubble can be seen in sectors’ performance as well" which as we showed yesterday, had pushed the divergence between growth and value stocks to unprecedented YTD levels.

Looking at the chart above, Kolanovic said that "Bonds, momentum stocks, and low volatility stocks rallied – pushing the valuation spread between defensive and cyclical stocks to a level 2x worse than during the peak of the tech bubble. This bubble will likely collapse, i.e. this time is not different."

He then went on to note what we pointed out last week, namely that signs that "certain segments of tech are trading at unsustainable valuations are supported by the record level of speculative call option activity and outsized gains in certain tech stocks (Figure 2)." Sound familiar? This is precisely what we wrote one week ago in "Frenzied Traders Send Option Volumes To All Time High; Go All-In Tesla, Tech Calls"

Most importantly, the JPMquant showed that the the divergence between low-vol/growth/momentum factors and value factors had reached levels observed during the peak of the dot com bubble.

In short, Kolanovic had a simple message to JPM Clients: stick with the max pain value-growth/low-vol convergence trade, as it's just a matter of time before it finally makes money.

There is just one problem: while Kolanovic may finally be right, a recent note from Morgan Stanley's Chris Metli suggests that any reversal out of the popular growth/momentum/low-vol factors and into value would hardly be a walk in the park and will be met with a very violent market reaction, one which could be far greater than the September quant crash, to wit:

there is a concerning shift in the relative volatilities of factors.  For all of 2019, Growth names became steadily less volatile than Value names – but this is now showing signs of reversal.  Any increase in volatility in Growth is concerning because there is a greater overlap with the long side of investor portfolios (while Value is more representative of the shorts), and higher volatility on the long side of books is more dangerous because it impacts a broader investor base (note the Oct/Nov 2018 unwind had higher Growth volatility).

If correct, what are the market implications:

A concerning dynamic is a recent breakdown in the correlation between the legs of different factors – i.e. the correlation between the long side of Momentum and the short side (and similar for Growth and Value) all fell in late 2019 into January 2020.  Previous big declines in correlation were December 2017 and September 2018 – notably before big market volatility events.  An increase in correlation instability like we are seeing now makes it harder for market participants to manage portfolios – and an increase in the rate of change of these correlations typically precedes higher factor volatility.

It is also worth noting that any factor unwind would happen in a time of record high hedge fund gross leverage. As MS noted, its prime brokerage "team has noted that gross leverage for L/S hedge funds is near historical highs, while positioning in some (but not all) factors is extreme – Growth versus Value looks particularly stretched."

In other words, any sharp re-positioning moves in factors - such as the one we just observed in the broader market on Thursday morning - and which had an immediate and adverse impact on the market, could well be the start of the factor-induced crash that Morgan Stanley has been warning about for quite some time now. Keep a close eye on what growth/momentum vs value are doing, and if there is indeed a sharp reversal, it may be time to get out of dodge.

For those who missed Metli's note previously, here it is again:

* * *

Authored by Christopher Metli, Executive Director of Morgan Stanley Quant Derivative Strategies

Investors largely shrugged off the factor rotation on Feb 4th as an isolated event, but it shouldn’t be dismissed – higher factor volatility is structural and is here to stay.  Funds are taking bigger factor bets, positioning is crowded, leverage is high, and factor correlations are getting more unstable – all of which mean that future rotations will occur again (probably soon), and will likely be violent.  While fully acknowledging that Fed liquidity is supportive of Growth stocks, it’s also true that the consensus believes the rally in Growth will continue.  As a result QDS thinks the bar is low for an unwind should the economy change in either direction – a growth scare is the worst outcome for most investors, but growth acceleration can be painful too.

In this environment investors should consider:

  • Replacing longs with upside calls in names that have rallied where volatility is low (i.e. stock replace, keeping upside but limiting downside)
  • Hedging against sharp moves lower in the most vulnerable areas of the market – Crowded stocks (MSXXCRWD) or Growth vs Value (MSZZGRVL)

First, investors should recognize that the sources of risk have been shifting over the last 10 years.  Factor volatility has been on a steady upward path since 2010.  This impacts everyone (not just quants) because how stocks rank on factor scores now account for an increased portion of the total dispersion in the market.

This increase in factor volatility is not a one-off event, it is a byproduct of HFs making bigger sector and factor bets than they were a few years ago.  As one example, the chart below shows the distribution of Value exposures for discretionary long/short hedge funds in 2010 and in 2019, per public 13F filings.  In 2010 HFs leaned short Value, just as they do now, but the distributions were much more tightly clustered around the mean.  Today there are more funds in the tails running big overweights and big underweights.  This trend is not limited to just Value or even factors – the distribution of overweights / underweights across sectors is also wider than it used to be.

At the same time that factor and sector bets are getting bigger, funds making those bets are doing so in increasingly similar ways.  QDS has found that within groups of hedge funds with similar styles, investor portfolios are getting more similar to each other.  Similar portfolios means an increased risk of funds trading the same stocks at the same time.

Looking more recently, there is a concerning shift in the relative volatilities of factors.  For all of 2019, Growth names became steadily less volatile than Value names – but this is now showing signs of reversal.  Any increase in volatility in Growth is concerning because there is a greater overlap with the long side of investor portfolios (while Value is more representative of the shorts), and higher volatility on the long side of books is more dangerous because it impacts a broader investor base (note the Oct/Nov 2018 unwind had higher Growth volatility).

Another concerning dynamic is a recent breakdown in the correlation between the legs of different factors – i.e. the correlation between the long side of Momentum and the short side (and similar for Growth and Value) all fell in late 2019 into January 2020.  Previous big declines in correlation were December 2017 and September 2018 – notably before big market volatility events.  An increase in correlation instability like we are seeing now makes it harder for market participants to manage portfolios – and an increase in the rate of change of these correlations typically precedes higher factor volatility.

And then of course there is positioning.  The MS PB Content team has noted that gross leverage for L/S hedge funds is near historical highs, while positioning in some (but not all) factors is extreme – Growth versus Value looks particularly stretched.

The MS PB Content team put out an excellent note in November titled ‘O Factors, Why Art Thou So Volatile?’ which addresses a lot of these topics.  They find that higher gross leverage, a high level of crowding in the same stocks, and increased factor tilts has coincided with the increase in factor volatility over the last few years.  And importantly they find that it has tended to be L/S discretionary hedge funds, not quants, whose flows have most correlated to factor volatility in the last few years.  Contact your MS PB salesperson for the full report.

Trading Implications

Fundamental traders with concentrated portfolios should consider replacing stretched longs with call options, retaining the upside but minimizing downside risks.  The below screen shows top 100 S&P 500 stocks that are within 2% of recent highs – the upper left is where volatility is low and upside skew is steep.  For example names like ADP, CRM, and CHTR in the highlighted box below have call options that price relatively attractively versus history.

Investors should also consider hedging some of the factor/crowding risks in their portfolios.  In an unwind factor and thematic baskets can see an increase in correlation that means more downside making them good portfolio hedges.  QDS’s preferred methods are:

  • Short Growth versus Value (MSZZGRVL) given positioning for this factor remains stretched
  • Short the most Crowded stocks (MSXXCRWD) versus going long the market or long Technology against it (for less net sector exposure)

Timing future unwinds is of course difficult, but given the instabilities in the market highlighted above QDS thinks it makes sense to trim some factor risk in portfolios

Tyler Durden Thu, 02/20/2020 - 12:21
Published:2/20/2020 11:22:56 AM
[Markets] Omens, Portents, Karma, & The Mandate Of Heaven Omens, Portents, Karma, & The Mandate Of Heaven

Authored by Charles Hugh Smith via OfTwoMinds blog,

The question of legitimacy isn't limited to China.

what makes humans unique among social mammals? Some say humor, I would nominate superstition: regardless of how hard we promote our rationality and logic, humanity continues to sense portents and omens in events and feel the intangible tug of karma: the consequences of past actions that we arrogantly thought we'd escaped forever.

Michael Snyder recently compiled a list of peculiarities that are raising eyebrows around the globe: One, sure, two, not that unusual, three, well things happen in threes, but ten disturbances and we're only six weeks into 2020? 10 'Plagues' That Are Hitting Our Planet Simultaneously (Zero Hedge)

As the saying has it, Nature Bats Last, and maybe arrogant, destructive humanity's war on Nature is about to get its comeuppance. Maybe overdosing hundreds of millions of chickens and pigs to knock down bacteria in overcrowded conditions has finally generated a karmic blowback via bird and swine viruses.

As for karma in human society: maybe the disruption of the supply chain in China is a karmic response to offshoring production to fatten Corporate America's profits at the expense of all else in America's society and economy.

Then there's the celestial right to rule, a.k.a. The Mandate of Heaven, the concept rooted in Chinese culture that political leadership which fails the people invites divine retribution in the form of withdrawing the support of Heaven. This withdrawal of support manifests in the tangible world as natural disasters: earthquakes, floods, droughts, plagues, etc.

Though it's not politically correct to discuss The Mandate of Heaven in any serious way, the reading of omens goes back in Chinese history to oracle bones, the process of heating bones until they crack and then interpreting the patterns as portents to the future.

With human and domestic animal epidemics devastating China in a novel cluster of natural disasters, The Mandate of Heaven is in play even if no one dares speak of it openly. The regime is well aware that these parallel plagues are understood as manifestations that question the legitimacy of the current regime.

The question of legitimacy isn't limited to China. Soaring wealth inequality, the dependence on debt to fund "growth" and the political disenfranchisement of the masses are global manifestations of political-financial systems that invite divine retribution for their excesses of corruption, self-aggrandizement, and exploitation of the planet and its human workforce.

My COVID-19 Pandemic Posts

*  *  *

My recent books:

Audiobook edition now available:
Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World ($13)
(Kindle $6.95, print $11.95) Read the first section for free (PDF).

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

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

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

*  *  *

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

Tyler Durden Wed, 02/19/2020 - 15:30
Published:2/19/2020 2:48:55 PM
[Books] CRB: Who’s your daddy? (Scott Johnson) The identity politics that permeates our public life will destroy the United States if it has not already remade it into something that is destined to fall of its own weight. In the just published Winter issue of the Claremont Review of Books, the Heritage Foundation’s David Azzerad reviews Mary Eberstadt’s new book on identity politics. The book comprises a short monograph by Eberstadt along with responses by Rod Dreher Published:2/19/2020 5:46:25 AM
[Markets] Dr.Doom On Gold & 'The White Swans Of 2020' Dr.Doom On Gold & 'The White Swans Of 2020'

Authored by Nouriel Roubini via Project Syndicate,

In my 2010 book, Crisis Economics, I defined financial crises not as the “black swan” events that Nassim Nicholas Taleb described in his eponymous bestseller, but as “white swans.”

According to Taleb, black swans are events that emerge unpredictably, like a tornado, from a fat-tailed statistical distribution.

But I argued that financial crises, at least, are more like hurricanes: they are the predictable result of built-up economic and financial vulnerabilities and policy mistakes.

There are times when we should expect the system to reach a tipping point – the “Minsky Moment” – when a boom and a bubble turn into a crash and a bust. Such events are not about the “unknown unknowns,” but rather the “known unknowns.”

Beyond the usual economic and policy risks that most financial analysts worry about, a number of potentially seismic white swans are visible on the horizon this year. Any of them could trigger severe economic, financial, political, and geopolitical disturbances unlike anything since the 2008 crisis.

For starters, the United States is locked in an escalating strategic rivalry with at least four implicitly aligned revisionist powers: China, Russia, Iran, and North Korea. These countries all have an interest in challenging the US-led global order, and 2020 could be a critical year for them, owing to the US presidential election and the potential change in US global policies that could follow.

Under President Donald Trump, the US is trying to contain or even trigger regime change in these  four countries through economic sanctions and other means. Similarly, the four revisionists want to undercut American hard and soft power abroad by destabilizing the US from within through asymmetric warfare. If the US election descends into partisan rancor, chaos, disputed vote tallies, and accusations of “rigged” elections, so much the better for America’s rivals. A breakdown of the US political system would weaken American power abroad.

Moreover, some countries have a particular interest in removing Trump. The acute threat that he poses to the Iranian regime gives it every reason to escalate the conflict with the US in the coming months – even if it means risking a full-scale war – on the chance that the ensuing spike in oil prices would crash the US stock market, trigger a recession, and sink Trump’s re-election prospects. Yes, the consensus view is that the targeted killing of Qassem Suleimani has deterred Iran, but that argument misunderstands the regime’s perverse incentives. War between US and Iran is likely this year; the current calm is the one before the proverbial storm.

As for US-China relations, the recent “phase one” deal is a temporary Band-Aid. The bilateral cold war over technology, data, investment, currency, and finance is already escalating sharply. The COVID-19 outbreak has reinforced the position of those in the US arguing for containment, and lent further momentum to the broader trend of Sino-American “decoupling.” More immediately, the epidemic is likely to be more severe than currently expected, and the  disruption to the Chinese economy will have spillover effects on global supply chains – including pharma inputs, of which China is a critical supplier – and business confidence, all of which will likely be more severe than financial markets’ current complacency suggests.

Although the Sino-American cold war is by definition a low-intensity conflict, a sharp escalation is likely this year. To some Chinese leaders, it cannot be a coincidence that their country is simultaneously experiencing a massive swine flu outbreak, a severe bird flu, a coronavirus epidemic, political unrest in Hong Kong, the re-election of Taiwan’s pro-independence president, and stepped-up US naval operations in the East and South China Seas. Regardless of whether China has only itself to blame for some of these crises, the view in Beijing is veering toward the conspiratorial.

But open aggression is not really an option at this point, given the asymmetry of conventional power. China’s immediate response to US containment efforts will likely take the form of cyberwarfare. There are several obvious targets. Chinese hackers (and their Russian, North Korean, and Iranian counterparts) could interfere in the US election by flooding Americans with misinformation and deep fakes. With the US electorate already so polarized, it is not difficult to imagine armed partisans taking to the streets to challenge the results, leading to serious violence and chaos.

Revisionist powers could also attack the US and Western financial systems – including the Society for Worldwide Interbank Financial Telecommunication (SWIFT) platform. Already, European Central Bank President Christine Lagarde has warned that a cyberattack on European financial markets could cost $645 billion. And security officials have expressed similar concerns about the US, where an even wider range of telecommunication infrastructure is potentially vulnerable.

By next year, the US-China conflict could have escalated from a cold war to a near-hot one. A Chinese regime and economy severely damaged by the COVID-19 crisis and facing restless masses will need an external scapegoat, and will likely set its sights on Taiwan, Hong Kong, Vietnam, and US naval positions in the East and South China Seas; confrontation could creep into escalating military accidents. It could also pursue the financial “nuclear option” of dumping its holdings of US Treasury bonds if escalation does take place. Because US assets comprise such a large share of China’s (and, to a lesser extent, Russia’s) foreign reserves, the Chinese are increasingly worried that such assets could be frozen through US sanctions (like those already used against Iran and North Korea).

Of course, dumping US Treasuries would impede China’s economic growth if dollar assets were sold and converted back into renminbi (which would appreciate). But China could diversify its reserves by converting them into another liquid asset that is less vulnerable to US primary or secondary sanctions, namely gold. Indeed, both China and Russia have been stockpiling gold reserves (overtly and covertly), which explains the 30% spike in gold prices since early 2019.

In a sell-off scenario, the capital gains on gold would compensate for any loss incurred from dumping US Treasuries, whose yields would spike as their market price and value fell. So far, China and Russia’s shift into gold has occurred slowly, leaving Treasury yields unaffected. But if this diversification strategy accelerates, as is likely, it could trigger a shock in the US Treasuries market, possibly leading to a sharp economic slowdown in the US.

The US, of course, will not sit idly by while coming under asymmetric attack. It has already been increasing the pressure on these countries with sanctions and other forms of trade and financial warfare, not to mention its own world-beating cyberwarfare capabilities. US cyberattacks against the four rivals will continue to intensify this year, raising the risk of the first-ever cyber world war and massive economic, financial, and political disorder.

Looking beyond the risk of severe geopolitical escalations in 2020, there are additional medium-term risks associated with climate change, which could trigger costly environmental disasters. Climate change is not just a lumbering giant that will cause economic and financial havoc decades from now. It is a threat in the here and now, as demonstrated by the growing frequency and severity of extreme weather events.

In addition to climate change, there is evidence that separate, deeper seismic events are underway, leading to rapid global movements in magnetic polarity and accelerating ocean currents.. Any one of these developments could augur an environmental white swan event, as could climatic “tipping points” such as the collapse of major ice sheets in Antarctica or Greenland in the next few years. We already know that underwater volcanic activity is increasing; what if that trend translates into rapid marine acidification and the depletion of global fish stocks upon which billions of people rely?

As of early 2020, this is where we stand:

  • the US and Iran have already had a military confrontation that will likely soon escalate;

  • China is in the grip of a viral outbreak that could become a global pandemic;

  • cyberwarfare is ongoing;

  • major holders of US Treasuries are pursuing diversification strategies;

  • the Democratic presidential primary is exposing rifts in the opposition to Trump and already casting doubt on vote-counting processes;

  • rivalries between the US and four revisionist powers are escalating;

  • and the real-world costs of climate change and other environmental trends are mounting.

This list is hardly exhaustive, but it points to what one can reasonably expect for 2020. Financial markets, meanwhile, remain blissfully in denial of the risks, convinced that a calm if not happy year awaits major economies and global markets.

Tyler Durden Wed, 02/19/2020 - 05:00
Published:2/19/2020 4:16:42 AM
[Markets] The World Is Awash In Oil, False Assurances, Magical Thinking, & Complacency... The World Is Awash In Oil, False Assurances, Magical Thinking, & Complacency...

Authored by Charles Hugh Smith via OfTwoMinds blog,

This collapse of price will manifest in all sorts of markets that are based on debt-funded purchases of desires rather than a warily prudent priority on needs.

Since markets are supposed to discover the price of excesses and scarcities, it's a mystery why everything that is in oversupply is still grossly overpriced as global demand slides off a cliff: oil, semiconductors, Uber rides, AirBNB listings and many other risk-on / global growth stories are still priced as if pre-Covid-19 demand was still guaranteed.

Punters are still buying semiconductor stocks based on out-of-touch projections that are the equivalent to counting the number of fairies on the head of a pin, ignoring the fundamental reality that very few people actually need a new mobile phone, vehicle, laptop, refrigerator, etc.

It boils down to confidence and certainty. People pursue what they desire but don't need when they're brimming with confidence in the future, bolstered by an animal-spirits euphoria that their income and wealth will continue rising--a sense of certainty anchored by a belief that their economic world is essentially without risk.

When confidence dissipates and is replaced by fear and uncertainty, desires lose their luster and needs take precedence. When you're afraid of getting a deadly virus or losing your livelihood, status symbols and frivolous spending no longer top the agenda.

Yet the entire risk-on / global growth story is based entirely on desires not needs. The vast majority of demand isn't for a pressing need, it's for euphoric aspirational consumption, spending intended to make the buyer larger than they really are, in their own self-image and in the image they present to the world in the brands they display, the cafes they dine in, etc. etc.

Since the world is awash in false assurances, magical thinking and complacency, we might ask: what's the market value of these disconnected-from-reality fantasies? There's no pricing mechanism for such intangibles, of course, but should counting the number of fairies on the head of a pin give way to a new appreciation of risk and a pervasive awareness of uncertainty, then global demand will fall off a cliff as desires are set aside indefinitely.

In a world of bogus projections and rigged statistics, plunging demand for oil is one of the few reality-based measures available. One of the games being played is whenever a reality-based measure is discovered--electricity consumption, satellite images of empty parking lots, etc.--authorities immediately limit access to the measures and/or unleash a tsunami of counter-narratives to discredit the real-world evidence that global demand is cratering.

Since oil is the master resource for the industrialized, interconnected global economy, it's tough to argue that declining consumption of oil doesn't matter.

When demand craters, producers must restrict supply or price will crater, too. The problem with oil and everything else that's now in over-supply / over-production is that producers can't survive either a sustained drop in price or a sustained drop in production. Since both are equally fatal, producers have every incentive to keep producing and hope that somebody else lowers their production to keep prices high.

Alas, no producer is willing to fall on their sword to keep prices unnaturally elevated. And so excess production continues apace until price collapses.

This collapse of price will manifest in all sorts of markets that are based on debt-funded purchases of desires rather than a warily prudent priority on needs.

My COVID-19 Pandemic Posts

*  *  *

My recent books:

Audiobook edition now available:
Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World ($13)
(Kindle $6.95, print $11.95) Read the first section for free (PDF).

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

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

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

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

Tyler Durden Tue, 02/18/2020 - 16:50
Published:2/18/2020 4:12:34 PM
[Entertainment] Washington Post hardcover bestsellers A snapshot of popular books. Published:2/18/2020 2:12:34 PM
[Markets] Covid-19 Pandemic: The Complacent Are Clueless Covid-19 Pandemic: The Complacent Are Clueless

Authored by Charles Hugh Smith via OfTwoMinds blog,

The eventual price of substituting magical thinking and survivorship bias for actual evidence will be far higher than the complacent realize.

Here's a sampling of complacent assertions being made about the COVID-19 virus as if they were certitudes:

  • It's no worse than a bad cold.

  • It's less deadly than a normal flu.

  • You can't catch it unless you're in sustained close contact with a carrier.

  • Carriers are only contagious for 14 days. After that, you're home free.

  • A vaccine is just around the corner.

  • The Chinese government has it under control.

  • Only 2,000 people have died, it's no big deal.

  • The few cases in other countries are being managed, and it will soon disappear.

  • The pandemic will fade away by April due to rising temperatures.

  • China's GDP will only take a 1% hit, and global growth will only drop 0.25%.

Interestingly, there is no large-scale, credible data to support any of these claims. But the complacent are not just falling for false claims being passed off as "facts" rather than what they really are--magical thinking--they're making a much larger error known as Survivorship Bias.

The complacent are focusing on the few who have been tested for the virus, not the millions who haven't been tested.

The complacent are focusing on the accurate tests, not the many carriers who tested negative or the healthy people incorrectly tagged by false positive tests. The complacent are overlooking the fact that multiple tests are needed to confirm and even multiple tests can fail.

The complacent are focusing on the few who went to the hospital to get tested and treated, not the multitudes who did not go to a doctor or hospital (for a variety of reasons).

The complacent are focusing on the few carriers who have been forcibly hauled off by Chinese police and not the many who have wisely hidden away from prying eyes.

The complacent are focusing on the few facilities with test kits, not on the multitude of clinics which do not have test kits.

The complacent are focusing on the few who have been identified as carriers in other nations, not the asymptomatic carriers who have not been identified because 1) they have no symptoms and thus no reason to get tested and 2) they chose not to go to a doctor or hospital despite having symptoms.

In effect, the complacent are focusing solely on the few carriers who are symptomatic and have been tested, not on the much larger number of asymptomatic carriers who have not been tested. The complacent are ignoring the highly contagious nature of COVID-19, and the impossibility of controlling a virus that can be spread by asymptomatic carriers for up to 24 days.

The complacent are assuming 100% of all carriers outside China have come forward and been identified as carriers via tests, when the reality is asymptomatic carriers don't even know they are infected and contagious.

The complacent are assuming every healthcare facility in China has test kits in such abundance that they can test suspected carriers three times to confirm the diagnosis, when the reality is test kits are scarce and one test is not enough to make a reliable assessment. Carriers can test negative, positive and then negative.

The complacent are assuming casual contact isn't enough to catch the virus while a rising tide of cases confirm that brief, casual contact is enough to get the virus.

The complacent are assuming 100% of symptomatic carriers will go to the hospital to be tested and treated, when an unknown but consequential number of symptomatic carriers are fearful of what will be done to them and their families by authorities, so they hide from prying neighbors and authorities.

The complacent are assuming that asking people if they recently visited China or hosted a visitor from China will identify 100% of the asymptomatic carriers, when there is already proof that asymptomatic carriers have caught the virus from others: they did not visit China or have any known contact with anyone who came from China. They caught the virus from an intermediary who didn't even know they were infected.

The complacent are looking at cases and carriers that are known, not the cases and carriers which are unknown. Since asymptomatic carriers can spread the pathogen, the majority of carriers remain unknown. Since not every symptomatic carrier chooses to go to the hospital, many cases remain unknown.

In sum, the complacent are clueless. The eventual price of substituting magical thinking and survivorship bias for actual evidence will be far higher than the complacent realize. Playing games with statistics and high finance will not limit the spread of the virus or limit its profound economic impact.

My COVID-19 Pandemic Posts

*  *  *

My recent books:

Audiobook edition now available:
Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World ($13)
(Kindle $6.95, print $11.95) Read the first section for free (PDF).

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

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

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

*  *  *

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

Tyler Durden Tue, 02/18/2020 - 08:40
Published:2/18/2020 7:43:37 AM
[Markets] Bloomberg Qualifies For Nevada Democratic Debate, Releases 'AOC-Lite' Tax Plan Bloomberg Qualifies For Nevada Democratic Debate, Releases 'AOC-Lite' Tax Plan

Former New York Mayor Michael Bloomberg qualified on Tuesday to participate in this week's Democratic presidential debate in Nevada, which will take place in Las Vegas Wednesday night. 

Bloomberg has vowed to leverage his fortune to defeat President Donald Trump, who has already raised a campaign war chest that dwarfs the money raised by the other Democratic rivals.

As Tom Steyer demonstrated during the pre-Iowa debate, it seems that money can buy you anything in America: even a spot on the debate stage.

It also rendered this SNL sketch eerily prophetic:

The media mogul has a net worth of $64 billion, and has openly said he will spend $1 billion or more to defeat President Trump.

Bloomberg received 19% of the support from an NPR/PBS NewsHour/Marist poll, which guaranteed him a spot on the debate stage in Las Vegas on Wednesday. 

His campaign said he's 'looking forward' to joining the other Democrats on stage.

"Mike is looking forward to joining the other Democratic candidates on stage and making a case for why he's the best candidate to defeat Donald Trump and unite the country," a statement read, published by campaign manager Kevin Sheekey.

And based on the latest PredictIt odds, it looks like Bloomberg could be the new Democratic frontrunner after Joe Biden's odds have plunged. 

How did Bloomberg, with his cardboard charisma and 'Mr. Burns' mannerisms, stage such a sudden and meteoric rise in the polls? Well, he's definitely been helped by Biden's implosion. But the difference-maker was definitely the $386 million+ he's plowed into advertising and hiring massive, well-paid campaign operations, with campaign workers expecting to be employed into the fall.

In a shocking sign of just how far left Democratic candidates feel they need to go to succeed in the primary, the Bloomberg campaign leaked the candidate's new 'progressive' tax plan to the New York Times: Highlights include a 0.1% transaction tax that many have warned would upend traditional Wall Street business models, tightening Volcker rule regulations (i.e. making it even more difficult for banks to hold large stockpiles of securities on their books), reviving the CFPB and expanding its jurisdiction, while requiring 'too-big-to-fail' banks to hold even more capital in reserve.

Instead of forgiving student loans, Bloomberg promises to enroll borrowers automatically in income-based repayment schemes that would cap payments at manageable levels, effectively promising to create a raft of student-loan 'century bonds' which we suspect will be very popular among yield-starved investors.

As the NYT points out, Bloomberg's proposed Wall Street transaction tax is eerily similar to a proposal embraced by AOC.

Bloomberg is expected to officially announce the plan on Tuesday. Here's a quick breakdown courtesy of the NYT:

  • A financial transactions tax of 0.1 percent
  • Toughening banking regulations like the Volcker Rule and forcing lenders to hold more in reserve against losses
  • Having the Justice Department create a dedicated team to fight corporate crime and “encouraging prosecutors to pursue individuals, not only corporations, for infractions”
  • Merging Fannie Mae and Freddie Mac
  • Strengthening the Consumer Financial Protection Bureau and “expanding its jurisdiction to include auto lending and credit reporting”
  • Automatically enrolling borrowers of student loans into income-based repayment schemes and capping payments

Apparently, even a billionaire can't win the Democratic Primary without pandering to the left.

Bloomberg entered the presidential race two months ago, and has surged in the polls after skipping the first few contests (of course, he didn't miss much in Iowa).

So will the 2020 race become a 'battle of the billionaires'?

Tyler Durden Tue, 02/18/2020 - 08:06
Published:2/18/2020 7:10:05 AM
[Books] CRB: Going off the rails (Scott Johnson) The Claremont Review of Books has just published its new (Winter) issue. Thanks to the editors, I reviewed the issue in galley to pick out four pieces to roll out this for Power Line readers. As always, I encourage readers to become subscribers (subscribe here) for the absurdly low price of $19.95 and get online access thrown in for free. This issue features essays by the likes of Amy Wax Published:2/18/2020 5:11:26 AM
[Markets] China's Latest Data Fabrication: Home Prices "Increased" Even As Largest Home Developer Offers 25% Discounts China's Latest Data Fabrication: Home Prices "Increased" Even As Largest Home Developer Offers 25% Discounts

There has been a slew of openly bizarre, if not outright ridiculously manipulated and fabricated data out of China in the past month - which is to be expected by an authoritarian regime that for much of January arrested anyone who "leaked" the facts about the deadly coronavirus pandemic which Beijing was hoping to cover up until it simply became far too big - but the latest house price "data" may have been the straw that broke the camel's back.

Overnight, the National Bureau of Statistics reported that the latest 70-city housing price data showed that in January, the average home price appreciation in the primary market was 0.4% in January, the identical same pace as December, despite tens of millions of Chinese citizens living under quarantine or some form of lock down. Even more surreal, the number of cities with housing price increases was higher in January - which China's economy ground to a halt ahead of both the Lunar New Year and the subsequent coronavirus chaos - than in December.

Here are the details according to Beijing: Commercial housing prices in the primary market in the 70 cities tracked by China's National Bureau of Statistics (NBS) (weighted by population) rose 0.4% month-over-month in January after seasonal adjustment, same as December. Property price appreciation was faster in tier 1 cities and unchanged in tier 2/3 cities, while price declines narrowed in tier 4 cities.

It gets better: out of the 70 cities monitored, 60 cities saw seasonally adjusted housing prices increase in January (53 cities saw price increase in December last year.) On a year-over-year, population-weighted basis, in the primary market, housing price appreciation was 6.2% in January in the 70 cities, slower than 6.5% in December.

That, in a nutshell, is the official version.

Meanwhile, in the real world outside of Beijing's excel spreadsheets and goalseek models (as a reminder, and as we wrote three years ago, "the Fate Of The World Economy Is In The Hands Of China's Housing Bubble", as the bulk of China's net worth is not in the financial market but in real estate), China's biggest property developer Evergrande Group announced on Sunday that amid tumbling demand, it would launch "great incentives" to lure domestic consumers via online subscriptions starting Tuesday, a "self-rescue" promotion which analysts said would help shore up the sluggish domestic housing market in February amid the novel coronavirus outbreak.

Paradoxically, even as Beijing reports a sequential increase in home prices, Evergrande will offer a 25 percent discount for consumers who purchase housing units, including apartments and office buildings, from Tuesday to February 29. The discounts will continue and be adjusted to 22% off from March 1 to 31.

Putting the move in context, "it will be the largest incentives the firm has offered in its business history, Liu Xuefei, vice president in charge of sales with Evergrande, told an online meeting on Sunday", according to the Global Times.

But why offer the biggest incentive in firm history if the housing market is firing on all cylinders as China's NBS reported, even as tens of millions of people are threatened with arrest if they so much as exit their apartments?

Don't answer: that's rhetorical.

Some more details on Evergrande's panicked sales promotion via the Global Times:

Since Evergrande started online sales promotion Thursday amid the novel coronavirus outbreak, the number of apartments subscribed online was 47,500 units from more than 600 housing projects the company has nationwide, worth 58 billion yuan ($8.3 billion), according to the company.

Consumers who pay 5,000 yuan ($715.6) down payments and sign subscription books on the company's online platform Hengfangtong, can preorder housing resources from projects the company has across the country, said Evergrande.

From the day that consumers sign contracts until May 10, they can enjoy a right to buy at the lowest price - if the price on the home they buy goes down, they can obtain the difference and can return the apartment.

"Online promotions by real estate companies do not affect the domestic housing market that much, but if one can preorder an apartment with a 5,000-yuan down payment, the stimulus will be quite large and will attract many first home buyers who have rigid demand," Yan Yuejin, research director at Shanghai-based E-house China R&D Institute, told the Global Times on Sunday.

"I found Evergrande's promotion ad on WeChat moments and the incentives are quite attractive. I cannot remember such large discounts a Chinese developer offered in recent years," a Beijing resident surnamed Lei in her 30s told the Global Times on Sunday.

One would almost think that Evergrande would not be offering such a giant discount if the housing market was doing as well as China's official indicated. Almost.

As the Global Times concludes, Evergrande's incentives "will help it drive sales volume and many other domestic housing developers are more likely to follow suit, experts said."

Of course, the communist party's populist mouthpiece is correct, but a familiar question emerges: just what will be the full extent of the coronavirus damage on China's housing market, when as even Goldman admits, "the outbreak of coronavirus suppressed property transaction volumes in February" and "daily property transaction volume remained low in top tier cities in the first half of February, and total transaction volume in 30 major cities were less than 10% of what the usual seasonal pattern would suggest after the Chinese New Year."

Speaking to the Global Times, Yan Yuejin, research director at Shanghai-based E-house China R&D Institute, who described Evergrande's new policy as "self rescuing," noted that instead of waiting for government support policies, domestic real estate companies should take the initiative to actively reduce housing inventories and stabilize their cash flow.

Is that a tacit admission that China will not be bailing out the housing market this time around?

In any case, in light of the above data one can see why Beijing is in such a rush to force the country's 1.4 billion residents and countless (zombie) businesses to pretend that the epidemic is over (which ifs one believes China's fake infection data, it almost is) and for people to get back to business as usual. The alternative is not only banks being flooded with trillions in bad loans, but China's biggest household asset, real estate, getting a crash course in price discovery under a severe crisis. We already know that with the Chinese economy on lock down for two weeks after the Lunar new year, the clearing price is now roughly 25% below where it was just a month ago (and a far cry from the 0.4% sequential increase according to the NBS). Will it be 50% in another two weeks, then 75% two more weeks after that, and so on?

For the sake of Xi Jinping's dictatorship, one can only hope that if the coronavirus epidemic persists - and any fake news that the virus is no longer a threat will be promptly refuted as new cases break out in work places across the country - that Beijing can find the tens of trillions in dollars, yuan or both it will need to bail out not only China's banking system, but the country's housing market as well.

Tyler Durden Mon, 02/17/2020 - 19:30
Published:2/17/2020 6:38:27 PM
[Markets] Why You Shouldn't Borrow Too Much Money, China Edition Why You Shouldn't Borrow Too Much Money, China Edition

Authored by John Rubino via,

When the US housing bubble burst in 2007, most observers were focused on the threat to Wall Street banks and their massive derivative books. This was a legitimate fear, since the worst case scenarios involved the death of Goldman Sachs and JP Morgan Chase, with all the stock market carnage that that implied.

But for China the stakes were a lot higher - picture half a billion people taking to the streets and demanding an end to a government whose only claim to legitimacy was its ability to provide millions of ever-more-lucrative jobs.

So while the US was bailing out every bank in sight with lower interest rates and loan guarantees, China upped the ante by ordering pretty much every sector if its economy start building things with borrowed money. The result was the biggest infrastructure binge in history, in which roads, bridges, airports, and — hey, why not — entire new cities sprang up in just a few years, providing jobs for millions of would-be rioters and a torrent of cash flow for foreign suppliers of iron ore, copper, cement, steel, lumber, and pretty much every other industrial commodity you can name.

China boomed, the rest of the world recovered, and today’s longest-ever economic expansion was born. And Chinese debt-to-GDP soared to record-high levels.

Now dial back the perspective to that of a single hypothetical family. Say one of the breadwinners loses their job and the family’s income is cut in half. They can chose to scale back their spending to match their newly-diminished circumstances and accept the resulting turmoil of fewer cars, smaller house, public rather than private schools, etc. Or they can max out a series of credit cards and just go on as before, avoiding stress in the moment at the cost of bigger bills — and greater fragility — in the future.

The second strategy will work if the unemployed breadwinner gets a new job reasonably soon and — crucially — if no other crisis pops up that requires (now nonexistent) resources. No illness, no new job loss, no leaky roof, no wrecked car … and things might work out.

Now zoom back out to China, which chose strategy number two and is currently “rich” but also way too leveraged to handle another shock to the system. Just in time for a pandemic that shuts down half the country. From today’s South China Morning Post:

Forget Sars, the new coronavirus threatens a meltdown in China’s economy

Never before has China paid such an economic price for an epidemic as it has done already with the coronavirus, which originated in the Chinese city of Wuhan and causes the disease now officially known as Covid-19. And the damage is spreading.

It is obvious that the economic impact of Covid-19 will be far more severe than that of Sars, or any other previous epidemic.

Whole cities have been locked down, effectively grinding some local economies to a halt since Beijing declared all-out war on January 23. Currently, 30 of China’s 31 provinces have declared a top-level public health emergency, with all major cities and economic hubs effectively shut for weeks. The government has locked down 56 million people in quarantine in Hubei, banned tens of millions more from travelling across the nation, and imposed restrictions on activities in most urban areas. The Lunar New Year holiday has been extended for one or two weeks for most of the country. At the peak, provinces accounting for almost 69 per cent of China’s GDP were closed for business, according to Bloomberg Economics.

For the millions of small and medium-sized enterprises (SMEs) in China, the nightmare may be just beginning. Many small manufacturers fear foreign customers will shift orders to other countries due to disruptions in production and delivery. In a survey of 995 SMEs by academics from Tsinghua and Peking universities, 85 per cent said they would be unable to survive for more than three months under the current conditions. If the disruption goes on long enough, it could trigger a wave of bankruptcy among SMEs, which contribute more than 60 per cent of China’s GDP, 70 per cent of its patents and account for 80 per cent of jobs nationwide.

A financially solid country might be able to weather this kind of crisis by drawing down reserves and using its stellar credit to take on new, temporary debt. But an already over-leveraged system may not have those options.

As for what part of China’s economy blows up first, check out the repayment schedule of municipal debt. These are the cities and states that borrowed immense amounts of money — much of it in US dollars — to build the previously mentioned roads, bridges, etc. Much of this infrastructure was already failing to generate cash flow sufficient to cover the related debt. Now those cash flows are drying up.

China, in short, is providing a life lesson for the rest of us in how to respond to a crisis. Remember it next time you think about maxing out a credit card.

Tyler Durden Mon, 02/17/2020 - 18:15
Published:2/17/2020 5:36:43 PM
[Markets] Los Alamos Experts Warn Covid-19 "Almost Certainly Cannot Be Contained", Project Up To 4.4 Million Dead Los Alamos Experts Warn Covid-19 "Almost Certainly Cannot Be Contained", Project Up To 4.4 Million Dead

Authored by Sharon Begley via,

At least 550,000 cases. Maybe 4.4 million. Or something in between.

Like weather forecasters, researchers who use mathematical equations to project how bad a disease outbreak might become are used to uncertainties and incomplete data, and Covid-19, the disease caused by the new-to-humans coronavirus that began circulating in Wuhan, China, late last year, has those everywhere you look. That can make the mathematical models of outbreaks, with their wide range of forecasts, seem like guesswork gussied up with differential equations; the eightfold difference in projected Covid-19 cases in Wuhan, calculated by a team from the U.S. and Canada, isn’t unusual for the early weeks of an outbreak of a never-before-seen illness.

But infectious-disease models have been approximating reality better and better in recent years, thanks to a better understanding of everything from how germs behave to how much time people spend on buses.

“Year by year there have been improvements in forecasting models and the way they are combined to provide forecasts,” said physicist Alessandro Vespignani of Northeastern University, a leading infectious-disease modeler.

That’s not to say there’s not room for improvement. The key variables of most models are mostly the same ones epidemiologists have used for decades to predict the course of outbreaks. But with greater computer power now at their disposal, modelers are incorporating more fine-grained data to better reflect the reality of how people live their lives and interact in the modern world — from commuting to work to jetting around the world. These more detailed models can take weeks to spit out their conclusions, but they can better inform public health officials on the likely impact of disease-control measures.

Models are not intended to be scare machines, projecting worst-case possibilities. (Modelers prefer “project” to “predict,” to indicate that the outcomes they describe are predicated on numerous assumptions.) The idea is to calculate numerous what-ifs: What if schools and workplaces closed? What if public transit stopped? What if there were a 90% effective vaccine and half the population received it in a month?

“Our overarching goal is to minimize the spread and burden of infectious disease,” said Sara Del Valle, an applied mathematician and disease modeler at Los Alamos National Laboratory. By calculating the effects of countermeasures such as social isolation, travel bans, vaccination, and using face masks, modelers can “understand what’s going on and inform policymakers,” she said.

For instance, although many face masks are too porous to keep viral particles out (or in), their message of possible contagion here! “keeps people away from you” and reduces disease spread, Del Valle said. “I’m a fan of face masks.”

The clearest sign of the progress in modeling comes from flu forecasts in the U.S. Every year, about two dozen labs try to model the flu season, and have been coming ever closer to accurately forecasting its timing, peak, and short-term intensity. The U.S. Centers for Disease Control and Prevention determines which model did the best; for 2018-2019, it was one from Los Alamos.

Los Alamos also nailed the course of the 2003 outbreak of SARS in Toronto, including when it would peak. “And it was spot on in the number of people who would be infected,” said Del Valle: just under 400 in that city, of a global total of about 8,000.

The Covid-19 outbreak in China is quickly spreading worldwide, sparking quick calculations on how deadly this new disease is. One measure is called a case fatality rate. While the formula is simple, it’s difficult to get a precise answer.HYACINTH EMPINADO/STAT

The computers that run disease models grind through calculations that reflect researchers’ best estimates of factors that two Scottish researchers identified a century ago as shaping the course of an outbreak: how many people are susceptible, how many are infectious, and how many are recovered (or dead) and presumably immune.

That sounds simple, but errors in any of those estimates can send a model wildly off course. In the autumn of 2014, modelers at CDC projected that the Ebola outbreak in West Africa could reach 550,000 to 1.4 million cases in Liberia and Sierra Leone by late January if nothing changed. As it happened, heroic efforts to isolate patients, trace contacts, and stop unsafe burial practices kept the number of cases to 28,600 (and 11,325 deaths).

To calculate how people move from “susceptible” to “infectious” to “recovered,” modelers write equations that include such factors as the number of secondary infections each infected person typically causes and how long it takes from when one person gets sick to when the people she infects does. “These two numbers define the growth rate of an epidemic,” Vespignani said.

The first number is called the basic reproduction number. Written R0 (“R naught”), it varies by virus; a strain that spreads more easily through the air, as by aerosols rather than heavier droplets released when an infected person sneezes or coughs, has a higher R0. It has been a central focus of infectious disease experts in the current outbreak because a value above 1 portends sustained transmission. When the R0 of Covid-19 was estimated several weeks ago to be above 2, social media exploded with “pandemic is coming!” hysteria.

But while important, worshipping at the shrine of R0 “belies the complexity that two different pathogens can exhibit, even when they have the same R0,” the Canadian-U.S. team argues in a paper posted to the preprint site medRxiv. Said senior author Antoine Allard of Laval University in Quebec, “the relation between R0, the risk of an epidemic, and its potential size becomes less straightforward, and sometimes counterintuitive in more realistic models.”

To make models more realistic, he and his colleagues argue, they should abandon the simplistic assumption that everyone has the same likelihood of getting sick from Covid-19 after coming in contact with someone already infected. For SARS, for instance, that likelihood clearly varied.

“Bodies may react differently to an infection, which in turn can facilitate or inhibit the transmission of the pathogen to others,” Allard said.

“The behavioral component is also very important. Can you afford to stay at home a few days or do you go to work even if you are sick? How many people do you meet every day? Do you live alone? Do you commute by car or public transportation?”

When people’s chances of becoming infected vary, an outbreak is more likely to be eventually contained (by tracing contacts and isolating cases); it might reach a cumulative 550,000 cases in Wuhan, Allard and his colleagues concluded. If everyone has the same chance, as with flu (absent vaccination), the probability of containment is significantly lower and could reach 4.4 million there.

Or as the researchers warn, “the outbreak almost certainly cannot be contained and we must prepare for a pandemic ….”

Modelers are also incorporating the time between when one person becomes ill and someone she infects does. If every case infects two people and that takes two days, then the epidemic doubles every two days. If every case infects two people and they get sick four days after the first, then the epidemic doubles every four days.

This “serial time” is related to how quickly a virus multiplies, and it can have a big effect. For a study published this month in Annals of Internal Medicine, researchers at the University of Toronto created an interactive tool that instantly updates projections based on different values of R0 and serial interval.

Using an R0 of 2.3 and serial interval of seven days, they project 300,000 cases by next week. If the serial interval is even one day less, the number of cases blasts past 1.5 million by then. But if the countermeasures that China introduced in January, including isolating patients, encouraging people to wear face masks, and of course quarantining Wuhan, reduce the effective reproduction number, as has almost certainly happened, those astronomical numbers would plummet: to 100,000 and 350,000 cases, respectively.

Just as public health officials care how long someone can be infected without showing symptoms (so they know how long to monitor people), so do modelers. “When people are exposed but not infected, they tend to travel and can’t be detected,” Vespignani said. “The more realistic you want your model to be, the more you should incorporate” the exposed-but-not-ill population. This “E” has lately become a fourth category in disease models, joining susceptible, infectious, and recovered.

At Los Alamos, Del Valle and her colleagues are using alternatives to the century-old susceptible/infectious/recovered models in hopes of getting a more realistic picture of an outbreak’s likely course. A bedrock assumption of the traditional models is “homogeneous mixing,” Del Valle said, meaning everyone has an equal chance of encountering anyone. That isn’t what happens in the real world, where people are more likely to encounter others of similar income, education, age, and even religion (church pews can get crowded).

“Ideally, you’d break the population into many groups” and estimate the likelihood of each one’s members interacting with each other and with every kind of outsider, Del Valle said.

“Your model would become more accurate.”

Called “agent-based models,” they simulate hypothetical individuals, sometimes tens of millions of them, as they go about their day. That requires knowing things like how many people commute from where to where for work or school, how they travel, where and how often they shop, whether it’s customary to visit the sick, and other key details. Computers then simulate everyone’s movements and interactions, for instance by starting with one infected person leaving home in the morning, chatting with other parents at school drop-off, continuing to work on a bus, standing 2 feet from customers and colleagues, and visiting a pharmacy for her migraine prescription.

The models keep track of people second by second, said Los Alamos computer scientist Geoff Fairchild, “and let you assess the impact of different decisions, like closing schools during flu season.” (Some research shows that can dampen an outbreak.) Although “agent-based models can simulate reality better,” he said, they are less widely used because they require enormous computing power. Even on the Los Alamos supercomputer, a single run of a complicated model can take days or even weeks — not counting the weeks of work modelers spend writing equations to feed the computer.

The Los Alamos researchers are still wrestling with their Covid-19 model, which is showing - incorrectly - the outbreak “exploding quite quickly in China,” Del Valle said. It is overestimating how many susceptible people become infected, probably because it’s not accurately accounting for social isolation and other countermeasures. Those seem to have reduced R0 toward the lower range of 2-to-5 that most modelers are using, she said.

In the current outbreak, researchers are building models not only to peek into the future but also to reality-check the present. Working backwards from confirmed infections in countries other than mainland China, researchers at Imperial College London who advise the World Health Organization estimated that Wuhan had 1,000 to 9,700 symptomatic cases as of Jan. 18. Three days later, all of mainland China had officially reported 440 cases, supporting the concerns of global health officials that China was undercounting.

In a more recent model run, Jonathan Read of England’s University of Lancaster and his colleagues estimated “that only about 1 in 20 infections were being detected” in late January, Read said: There were probably 11,090 to 33,490 infections in Wuhan as of Jan. 22, when China reported 547 cases.

“It highlights how difficult it is to track down and identify this virus,” Read said, especially with residents of quarantined Wuhan being turned away from overwhelmed hospitals and clinics without being tested for the virus. Using a similar approach, modelers led by Dr. Wai-Kit Ming of Jinan University in Guangzhou estimated that through Jan. 31, China probably had 88,000 cases, not the 11,200 reported.

Read’s group is updating its model to estimate the fraction of true cases in February; China’s cumulative cases topped 60,000 on Thursday.

For modelers, a huge undercount can corrupt the data they base their equations on. But even with that disadvantage the Covid-19 models “are doing quite well, despite a lot of complicated dynamics on the ground,” said Los Alamos’s Fairchild. While it’s not clear yet if they’ve nailed the true numbers of cases, they are correctly projecting the outbreak’s basic shape: increasing exponentially, the number of cases growing more quickly the more cases there are.

Tyler Durden Mon, 02/17/2020 - 14:55
Published:2/17/2020 2:07:34 PM
[Markets] Fedophilia: The Intellectual Disease And Cure Fedophilia: The Intellectual Disease And Cure

Authored by George Selgin via,

Although the movement to “End the Fed” has a considerable popular following, only a very tiny number of economists—our illustrious contributors amongst them—take the possibility seriously. For the rest, the Federal Reserve System is, not an ideal currency system to be sure (for who would dare to call it that?), but, implicitly at least, the best of all possible systems. And while there’s no shortage of proposals for reforming it almost all of them call only for mere tinkering. Tough though their love may be, the fact remains that most economists are stuck on the Fed.

This veneration of the Fed has long struck me as perverse. Its record can hardly be said, after all, to supply grounds for complacency, much less for the belief that no other system could possibly do better. (Indeed that record, as Bill Lastrapes, Larry White and I have shown, even makes it difficult to claim that the Fed has improved upon the evidently flawed National Currency system it replaced.) Further, as the Fed is both a monopoly and a central planning agency, one would expect economists’ general opposition to monopolies and to central planning, as informed by their welfare theorems and by the general collapse of socialism, to prejudice them against it. Yet instead of ganging up to look into market-based alternatives to the Fed, the profession, for the most part, has relegated such inquiries to its fringe.

Why? The question warrants an answer from those of us who insist that exploring alternatives to the Fed is worthwhile, if only to counter people’s natural but nevertheless mistaken inclination to assume that the rest of the profession isn’t interested in such alternatives because it has already carefully considered—and rejected—them.

It’s tempting to blame Fedophilia, and the more general phenomenon of what Larry White calls “status quo” bias in monetary research, on the Fed’s direct influence upon the economics profession. According to White, in 2005 the Fed employed about 27 percent more full-time macro- and monetary (including banking) economists than the top 50 US academic economics departments combined, while disseminating much of their research gratis through various in-house publications or as working papers. Perhaps not surprisingly, despite a thorough review of such publications, White could not find “a single Fed-published article that calls for eliminating, privatizing, or even restructuring the Fed.” That professional monetary economics journals are not much better may, in turn, reflect the fact, also documented by White, that Fed-affiliated economists also dominate those journals’ editorial boards.

But I doubt that a reluctance to bite the hand that feeds them is the only, or even the most important, reason why most economists seldom question the Fed’s desirability.

Another reason, I suppose, is their desire to distance themselves from… kooks. Let’s face it: more than a few persons who’d like to “End the Fed” want to do so because they think the Rothschilds run it, that it had JFK killed because he planned to revive the silver dollar, and that the basic plan for it was hatched not by the Congressional Committee in charge of monetary reform but by a cabal of Wall Street bankers at a top-secret meeting on Jekyll Island.

Oh, wait: the last claim is actually true. But claims like the others give reasonable and well-informed Fed critics a bad name, while giving others reason for wishing to put as much space as possible between themselves and the anti-Fed fringe.

I’m convinced that imagination, or the lack of it, also plays a part. To some extent, the problem is too much rather than too little imagination. With fiat money, and a discretionary central bank, it’s always theoretically possible to have the money stock (or some other nominal variable) behave just like it ought to, according to whichever macroeconomic theory or model one prefers. In other words, a modern central bank is always technically capable of doing the right thing, just as a chimpanzee jumping on a keyboard is technically capable of typing-out War and Peace.

Just as obviously, any conceivable alternative to a discretionary central bank, whether based on competition and a commodity standard or frozen fiat base or on some other “automatic” mechanisms, is bound to be imperfect, judged relative to some—indeed any—theoretical ideal. Consequently, an economist need only imagine that a central bank might somehow be managed according to his or her own particular monetary policy ideals to reckon it worthwhile to try and nudge it in that direction, but not to consider other conceivable arrangements.

That there’s a fallacy of composition of sorts at play here should be obvious, for a dozen economists might hold as many completely different monetary policy ideals; yet every one might be a Fedophile simply because the Fed could cater to his or her beliefs. In actual fact, of course, the Fed’s conduct can at most satisfy only one of them, and is indeed likely to satisfy none at all, and so might actually prove distinctly inferior to what some non-central bank alternative would achieve. So in letting their imaginations get the best of them, all twelve economists end up endorsing what’s really the inferior option.

If you don’t think economists are really capable of such naivete, I refer you to the literature on currency boards, in which one routinely encounters arguments to the effect that central banks are always better than currency boards because they might be better. Or how about those critics of the gold standard who, having first observed how, under such a standard, gold discoveries will cause inflation, go on to conclude, triumphantly, that a fiat-money issuing central-bank is better because it might keep prices stable?

But if economists let their imaginations run wild in having their ideal central banks stand in for the real McCoys, those same imaginations tend to run dry when it comes to contemplating radical alternatives to the monetary status quo. Regarding conventional beliefs concerning the need for government-run coin factories, which he (rightly) dismissed as so much poppycock, Herbert Spencer observed, “So much more does a realized fact influence us than an imagined one, that had the baking of bread been hitherto carried on by government agents, probably the supply of bread by private enterprise would scarcely be conceived possible, much less advantageous.” Economists who haven’t put any effort into imagining how non-central bank based monetary systems might work find it all too easy to simply suppose that they can’t work, or at least that they can’t work at all well. The workings of decentralized markets are often subtle; while such markets’ ability to solve many difficult coordination problems is, not only mysterious to untrained observers, but often difficult if not impossible even for experts to fathom except by means of painstaking investigations. In comparison monetary central planning is duck soup—on paper, anyway.

Nor does the way monetary economics is taught help. In other subjects, the welfare theorems are taken seriously. In classes on international trade, for example, time is always spent, early on, on the implications of free trade: never mind that the world has never witnessed perfectly free trade, and probably never will; it’s understood that the consequences of tariffs and other sorts of state interference can only be properly assessed by comparing them to the free trade alternative, and no one who hasn’t studied that alternative can expect to have his or her pronouncements about the virtues of protectionism taken seriously.

In classes in monetary economics, on the other hand, the presence of a central bank—a monetary central planner, that is—is assumed from the get-go, and no serious attention is given to the implications of “free trade in money and banking.” Consequently, when most monetary economists talk about the virtues of this or that central bank, they’re mostly talking through their hats, because they haven’t a clue concerning what other institutions might be present, and what they might be up to if the central bank wasn’t there.

Since monetary systems not managed by central banks, including some very successful ones, have in fact existed, economists’ inability to envision such systems is also evidence of their ignorance of economic history. That ignorance in turn, among younger economists at least, is a predictable consequence of the now-orthodox view that history can be safely boiled down to a bunch of correlation coefficients, so that they need only gather enough numbers and run enough regressions to discover everything worth knowing about the past.

Those who’ve been spared such “training,” on the other hand, often have a purblind view of the history of money and banks—one that brings to mind Saul Steinberg’s famous New Yorker cover depicting a 9th-Avenuer’s view of the world, with its almost uninhabited desert between the Hudson and the Pacific, and China, Japan, and Russia barely visible on the horizon. If he or she knows any monetary history at all, the typical (which is to say American) economist knows something about that history in the U.S., and perhaps considerably less about events in Great Britain. Theirs is, in short, just the right amount of knowledge to be very dangerous indeed.

And dangerous it has been. In particular, because the U.S. before 1914, and England before the Bank of England began acting as a lender of last resort, happened to suffer frequent financial crises, economists’ historical nearsightedness has given rise to the conventional wisdom that any fractional-reserve banking system lacking a lender of last resort must be crisis-prone, and two clever (if utterly fantastic) formal models serving to illustrate the same view (or, according to economists’ twisted rhetoric, to “prove” it “rigorously”). It has, correspondingly, led economists to ignore or at least to underestimate the extent to which legal restrictions, including unit banking laws in the U.S. and the six-partner rule in England, contributed to the deficiencies of those countries’ banking systems. Finally, and most regrettably, it has caused economists to overlook altogether the possibility that the monopolization of paper currency has itself been more a cause of than a cure for financial instability.

The good news is that Fedophilia is curable. Milton Friedman, for one, was a recovering Fedophile: later in his career, he repudiated the mostly-conventional arguments he’d once put forward in defense of a currency monopoly. Friedman, of course, was a special case: a famous proponent of free markets, he had more reason than most economists do to view claims of market failure with skepticism, even if he’d once subscribed to them himself. Even so, his was only a half-hearted change of heart, in part (I believe) because he still hadn’t drawn the lessons he might have from the banking experiences of countries other than the U.S. and England.

Friedman’s case suggests that it will take some pretty intense therapy to deprogram other Fed inamoratos, including a regimen of required readings.

Charles Conant’s History of Modern Banks of Issue will help them to overcome their historical parochialism.

Vera Smith’s The Rationale of Central Banking will do more of the same, while also exposing them to the lively debates that took place between advocates and opponents of currency monopolies before the former (supported by their governments’ ravenous Treasuries) swept the field. 

The Experience of Free Banking, edited by Kevin Dowd (with contributions by several Alt-M contributors including yours truly) gathers studies of a number of past, decentralized currency systems, showing how they tended to be more stable than their more centralized counterparts, while another collection, Rondo Cameron’s Banking in the Early Stages of Industrialization, shows that less centralized systems were also better at fostering economic development. Finally, instead of being allowed to merely pay lip service to Walter Bagehot’s Lombard Street, Fedophile’s should be forced, first to read it from cover to cover, and then to re-read out-loud those passages (there are several) in which Bagehot explains that there’d be no need for lenders of last resort had unwise legislation not created centralized (“one reserve”) currency systems in the first place. The last step works especially well in group therapy.

Of course, even the most vigorous deprogramming regimen is unlikely to alter the habits of hard-core Fed enthusiasts. But it might at the very least make them more inclined to engage in serious debate with the Fed’s critics, instead of allowing the Fed’s apologists to go on believing that they answer those critics convincingly simply by rolling their eyes.

Tyler Durden Sun, 02/16/2020 - 21:00
Published:2/16/2020 8:04:00 PM
[Media] Scenes from the Media Meltdown (Steven Hayward) The most obvious velleities of the major mainstream media today are, first, a hatred of Fox News, and second, a primal scream at the fact that over the last 25 years old fashioned print and broadcast media have shrunk more than coal mining. Nicholas Lemann, dean of Columbia University’s famed journalism school, took to the pages of the New York Review of Books in a recent issue to lament the Published:2/16/2020 11:59:23 AM
[Markets] The Geopolitics Of Biological Weapons, Part 2: Efficiency & Deployment The Geopolitics Of Biological Weapons, Part 2: Efficiency & Deployment

Authored by Larry Romanoff via,

Read Part 1 here...

It should be apparent that the launching of bio-warfare, as with conventional warfare, is considerably eased by locating military bases, offensive weapons and delivery systems as physically close as possible to one’s potential enemies. This is one reason the US has established its nearly 1,000 foreign military bases – to ensure the capability of putting an enemy under attack within 30 minutes anywhere in the world. Clearly, the same strategy applies to biological warfare, the US military having created scores of these labs euphemistically defined as “health-security infrastructure” in foreign countries.

It is frightening to learn that many of these foreign bio-installations are classified as so “Top-Secret” they are outside the knowledge and control of even the local governments in the nations where they are built. It is also frightening to learn that the Ebola outbreaks all occurred in close proximity to several of these well-known (and top-secret) US bio-weapons labs in Africa.

There were great fears a few years ago when American scientists recreated the Spanish flu virus that killed around 50 million people in 1918. They spent nine years on this effort before succeeding, and now large quantities of this virus are stored in a high-security government laboratory in Atlanta, Georgia. More recently, scientists have created a mutated super-strain of the deadly H5N1 bird flu virus that is directly transmissible among humans and would have at least a 50% kill rate, spawning fears in 2005 of a global pandemic that might kill hundreds of millions.

In late 2013, more than 50 of the world’s most eminent scientists severely criticised the research Ron Fouchier and colleagues at the Erasmus Medical Centre in Rotterdam, who have been developing mutant varieties of the H5N1 bird-flu virus that are far more dangerous to humans. The scientists wrote that the research was designed to make the virus fully transmissible between humans, and clearly had a dual civil-military function. This engineered flu could kill half the world’s population, and not by accident. The US military funded this research with more than $400 million.

The Korean War

During and after the Korean War, China produced considerable evidence that the US military was employing biological pathogens against both the Chinese and the North Koreans. More than 25 US POWs supported Chinese claims – and provided further, and very detailed, corroborating evidence  of anthrax, various insects such as mosquitoes and fleas carrying Yellow Fever, and even propaganda leaflets infected with cholera, over the entire North-East of China and virtually all of North Korea. The US government immediately filed charges of sedition against the soldiers who told their stories of these illegal activities, applying enormous pressure to silence them, even threatening defending lawyers with unspecified retribution. As a final desperate attempt to silence these former POWs, the US military relied on the CIA to subject them to extensive treatments with a newly-discovered and dangerous drug called Metrazol, in attempts to totally erase all memories of their activities in Korea, apparently destroying the mens’ minds in the process.

Global Research published an article on September 07, 2015 by David Swanson which provided some detail on American attempts to flood North Korea with the Bubonic Plague, beginning with the statement, “This happened some 63 years ago, but as the U.S. government has never stopped lying about it, and it’s generally known only outside the United States, I’m going to treat it as news.”

Correct on all counts. Curtis LeMay not only conducted his sincere attempts to exterminate the entire civilian population of North Korea by bombing virtually every house in the country, but there is now a huge and still emerging volume of indisputable evidence the Americans dropped on both North Korea and China insects and materials carrying anthrax, cholera, encephalitis, and bubonic plague.

Then on September 10, 2012, the Los Angeles Times ran an article discussing the topic of doctors “still trying to diagnose mysteries of the Hantavirus” more than 20 years after this deadly pathogen was first identified in the US in 1993.  In this case, the virus appeared to attack only native Indians – the infections concentrated in a four-state area – who developed sudden respiratory problems and were often dead within hours. Most victims reported “not feeling well” one day, and were dead the next, from what appeared as a very mysterious pathogen with an undeterminable source. But then, “a lucky clue” arose from a television viewer, a physician who stated this illness seemed very similar to that caused by a virus he had observed the US military using in Korea in the 1950s. And sure enough, tests proved the illness to be caused by a variation of the same Hantavirus that attacked troops in Korea.

The virus attracted attention because some American troops were accidentally exposed to it in Korea, most of whom died very suddenly. Two facts that were eliminated from the public reports of the time: (1) the virus attacked North Koreans and Chinese in greater numbers, and (2) this Hantavirus was one item in the treasure trove of biological weapons the Americans inherited from Dr. Ishii and his Unit 731. The Japanese were light-years ahead of the Americans and the Western Allies in virus research and had isolated the lethal Hantavirus by the late 1930s, with much evidence it was used against China by the Japanese and later against both China and North Korea by the Americans. It seems that some of this weaponised material escaped containment and exposed American and South Korean soldiers to their own handiwork.

US Biowarfare on Cuba

One of the commonly-known (outside the US) biological warfare programs conducted by the US, remarkable for its longevity, is the decades-long offensive attack on Cuba. The US military and CIA conducted so many of these biological assaults that there is a museum in Havana that provides substantial evidence of the many years of biological warfare against this small country. Jeffrey St. Clair noted in an article a few of these events, as follows:

“In 1971 the first documented cases of swine fever in the western hemisphere showed up in Cuba, resulting in the deaths of more than 500,000 hogs. Cuba accused the US of importing that virus into the country, and a CIA agent later admitted that he delivered the virus to Cuban exiles in Panama, who carried the virus into Cuba. The news was public, but the US media ignored it. In 1981, Fidel Castro blamed an outbreak of dengue fever in Cuba on the CIA. The fever killed 188 people, including 88 children. In 1988, a Cuban exile leader named Eduardo Arocena admitted bringing some germs into Cuba in 1980. Another occasion involved an outbreak of thrips palmi, an insect that kills potato crops, palm trees and other vegetation. Thrips first showed up in Cuba on December 12, 1996, following low-level flights over the island by US government spray planes. The US was able to quash a United Nations investigation of the incident.”

This was only a small part of America’s biological aggression against Cuba. In 1979, the Washington Post published reports on a long-standing American bio-warfare program against Cuban agriculture that had existed at least since 1962, by the CIA’s biological warfare section. And in 1980, the US believed it had discovered a biological agent that would target ethnic Russians, and sent a ship from Florida to Cuba on a mission to “carry some germs to Cuba to be used against the Soviets”. And as recently as 1996 and 1997, the Cuban government was again accusing the US of engaging in biological warfare by spraying Cuban crops with biological pathogens during illegal “reconnaissance flights”. It was also definitively reported that during the Cuban missile crisis, large numbers of chemical and biological weapons were loaded on American military aircraft in preparation for use on Cuba.

American bio-warfare efforts have also been launched on at least several other nations in Central and South America, involving a number of viral pathogens, cancers and chemicals. In his article, St. Clair referred to an epidemic of dengue fever that erupted in Managua, Nicaragua, where about 50,000 people became seriously ill and many died. The attack occurred during the CIA’s war against the Sandinista government, where the outbreak immediately followed a series of low-level so-called “reconnaissance flights” conducted by the Americans over Managua.

It has also been reliably reported by several sources that the US military has used Haiti as a kind of “open season” biological lab, exposing the local population to almost everything imaginable, with the US media keeping a very tight lid on information leakage. Even more reprehensible was the treatment awarded to those Haitians who made the serious mistake of becoming “boat people”, i.e. escaping their American pathology lab by emigrating in small boats to the US. The US government deported most to Puerto Rico to be used as guinea pigs and lab rats, where they would be out of view of Congress and the media and, according to reports, having contained them in concentration camps to inflict upon them whatever ‘scientific tests’ they avoided at home. In one case as recently as 1980, hundreds of Haitian men in these detention camps developed full-size female breasts after being injected repeatedly with unknown hormones by US military physicians. The historical record tells us the same was done to the same people in a publicly off-limits military base in Florida.

Along with Cuba, there is the strange case of the more or less simultaneous occurrence of cancers among the leaders of South American countries, coincidentally in each case, the infection of a national leader the US despised and had tried to remove by several other means. We had Hugo Chávez, the President of Venezuela, Argentina’s president Cristina Fernández de Kirchner, Brazil’s president, Dilma Rousseff, Paraguay’s Fernando Lugo, and the former Brazilian President, Luiz Inácio Lula da Silva. A former Brazilian President, speaking of these cancers, said in an interview,

“It is very hard to explain, even with the law of probabilities, what has been happening to some leaders in Latin America. It’s at the very least strange, very strange.”

The Secret WW II US-Japan Bio-Partnership

When Japanese troops invaded North-East China in 1932, Dr. Shiro Ishii began his notorious biological warfare experimentation program in a sector near Harbin disguised as a water-purification unit, then known as Unit 731. He began with various poisonous gases including mustard gas, then used aircraft to distribute cotton and rice husks contaminated with the bubonic plague, in various parts of Central China. His unit collected Chinese resisting the Japanese occupation, using them for unlimited medical atrocities including live vivisection. The New York Times reported one instance of a Japanese physician describing his experience there:

“I cut him open from the chest to the stomach and he screamed terribly and his face was all twisted in agony. He made this unimaginable sound, he was screaming so horribly. But then finally he stopped. This was all in a day’s work for the surgeons, but it really left an impression on me because it was my first time.”

Ishii would first have his teams infect the victims with anthrax, cholera, typhoid, tetanus, dysentery, syphilis, the bubonic plague and other pathogens, then dissect them while still alive to examine the results, followed by cremation of the evidence. The US military’s Surgeon-General’s Department estimated that 580,000 Chinese were killed in this manner, with atrocities committed by some of Japan’s most distinguished physicians.

At the end of the war when it became clear Japan was losing and would have to evacuate China, Ishii ordered all the remaining Chinese in custody to be killed and their bodies burned, then destroyed with explosives the entire Unit 731 compound to hide all traces of his experiments. General Douglas MacArthur, then Commander of the Allied Powers in Japan, made a secret deal with Ishii and the entire staff of Unit 731 to transfer to the US military all records of the biowarfare and vivisections for US military study, in exchange for a complete cover-up of all evidence of the existence of these activities, and a promise of immunity from war-crimes prosecution.

Ishii turned over to the US military on one occasion alone more than 10,000 pages of his “research findings”, after which the Americans re-wrote Japan’s history books, which is why neither the Japanese nor the world know of the massive atrocities committed in China, and which is where the American military gained much of its expertise and know-how in chemical and biological weapons and the methods of human experimentation it would later apply so freely in Korea and Vietnam and to American citizens.

On 6 May 1947, MacArthur wrote to Washington that “additional data, possibly some statements from Ishii probably can be obtained by informing Japanese involved that information will be retained in intelligence channels and will not be employed as ‘War Crimes’ evidence.” Some Japanese were arrested by Soviet forces for their biological crimes against Russians, and tried at the Khabarovsk War Crime Trials in 1949 but, to cover their own tracks, the Americans dismissed all surviving victim testimony and Russia’s war-crimes trials of Japanese as “communist propaganda”.

Not only did the US government and military provide Dr. Ishii and his staff total immunity from prosecution, they imported the entire group to the US, all secretly stationed on US military bases and on the US Army payroll. Ishii was for years a frequent guest lecturer at the US military’s bio-warfare school at Fort Detrick, and given a lucrative post as full professor and supervisor of biological research at the University of Maryland until he died decades later. It was only in 1995 that the US military finally admitted it had offered immunity, secret identities, and good jobs with high salaries, to these Japanese scientists and physicians in exchange for their work on biological warfare research and human experimentation. These people were recruited not only by the military, but by the CDC, the US State Department, military intelligence, the CIA, and the US Department of Agriculture, all for work on “secret government projects”.


From the very earliest days of America’s bio-warfare experiments, US political and military leaders, as well as CIA officials, made no effort to hide their interest in developing methods of infecting individuals with cancer as a method of ridding themselves of national leaders they didn’t like, a method with perfect deniability. The US record of having assassinated by various means about 150 political leaders in other nations will attest to this assertion.

“The attraction is that bio-weapons are not only very efficient mass killers but are quite cost-effective compared to shooting wars. As well, genetic weapons can be dispersed in a multitude of ways, using virus-infected insects or bacteria, or spliced into GM seeds. These weapons are difficult to detect and identify, and often a treatment or vaccine could be years in the making.”

Dr. Leonard Horowitz, the famed pharma industry whistleblower, quoted one expert as saying he would plan a bio-attack

“with subtle finesse, to make it look like a natural outbreak. That would delay the response and lock up the decision-making process. Even if you suspect biological terrorism, it’s hard to prove. It’s equally hard to disprove . . . You can trace an arms shipment, but it’s almost impossible to trace the origins of a virus that comes from a bug.”

One author noted that a properly-done release of an infectious agent would make diagnosis and treatment difficult, adding that this kind of bio-warfare cannot be traced to its source and might be considered an “act of God”.

Many recent disease outbreaks would seem to properly qualify as potential bio-warfare agents: AIDS, SARS, MERS, Bird Flu, Swine Flu, Hantavirus, Lyme Disease, West Nile Virus, Ebola, Polio (Syria), Foot and Mouth Disease, the Gulf War Syndrome and ZIKA.

The Western mass media have ignored all of this, censoring this entire portion of history, and even the Internet has been scrubbed with Google and Bing unable to find the truth which is out there. Once again, freedom of speech depends entirely on who controls the microphone.

Tyler Durden Sat, 02/15/2020 - 23:30
Published:2/15/2020 10:57:37 PM
[Books] The Power Line Show, Ep 168: Fight! Fight! In the White House No Less! (Steven Hayward) This week we violate the legendary first rule of Fight Club with Tevi Troy, author of the wonderfully gossipy new book Fight House: Rivalries in the White House from Truman to Trump. Troy, a veteran of the George W. Bush White House and author of several previous books about overlooked aspects of the presidency, takes us of a tour of some of the legendary feuds and personality and power clashes Published:2/15/2020 1:56:15 PM
[Lincoln] One More Glance at Abe (Steven Hayward) I didn’t get in on the observances here of Lincoln’s birthday earlier in the week, though Scott had the beat well covered. But perhaps one last glance back. From time to time people ask me what I regard as the best Lincoln biography, and without hesitation I still always pick Lord Charnwood’s 1917 biography (though Allan Guelzo’s various books on Lincoln are equivalent in their quality). In fact I have Published:2/14/2020 6:18:57 PM
[Quick Takes] Libraries at Georgetown University Remove Novels That Offend Some Students "expected the university to remove books that are 'problematic,' a subjective term the report uses six times" Published:2/14/2020 7:20:29 AM
[Entertainment] If that audiobook narrator sounds familiar, check your theater program When not onstage, some local actors are putting their dramatic skills to work making “talking books” at the Library of Congress. Published:2/14/2020 6:16:17 AM
[] Prosecutors seek nearly five years in prison for former Baltimore mayor over 'Healthy Holly' book scam Published:2/13/2020 8:47:03 PM
[Markets] If You Want To Understand The Constitution, Don't Ask A Lawyer If You Want To Understand The Constitution, Don't Ask A Lawyer

Authored by Michael Maharrey via,

Most Americans say the Constitution is important. Most Americans say it’s crucial for the government to stay within its constitutional bounds. But what exactly are the constitutional limits on federal power? How do we know?

Well, whatever you do, don’t ask a lawyer. Most of them know very little about the Constitution.

I can already hear you protesting. Lawyers know a lot about the Constitution. They learn constitutional law, for goodness sake!

But read closely what I wrote. I didn’t say they don’t know a lot about constitutional law. I said they typically don’t know a lot about the Constitution. There’s a huge difference.

Constitutional law is made up of a bunch of lawyers’ opinions about what the Constitution means. But that’s not how you understand the actual meaning of the Constitution.

I’ve been told that law students prepping for the Bar Exam are told that if the Tenth Amendment is ever among the answers on a multiple-choice question, they can immediately rule it out.

The Tenth Amendment is never the right answer.

Thomas Jefferson had a little different view of the Tenth Amendment. He called it the “foundation of the Constitution.”

I consider the foundation of the Constitution as laid on this ground: That ‘all powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States or to the people.’ To take a single step beyond the boundaries thus specifically drawn around the powers of Congress, is to take possession of a boundless field of power, no longer susceptible of any definition.”

The Tenth Amendment makes it unquestioningly clear that the Constitution constrains the general government to very specific and very limited powers. As James Madison explained in Federalist #45, “The powers delegated to the federal government by the proposed Constitution are few and defined.”

That’s the dirty little secret politicians don’t want you to know.

Now – brace yourself. This might come as a shock. But the people in power are perfectly happy to operate with an undefined, boundless field of power.

And that’s why the Tenth Amendment is never the right answer according to the politicians, and the academics, judges, power brokers, lobbyists and talking heads that support them.

Before the ink was even dry on the Constitution, the political class was already “interpreting” the document to expand its own powers. Today, that federal government controls nearly every aspect of your life. It runs your healthcare, educates your children and monitors your every move. Bureaucrats in Washington D.C. even tell you what kind of light bulbs you can screw into your fixtures and how much water you can flush down your toilets.

So much for powers “few and defined.”

Sadly, most Americans accept this state of affairs. They even embrace it. In fact, most Americans actually believe that the federal government legitimately exercises all of this authority. After all, they’ve been taught all their lives that the Tenth Amendment is the wrong answer.

The nature of the American political system exacerbates the expansion of power. “Democracy” gives everybody the false sense that they have some hand in exercising power – or that they will at least benefit from its expansion. This creates a dilemma, as political economist Bertrand de Jouvenel explained.

Under the ‘ancient regime,’ society’s moving spirits, who had, as they knew, no chance of a share in Power, were quick to denounce its smallest encroachment. Now, on the other hand, when everyone is potentially a minister, no one is concerned to cut down an office to which he aspires one day himself, or to put sand in a machine which he means to use himself when his turn comes. Hence, it is that there is in the political circles of a modern society a wide complicity in the extension of Power.”

A written constitution was meant to lay down rules that check the tendency for government to grow. It erects barriers to government power that must not be crossed. As Jefferson put it, “in questions of power then, let no more be heard of confidence in man, but bind him down from mischief by the chains of the constitution.”

But like most things, a constitution won’t work if you don’t know how to use it.

Don’t ask a lawyer. Read this instruction manual!

After all, the Constitution belongs to you. And it belongs to me. It doesn’t belong to the government and its functionaries. It belongs to “we the people.”

But for far too long politicians, bureaucrats, judges, law professors, and chattering pundits have told us how the Constitution should work. The political class has “interpreted” the rules. And it’s interpreted them to give it more and more power over you and me.

After 231 years of interpretation, we now have a federal government that claims the authority to do virtually anything and everything. It has taken possession of a boundless field of power, no longer susceptible of any definition. Along the way, our liberties have been whittled away. The power of the politicians grows at the expense of our liberties.

If we want to reclaim our liberties, something has got to give. It’s time for dis-interpretation. It’s time for “we the people” to reclaim the Constitution.  That’s what this book is all about. This is our instruction manual. We’re going look at the Constitution through the eyes of the generation who wrote and ratified it. We’re going to follow Jefferson’s admonition and “carry ourselves back to the time when the Constitution was adopted, recollect the spirit manifested in the debates, and instead of trying what meaning may be squeezed out of the text, or intended against it, conform to the probable one in which it was passed.”

This is the real Constitution that the politicians don’t want you to know about.

*  *  *

This article was adapted from the introduction of my new book Constitution – Owner’s Manual: The Real Constitution the Politicians Don’t Want You to Know About. Available in paperback or Kindle editions. For ordering information, visit

Tyler Durden Thu, 02/13/2020 - 19:25
Published:2/13/2020 6:43:17 PM
[Entertainment] US-Best-Sellers-Books-USAToday US-Best-Sellers-Books-USAToday Published:2/13/2020 1:15:28 PM
[Markets] Our "Come To Mao" Reckoning And The Next Cultural Revolution Our "Come To Mao" Reckoning And The Next Cultural Revolution

Authored by Charles Hugh Smith viua OfTwoMinds blog,

Only fools are blind to the potential for this uprising to extend to Apple and the rest of Corporate America's greedy exploiters who've been delighted to profit from the protection of the CCP.

Let's start our "Come to Mao" reckoning with the obvious:

To the U.S. stock market:

The coronavirus ravaging China doesn't matter.

China doesn't matter.

1,500 deaths don't matter, 5,000 deaths don't matter, 50,000 deaths don't matter, 500,000 deaths don't matter.

10,000 coronavirus cases don't matter,100,000 cases don't matter, 1,000,000 cases don't matter.

All that matters is that exploited Chinese workers get back to assembling iPhones for Apple and all the landfill economy stuff that generates billions in profits for Amazon and the rest of Corporate America.

Nothing else matters. Even coronavirus cases and deaths outside China don't matter. All that matters is that Apple and the rest of Corporate America continue reaping billions in profits off exploited workforces.

Like every other venal, exploitive Empire in history, Apple relies on rapacious, ruthless local elites to enforce its exploitation--in this case, Foxconn and the Communist Party elites who've gorged at the Apple/Foxconn trough. Thus Apple claims that when Foxconn re-opens production is up to Foxconn while Apple execs hound Foxconn to start production no matter how many workers might become ill and die.

Apple has always bought the best PR cover for its exploitation and greed that money can buy, starting with the famous 1984 commercial during the 1984 Super Bowl. That Apple ruthlessly exploits workers and the planet and pays essentially zero federal taxes--those don't fit its bogus but oh-so-glossy PR image.

Apple insists on $5 for you, Chinese workforce, and $500 for us. The greed of Apple is only surpassed by the greed of the elite fund managers who depend on Apple's ruthlessness to fatten their own gains.

Those are the most obvious realities of our "Come to Mao" reckoning, but there's more-- much more.

Thanks to the official mishandling of the coronavirus, the Chinese people are awakening anew to the grim reality that the only thing that matters to the Chinese Communist Party (CCP)-- the CCP leadership and cadres--is maintaining the wealth and power of the CCP. The Chinese people don't matter except as exploited workers generating the profits for Apple et al. and for corrupt and venal Party elites.

Nothing else matters--except enforcing the exploitation of Chinese workers by Apple and the rest of Corporate America, because the CCP and Apple are best buddies: each equally rapacious, greedy and exploitive of those under their power.

The righteous anger of the people, currently directed at the CCP, is only a millimeter away from widening to include Foxconn, Apple and the rest of the elites exploiting the Chinese workforce. Where the workers responded to inhuman conditions at Foxconn a few year ago by killing themselves, the next time around they may choose to administer some rough justice to the elites in the CCP, Foxconn and Apple, their tormentors and exploiters.

We can hazard a guess that Mao would heartily approve of hacking U.S. corporations and agencies, and selling Huawei equipment with backdoors and taps, but the CCP's enforcement of American corporate profits might not have won Mao's approval.

As the exploitation and oppression in China has ramped steadily higher, the Revolutionary Mao has been making a come-back. Not every Chinese citizen is thrilled that the CCP destroyed the environment and ransacked the nation's resources and workforce for the elites' personal aggrandizement. Since speaking openly about this will quickly draw a prison sentence or worse, the only sanctioned way to express one's rejection of the CCP's self-serving leadership is to harken back to Mao.

The implicit topic here that cannot be spoken about directly in China is the Cultural Revolution of 1966 - 1976, which Mao unleashed to cleanse the Party of potential rivals, under the PR banner of "eliminating Counter-Revolutionaries," i.e. anyone who questioned the supremacy of Mao's clique.

This campaign quickly got out of hand, and millions of innocents and loyal Army and Party cadres were beaten, imprisoned, exiled or killed. In effect the Monster Id of all China's suffering from Mao's ill-conceived policies--The Great Leap Forward, etc.--was unleashed on the Party and anyone who had any ties to pre-Revolutionary elites, regardless of their blameless service to the revolution.

Young cadres switched alliance between local groups seemingly at random, destroying cultural treasures one month and then gutting the educational system the next.

Only fools are blind to the potential for a bottom-up Cultural Revolution that cleanses the CCP of its corrupt, self-serving, greedy elites, and only greater fools are blind to the potential for this uprising to extend to Apple and the rest of Corporate America's greedy exploiters who've been delighted to profit from the protection of the CCP.

Put another way: just as the amoral greed of Corporate America knows no bounds, Divine Retribution will also know no bounds.

*  *  *

My recent books:

Audiobook edition now available:
Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World ($13)
(Kindle $6.95, print $11.95) Read the first section for free (PDF).

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

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

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

*  *  *

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

Tyler Durden Thu, 02/13/2020 - 14:00
Published:2/13/2020 1:15:28 PM
[Entertainment] Washington Post paperback bestsellers A snapshot of popular books. Published:2/12/2020 9:12:17 AM
[Entertainment] The top 10 Apple Books on the iTunes Store The top 10 Apple Books on the iTunes Store Published:2/11/2020 12:34:45 PM
[Entertainment] February 2020 Celebrity Book Club Picks From Reese Witherspoon, Oprah Winfrey & More E-Comm: Celebrity Feb 2020 Books Club PicksWe love these products, and we hope you do too. E! has affiliate relationships, so we may get a small share of the revenue from your purchases. Items are sold by the retailer, not E!. A...
Published:2/11/2020 6:06:36 AM
[Markets] The USA's Doll House: A Vast Tapestry Of Lies And Illusions The USA's Doll House: A Vast Tapestry Of Lies And Illusions

Authored by Edward Curtin via,

It never happened. Nothing ever happened. Even while it was happening it wasn’t happening. It didn’t matter. It was of no interest. The crimes of the United States have been systematic, constant, vicious, remorseless, but very few people have actually talked about them. You have to hand it to America. It has exercised a quite clinical manipulation of power worldwide while masquerading as a force for universal good. It’s a brilliant, even witty, highly successful act of hypnosis.

- Harold Pinter’s Nobel Prize Acceptance Speech, 2005

While truth-tellers Julian Assange and Chelsea Manning sit inside jail cells and Edward Snowden lives in exile in Russia, the American people hole up in an illusionary dwelling constructed to reduce them to children afraid of the truth. Or is it the dark?

This is not new; it has been so for a very long time, but it has become a more sophisticated haunted doll’s house, an electronic one with many bells and whistles and images that move faster than the eye can see. We now inhabit a digital technological nightmare controlled by government and corporate forces intent on dominating every aspect of people’s lives.

This is true despite the valiant efforts of dissidents to use the technology for human liberation. The old wooden doll houses, where you needed small fingers to rearrange the furniture, now only need thumbs that can click you into your cell’s fantasy world. So many dwell there in the fabricated reality otherwise known as propaganda. The result is mass hallucination.

In a 1969 interview, Jim Garrison, the District Attorney of New Orleans and the only person to ever bring to trial a case involving the assassination of President John F. Kennedy, said that as a result of the CIA’s murderous coup d’état on behalf of the military-industrial-financial-media-intelligence complex that rules the country to this day, the American people have been subjected to a fabricated reality that has rendered them a nation of passive Eichmanns, who sit in their living rooms, popping pills and watching television as their country’s military machine mows down people by the millions and the announcers tell them all the things they should be afraid of, such as bacteria on cutting boards and Russian spies infiltrating their hair salons.

Garrison said:

The creation of such inanities as acceptable reality and unacceptable reality is necessary for the self-preservation of the super-state against its greatest danger: understanding on the part of the people as to what is really happening.

All factors which contribute to its burgeoning power are exaggerated.
All factors which might reveal its corrosive effect on the nation are concealed.

The result is to place the populace in the position of persons living in a house whose windows no longer reveal the outside but on which murals have been painted.

Some of the murals are frightening and have the effect of reminding the occupants of the outside menaces against which the paternal war machine is protecting them. Other murals are pleasant to remind them how nice things are inside the house.

But to live like this is to live in a doll’s house. If life has one lesson to teach us, it is that to live in illusion is ultimately disastrous.

In the doll’s house into which America gradually has been converted, a great many of our basic assumptions are totally illusory.

Fifty years have disappeared behind us since the eloquent and courageous Garrison (read On the Trail of the Assassins) metaphorically voiced the truth, despite the CIA’s persistent efforts to paint him as an unhinged lunatic through its media mouthpieces.

These days they would probably just lock him up or send him fleeing across borders, as with Assange, Manning, and Snowden.

It is stunning to take a cue from his comment regarding the JFK assassination, when he suggested that one reverse the lone assassin scenario and place it in the U.S.S.R.

No American could possibly believe a tale that a former Russian soldier, trained in English and having served at a top Soviet secret military base, who had defected to the U.S. and then returned home with the help of the K.G.B., could kill the Russian Premier with a defective and shoddy rifle and then be shot to death in police headquarters in Moscow by a K.G.B. connected hit man so there would be no trial and the K.G.B. would go scot-free.

That would be a howler! So too, of course, are the Warren Commission’s fictions about Oswald.


If we then update this mental exercise and imagine that Snowden, Assange, and Manning were all Russian, and that they released information about Russian war crimes, political corruption, and a system of total electronic surveillance of the Russian population, and were then jailed or sent fleeing into exile as a result, who in the U.S., liberal, libertarian or conservative, would possibly believe the Russian government’s accusations that these three were criminals.

Nevertheless, Barack Obama, the transparency president, made sure to treat them as such, all the while parading as a “liberal” concerned for freedom of speech and the First Amendment. He made sure that Snowden and Manning were charged under the Espionage Act of 1917, and that Assange was corralled via false Swedish sex charges so he had to seek asylum in the Ecuadorian Embassy in London (a form of jail).

He brought Espionage Act prosecutions against eight people, more than all former presidents combined. He hypocritically pardoned Manning on his way out the door as if this would polish his deluded liberal legacy after making her suffer terribly through seven years of imprisonment.

He set the stage for Trump to re-jail Manning to try to get this most courageous woman to testify against Assange, which she will not do, and for the collaborationist British government to jail Assange in preparation for his extradition to the United States and a show trial. As for Snowden, he has been relegated to invisibility, good for news headlines once and for a movie, but now gone and forgotten.

Obama and Trump, arch political “enemies,” have made sure that those who reveal the sordid acts of the American murderous state are cruelly punished and silenced.

This is how the system works, and for most Americans, it is not happening. It doesn’t matter. They don’t care, just as they don’t care that Obama backed the 2009 coup d’état in Honduras that has resulted in so many deaths at the hands of U.S trained killers, and then Trump ranted about all these “non-white” people fleeing to the U.S. to escape a hell created by the U.S., as it has been doing throughout Latin America for so long.

Who does care about the truth? Has anyone even noticed how the corporate media has disappeared the “news” of all those desperate people clamouring to enter the U.S.A. from Mexico? One day they were there and in the headlines; the next day, gone. It’s called news.


But even though a majority of Americans have never believed the government’s explanation for JFK’s murder, they nevertheless have insouciantly gone to sleep for half a century in the doll’s house of illusions as the killing and the lies of their own government have increased over the years and any semblance of a democratic and peaceful America has gone extinct.

The fates of courageous whistle-blowers Assange, Manning, and Snowden don’t concern them. The fates of Hondurans don’t concern them. The fates of Syrians don’t concern them. The fates of Iraqis, Afghans, Yemenis, Palestinians don’t concern them. The fates of America’s victims all around the world don’t concern them. Indifference reigns.

Obviously, if you are reading this, you are not one of the sleepwalkers and are awake to the parade of endless lies and illusions and do care. But you are in a minority.

That is not the case for most Americans. When approximately 129 million people cast their votes for Donald Trump and HilIary Clinton in the 2016 presidential election, you know idiocy reigns and nothing has been learned. Ditto for the votes for Obama, Bush, Clinton, et al. You can keep counting back. It is an ugly fact and sad to say.

Such a repetition compulsion is a sign of a deep sickness, and it will no doubt be repeated in the 2020 election. The systemic illusion must be preserved at all costs and the warfare state supported in its killing. It is the American way.

It is true that average Americans have not built the doll’s house; that is the handiwork of the vast interconnected and far-reaching propaganda arms of the U.S. government and their media accomplices. But that does not render them innocent for accepting decades of fabricated reality for so-called peace of mind by believing that a totally corrupt system works.

The will to believe is very powerful, as is the propaganda.

The lesson that Garrison spoke of has been lost on far too many people, even on those who occasionally leave the doll house for a walk, but who only go slightly down the path for fear of seeing too much reality and connecting too many dots. There is plain ignorance, then there is culpable ignorance, to which I shall return.


One of the first things an authoritarian governing elite must do is to convince people that they are not free. This has been going on for at least forty years, ever since the Church Committee’s revelations about the CIA in the mid-seventies, including its mind-control program, MKULTRA. Everyone was appalled at the epiphany, so a different tactic was added.

Say those programs have been ended when in fact they were continued under other even deeper secret programs, and just have “experts” – social, psychological, and biological “scientists” – repeat ad infinitum that there is no longer any mind control since we now know there is no mind; it is an illusion, and it all comes down to the brain.

Biology is destiny, except in culturally diversionary ways in which freedom to choose is extolled – e.g. the latest fashions, gender identity, the best hairstyle, etc. Create and lavishly fund programs for the study of the brain, while supporting and promoting a vast expansion of pharmaceutical drugs to control people.

Do this in the name of helping people with their emotional and behavioral problems that are rooted in their biology and are beyond their control. And create criteria to convince people that they are sick and that their distress has nothing to do with the coup d’état that has rendered them “citizens” of a police state.

We have been interminably told that our lives revolve around our brains (our bodies) and that the answers to our problems lie with more brain research, drugs, genetic testing, etc. It is not coincidental that the U. S. government declared the 1990s the decade of brain research, followed up with 2000-2010 as the decade of the behavior project, and our present decade being devoted to mapping the brain and artificial intelligence, organized by the Office of Science and Technology Project and the Defense Advanced Research Projects Agency (DARPA). How convenient! George H. W. Bush, Clinton, George W. Bush, Obama, Trump — what a difference! But this is science and the welfare of the world. Science for idiots.

Drip by drip, here and there, in the pattern of the best propaganda, as the French sociologist Jacques Ellul says – “for propaganda is not the touch of the magic wand. It is based on slow, constant impregnation. It creates conviction and compliance through imperceptible influences that are effective only by continuous repetition” – articles, books, media reports have reiterated that people are “determined” by biological, genetic, social, and psychological forces over which they have no control.

To assert that people are free in the Sartrean sense (en soir, condemned to freedom, or free will) has come to be seen as the belief of a delusional fool living in the past, a bad philosopher, an anti-scientist, a poorly informed religionist, one nostalgic for existential cafes, Gauloises, and black berets.

One who doesn’t grasp the truth since he doesn’t read the New York Times or watch CBS television. One who believes in nutty conspiracy theories.

The conventional propaganda – I almost said wisdom – created through decades-long media and academic repetition, is that we are not free.

Let me repeat: we are not free. We are not free.

Investigator reporter John Rappoport has consistently exposed the propaganda involved in the creation and expansion of the Diagnostic and Statistical Manual (DSM) with its pseudo-scientific falsehoods and collusion between psychiatrists and the pharmaceutical industry. As he correctly notes, the CIA’s MKULTRA mind-control program has morphed into modern psychiatry, both with the same objectives of disabling and controlling people by convincing them that they are not free and are in need of a chemical brain bath.

[Robert Kennedy assassin hospitalized after prison stabbing.]

RFK assassin, RFK assassin, RFK assassin … all the media said the same thing, which they have been doing for fifty-two years. Their persistency endures despite all the facts that refute their disinformation and show that Senator Kennedy, who was on his way to becoming president, was murdered, like his brother John, by forces of the national security state.


Lying and dissembling are ubiquitous. Being deceived by the media liars is mirrored in people’s personal lives.

People lie and want to be deceived. They choose to play dumb, to avoid a confrontation with truth. They want to be nice (Latin, nescire, not to know, to be ignorant) and to be liked. They want to tuck themselves into a safe social and cultural framework where they imagine they will be safe. They like the doll’s house. They choose to live in what Jean Paul Sartre called bad faith (mauvaise foi).

In Existential Psychoanalysis he put it thus:

In bad faith it is from myself that I am hiding the truth. But with this ‘lie’ to myself, the one to whom the lie is told and the one who lies are one and the same person, which means that I must know in my capacity as deceiver the truth which is hidden from me in my capacity as the one deceived.

Such bad faith allows people to fabricate a second act of bad faith: that they are not responsible for their ignorance of the truths behind the government’s and corporate media’s lies and propaganda, even as the shades of the prison house ominously close around us and the world edges toward global death that could arrive in an instant with nuclear war or limp along for years of increasing suffering.

Those of us who write about the U.S. led demented wars and provocations around the world and the complementary death of democracy at home are constantly flabbergasted and discouraged by the willed ignorance of so many Americans.

For while the mainstream media does the bidding of the power elite, there is ample alternative news and analyses available on the internet from fine journalists and writers committed to truth, not propaganda. There is actually far too much truth available, which poses another problem.

But it doesn’t take a genius to learn how to research important issues and to learn how to distinguish between bogus and genuine information. It takes a bit of effort, and, more importantly, the desire to compare multiple, opposing viewpoints and untangle the webs the Web weaves.

We are awash in information (and disinformation) and both good and bad reporting, but it is still available to the caring inquirer.

The problem is the will to know. But why? Why the refusal to investigate and question; why the indifference? Stupidity? Okay, there is that. Ignorance? That too. Willful ignorance, ditto. Laziness, indeed. Careerism and ideology? For certain.

Upton Sinclair put it mildly when he said, “It is difficult to get a man to understand something, when his salary depends on not understanding it.” Difficult? No, it’s almost impossible.

But then there are many very intelligent people who have nothing to lose and yet adamantly refuse to entertain alternative possibilities to the reigning orthodoxies that have them in their grip.

As do many others, I know many such people who will yes me to death and then never fully research issues. They will remain in limbo or else wink to themselves that what may be true couldn’t be true. They close down.

This is a great dilemma and frustration faced by those who seek to convince people to take an active part in understanding what is really going on in the world today, especially as the United States wages war across the globe, threatens Russia, China, and Iran, among many others, and expands and modernizes its nuclear weapons capabilities.

As for Assange, Manning, and Snowden, their plight matters not a whit.

In fact, they have been rendered invisible inside the doll’s house, except as the murals on the windows flashback their images as threats to the occupants, Russian monsters out to eat them up.

As the great poet Constantine Cavafy wrote long ago in his poem “Waiting for the Barbarians” and they never come: “Now what’s going to happen to us without barbarians? Those people were a kind of solution.”

Then again, for people like U.S. Representative Adam Schiff, who knows the Russian barbarians have and will come again, life must be terrifying as he tries so manfully to bar the gates. The Russians have been the American solution in this fairy tale for so long that it’s hard for many Americans to believe another story.


On the one hand, there is the massive propaganda apparatus operated by American intelligence agencies in conjunction with their media partners.

On the other, there is the human predilection for untruth and illusions, the sad need to be comforted and to submit to greater “authority,” gratefully to accept the myths proffered by one’s masters. This tendency applies not just to the common people, but even more so to the intellectual classes, who act as though they are immune.

Erich Fromm, writing about Germans and Hitler, but by extension people everywhere, termed this the need to “escape from freedom,” since freedom conjures up fears of vertiginous aloneness and the need to decide, which in turn evokes the fear of death. There are also many kinds of little deaths that precede the final one: social, career, money, familiar, etc., that are used to keep people in the doll’s house.

Fifty years ago, the CIA coined the term “conspiracy theory” as a weapon to be used to dismiss the truths expressed by critics of its murder of President Kennedy, and those of Malcolm X, MLK, and RFK. All the media echoed the CIA line.

While they still use the term to dismiss and denounce, their control of the mainstream media is so complete today that every evil government action is immediately seconded, whether it be the lies about the attacks of September 11, 2001, the wars against Afghanistan, Iraq, Syria, Libya, Yemen, Iran, etc., the coups disguised as color revolutions in Ukraine, Venezuela, Bolivia, Hong Kong, the downing of the Malaysian jetliner there, drone murders, the Iranian “threat,” the looting of the American people by the elites, alleged sarin gas attacks in Syria, the anti-Russia bashing and the Russia-gate farce, the “criminals” Assange, Manning, Snowden – everything.

The New York Times, Wall Street Journal, The Guardian, Fox News, the Washington Post, CNN, NPR, etc. – all are stenographers for the deep state.

So much of the ongoing propaganda travels under the banner of “the war on terror,” which is, of course, an outgrowth of the attacks of September 11, 2001, appropriately named and constantly reinforced as 9/11 in a wonderful example of linguistic mind-control: a constant emergency reminder to engender anxiety, depression, panic, and confusion, four of the symptoms that lead the DSM “experts” and their followers to diagnose and drug individuals.

The term 9/11 was first used in the New York Times on September 12, 2001 by Bill Keller, the future Times’ editor and Iraq war cheerleader. Just a fortuitous coincidence, of course.


Jacques Ellul has argued convincingly that modern propaganda in a technological mass society is more complicated than the state and media lying and deceiving the population.

He argues that propaganda meets certain needs of modern people and therefore the process of deceit is reciprocal. The modern person feels lost, powerless, and empty.

Ellul says, “He realizes that he depends on decisions over which he has no control, and that realization drives him to despair.” But he can’t live in despair; desires that life be meaningful; and wants to feel he lives in a world that makes sense.

He wants to participate and have opinions that suggest he grasps the flow of events. He doesn’t so much want information, but value judgments and preconceived positions that provide him with a framework for living. Ellul wrote the following in 1965 in his classic book Propaganda:

The majority prefers expressing stupidities to not expressing any opinion: this gives them the feeling of participation. For they need simple thoughts, elementary explanations, a ‘key’ that will permit them to take a position, and even readymade opinions….The man who keeps himself informed needs a framework….the more complicated the problems are, the more simple the explanations must be; the more fragmented the canvas, the simpler the pattern; the more difficult the question, the more all-embracing the solution; the more menacing the reduction of his own worth, the greater the need for boosting his ego. All this propaganda – and only propaganda – can give him.

Another way of saying this is that people want to be provided with myths to direct them to the “truth.” But such so-called truth has been preconceived within the overarching myth provided by propaganda, and while it satisfies people’s emotional need for coherence, it also allows them to think of themselves as free individuals arriving at their own conclusions, which is a basic function of good propaganda.

In today’s mass technological society, it is essential that people be convinced that they are free-thinking individuals acting in good faith. Then they can feel good about themselves as they lie and act in bad faith.


It is widely accepted that political leaders and the mass media lie and dissemble regularly, which, of course, they do. That is their job in an oligarchy. Today we are subjected to almost total, unrelenting media and government propaganda.

Depending on their political leanings, people direct their anger toward politicians of parties they oppose and media they believe slant their coverage to favor the opposition.

Trump is a liar. No, Obama is a liar. And Hillary Clinton. No, Fox News. Ridiculous! – it’s CNN or NBC.

And so on and so forth in this theater of the absurd that plays out within a megaplex of mainstream media propaganda, where there are many shows but one producer, whose overall aim is to engineer the consent of all who enter, while setting the different audiences against each other. It is a very successful charade that evokes name-calling from all quarters.

In other words, for many people their opponents lie, as do other people, but not them. This is as true in personal as well as public life. Here the personal and the political converge, despite protestations to the contrary. Dedication to truth is very rare.

But there is another issue with propaganda that complicates the picture further. People of varying political persuasions can agree that propaganda is widespread. Many people on the left, and some on the right, would agree with Lisa Pease’s statement in her book on the RFK assassination, A Lie Too Big to Fail: The Real History of the Assassination of Robert F. Kennedy, that “the way the CIA took over America in the 1960s is the story of our time.”

That is also what Garrison thought when he spoke of the doll’s house.

If that is so, then today’s propaganda is anchored in the events of the 1960s, specifically the infamous government assassinations of JFK, Malcolm X, MLK, and RFK, the truth of which the CIA has worked so hard to conceal. In the fifty or so years since, a vast amount of new information has made it explicitly clear that these murders were carried out by elements within the U.S. government, and were done so to silence the voices of four charismatic leaders who were opposed to the American war machine and the continuation of the Cold War.

To turn away from this truth and to ignore its implications can only be described as an act of bad faith and culpable ignorance, or worse. But that is exactly what many prominent leftists have done. Then to compound the problem, they have done the same with the attacks of September 11, 2001.

One cannot help thinking of what the CIA official Cord Meyer called these people in the 1950s: “the compatible left.” He felt that effective CIA propaganda, beside the need for fascist-minded types such as Allen Dulles and James Jesus Angleton, depended on “courting” leftists and liberal into its orbit. For so many of the compatible left, those making a lot of money posing as opponents of the ruling elites but often taking the money of the super-rich, the JFK assassination and the truth of September 11, 2001 are inconsequential, never to be broached, as if they never happened, except as the authorities say they did. By ignoring these most in-your-face events with their eyes wide shut, a coterie of influential leftists has done the work of Orwell’s crime-stop and has effectively succeeded in situating current events in an ahistorical and therefore misleading context that abets U.S. propaganda. They truncate the full story to present a narrative that distorts the truth.

Without drawing a bold line connecting the dots from November 22, 1963 up to the present, a critique of the murderous forces ruling the United States is impossible.

Among the most notable of such failures are Noam Chomsky, Alexander Cockburn, Howard Zinn, and Chris Hedges, men idolized by many liberals and leftists. And there are many others who have been deeply influenced by Chomsky, Cockburn, and Zinn and follow in their footsteps.

Their motivations remain a mystery, but there is no doubt their refusals have contributed to the increased power of those who control the doll’s house. To know better and do as they have is surely culpable ignorance.


Ask yourself: Has the power of the oligarchic, permanent warfare state with its propaganda and spy networks, increased or decreased in the past half century? Who is winning the battle, the people or the ruling elites?

The answer is obvious.

It matters not at all whether the president has been Trump or Bill Clinton, Ronald Reagan or George W. Bush, Barack Obama or George H. W. Bush, Richard Nixon or Jimmy Carter.

The power of the national security state has grown under them all and everyone is left to moan and groan and wonder why. All the while the doll’s house has become more and more sophisticated and powerful with the growth of electronic media and cell phone usage.

The new Cold War now being waged against Russia and China is a bi-partisan affair, as is the confidence game played by the secret government intended to create a fractured consciousness in the population.

This fragmentation of consciousness prevents people from grasping the present from within because so many suffer from digital dementia as their attention hops from input to output in a never-ending flow of mediated, disembodied data.

Trump and his followers on one side of the coin; liberal Democrats on the other. The latter, whose bibles are the New York Times, NPR, The Washington Post, Democracy Now, The Guardian, etc. – can only see propaganda when they can attribute it to Trump or the Russians. The former see everything as a liberal conspiracy to take down Trump.

The liberals have embraced a new McCarthyism and allied themselves with the deep-state forces that they were once allegedly appalled by, including Republicans. Their embrace of the formerly despised war-monger John Bolton in the impeachment trial of Trump is a laughable case in point, if it weren’t so depraved and slimy.

It surely isn’t the bloodthirsty policies of the Trump administration or his bloviating personality, for these liberals allied themselves with Obama’s anti-Russian rhetoric, his support for the U.S. orchestrated neo-fascist Ukrainian coup, his destruction of Libya, his wars of aggression across the Middle East, his war on terror, his trillion-dollar nuclear weapons modernization, his enjoyment of drone killing, his support for the coup in Honduras, his embrace of the CIA and his CIA Director John Brennan, his prosecution of whistle-blowers, etc.

The same media that served the CIA so admirably over the decades became the liberals’ paragons of truth. It’s enough to make your head spin, which is the point.

Spin left, spin right, spin all around, because we have possessed your mind in this spectacular image game where seeming antinomies are the constancy of the same through difference, all the presidents coined by the same manufacturer who knows that coin-flipping serves to entertain the audience eager for hope and change.

This is how the political system works to prevent change. It is why little has changed for the better over half a century and the American empire has expanded.

While it may be true that there are signs that this American hegemony is coming to an end (I am not convinced), I would not underestimate the power of the U.S. propaganda apparatus to keep people docile and deluded in the doll’s house, despite the valiant efforts of independent truth-tellers.

How, for example, is it possible for so many people to see such a stark difference between the despicable Trump and the pleasant Obama? They are both puppets dancing to their masters’ tunes – the same masters.

They both front for the empire.

In his excellent book, Obama’s Unending Wars: Fronting the Foreign Policy of the Permanent Warfare State, Jeremy Kuzmarov assiduously documents Obama’s crimes, including his CIA background.

As Glen Ford, of Black Agenda Report, says in the first sentence of his forward, “Barack Obama may go down in presidential history as the most effective-and deceptive-imperialist of them all.” Read the book if you want all the details. They form an overwhelming indictment of the con artist and war criminal that is irrefutable.

But will those who worship at the altar of Barack Obama read it? Of course not.

Just as those deluded ones who voted for the reality television flim-flam man Trump will ignore all the accumulating evidence that they’ve been had and are living under a president who is Obama’s disguised doppelganger, carrying out the orders of his national security state bosses. This, too, is well documented, and no doubt another writer will arise in the years to come to put it between a book’s covers.

Yet even Jeremy Kuzmarov fails to see the link between the JFK assassination and Obama’s shilling for the warfare state. His few references to Kennedy are all negative, suggesting he either is unaware of what Kennedy was doing in the last year of his life and why he was murdered by the CIA, or something else. He seems to follow Noam Chomsky, a Kennedy hater, in this regard.

I point out this slight flaw in an excellent book because it is symptomatic of certain people on the left who refuse to complete the circle.

If, as Kuzmarov, argues, Obama was CIA from the start and that explains his extraordinarily close relationship with the CIA’s John Brennan, an architect, among many things, of the CIA’s extraordinary rendition program, and that Obama told CIA Director Panetta that the CIA would “get everything it wanted,” and the CIA killed JFK, well, something’s amiss, an enormous gap in the analysis of our current condition.

The doll’s house is a mind game of extraordinary proportions, orchestrated by the perverted power elites that run the show and ably abetted by their partners in the corporate mass media, even some in the alternative press who mean well but are confused, or are disinformation agents in the business of sowing confusion together with their mainstream Operation Mockingbird partners. It is a spectacle of open secrecy, in which the CIA has effectively suckered everyone into a game of to-and-fro in which only they win.

Our only hope for change is to try and educate as many people as possible about the linkages between events that started with the CIA coup d’état in Dallas on November 22, 1963, continued through the killings of Malcolm X, MLK, RFK and on through so much else up to September 11, 2001, and have brought us to the deeply depressing situation we now find ourselves in where truthtellers like Julian Assange, Chelsey Manning, and Edward Snowden are criminalized, while the real perpetrators of terrible evils roam free.

Yes, we must educate but also agitate for the release of this courageous trio. Their freedom is ours; their imprisonment is ours, whether we know it or not. The walls are closing in.

Lisa Pease is so right: “The way the CIA took over America in the 1960s is the story of our time, and too few recognize this. We can’t fix a problem we can’t even acknowledge exists.”

If we don’t follow her advice, we will be toyed with like dolls for a long time to come. There will be no one else to blame.

Tyler Durden Tue, 02/11/2020 - 00:05
Published:2/10/2020 11:26:27 PM
[World] BOOK REVIEW: 'Call Sign Chaos'

With purported “tell all” books emerging from most every White House, it is natural to wonder if the book penned by President Trump’s first Defense secretary would offer a take on his former boss and presidential decision-making. But in “Call Sign Chaos,” Jim Mattis has not written such a book, ... Published:2/10/2020 2:53:19 PM

[Entertainment] Best Accessories at Oscars 2020: Natalie Portman, Cynthia Erivo & More Cynthia Erivo, Natalie Portman, 2020 Oscars, Academy Awards, Best AccessoriesThe Academy Awards red carpet is always a place for statement pieces, but this year was really one for the books! This year, everyone brought their stylin' A-game to the 2020 Oscars,...
Published:2/10/2020 8:22:47 AM
[Entertainment] Why Jennifer Lopez, Taylor Swift and More Stars Were MIA at the 2020 Oscars Taylor Swift, 2020 Golden Globe Awards, Red Carpet FashionAnd just like that, another Academy Awards is in the books. On Sunday, the 2020 Oscars brought together the biggest names to celebrate the year's achievements in film, delivering...
Published:2/10/2020 7:22:15 AM
[Markets] Controlling The Narrative Is Not The Same As Controlling The Virus Controlling The Narrative Is Not The Same As Controlling The Virus

Authored by Charles Hugh Smith via OfTwoMinds blog,

Are these claims even remotely plausible for a highly contagious virus that spreads easily between humans while carriers show no symptoms?

It's clear that the narrative about the coronavirus is being carefully managed globally to minimize the impact on global sentiment and markets. Authorities are well aware of the global economy's extreme fragility, and so Job One for authorities everywhere is to scrub the news flow of anything that doesn't support the implicit official narrative:

1. The coronavirus is only an issue in China; it's contained outside China.

2. The coronavirus will soon be contained in China, and global business will quickly return to normal.

In pushing this narrative, authorities around the world share the same goal: limit the damage to consumer confidence and markets, as the legitimacy of every regime from Beijing to Washington D.C. to Nairobi is based on maintaining these economic fictions:

1. Global growth will continue in an unbroken trend in the decades ahead.

2. This growth benefits everyone, not just elites.

As I've noted in previous posts, the critical dynamic here is consumer confidence: consumers cannot be allowed to become hesitant or afraid lest they stop borrowing, borrowing, borrowing, buying, buying, buying and speculating, speculating, speculating.

Authorities outside China have no more interest in accurate death totals being released than Chinese authorities, and so official agencies and the corporate media dutifully parrot the implausibly low Chinese statistics as if they reflected reality.

But controlling the narrative is not the same as controlling the virus. The narrative is intangible but the virus is real-world. Authorities are betting that controlling the narrative about the virus is equivalent to controlling the actual virus. If everyone believes only 800 people have died and the number of infected people is plummeting, they will obediently keep borrowing and buying and authorities will retain their legitimacy, power and wealth.

If controlling the narrative fails, elites' legitimacy, power and wealth are at risk.

Thought experiment: cremating human corpses generates a chemical plume with a signature that's measurable from low-orbit sensors. Rather than accept implausibly low Chinese claims about total deaths, why not use low-orbit assets to measure the chemical signatures of plumes above Wuhan and calculate an estimate of the total number of corpses being cremated daily?

Again, no one in authority anywhere on the planet wants the real death totals to become public: managed ignorance is bliss.

One of the key tactics in controlling the narrative is to withhold data. But-- no data doesn't mean no virus. Let's think through the implicit narratives as a series of claims and test the plausibility of each claim.

Narrative #1: the coronavirus has been contained in North America. 

Let's break this down into specific claims:

Only 19 people in all of North America have the virus, and authorities found every one of them before they infected a single other person.

Is this even remotely plausible? Tens of thousands of people traveled from China to North America in January, including numerous direct flights from Wuhan, Ground Zero of the pandemic, before authorities limited flights; yet miraculously, only 19 of these thousands of people had contracted the pathogen and even more miraculously, not a single one of these asymptomatic carriers unknowingly infected a single passerby before being quarantined.

Since U.S. citizens and green-card holders and their families are still allowed to fly from China to the U.S. and travel freely once they pass a simple temperature test for fever, the narrative also claims not a single one of these hundreds of people are asymptomatic carriers, and if any are carriers, they won't infect a single other person while they travel freely around North America.

Are these claims even remotely plausible for a highly contagious virus that spreads easily between humans while carriers show no symptoms?

Let's imagine a slightly more realistic scenario: a Chinese national who unknowingly carries the virus infects dozens of passersby in taxis, Uber vehicles, subway cars, restaurants, hotels, etc. before coming down with symptoms of the flu. Since the visitor is concerned about what authorities might do to him and his family if it were discovered he has the coronavirus, he monitors his symptoms and concludes that since they're the same as a run-of-the-mill flu, he must not have the coronavirus. He recovers in 10 days, unaware that he had the coronavirus and unknowingly infected dozens of others.

Since roughly 80% of those who contract the coronavirus experience "mild symptoms" much like conventional flu, this is a reasonable assumption.

No data doesn't mean no virus: this individual had the coronavirus and spread it to dozens of other people while asymptomatic, and authorities don't know because he never went to a doctor or hospital and thus was never tested or quarantined.

Narrative #2: the coronavirus will soon be contained in China.

Millions of people left Wuhan prior to the lockdown, and since the lockdown was pre-announced, tens of thousands hurried out before the lockdown took effect. Meanwhile, the lockdown did not include flights leaving Wuhan's airport, so hundreds of flights left for destinations in China and elsewhere in the days between the lockdown announcement and the time when flight restrictions took effect.

Some consequential percentage of these millions were asymptomatic carriers of coronavirus, and since these millions of people dispersed throughout China, they undoubtedly infected passersby who never went to Wuhan.

Tracking down everyone from Wuhan will not identify everyone unknowingly infected by a traveler from Wuhan.

Screening for fever with thermometers will not identify asymptomatic carriers of coronavirus, so screening is not going to stop the spread of the virus.

Since there appears to be a severe shortage of test kits, the likelihood that every clinic and hospital in rural China has ample test kits to confirm a diagnosis (up to three tests per patient, as follow-up test results can be positive or negative) is near-zero. Thus the likelihood that the healthcare system has an accurate count of carriers with symptoms in rural China is near-zero.

And since asymptomatic carriers have no reason to be tested, and authorities have no reason to test them, the chances that authorities can magically identify every asymptomatic carrier is also near-zero.

No data doesn't mean no virus: is the claim that the coronavirus will soon be controlled in China even remotely plausible for a highly contagious virus that spreads easily between humans while carriers show no symptoms?

Controlling the narrative doesn't mean you're controlling the virus. The gulf between happy-story narratives and the real world is widening to the breaking point.

*  *  *

My recent books:

Audiobook edition now available:
Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World ($13)
(Kindle $6.95, print $11.95) Read the first section for free (PDF).

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

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

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

*  *  *

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

Tyler Durden Mon, 02/10/2020 - 08:15
Published:2/10/2020 7:22:15 AM
[Entertainment] All the History Made at the 2020 Oscars Bong Joon Ho, 2020 Oscars, Academy Awards, WinnersIt was a night for the history books. The 92nd Academy Awards, held at the Dolby Theatre in Hollywood on Sunday, Feb. 9, are done and over. And with them, we've got a whole list of...
Published:2/9/2020 11:21:35 PM
[Markets] The Clinton Machine Will Do Anything To Stop Bernie Sanders The Clinton Machine Will Do Anything To Stop Bernie Sanders

Authored by Robert Scheer via,

The botched Iowa caucuses have raised many legitimate questions about the Democratic establishment, but to understand the point we’re at now, it’s necessary to think back several years. According to Grayzone journalist and editor Max Blumenthal, Truthdig Editor in Chief Robert Scheer’s guest on the latest installment of “Scheer Intelligence,” part of the backlash Bernie Sanders is currently experiencing as he attempts to transform the Democratic Party dates back to Bill Clinton’s presidency.

“[Bill and Hillary Clinton] set up a machine that was really a juggernaut with all this corporate money they brought in through the Democratic Leadership Committee,” says Blumenthal.

“It was a very different structure than we’d seen with previous Democratic candidates who relied heavily on unions and the civil rights coalition.

“And that machine never went away,” the journalist goes on.

“It kept growing, kind of like this amoeba that began to engulf the party and politics itself. So that when Bill Clinton was out of power, the machine was passed to Hillary Clinton, and the machine followed her into the Senate. And the machine grew into the Clinton Global Initiative.”

Speaking of his personal experience with the Clintons, Blumenthal tells Scheer he once met Chelsea Clinton and thought of her as an “admirable figure at that time” who had undergone humiliation and bullying on a national scale as she went through an “awkward phase” as a child. His memory of the child he once met made what followed all the more devastating to watch, Blumenthal laments.

“I’ve watched her grow into adulthood and become a complete kind of replication of the monstrous political apparatus that her family has set up, without really charting her own path,” he says.

“She just basically inherited the reign of the Clinton Foundation and Clinton Global Initiative. She does paid talks for Israel. Her husband, Marc Mezvinsky, he gambled on Greece’s debt along with Lloyd Blankfein, the CEO of Goldman Sachs.

“I mean, as a young person,” Blumenthal adds, “seeing someone of my generation grow up and follow that path, do nothing to carve out her own space — it just absolutely disgusts me.”

The conversation between Blumenthal and Scheer centers largely on two subjects that overlap with the current presidential election and primaries: the rightward shift of the Democratic Party and Israeli politics. Partly the two subjects converge in talking about Sanders, the man who could very well become the first Jewish president of the United States. Scheer asks Blumenthal to draw on his experiences growing up close to the Clintons, due to the ties of his parents, Sidney and Jacqueline Blumenthal, to the administration, and is linked to Blumenthal’s most recent book, “The Management of Savagery: How America’s National Security State Fueled the Rise of Al Qaeda, Isis, and Donald Trump.”

“It seems to me [there is] a real contradiction [in] the Democratic Party, which you know quite a bit about,” when it comes to Israel, says Scheer.

“There’s this great loathsome feeling about Donald Trump. And many of these people don’t really like [Israeli Prime Minister Benjamin] Netanyahu. You know, the polling data shows that Jews are, you know, just about as open to the concern for the Palestinians as any other group. And Bernie Sanders, the one Jewish candidate, is the one who dared to bring up the Palestinians — that they have rights also, that they’re human beings. He’s being attacked for it as, like you, a self-hating Jew.”

Blumenthal, whose 2013 book, “Goliath: Life and Loathing in Greater Israel,” touches upon many questions absent in the American conversation about Israel, points out how the Vermont senator’s own position on Palestine has shifted over time.

“Bernie Sanders [is] better than most of the other [Democratic] candidates on this issue,” says the Grayzone reporter. “After we put a lot of pressure on him in the left-wing grassroots — I mean, I personally protested him at a 2016 event for his position on Palestinians, and we shamed him until he took at least a slightly better position, where you acknowledge the humanity of Palestinians.”

The two journalists discuss what some of the main reasons are that Sanders is facing so much resistance within the Democratic Party, in addition to his views on Palestine. Blumenthal believes there will be a repeat of what happened in 1972 when George McGovern ran for president.

“I think that if Bernie Sanders gets the nomination, there will be an effort to ‘McGovern’ him,” he posits. The Democratic Party will “hope that Bernie Sanders gets destroyed by Donald Trump, and then wag their fingers at the left for the next 20 years until they get another Bill Clinton.

“I think that they don’t know how to stop him at this point, but they’re willing to let him be the nominee and go down to Donald Trump, because Bernie Sanders threatens their interests, and the movement behind him particularly, more than Donald Trump does.”

Listen to the full discussion between Blumenthal and Scheer, which took place aptly on the eve of the Iowa caucuses that, at the time, Blumenthal assumed would be a landslide win for Sanders. You can also read a transcript of the interview below the media player and find past episodes of “Scheer Intelligence” here.

- Introduction by Natasha Hakimi Zapata

ROBERT SCHEER: Hi, this is Robert Scheer with another edition of “Scheer Intelligence,” where the intelligence comes from my guests. In this case Max Blumenthal, who I must say is one of the gutsiest journalists we have in the United States, and have had for the last five years or so. He’s, in addition to having considerable courage and [going] out on these third-rail issues — like Israel, being one of the more prominent ones — and challenging some of the major conceits of even liberal politics in the United States about our virtue, our constant virtue, he’s done just great journalism. I really loved his book, “Goliath: Life and Loathing in Greater Israel,” which came out in 2013, because it was based on just good, solid journalism of interviewing people and trying to figure out what’s going on.

I’d done something a half century earlier, or not quite that long ago, during the Six-Day War in Israel, where I went over when I was the editor of Ramparts. And I know how difficult it is to deal with that issue, because I put Ramparts into bankruptcy over the controversy about it. [Laughter] So maybe that’s a good place to begin. You know, you dared touch this issue of Israel, and it didn’t help that you are Jewish. I guess you are Jewish, right? Do you have a background, did you practice any aspect of Judaism? Literature, culture, religion?

MAX BLUMENTHAL: I’m a Jew who had a bar mitzvah, and I even had a bris.

RS: Oh. [Laughs]

MB: And you know, I’ve continued to pop in in synagogues here and there on High Holy Days. I guess you could say, you know, when the rabbi asked, you know, asked me to join the army of God, I tell him I’m in the Secret Service. But I’m definitely Jewish, you know, and it’s a big part of who I am and why I do what I do.

RS: Well, and I thought your writing on that, and your journalism, was informed by that. Because after all, a very important part of the whole experience of Jewish people as victims, as people forced into refugee status, living in the diaspora, was to develop a sense of universal values, and of decency and obligation to the other. And I think your reporting reflected that. However, my goodness, you got a lot of heat over it. And it’s the heat I want to talk about. I want to talk about the difficulty, in this post-Cold War world, of actually writing about the U.S. imperial presence, or writing critically about what our government does, and some of its allies.

And I think Israel is a really good case in point, because we have one narrative that said in the last election we had foreign interference, mostly coming from Russia. And we talk about Russia as if it’s the old communist Soviet Union, with a top-down, big, organized party — forgetting that [Vladimir] Putin actually defeated the Communist Party, and even though he had been in the KGB, and most Russians had been in some kind of official connection with society or another. Nonetheless, Russia really has gotten very little out of whatever interference it did. Israel, that is very rarely talked about, interfered in the election in a very open, blatant way in the presence of Netanyahu, who denounced Barack Obama’s major foreign policy achievement, the deal with Iran, and has focused U.S. policy mostly against the enemy being Iran, and ignoring Saudi Arabia and everything else.

And the interesting thing is that Israel’s interference in the election, and Netanyahu, has been rewarded over and over — the embassy got shifted, the settlers got more validation, now there’s a big peace plan that gives the hawks in Israel everything they want. So why don’t we begin with that, and your own writing about U.S.-Israel relations. It’s kind of odd that there’s — or maybe not odd, maybe it’s just because it is the third rail — that there’s been so little discussion about Donald Trump’s relation to Israel and his payoff to Netanyahu.

MB: Yeah, I mean, there’s a lot to chew on there. I would first start with just an observation, because you mentioned that we’re in a post-Cold War world — well, we’re not in a post-Cold War world anymore, we’re in a new Cold War. And for all the attacks I got over Israel, which were absolutely vicious, personalized, you know, framed through emotional blackmail, attacking my identity as a Jew, calling me a Jewish anti-Semite — the Simon Wiesenthal Center, which is this right-wing racket over there in L.A., made me the No. 4 anti-Semite of 2015. You know, I was right behind Ayatollah Khomeini. But you know, the worst attacks, the most vicious attacks I’ve received have actually been from centrists and liberal elements over my criticism of the Russiagate narrative that they foisted on the American public starting in 2016, and also on the dirty war that the U.S. has been waging on Syria, and how we at the site that I edit, the Grayzone, started unpacking a lot of the deceptions and lies that were used to try to stimulate support among middle-class liberals in the west for this proxy war on Syria, for regime change in Syria. This was absolutely forbidden, and that attack actually turned out to be more vicious and is ongoing.

With Israel, you have a situation where you have, not maybe a plurality, but maybe a majority of secular Jewish Americans, progressive Jews, who have completely turned their back on the whole Zionist project. And it has a lot to do with Netanyahu. Netanyahu is someone who came out of the American — out of American life. He went to high school in suburban Philadelphia, he went to MIT, he was at Boston Consulting with Mitt Romney. His father ended his life in upstate New York as Jabotinsky’s press secretary, the press secretary for the revisionist wing of the Zionist movement that inspired the Likud party. So Netanyahu is really kind of an American figure, number one; number two, he’s a Republican figure. He’s like a card-carrying neoconservative Republican.

So a lot of Jews who’ve historically aligned themselves with the Democratic Party, who see being a Democrat as almost synonymous with being Jewish in American life, just absolutely revile Netanyahu. And here he is, basically the longest-serving prime minister in Israel; he’s completely redefined the face of Israel and what it is. And he’s provoked — I wouldn’t say provoked, but he’s accelerated the civil war in American Jewish life over Zionism. And what I did was come in at a time when it wasn’t entirely popular, to not just challenge Israel as a kind of occupying entity, but to actually challenge it at its core, to challenge the entire philosophy of Zionism, and to analyze the Israeli occupation as the byproduct of a system of apartheid which has been in place from the beginning, since 1948, which was a product of a settler colonial movement.

That really upset a lot of people who kind of reflect the same elements that I’m getting, who are attacking me on Syria or Russia. People like Eric Alterman at The Nation. He wrote 11 very personal attack pieces on me when my book “Goliath” came out in 2013. Truthdig, you, Chris Hedges, it was a great source of support. And you, you know, you opened up the debate at Truthdig, you allowed people to come in and criticize the book, but kind of in a principled, constructive way. Whereas Eric Alterman was demanding that The Nation censor me, blacklist me, ban me for life, and was comparing me to a neo-Nazi by the end, and claiming I was secretly in league with David Duke. And that was because he had simply no response to my reporting and my analysis of the kind of, the inner contradictions of Zionism.

And so to me, it was really a sign of the success of the book, that someone like Alterman was sort of dispatched, or took it upon himself to wage this really self-destructive attack. And in the end, he really had nothing to show for himself; he wasn’t arguing on the merits. And that’s just what I find time and again with my reporting is, you know, you get these personal attacks and people try to dissuade you from going and touching these third-rail issues, but ultimately there’s no substance to the attacks. I mean, if they really wanted to nail me and take me down, they would address the facts, and they really haven’t been able to do that.

RS: Right. But Max, if I can, let’s focus on the power of your analysis in that book, which is that it is a settler colonialism. And Netanyahu actually is — we can talk about the old labor Zionists, you know, and what was meant by progressive Zionism and so forth. Even at the time of the Six-Day War when I interviewed people like Moshe Dayan and Ya’alon and these people, they all were against a full occupation of the West Bank. They didn’t act on that, unfortunately. But they were aware of the dangers of a colonial model. But right now you have a figure in Israel in Netanyahu, who is, very clearly embodies a racialized view, a jingoistic view of the other, which is really, you know, very troubling. And he’s embraced by this troubling American figure.

And so what your book really predicted is that the settler colonialism was a rot at the center of the Israeli enterprise — and historically, one could justify that enterprise. I don’t know if you would agree. But even the old Soviet Union, I think, was the second, if not the first country to recognize Israel. There was vast worldwide support for some sort of refuge for the Jewish people after such horrible, you know, genocidal policies visited upon them. But what we’re really talking about now is something very different. And that is whether political leadership, and interference and so forth comes mainly for Democrats, very often; obviously, for republicans and Bible-belters and all that, who seem to like this image of the end of time coming in Israel. But really what’s happening — and it’s not discussed in this election, except to attack Bernie Sanders, who dared make some criticisms of Israel in some of these debates — you have a very weird notion of the Jewish experience, as identified with a very hardline, as you say, sort of South African settler colonialist mentality.

And so I want to ask you the question as someone–and we’ll get to it later — you grew up sort of within the Democratic liberal establishment in Washington. Your parents both worked for the Clinton administration, were close to it. How do you explain this blind eye toward Trump’s relationship to Netanyahu? And ironically, for all the Russia-bashing, Netanyahu and Putin seem to get along splendidly, you know. And that doesn’t bother people as far as criticizing Netanyahu. So why don’t we visit that a little bit, and forget about Eric Alterman for a while.

MB: [Laughs] Well, he’s already forgotten, so we don’t have much work to do there. But there’s a lot, again, a lot to chew on, a lot of questions packed into that. You know, just starting with your mention of Moshe Dayan — who is a seminal figure in the Nakba, the initial ethnic cleansing of the Palestinian population in 1948 to establish Israel — he was the southern commander of the Israeli military. And he later kind of became a kind of schizophrenic figure in Israeli politics; he would sometimes offer some kind of left-wing opinions, and then be extremely militaristic. But you know, when it came down to it, Moshe Dayan — like every other member of the Israeli Labor Party — was absolutely opposed to a viable Palestinian state. He even said that we cannot have a Palestinian state because it will connect psychologically, in the minds of the Palestinian public who are citizens of Israel — that 20% of Israel who are indigenous Palestinians — it will connect them to Nablus in the West Bank, and it will provide them with a basis for rebelling against the Israeli state to expand the Palestinian state.

The other labor leaders spoke in terms of the kind of, with the racist language of the demographic time bomb that, you know, we need to give Palestinians a state, otherwise we will be overwhelmed demographically. And so the state that they were proposed was what Yitzhak Rabin, in his final address before the Israeli Knesset, the Israeli parliament, called “less than a state.” He promised Israel that at Oslo, he would deliver the Palestinians less than a state. And if you look at the actual plan that the Palestinians were handed at Oslo — which Yasser Arafat, the Palestinian Authority chairman, didn’t even review before signing — the map was not that different from the map that Donald Trump has offered with the “ultimate deal.” And they’d say, oh, you get 97% of what was, you know, offered in U.N. Resolution 242 in 1967. But it really just isn’t the case when you get down to the details. What the strategy has been with the Labor Party, and with successive Israeli administrations — and with Netanyahu until he got Trump in — was to kind of kick the can down the road with the so-called peace process, so that Israel could keep putting more facts on the ground.

So it was actually Ehud Barak of the Labor Party, Yitzhak Rabin’s successor, who moved more settlers into the West Bank, by a landslide, than Netanyahu did. Ehud Barak actually campaigned on his connection to the settlers. And then Netanyahu capitalizes on the strength of the settlement movement to build this kind of Titanic rock of a right-wing coalition that’s kept him in power for so long. And if you look at who the leading figures are in Israeli life — Naftali Bennett, who was from the Jewish Home Party, he comes out of the Likud party and he’s someone who was an assistant to Netanyahu. Avigdor Lieberman, who was for a long time the leader of the Russian Party. Yisrael Beiteinu, this is someone who came out of the Likud Party, who helped Netanyahu rustle up Russian votes. It’s a Likud one-party state — but then you have, culturally, a dynamic where starting with 1967, the public just becomes more infused with religious Messianism.

The West Bank is the site of the real, emotionally potent Jewish historical sites, particularly in a city like Hebron. And the public becomes attached to it and attains its dynamism through this expansionist project, and the public changes. A lot of people from the kind of liberal labor wing became religious Messianists, started wearing kippot, wearing yarmulkes, the kind of cloth yarmulkes that the modern orthodox settlers where.

RS: OK, but —

MB: Today you not only have that, you have a new movement called the temple movement, which aims to actually replace Jewish prayer at the Western Wall with animal sacrifice, as Jews supposedly practiced thousands of years ago, and to destroy the Al-Aqsa mosque, and practice Jewish prayer there. This is not just a messianic movement, but an apocalyptic movement that is actually gaining strength in the Likud party. So when you mentioned Donald Trump’s “ultimate deal,” there’s one detail that everyone seems to have missed there, which is prayer for all at the Dome of the Rock, at Al-Aqsa. That means there will be Jewish prayer there, officially, that Palestinians must be forced to accept that and destroy the status quo, which has prevailed since 1967.

RS: I know, but Max, before I lose this whole interview here — because I think that’s all really interesting; people should read your book, “Goliath: Life and Loathing in Greater Israel.” That’s not the focus of this discussion I want to have with you.


RS: And I want to discuss, in this aspect, the whole idea of Israel as a third-rail issue for American politics.

MB: Yeah.

RS: American politics. And the reason I want to do that is there’s obviously a contradiction in the Jewish experience, because Jews — as much or more so than any other group of people in the world — understand what settler colonialism does. They understand what oppression does, they’ve been under the thumb of oppressors. And so I would argue the major part of the Jewish experience was one of revolt against oppression, and recognition of the danger of unbridled power. And that represents a very important force in liberal politics in the United States: a fear of coercive power, a desire for tolerance, and so forth. And we know that Jews have, in the United States and elsewhere in the world, been a source of concern for the other, and tolerance, and criticism of power.

And the reason I’m bringing that up is it seems to me it’s a real contradiction for the Democratic Party, which you know quite a bit about. And in this Democratic Party, there’s this great loathsome feeling about Donald Trump. And many of these people don’t really like Netanyahu. You know, the polling data shows that Jews are, you know, just about as open to the concern for the Palestinians as any other group. And Bernie Sanders, the one Jewish candidate, is the one who dared to bring up the Palestinians — that they have rights also, that they’re human beings. He’s being attacked for it as, like you, a self-hating Jew. And so I want to get at that contradiction. And, you know, full confession, as a Jewish person I believe it’s an honorable tradition of dissent, and concern for the others, and respect for individual freedom. And I think it’s sullied by the identification of the Jewish experience with a colonialist experience. It is a reality that we have to deal with, but that’s not the whole tradition. And I daresay your own family, whatever your contradiction — and I should mention here your father and mother both were quite active in the Clinton administration, right.

And your father, a well-known journalist, Sidney Blumenthal, and your mother, Jacqueline Blumenthal, was I think a White House fellow or something in the Clinton administration? I forget what her job was, but has been active. And they certainly come out of a more liberal Jewish experience, as do most well-known Jewish writers and journalists in the United States. That’s the contradiction that I don’t see being dealt with here. Because after all, it’s easy to blast Putin and his interference, but as I say, Netanyahu interfered very openly, but in a really unseemly way, in the American election by attacking a sitting American president in an appearance before the Congress, and attacking his major foreign-policy initiative. And there’s hardly a word ever said about it. It doesn’t come up in the democratic debates. You know, and the — as I say, there was this incredible moment where Netanyahu, after coming over here and praising Trump for his peace deal, as did his opponent, then he goes off and meets with Putin. And so suddenly it’s OK, and yet the Democrats who want to blast Putin don’t mention Netanyahu, and they don’t mention his relation to Trump.

MB: Well, yeah, I was trying to illustrate kind of the reality of Israel, which just, it’s gotten so extreme that it repels people who even come out of the kind of Democratic Party mainstream. And the Democratic Party was the original bastion in the U.S. for supporting Israel. So my father actually held a book party for my book, “Goliath,” back in 2013. It’s the kind of thing that, you know, a parent who had been a journalist would do for a son or daughter who’s a journalist. And he was harshly attacked when word got out that he had held that party in a neoconservative publication called the Free Beacon, which is kind of part of Netanyahu’s PR operation in D.C. You know, it was like my father had supported, provided material support for terrorism by having a book party for his son.

But the interesting part about that party was who showed up. I didn’t actually know what it was going to be like, and it was absolutely packed. I mean, they live in a pretty small townhouse in D.C, and there just was nowhere to walk, there was nowhere to move. And I found myself in the corner of their dining room shouting through the house to kind of explain what my book was about and answer questions. And a lot of the people there were people who were in or around Hillary’s State Department, people who worked for kind of Democratic Party-linked organizations — just a lot of mainstream Democrat people. And they were giving me a wink and a nod, shaking my hand, giving me a pat on the back, and saying thank you, thank God you did this. Because they cannot stand the Israel lobby, they despise Netanyahu, and they’re disgusted with what Israel’s become.

And we had reached a point by 2013 where it was pretty obvious there was not going to be a two-state solution, and that whole project, the liberal Zionist project, wasn’t going to work out. You know, and the fact that they just could give me a wink and a nod shows also how cowardly a lot of people are in Washington. They weren’t even stepping up to the level my father had, where when his emails with Hillary Clinton were exposed, it became clear that he was sending her my work. And he was actually trying to move people within the State Department toward a more, maybe you could say a more humanistic view, but also a more realistic view of Israel, Palestine and the Netanyahu operation in Washington. Working through [Sheldon] Adelson, using this fraud hack of a rabbi, Shmuley Boteach, has kind of their front man. They ran like a full-page ad in the New York Times painting me and my father as Hillary Clinton’s secret Middle East advisers.

And then one day in the middle of the campaign, Elie Wiesel died. You know, someone who is supposed to be this patron saint of Judaism and the kind of secular theology of Auschwitz, who had spent the last years of his life as part of Sheldon Adelson’s political network. Basically, he had lost all his money to Bernie Madoff, and so he was getting paid off by Adelson. He got half a million dollars from this Christian Zionist, apocalyptic, rapture-ready fanatic, Pastor John Hagee. He was going around with Ted Cruz giving talks. And so when he died, I went on Twitter and tweeted a few photos of Elie Wiesel with these extremist characters.

And I said, you know, here are photos of Elie Wiesel palling around with fascists. And the kind of Netanyahu-Adelson network activated to attack me. And ultimately it led — I actually, within a matter of a few days, it led to Hillary Clinton’s campaign officially denouncing me and demanding that I cease and desist. And so, you know, I looked at the debate on Twitter, and a lot of people were actually supporting me. And it was clear Elie Wiesel, this person who was supposed to be a saint, was actually no longer seen as stainless, that the whole debate had been opened up by 2016.

And now when we look at the Democratic Party and we look at the Democratic field, you know, Bernie Sanders — he’s better than most of the other candidates, or the other candidates, on this issue. After we put a lot of pressure on him in the left wing-grassroots — I mean, I personally protested him at a 2016 event for his position on Palestinians, and we shamed him until he took at least a slightly better position, where you acknowledge the humanity of Palestinians. But what we’re hearing, even from Bernie Sanders, doesn’t even reflect where the grassroots of the Democratic Party — particularly all those young people who are coming out and delivering him a landslide victory tonight in Iowa — are. The Democratic Party is not democratic on Israel, but it’s no longer a third-rail issue. You can talk about it, and the only way that you can be stopped is through legislation, like the legislation we see in statehouses to actually outlaw people who support the Palestinian boycott of Israel. So we’re just in an amazing time where all of the contradictions are completely out in the open.

RS: OK, let me just take a quick break so public radio stations like KCRW that make this available can stick in some advertisements for themselves, which is a good cause. And we’ll be right back with Max Blumenthal. Back with Max Blumenthal, who has written — I mean, I only mentioned one of his books. He wrote a very important book on the right wing in America that was a bestseller; he has been honored in many ways, and yet is a source of great controversy. And I must say, I respect your ability to create this controversy, because it’s controversy about issues people don’t want to deal with. You know, they want to deal with them in sort of feel-good slogans, and it doesn’t work, because people get hurt. And including Jewish people, in the case of Israel. If you develop a settler, colonialist society, and that stands for the Jewish position, and you’re oppressing large numbers of people, be they Palestinian or others, that’s hardly an advertisement for what has been really great about the Jewish experience, which I will argue until my death.

It was represented by people like my mother, who were in the Jewish socialist bund, and two of her sisters were killed by the Czar’s police in Russia. And they believed in Universalist values, an idea of being Jewish as standing for the values of the oppressed, and concern for the oppressed. And most of their experience in the shtetls, and out there in the diaspora, had been being oppressed.

And so I don’t want to lose that there. But I wanted to get now to the last part of this, to what I think is the hypocrisy of the liberal wing of American politics, or so-called. And now they call themselves more progressive. And it really kind of centers around Hillary Clinton. And whatever you want to say about Bernie Sanders — you know, Hillary Clinton’s recent attack on Bernie Sanders, that no one likes him and he stands for nothing and he gets nothing done. And I think this is a, you know, a person that I thought, you know, at one point — despite her starting out as a Goldwater girl and being quite conservative — I thought was, you know, somewhat decent.

And I’m going to make this personal now. I was brought to a more favorable view of Bill and Hillary Clinton, in considerable measure, by your father, as a journalist at the Washington Post, and then working in the administration. And I respect your father and mother, you know, and Sidney Blumenthal and Jacqueline Blumenthal, I think are intelligent people. And I once, you know, went through a White House dinner; I think I only got in because your father put me on the list, and Hillary Clinton said I was her favorite columnist in America — no, the whole world — and it was very flattering. But I look back on it now — Hillary Clinton has really represented a kind of loathsome, interventionist, aggressive, America-first politics that in some ways is even more offensive than Trump. When Trump said he’s going to make America great again, Hillary Clinton said, America’s always been great. What?

MB: Yeah.

RS: What? Slavery, segregation, killing the Native Americans — always been great? You grew up with these people, right? You were in that world. What — so yes, they can come up to you at a book party and say, yes, it’s about time somebody said that. But what are they really about? That they — you know, you mentioned Syria. You know, their great achievement, they created a mess of that society. And she’s the one who went to, said about Libya, oh, we came, we saw, and he’s dead. You know, sodomized to death. So take me into the heart of the so-called liberal experience.

MB: Well, first of all, since you invoke Sidney Blumenthal so frequently, he has a — I think his fourth book in a five-part series on Abraham Lincoln out. And you know, these books address Lincoln almost as if he were a contemporary politician. It’s a completely new contribution to the history of Lincoln, and if you invite him on, be sure —

RS: I’m familiar with it, and I’ll endorse it —

MB: If you invite him on, you can ask him, I would love to hear that debate —

RS: I certainly would, and I have — as I said, I have a lot of respect for your father and mother. I’m asking a different question. Why do good people look the other way? Or how does it work? Just, you know, to the degree you can, take me inside that Washington culture. And where there’s a certain arrogance in it, that they are always, even when they do the wrong things, they’re just always accidents. They’re always mistakes. You know, it never comes out of their ideology, their aggression. So I want to know more about that.

MB: I mean, I saw all these — so many different sides of Washington. And so — and I was always supported by my parents, no matter what view I took. So I don’t feel like I have to live in my father’s shadow or something like that. They remain really supportive of me. I have a new book out — it’s not really new, it came out last April. It’s called “The Management of Savagery,” and it deals substantially with my view of the bipartisan foreign policy establishment, but particularly the Hillary State Department, the Obama foreign policy team, and the destruction they wrought in Libya and Syria. So, you know, I put everything I knew about Washington and foreign policy into that book. And so I really would recommend that as well.

But, you know, how does it work with the Clintons? They were — they set up a machine that was really a juggernaut with all this corporate money they brought in through the DLC, the Democratic Leadership Committee. It was a very different structure than we’d seen with previous Democratic candidates who built — who relied heavily on unions and, you know, the civil rights coalition. And that machine never went away. It kept growing like this — kind of like this amoeba that began to engulf the party and politics itself. So that when Bill Clinton was out of power, the machine was passed to Hillary Clinton, and the machine followed her into the Senate. And the machine grew into the Clinton Global Initiative, which was this giant influence-peddling scam that just cashed in on disasters in Haiti, brought in tons of money, tens of millions of dollars from Gulf monarchies, and big oil and the arms industry — everything that funds all the repulsive think tanks on K Street through the Clinton Foundation.

And everyone who was trying to get close to the Clinton Foundation, whether they were in Clinton’s inner circle or not, was just trying to gather influence. That’s why you saw at Chelsea Clinton’s wedding, behind her, Ghislaine Maxwell, who was basically Jeffrey Epstein’s personal child sex trafficker, just trying to cultivate influence with people who have this gigantic political machine.

So that’s why so many people, I think, have stayed loyal to this odious project, and have looked the other way as entire countries were destroyed under the direct watch of Hillary Clinton. Libya today — where Hillary Clinton took personal credit for destroying this country, which was at the time before its destruction, I think the wealthiest African nation with the highest quality of life — is now in, still in civil war. We’ve seen footage of open-air slave auctions taking place, and large parts of the country for years were occupied by affiliates of Al Qaeda or ISIS, including Muammar Gaddafi’s hometown of Sirte. It was immediately transformed into a haven for the Islamic State.

This is the legacy of Hillary Clinton. There would have been no Benghazi scandal if she hadn’t gone into Libya to come, see, and kill, as she bragged that she did. And in Syria, she attempted the same thing; fortunately failed, thanks to assistance from Iran and Russia. But this was, it consisted of a billion dollars, multibillion-dollar operation to arm and equip some of the most dangerous, psychotic fanatics on the face of the planet in Al Qaeda and 31 flavors of Salafi jihadi. Hillary Clinton said we can’t be negotiating with the Syrian government; the hard men with guns will solve this problem. She said that in an interview, and that’s her legacy.

Beyond that, you know, I in Washington grew up in a very complex situation. I don’t know what view people have of me, but I grew up in what was – D.C. when D.C. was known as C.C., or Chocolate City. It was a mostly black city, run by a local black power structure with a strong black middle class, and I grew up in a black neighborhood. And I kind of saw apartheid firsthand, where I saw how a small white minority actually controlled the city from behind the scenes. And then, you know, and I saw that reality, and then I went to school across town in the one white ward to a private school, and I got to know some of the children of the kind of mostly Democratic Party elite. And so I saw both sides of the city. And it was through that other side, and also my parents’ connection to the Clintons, that I — I mean, I barely interacted with the Clintons. I’ve had very minimal interaction with them ever.

But I did get to meet Chelsea Clinton once. And you know, for all my reservations about the Clintons or what they were, I thought you know, she was kind of an admirable figure at that time. She was a — she was a kid, she was an adolescent who was being mocked on “Saturday Night Live” because she was going through an awkward phase. She went to school down the street at Sidwell Friends, and I met her at a White House Christmas party; she was really friendly and personable. And you know, since then, I’ve watched her grow into adulthood and become a complete kind of replication of the monstrous political apparatus that her family has set up, without really charting her own path. She just basically inherited the reign of the Clinton Foundation and Clinton Global Initiative. She does paid talks for Israel. Her husband Marc Mezvinsky, he gambled on Greece’s debt along with Lloyd Blankfein, the CEO of Goldman Sachs. You know, the squid fish. I mean, there’s just — I mean, as a young person, seeing someone of my generation grow up and follow that path, do nothing to carve out her own space — it just absolutely disgusts me.

And now Hillary Clinton is still there! She won’t go away! She’s not only helped fuel this Russiagate hysteria that’s plunged us into a new Cold War, but she’s trying to destroy the hopes and dreams of millions of young people who are saddled with endless debt by destroying Bernie Sanders. And it’s because she sees her own legacy being smashed to pieces, not by any right-wing, vast conspiracy, but by the electorate, the new electorate of the Democratic Party. And I absolutely welcome that. I think, you know, tonight in Iowa, a landslide Bernie victory, one of the takeaways is this will be the end of Clintonism. It’s time to move on and hand things over to a new generation. They had their chance, and they not only failed, they caused disasters across the world.

RS: So this is — we’re going to wind this up, but I think we’ve hit a really important subject. And I want to take a little bit more time on it. And I thought you expressed it quite powerfully. But the error, if you’ll permit me, is to center it on the personality, or the family. And I don’t think Clintonism is going to go away. Because what it represents — and I know you —

MB: It could be become Bloombergism, you know?

RS: Well, that’s where I’m going. I think what Clintonism represents is this triangulation, this new Democrat. And I interviewed him when he was governor, just when he was campaigning. And I did a lot of writing on the Financial Services Modernization Act and on welfare reform, and all of these ingredients of this policy. And what it really represents — no wonder they’re rewarded by the super wealthy. But the Democratic Party lost its organizational base with the destruction of the labor movement and weakening of other sources of progressive class-based politics, concern about working people and ordinary people.

And what Clinton did is he came along, and he had a sort of variation of Nixon’s Southern Strategy, how he got the Republicans to be so important in the South. And it was this new politics, this redefinition. And it’s not going away, because it’s the cover for Wall Street. It’s the cover for exploitation. And the main thing that happened from when you were young — or born, actually; you’re 42 years — it’s 42 years of, since Clinton really, and you can blame Reagan, you can blame the first President Bush, you can blame other people, and certainly blame the whole bloody Republican Party. I’m not going to give them a pass.

But the fact is, what the Clinton revolution did was it made class warfare for the rich fashionable, in a way that no one else was able to do it, no other movement. And it said these thieves on Wall Street, these people who are going to rip you off 20 different ways to Sunday — they’re good people, and they support good causes. And you mentioned Lloyd Blankfein, you know; “government” Goldman Sachs, you know. Robert Rubin came from Goldman Sachs; he was Clinton’s treasury secretary. And the whole thing of unleashing Wall Street and getting, destroying the New Deal — that was a serious program to basically betray the average American and betray their interest. And that’s why we’ve had this growing income inequality since that time. That’s the Clinton legacy in this world, really, is the billionaire coup, the billionaire culture.

MB: Yep, the oligarchy was put on fast-forward by the new politics of the Clintons. What they promised wasn’t, you know, a break from Reaganism, although there was certainly a cultural difference. They promised continuity, and that’s what we saw through the Obama administration. Obama presided over the biggest decline in black home ownership in the United States since, I think, prior to World War II. You mentioned Glass-Steagall; this set the stage for the financial crisis; NAFTA, destroyed the unions, shipped American jobs first to Mexico and then to China, and destabilized northern Mexico along with the drug war that Clinton put on overdrive, creating the immigration crisis that helped fuel the rise of Donald Trump.

Welfare reform — all of these policies were just, were odious to me and so many people at the time, but there was just this desire to just beat the Republicans and out-triangulate them. Now that we’ve seen the effects on them and so many people have felt the effects, you have an entire generation that sees no future, that realizes they’re living in an oligarchy, realizes that the alternative to Bernie Sanders is a literal oligarch, this miniature Scrooge McDuck in Mike Bloomberg, and they’re just not having it.

I don’t know if Hillary Clinton understands this history; I don’t think she sees it in context. She just blames Russian boogeyman and fake news for everything. But the rest of us who’ve lived through it really do, and it’s the continuity that is so dangerous, especially on foreign policy. I mean, the Libya proxy war and the Syria proxy war, the stage was set in Yugoslavia with NATO’s war that destroyed a socialist country and unleashed hell on a large part of its population. And we still don’t debate that war. The stage for the Iraq invasion was set in 1998 with Bill Clinton passing the Iraqi Liberation Act, which sent $90 million into the pocket of the con-man Ahmed Chalabi and made regime change the official policy of the United States.

It’s tragic that Bernie Sanders voted for that. But we have to see the cause and the effect to understand why so many people are in open revolt against that legacy. And you’re right, it goes well beyond the Clintons. It’s a program that markets right-wing economics and a right-wing foreign policy in a sort of progressive bottle. Now what they’re trying to do with the label on that progressive bottle, the way they’re trying to preserve it — we see it a lot through the [Elizabeth] Warren campaign — is through a kind of neoliberal identity politics that divorces class from race and gender, and attempts to basically distract people with needless arguments about Bernie Sanders saying a woman couldn’t have gotten elected in a private conversation that only Elizabeth Warren was party to.

So I’m really encouraged, I guess, by the results that we’re seeing. We’re talking tonight on the eve of the Iowa caucus. I’m encouraged by those results, just because I see them as a repudiation of the politics that have just dominated my life as a 42-year-old, and just been so absolutely cynical and destructive at their core. But I would just remind anyone who is supporting Bernie Sanders and listening to this — he’s not just running for president. He’s running for the next target of a deep state coup, and the deep state exists, and will respond with more force and viciousness than it did to Donald Trump, who actually has much more in common with them than Bernie Sanders.

RS: I didn’t quite get the grammar of that last paragraph, not any fault of yours. You said he’s not just running — can you —

MB: He’s running for the next target of a deep state coup, the forces of Wall Street. You know, the —

RS: Oh, you mean he will be the target.

MB: He will be the target.

RS: Yeah, you know, it’s — you just said something really — OK, I know we have to wrap this up, but it’s actually just getting interesting for me. [Laughs]

MB: Sorry about that.

RS: No, no, no, come on, come on. [Laughter] What I mean is, I do these things because I learn, and I think, and you know, my selfish interests. And really the question right now, I did a wonderful interview with Chomsky on this podcast, and he took me to school for not appreciating the importance of the lesser evil. And I’ve lost sleep over it since. You know, well — and we always fall for that, you know. On the other hand, some of the things you’ve been talking about, you know — and this is going to get me in big trouble — but you know, Trump is so blatant. He’s so out there in favor of greed and corruption.

He’s so obnoxious. And actually, in terms of his policy impact — not his rhetoric, but his policy impact — is he really that much worse? Well, for instance, you mentioned NAFTA. The rewrite of NAFTA, even before, you know, some progressives got involved in it, it was a substantially better trade agreement than the first NAFTA. You know, he hasn’t gotten us into Syria-type, Iraq-type wars.

He actually — so I’m not — you know, yes, I consider him a neofascist; rhetoric can be very dangerous. He’s obviously spread very evil, poisonous ideas about immigrants and what have you, you know, I can go down the list. But the people that you’ve been talking about, that–you know, and I voted for all of them, and I’ve supported them — are they really the lesser evil? You know, or are they a more effective form of evil?

MB: I mean, to understand Trump, we just have to see him as the apotheosis of an oligarchy. In its most unsheathed, unvarnished form, he’s just lifted the mask off the corruption, the legal corruption that’s prevailed, and been completely unabashed about it. Donald Trump was targeted with this kind of Russiagate campaign, which was partly run by Clintonite dead-enders who wanted to blame Russia for her loss, and to attack Donald Trump with this kind of McCarthyite rhetoric. But it was also being influenced by the intelligence services — figures like John Brennan and James Comey, and neoconservative hardliners who could easily jump back into the Democratic Party. And they were just seeking a new Cold War, to justify the budgets of the intelligence services, and the defense budget and so on.

But at his core, Donald Trump, what he’s actually done, especially domestically, I think outside of the immigration stuff, is he’s been kind of a traditional Republican. And he won a lot of consent from Republicans in Congress when he passed a trillion-dollar tax cut. He’s given corporate America everything he wanted after kind of campaigning with this populist, Bannonite tone. So in a lot of ways, Donald Trump does share more in common with the Democratic Party elite — with a lot of the figures who’ve been nominated to serve on the DNC platform committee, who are just from the Beltway blob and the Beltway bandits — than they do with Bernie Sanders.

And I think that if Bernie Sanders gets the nomination, there will be an effort to McGovern him. To just kind of turn him — turn this whole process into McGovern ’72, hope that Bernie Sanders gets destroyed by Donald Trump, and then wag their fingers at the left for the next 20 years until they get another Bill Clinton. I think that they don’t know how to stop him at this point, but they’re willing to let him be the nominee and go down to Donald Trump, because Bernie Sanders threatens their interests, and the movement behind him particularly, more than Donald Trump does.

RS: You know, they will stop Bernie Sanders, and they will do it by the argument of lesser evilism. And you see the line developing —

MB: But who is the lesser evil, Bob? I mean, Joe Biden is like this doddering wreck. There is no other candidate who seems even remotely viable against Trump.

RS: No, no, no — I understand that. I’m telling you what — well, it seems to me there’s — you know, you want to talk about fake news, the, misreporting of Bernie Sanders — in fact, the misreporting of what democratic socialism is. I mean, he’s now branded in the mainstream media as some hopeless fanatic because he dared to defend democratic socialism. Democratic socialism has been the norm for the most successful economies in the world, even to a degree when we’ve been successful. That was the legacy of Roosevelt, after all, is to try to save capitalism from itself. That’s why you had some enlightened government programs, you know, right down the list, and that’s what saved Germany after the war, and that’s what France and England and so forth, that’s why they have health care systems.

But the mainstream media has actually taken a very moderate figure, Bernie Sanders, and demonized him as some kind of hopeless ideologue, right? And as you point out, Bernie Sanders is hardly a radical thinker on issues — particularly, as you mentioned, about the Mideast and so forth. What he is, is somebody who actually is honoring the best side of Franklin Delano Roosevelt: you can’t let these greed merchants control everything, you have to worry about some compensation for ordinary people. That’s what Bernie Sanders is all about. And it should be an argument that has great appeal to people of power, otherwise they’re going to come after you with the pitchforks. Instead the mainstream media, in its hysteria, you know, has taken this word “democratic socialist” and used it to vilify him.

But the point that I want — and we will end on this, but I’d like to get your reaction — that came up in my discussion with Chomsky, who I have great admiration for. But it is this lesser evilism. And I think while, yes, people in their vote can think about that, they can vote that way — I’ve done it much of my life; I’ve voted for all sorts of evil people because they were lesser. But as a journalist — and I want to end about your journalism — as a journalist, I think we have to get that idea out of our head. And it means being able to be objective about a Donald Trump when he comes up with his NAFTA rewrite, and say hey, there are some good things in it, including the fact that you have to pay $16 an hour to people in Mexico who are working on cars that are going to be sold in the United States, OK. And what the liberal community has been able to do in the mainstream media, MSNBC, is Trumpwash everything.

Which brings us back to your critique. They’ve been able to say — they’ve made warmongering liberal and fashionable. They’ve taken the — they’ve made the CIA now a wonderful institution, the FBI a wonderful institution, [John] Bolton a wonderful hero. And I want to take my hat off to your journalism, because you have — and I do recommend that people go to your website, the Grayzone. Because you have had the courage to say, wait a minute, what’s called a lesser evil can’t be given a pass. Because in fact, maybe in some ways, or in many ways, it’s a more effective evil. We know what Trump is; he stands exposed every hour of every day.

But you know, Bill Clinton, Hillary Clinton — and I’m not trying to pick on them, but you know, they represented this embrace of the Wall Street center — they were much more effective in redistributing income to the rich. You know, you can talk about Trump’s tax break, but the real redistribution came with letting Wall Street do its collateralized debt obligations and credit default swaps that caused the destruction of 70% of black wealth in America, 60% of brown wealth in America, according to the Federal Reserve. So really, in this election, people have to think — you know, yes, I’ll hold my nose and I’ll vote for the lesser evil. But what’s that going to get us? Does it get us a more effective evil, a better-packaged evil? Last word from you?

MB: Well, I mean, one of the things that we do at the, our mission is to oppose this policy of regime change that the U.S. imposes across the world against any state that seeks some independence from the U.S. sphere of influence that wants to craft its own economic policies in a socialist way, like Venezuela, Nicaragua. We, you know, we exposed a lot of the deceptions that were trying to stimulate public support for regime change in Syria, that would have been absolutely disastrous. And in all of these situations, we don’t stand alone, but we stand among a really, really small group of alternative outlets who don’t play the lesser-evil game on regime change.

Where we say, well, this leader or that leader are horrible, and they are evil dictators, but we should also be kind of suspicious of the, you know, of the war that the U.S. might wage. Or we should be critical of these brutal economic sanctions that have killed tens of thousands of Venezuelans through excess deaths. We say — we actually look at the alternative to the current government and show that there actually isn’t the lesser evil, that the alternative is far worse. In Syria it was Al Qaeda and the Syrian Muslim Brotherhood; in Venezuela it’s Juan Guaidó’s right-wing, white collar mafia, which is a front for Exxon Mobil. Same thing in Nicaragua.

And you know, as much as I respect and I’ve learned from Noam Chomsky, he plays that lesser-evil game on regime change. He’s trashed all of the, all of these governments. He celebrated the collapse of the Soviet Union, and we saw what happened to Russia after that. So it’s important to look at lesser evilism through a historical context, and then we can apply it to the United States as well. Look at who’s been sold to us as the lesser evil that we had to support. Well, we’ve been talking about them, Bob, for the last half hour, and they’ve subjected Americans to the same evil the Republican Party has, for the most part. Maybe they’ve limited it to some degree. But now there’s actually an option for something that I’d say is moderate in the United States.

You’re right — Bernie Sanders does nothing, and proposes nothing, outside the framework of the New Deal and LBJ’s Great Society. I don’t even think he’s a democratic socialist. I don’t know what that term really means. He’s a social democrat. And he is someone who at least offers a change from the consensus where the government actually starts to intervene to prevent people from dying excess deaths across the country, from the opioid crisis, from poverty, from homelessness. Eighty percent of new homes that have been built in the U.S. in the past two years are luxury housing. And you know who else is supporting Bernie Sanders besides all these debt-saddled youth? Active duty U.S. military veterans who are sick of permanent war. $160,000 in campaign contributions have been given to Bernie by active duty vets. That’s something like eight times more than have gone to Joe Biden, who is involved at the forefront of almost every American war since Gulf War I.

And we’re really capitalizing on that at the Grayzone. We understand the American public and the western public are sick of being lied into war, and they’re sick of being pushed into lesser evilism, whether it’s abroad in countries that are targeted by the U.S., or at home. And so we’re just there providing balance and exposing whatever the lie is of the day.

RS: Let me, as an older person, end with a little editorial about what — and I agree with the thrust of what you’ve been saying — but why I think this word “democratic socialism” is important, not just social democrat. Because it acknowledges the vast harm that has been done by the left in human history. It’s not just the right, it’s not just the corporate elite, and it’s not just the oligarchs. That people got hold of a message of concern for the ordinary person. It happened in religion too, after all, you know; structures were developed, people who claimed they were following the message of Christ, and they ended up building edifices to the exploitation of ordinary people.

I think what Bernie Sanders represents — and I’ll ask your response, but what I think he represents, the reason he’s so authentic — he actually believes in the grassroots. He actually believes that an ordinary person in Vermont can make intelligent decisions about the human condition, and about justice and freedom. And I think the reason Bernie Sanders can survive the rhetorical assaults on his leftism or his socialism, is that what people of power in the capitalist world have managed to do is identify this cause of social justice, a notion of democratic socialism with totalitarianism, with elitism.  And Bernie Sanders — and this is a good night to celebrate Bernie Sanders, if it’s true; I hadn’t caught up with the news, but if he’s really doing that well in Iowa. Because I thought he would get 1% of the vote four years ago when he started; I never thought this would happen.

I think what makes Bernie Sanders authentic is his respect for the ordinary person. He is the opposite of that leftist elitist–and you have them as well as rightist elitists — who thinks they have to distort history to protect the average person from reality. And Bernie Sanders is — he speaks truth about what’s going on. And at a time when people on the right and the left have nothing but contempt for most of the politicians, and journalistic leaders and everything else, for having betrayed them. So I think Bernie Sanders is a ray of hope. I wish he would be around a lot longer, but then again, I wish I’d be around a lot longer. But it’s nice to run into Max Blumenthal, who’s half my age and has all of that spirit that I’d like to see in journalism. So thanks, Max, for doing this.

MB: Thank you, Bob. It’s a real honor.

RS: And by the way, I ignored that last book of yours. Could you give the title again and how people get it?

MB: It’s called “The Management of Savagery.” And let me pull it off the shelf so I can actually read the subheader. You can edit this. It’s called “The Management of Savagery: How America’s National Security State Fueled the Rise of Al Qaeda, ISIS, and Donald Trump.” And it’s really kind of my look at the, sort of how the politics of my lifetime and my generation has been shaped by foreign policy disasters that an unelected foreign-policy establishment has subjected us to.

RS: Full disclosure, I actually have not read it, and I will get it as soon as I can.

MB: I’ll send you a copy —

RS: No, no, no, you got — it’s hard enough to make a living as a writer. I don’t think you should give these things away for nothing. I’ll get myself a copy. And I want to thank you again. I’ve been talking to Max Blumenthal, check out his work, check out the Grayzone. These podcasts are done basically for KCRW, the public radio station in Santa Monica, where Christopher Ho is the engineer who gets it up on the air.

At Truthdig, Natasha Hakimi Zapata writes the brilliant intros and overview of these things and posts them up there. Here at USC, Sebastian Grubaugh, the Annenberg School for Communication and Journalism, really gets the whole thing going and hooks up everyone, thanks to him. And finally, there’d be no “Scheer Intelligence” without the main Scheer, Joshua Scheer, who’s the show’s producer. And we’ll see you next week with another edition of “Scheer Intelligence.”

Tyler Durden Sun, 02/09/2020 - 23:45
Published:2/9/2020 11:04:12 PM
[Markets] Gun Seizures Could Lead To Civil War Gun Seizures Could Lead To Civil War

Authored by James Bovard via The Future of Freedom Foundation,

“Hell yes, we’re going to take your AR-15,” declared “Beto” O’Rourke at a Democratic party presidential candidate debate in September. Compelling Americans to surrender their so-called assault weapons is “the newest purity test” for Democratic presidential candidates, according to the Washington Post. O’Rourke and other Democratic presidential candidates, including Cory Booker, Kristin Gillibrand, and Bill de Blasio (now withdrawn from the race, as are Gillibrand and O’Rourke) have all endorsed mandatory buy-backs of assault weapons.

Though such proposals are momentarily politically profitable, they could start a cascade of public-policy dominoes that ends in civil war.

When Australia and New Zealand mandated buy-backs of assault weapons, most gun owners ignored the decrees despite politicians repeatedly ratcheting up their threats. Similar noncompliance to laws requiring surrender or registration of assault weapons has occurred in California, New York, Connecticut, New Jersey, and elsewhere.

Congress passed an assault-weapons ban in 1994 that lasted for a decade. The original assault-weapons ban protected Americans from being shot with rifles that included features such as grenade launchers, bayonet lugs, or other detailing whose primary impact was to fuel the phobias of gun haters.

Shortly after the 1994 ban was passed, a Washington Post editorial admitted, “Assault weapons play a part in only a small percentage of crime. The provision is mainly symbolic; its virtue will be if it turns out to be, as hoped, a stepping stone to broader gun control.” Post columnist Charles Krauthammer, in an article headlined, “Disarm the Citizenry. But Not Yet,” explained the “real logic of the ban”: “Its only real justification is not to reduce crime but to desensitize the public to the regulation of weapons in preparation for their ultimate confiscation.” Krauthammer, who was revered by much of the nation’s mainstream media, trumpeted his support for “real steps” on gun control including “the banning of handguns.”

There is not a clear, consistent definition of “assault weapon” but most politicians are using vague terms that could include more than 10 million firearms. Almost all the ban advocates favor prohibiting rifles built on the AR-15 design. Though these firearms have been endlessly demonized, they are involved in a very small percent of homicides. All types of rifles account for only 3 percent of homicides, and AR-15-style weapons are only a small fraction of the rifle-related homicides.

But that doesn’t matter to politicians who are crusading against guns the way Temperance activists crusaded for Prohibition a hundred years ago. Assault-weapons laws resemble hate-speech laws. Hate-speech laws usually begin by targeting a few words that almost no one approves of. Once the system for controlling and punishing “hate speech” is put into place, there is little or nothing to stop it from expanding to punish more and more types of everyday speech. Similarly, once an assault-weapons law is on the books, there is little to prevent politicians from vastly increasing the number of weapons banned under the law.

Revving up the rhetoric

Rep. Eric Swalwell (D-Cal.) has been among the most outspoken anti-gun politicians. Swalwell says the government should first offer a buy-back for retroactively banned weapons and then forcibly confiscate them one by one if necessary. Swalwell declares that his “mandatory national ban” of assault weapons is “bold and … it rightly treats gun violence as a life-or-death matter.” A Twitter critic summarized Swalwell’s pitch:

“We’re not taking anyone’s legal guns, we’re just changing the law so the guns are illegal and then we will take them.”

When a conservative activist suggested that gun grabbers wanted a war, Swalwell replied,

“And it would be a short war, my friend. The government has nukes. Too many of them. But they’re legit.”

Swalwell did not specify how many bombs he would be willing to drop to end violence. His anti-gun zealotry made him an instant hero, persuading him to briefly run for the Democratic nomination for president.

Other Democratic candidates have also warned of the grave perils facing anyone who would resist a government-disarmament command. Former Vice President Joe Biden scoffed in September, “If you want to protect yourself against the federal government, you’re going to need at least an F-15” fighter jet.

But Americans resisting mass gun confiscation will not need to defeat the feds. They would merely need to wait until government agents commit horrific blunders that turn millions more Americans against Washington. That pattern has repeated itself in American history in federal gun crackdowns gone awry.

And if the government attempts seizures?

In clashes between government agents and citizens, weaponry is not destiny. In August 1992, in the initial firefight at Ruby Ridge, Idaho, a camouflaged team of U.S. marshals with submachine guns was routed by a 14-year-old boy with a Ruger Mini-14 and a 25-year-old guy with a 30.06 rifle. False statements by federal officials during and after the siege at the Weavers’ cabin helped destroy the credibility of the criminal prosecution of the survivors the following year.

In February 1993, an assault by more than 70 federal Alcohol, Tobacco and Firearms agents was routed by the Branch Davidians near Waco, Texas, despite the ATF’s having automatic weapons and being supported by National Guard helicopters flying over the Davidians’ home. The ATF never sought to peacefully serve a search warrant on David Koresh and his followers. Instead, the agency’s code name for the attack was “Showtime” and local television stations had been alerted ahead of time to cover the glorious assault.

After each of those initial debacles, the FBI came in and made the situation far worse. FBI snipers at Ruby Ridge were given an unconstitutional “if you see them, shoot them” rule of engagement that resulted in the killing of Vicki Weaver as she stood in her cabin door holding her baby. At Waco, the FBI launched a tank and gas assault that included firing pyrotechnic grenades at the Davidians’ ramshackle dwelling; the subsequent fire left 80 people dead.

In both cases, the feds were spooked by popular resistance. At Ruby Ridge, the FBI and their law-enforcement allies were becoming encircled by armed private citizens, many of whom opposed the feds. Attorney General Janet Reno declared that the “first and foremost” reason she approved the final FBI assault at Waco was that “law-enforcement agents on the ground concluded that the perimeter had become unstable and posed a risk both to them and to the surrounding homes and farms. Individuals sympathetic to Koresh were threatening to take matters into their own hands to end the stalemate and were at various times reportedly on the way.”

Any firearms crackdown will be applauded by politicians and activists who hate gun owners as much as they hate guns if not more. Fair play is irrelevant when officialdom is saving humanity — especially women and children. The same politicians and media outlets who portray practically every privately owned firearm as a school massacre in waiting will scorn the rights of government victims.

Many rural gun owners are as unlikely to surrender their guns as they are to give up their Bibles. Escalating government force will create martyrs that multiply resistance. The British government’s heavy-handed repression of all Bostonians for a “tea party” by a smattering of activists helped turn the 13 colonies against King George. Any vigorous attempt to forcibly commandeer millions of weapons will result in clashes that the government will sometimes lose — especially given the record of police who either freeze up or cower in crisis situations, such as the Parkland School shooting, the Las Vegas Mandalay Hotel carnage, and the Orlando Pulse Nightclub massacre.

Any attempt to enforce widespread gun confiscation will require suspending Americans’ constitutional right to trial by jury. An Idaho jury found Ruby Ridge defendants not guilty: “Government witnesses cause case to collapse,” a Washington Post headline later declared. In 1994, a Texas jury rejected charges that Branch Davidians were guilty of murdering federal agents in a verdict the New York Times described as a “stunning defeat” for the feds. Juries in Montana, for instance, might resist convicting firearms violators the way that Massachusetts juries in the 1850s often refused to enforce the Fugitive Slave Act. Juries would not defer to the assertion of federal agents whom some people viewed as the equivalent of foreign invaders.

The First Amendment could be another gun-grab casualty. During the final day at Waco, the FBI continually broadcast “this is not an assault” as its tanks collapsed 20 percent of the Davidians’ home. The videos of the FBI tank assault swayed far more Americans to completely reject not just the federal claims on Waco but to question whether the entire government had far too much power for the safety of American citizens. Almost everybody with a cell phone has a video camera within reach, and film clips of federal agents smashing into homes and assailing defiant citizens would be more incendiary than any presidential tweet. Such optics will prove disastrous unless the government can prevent uploading any such videos to the Internet. If the government seeks to preemptively prevent exposures of its enforcement campaign, then it will lose the support of vast numbers of Americans who are not gun zealots.

Congress and their bureaucratic allies cannot count on local officials to carry out Washington’s commands. Sheriffs in New York state, New Mexico, and Colorado have already publicly refused to enforce what they consider unjust gun laws. The only way to carry out mass seizures of weapons in many parts of the nation would be by declaring martial law. But that would be perilous because many National Guard members might refuse to carry out orders, especially after enforcement efforts killed innocent civilians. Losing the loyalty of the troops would be the final straw to cause confiscation to collapse — but not until vast damage had been done to the government and private citizens. The more force the U.S. government uses, the more certain it is that federal credibility will collapse.

A ban on assault weapons would be only the first domino to fall — the “stepping stone,” as the Washington Post admitted decades ago. After an assault-weapons ban fails to end shootings, advocates will demand that all semi-automatic firearms be prohibited and confiscated. (The vast majority of rifles sold in recent decades have been semi-automatic.) And if such a ban was proclaimed and still failed to end violence, then politicians would of course have no choice but to confiscate all handguns. Each failed government intervention would provide the pretext for politicians to redouble their repression of Americans.

Citizens should remember that the government that claims a right to seize their firearms also denies that it has any legal obligation to protect individuals from violent criminals. Almost no one is holding politicians advocating mass gun confiscation liable for the carnage their proposals would produce. Instead, gun-ban proposals are being treated as moral imperatives or viewed as a chance for national atonement. Unfortunately, politicians can win votes in primary elections for championing policies that would ravage much of the nation.

Tyler Durden Sun, 02/09/2020 - 17:30
Published:2/9/2020 4:48:52 PM
[Markets] Key Witness Told Mueller Team That Russia Collusion Evidence Found In Ukraine Was Fabricated Key Witness Told Mueller Team That Russia Collusion Evidence Found In Ukraine Was Fabricated

Authored by John Solomon via,

One of Robert Mueller’s pivotal trial witnesses told the special prosecutor’s team in spring 2018 that a key piece of Russia collusion evidence found in Ukraine known as the “black ledger” was fabricated, according to interviews and testimony.

The ledger document, which suddenly appeared in Kiev during the 2016 U.S. election, showed alleged cash payments from Russian-backed politicians in Ukraine to ex-Trump campaign chairman Paul Manafort.

 “The ledger was completely made up,” cooperating witness and Manafort business partner Rick Gates told prosecutors and FBI agents, according to a written summary of an April 2018 special counsel’s interview.

In a brief interview with Just the News, Gates confirmed the information in the summary.

“The black ledger was a fabrication,” Gates said.

“It was never real, and this fact has since been proven true.”

Gates’ account is backed by several Ukrainian officials who stated in interviews dating to 2018 that the ledger was of suspicious origins and could not be corroborated.

If true, Gates’ account means the two key pieces of documentary evidence used by the media and FBI to drive the now-debunked Russia collusion narrative — the Steele dossier and the black ledger — were at best uncorroborated and at worst disinformation. His account also raises the possibility that someone fabricated the document in Ukraine in an effort to restart investigative efforts on Manafort’s consulting work or  to meddle in the U.S. presidential election. 

Much mystery has surrounded the black ledger, which was publicized by the New York Times and other U.S. news outlets in the summer of 2016 and forced Manafort out as one of Trump’s top campaign officials. 

After gaining wide attention as purported evidence of Russian ties to the Trump campaign, the ledger was never introduced as evidence at Manafort’s 2018 trial or significantly analyzed in Mueller’s final 2019 report, which concluded that Trump did not collude with Russia to influence the 2016 election. No FBI 302 interview reports have been released either showing what the FBI concluded about the ledger.

Gates’ interview with the Mueller team now provides a potential clue as to why.

By April 2018, Gates had reached a plea deal to testify against Manafort in a criminal case that ultimately resulted in Manafort’s conviction on tax and illegal lobbying charges. As the day-to-day manager of Manafort’s political consulting and lobbying efforts for former Ukrainian President Viktor Yanukovych, Gates handled Manafort’s operations and was deeply familiar with when and how payments were made and from whom.

During a debriefing with Mueller’s team on April 10, 2018, Gates was asked about the August 2016 New York Times article that first alerted the public to the existence of the black ledger and eventually led to Manafort’s downfall.

“The article was completely false,” Gates is quoted as telling Mueller’s team in a written summary of the interview created by some of the attendees.

“As you now know there were no cash payments. The payments were wired. The ledger was completely made up.”

When pressed as to why he was so certain, Gates explained the ledger did not match the way Yanukovych’s Party of Regions made payments to consultants like Manafort. 

“It was not how the PoR [Party of Regions] did their record keeping,” Gates told the prosecution team, according to the written summary.

Furthermore, Gates revealed that Manafort’s team had confirmed with the party’s former accountant that the black ledger could not be a contemporaneous document because the party’s official accounting books burned in a 2014 fire during Ukraine’s Maidan uprising. 

“All the real records were burned when the party headquarters was set on fire when Yanukovych fled the country,” Gates told the investigators, according to the interview summary.

The Party of Regions accountant reached by Manafort’s team told them that the black ledger was a “copy of a document that did not exist” and it “was not even [the accountant’s own] handwriting,” Gates told the prosecutors.

Gates’ account to prosecutors closely matches what several Ukrainian officials have said for more than a year.

Ukraine’s Special Anti-Corruption Prosecutor Nazar Kholodnytskyy told me last spring that he believed the black ledger was not a contemporaneous document, and likely manufactured after the fact.

“It was not to be considered a document of Manafort,” Kholodnytskyy said in an interview.

“It was not authenticated. And at that time it should not be used in any way to bring accusations against anybody.”

Likewise, one of Gates’ and Manafort’s Ukrainian business partners, Konstantin Kilimnik, who is now indicted in the same case as Manafort but remain at large, wrote a senior U.S. State Department official in summer 2016 that the black ledger did not match actual payments made to Manafort’s firm. 

“I have some questions about this black cash stuff because those published records do not make sense,” Kilimnik wrote the State official in August 2016.

“The time frame doesn’t match anything related to payments made to Manafort. … It does not match my records. All fees Manafort got were wires, not cash.”

In December 2018, a Ukrainian court ruled that two of that country’s government officials — member of parliament Sergey Leschenko and Artem Sytnyk, the head of the National Anticorruption Bureau of Ukraine — illegally interfered in the 2016 U.S. election by publicizing the black ledger evidence.

While that ruling has been overturned on a technicality, the role of Sytnyk and Leschenko in pushing the black ledger story remains true.

In an interview last summer, Leschenko said he first received part of the black ledger when it was sent to him anonymously in February 2016, but it made no mention of Manafort. Months later, in August 2016, more of the ledger became public, including the alleged Manafort payments.

Leschenko said he decided to publicize the information after confirming a few of the transactions likely occurred or matched known payments.

But Leschenko told me he never believed the black ledger could be used as court evidence because it couldn’t be proved beyond a reasonable doubt that it was authentic, given its mysterious appearance during the 2016 election.

“The black ledger is an unofficial document,” Leschenko told me. “And the black ledger was not used as official evidence in criminal investigations because you know in criminal investigations all proof has to be beyond a reasonable doubt. And the black ledger is not a sample of such proof because we don’t know the nature of such document.”

In the end, the black ledger did prompt the discovery of real financial transactions and real crimes by Manafort, which ultimately led to his conviction. 

But its uncertain origins raise troubling questions about election meddling and what constitutes real evidence worthy of starting an American investigation.

Tyler Durden Sun, 02/09/2020 - 16:30
Published:2/9/2020 3:50:34 PM
[Markets] Game Over? Is There Any Political Risk For Stocks In This Election Year? Game Over? Is There Any Political Risk For Stocks In This Election Year?

Authored by Sven Henrich via,

Is there any political risk for equities in this election year?

The 2016 US election has been a nirvana for US corporations who benefited the tremendously from the Republican led 2017 tax cuts that went into full effect in 2018. Taxes for US cooperations dropped dramatically and a lot of these tax cuts benefits went into buybacks which recorded record amounts in 2018 and 2019.

It probably doesn’t get better than this for US corporations although one may argue that the tax cuts have yet to translate into any meaningful increase in economic growth other than a temporary sugar high:

For Wall Street this coming US election could have negative consequences depending on the outcome, or it could have little to no impact.

The general view is if President Trump gets reelected and Republicans retain control of the Senate the current very tax friendly environment for US corporations will remain in place.

If a business friendly and centralist Democrat wins the election, say a Michael Bloomberg or a Joe Biden, then there may be some moderate change in tax policies, but nothing dramatically different. Unless of course a more populist left of center candidate wins such as Elizabeth Warren or Bernie Sanders then the threat to corporate America may be more severe, but that would really depend on whether Democrats would also take control of the Senate. A hypothetical President Warren or Sanders would find it visually impossible to pass changes to the tax code with a GOP lead Senate.

Too far apart are the ideological differences.

At this stage we don’t know who the Democratic nominee will be nor how the election will turn out, but Democrats face several key hurdles that have nothing to do with politics, but rather history, the economy and sentiment. And these hurdles suggest that the odds of President Trump getting re-elected are currently quite high.

While it’s true that President Trump never has had a plurality support of the overall population the 2016 election has already proven that this doesn’t necessarily mean anything. America is not a democracy based on plurality of the vote, but rather a republic and a president is elected by the electoral college. And hence, while Hillary Clinton received the plurality of the popular vote in 2016, it was the electoral college that decided the outcome of the presidency.

That’s the way it is, a problem for Democrats not lost on Jame Carville who recently stated“Eighteen percent of the population controls 52 Senate seats,” Carville said. “We’ve got to be a majoritarian party”.

Translated: For Democrats to win, they need to win big, not only the presidency, but also the Senate

Problem for Democrats is this: Whatever one’s political leanings, many people also vote with their pocket books, not on ideology.

Oh sure it appears most American’s are pretty much locked into ideological camps these days and there’s little to no movement in political view points based on the running MSN poll:

Steady as she goes. At the same time President Trump’s approval ratings appear to be improving according to the latest Gallup poll:

Why? Because currently economic news continues to be very supportive of the pocketbook sentiment.

With 3.6% unemployment, stock markets at all time highs and wage growth rising  3.2% in the past year, Americans are not only positive about the past year, but also for their personal financial outlook this coming year:

And note: Past election cycles suggest party control shifts as people are feeling financially worse off.

Democrats lost the presidency in 2000 as the US economy moved toward recession. Republican’s lost the presidency in 2008 as the financial crisis unfolded. In this sense the 2016 election then was perhaps a bit out of character in terms of the result, but not in terms of the vote as indeed the plurality of the vote was for Hillary Clinton.

No matter, Americans currently feel positive about their finances and they are confident in general as sentiment is positive:

And it’s not a surprise. Historically sentiment is positive when unemployment is low. But also note that confidence shifts on a dime once the unemployment picture shifts.

As Americans are politically very divided none of these data points will matter to a majority of voters. Many will vote for President Trump no matter what, some will vote for whoever the Democratic nominee will be no matter what. But US elections are decided on the margin of swing voters. And to the extent that consumer confidence and perception of financial well being remain high, a portion of swing voters will vote with their pocketbook and that implies a vote for President Trump. If the pocketbook is good why roll the dice and risk change or similar goes the calculus.

Perhaps the broader message: Republicans can’t afford to lose the economy or markets this year. Perception is reality and dropping markets are not good business for confidence.

So, from that perspective, unless these factors change dramatically ahead of the November election, it may already be game over for Democrats to win both the presidency and the Senate. Wall Street, for now, looks safe and political risk to equities appears low.

*  *  *

For the latest public analysis please visit NorthmanTrader. To subscribe to our market products please visit Services.

Tyler Durden Sun, 02/09/2020 - 09:20
Published:2/9/2020 8:48:12 AM
[Markets] The Pandemic Isn't Ending, It's Just The Beginning Of Global Disorder & Depression The Pandemic Isn't Ending, It's Just The Beginning Of Global Disorder & Depression

Authored by Charles Hugh Smith via OfTwoMinds blog,

When you've been lied to, you've been betrayed. Betrayal has consequences.

Unsurprisingly, denying the pandemic is unstoppable and consequential is the order of the day: authorities everywhere are terrified these realities might leak through all their oh-so-obviously desperate firewalls and filters. Why are they terrified? Because they know the entire global economy, including the linchpin Chinese and U.S. economies, was extremely fragile before the pandemic arose: why else the panic-stimulus and panic-repo policies of the Federal Reserve and the People's Bank of China in the pre-pandemic months of Q4 2019?

And so everything is covered up, and if that doesn't work, then outright denial is the default policy. The number of cases globally is absurdly understated, the number of deaths in China is absurdly under-reported, and so on.

But the biggest denial campaign is aimed at masking the fragility of the global economy, as the only thing keeping the rickety, speculative-bubble, insolvent global economy from imploding is the belief and confidence of the masses that everything is going swimmingly, so keep on borrowing, borrowing, borrowing, buying, buying, buying and speculating, speculating, speculating.

While the real-world battle to limit the spread of the virus in China gets the headlines, the battle inside your head to maintain your confidence in the system is just as important. Economists talk about recession and depression in quantitative terms: deflation, sales, profits, employment and so on.

The key dynamic in recessions and depressions is confidence: confidence that the condo you buy today will be worth a lot more tomorrow, the business investment you make today will generate higher profits tomorrow, your job benefits will increase tomorrow, your house value will rise tomorrow, and so on.

Once confidence in ever-higher wages, benefits, sales, profits and speculative gains withers, all bets are off. The loss of confidence is akin to a loss of faith or loss of credibility: none of these can be restored overnight. Once your confidence that a speculative gamble will pay off is dashed, you're not going to rush out to make the same gamble tomorrow.

Once your trust in authorities has been shattered by gross incompetence, authoritarian suppression and a laughably unbelievable tsunami of lies, you don't wake up the next morning with your trust in bogus statistics and reassurances fully restored.

Once credibility has been destroyed by an endless parade of fabrications, lies and transparently false reassurances, your faith and trust that what you're being told 24/7 is actually true is not magically restored.

Loss of confidence, trust, faith and credibility are self-reinforcing. Once you realize your speculative gamble is not just no longer going up but it's crashing, you want out, not in. Once you see your neighbors going broke, you shut down your business before you lose everything.

Confidence doesn't just evaporate; it's replaced by uncertainty, anxiety and fear. Better safe than sorry becomes the implicit context: better to close now than gamble on a magical-thinking return to normalcy tomorrow. Better to go back to the ancestral village now rather than risk going back to work and becoming a victim of the "no big deal, just another flu" who ends up dead as a result of trusting the authorities' reassurances.

The tragic irony is that Chinese authorities hid the epidemic to save political face, but their increasingly transparent lies and desperation are destroying what little international credibility remained after their attempt to save political face blew up. Rather than saving face, they've lost the last shreds of credibility they still possessed.

As for the Chinese people: how does it feel to know that the political optics matter so much more than your health and well-being?

Quarantining 400 million people in China still leaves a reservoir of 1 billion people in hundreds of small cities and towns and thousands of villages who may catch the virus from people who returned home from cities before they were locked down.

Here's how contagious viruses spread: a traveler who has the virus but doesn't yet have any symptoms rubs his nose beneath his mask and then takes the bus ticket and hands it to the driver. Then the traveler grabs the handrail in the bus, leaving viral particles. Later, in another bus station's bathroom, he lifts his mask because it's hot and uncomfortable and sneezes. Hundreds of other travelers pass through the bathroom within hours.

This is why those most familiar with epidemics and pandemics say that trying to control the spread of a highly contagious virus is like trying to control the wind.

The irony of all this is razor-sharp: the more authorities try to mask reality to maintain confidence, the more they destroy credibility, confidence, trust and faith. Once these intangibles are lost, the loss of confidence is self-reinforcing.

Depression isn't just an economic number. It's a self-reinforcing loss of confidence. Do you really think quarantining 400 million people will stop the pandemic? Based on what, other than magical thinking and the reassurances of authorities who've sacrificed all credibility?

Do you really think the Chinese economy can grind to a halt and absolutely nothing else in the global economy will be adversely impacted? Based on what, other than magical thinking and the reassurances of authorities who've sacrificed all credibility?

With the loss of trust and faith comes disorder. When you've been lied to, you've been betrayed. Betrayal has consequences.

*  *  *

My recent books:

Audiobook edition now available:
Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World ($13)
(Kindle $6.95, print $11.95) Read the first section for free (PDF).

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

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

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

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

Tyler Durden Sat, 02/08/2020 - 12:30
Published:2/8/2020 11:41:44 AM
[Markets] Beyond Ukraine: America's Coming (Losing) Battle For Eurasia Beyond Ukraine: America's Coming (Losing) Battle For Eurasia

Authored by US Army Major Danny Sjursen (ret.) via,

Academic historians reject anything smacking of inevitably. Instead they emphasize the contingency of events as manifested through the inherent agency of human beings and the countless decisions they make. On the merits, such scholars are basically correct. That said, there was something – if not inevitable – highly probable, almost (forgive me) deterministic about the two cataclysmic world wars of the 20th century. Both, in retrospect, were driven, in large part, by collective – particularly Western – nations’ adherence to a series of geopolitical philosophies.

The first war – which killed perhaps nine million soldiers in the sodden trench lines (among other long forgotten places) of Europe – began, in part, due to the continental, and especially maritime, competition between Imperial Great Britain, and a new, rising, and highly populous, land power, Imperial Germany. Both had pretensions to global leadership; Britain’s old and long-standing, Germany’s recent and aspirational – tinged with a sense of long-denied deservedness. Political and military leaders on both sides – along with other European (and the Japanese) nations – then pledged philosophical fealty to the theories of an American Navy man, Alfred Thayer Mahan. To simplify, Mahan’s core postulation – published from a series of lectures as The Influence of Sea Power Upon History – was that geopolitical power in the next (20th) century would be inherently maritime. The countries that maintained large, modern navies, held strategic coaling stations, and expanded their coastal, formal empires, would dominate trade, develop the strongest economies, and, hence, were apt to global paramountcy. Conversely, traditional land power – mass armies prepared to march across vast land masses – would become increasingly irrelevant.

Mahan’s inherently flawed, or at least exaggerated, conclusions – and his own clear institutional (U.S. Navy) bias – aside, key players in two of the major powers of Europe seemed to buy the philosophy hook-line-and-sinker. So, when Wilhelmine Germany took the strategic decision to rapidly expand its own colonial fiefdoms (before the last patches of brown-people-inhabited land were swallowed up) and, thereby necessarily embarked on a crash naval buildup to challenge the British Empire’s maritime supremacy, the stage was set for a massive war. And, with most major European rivals – hopelessly hypnotized by nationalism – locked in a wildly byzantine, bipolar alliance system, all that was needed to turn the conflict global was a spark: enter the assassin Gavrilo Princip, a pistol, Austrian Archduke Franz Ferdinand, and it was game on.

The Second World War – which caused between 50-60 million deaths – was, of course, an outgrowth of the first. It’s causes were multifaceted and complicated. Nonetheless, particularly in its European theater, it, too, was driven by a geopolitical theorist and his hypotheses. This time the culprit was a Briton, Halford John Mackinder. In contrast with Mahan, Mackinder postulated a land-based, continental power theory. As such, he argued that the "pivot" of global preeminence lay in the control of Eurasia – the "World Island" – specifically Central Asia and Eastern Europe. These resource rich lands held veritable buried treasure for the hegemon, and, since they lay on historical trade routes, were strategically positioned.

Should an emergent, ambitious, and increasingly populated, power – say, Nazi Germany – need additional territory (what Hitler called "Lebensraum“) for its race, and resources (especially oil) for its budding war machine, then it needed to seize the strategic "heartland" of the World Island. In practice, that meant the Nazis theoretically should, and did, shift their gaze (and planned invasion) from their outmoded Mahanian rival across the English Channel, eastward to the Ukraine, Caucasus (with its ample oil reserves), and Central Asia. Seeing as all three regions were then – and to lesser extent, still – dominated by Russia, the then Soviet Union, the unprecedentedly bloody existential war on Europe’s Eastern Front appears ever more certain and explainable.

Germany lost both those wars: the first badly, the second, disastrously. Then, in a sense, the proceeding 45-year Cold War between the US and the Soviet Union – the only two big winners in the Second World War – may be seen as an extension or sequel to Mackinder-driven rivalry. The problem is that after the end of – at least the first – Cold War, Western, especially American, strategists severely miscalculated. In their misguided triumphalism, US geopolitical theorists both provoked a weak (but not forever so) Russia by expanding the NATO alliance far eastward, but posited premature (and naive) theories that assumed global finance, free (American-skewed) trade, and digital dominance were all that mattered in a "Post" Cold War world.

No one better defined this magical thinking more than the still – after having been wrong about just about every US foreign policy decision of the last two decades – prominent New York Times columnist, Thomas Friedman. In article after article, and books with such catchy titles as The World is Flat, and The Lexus and the Olive Tree, Friedman argued, essentially, that old realist geopolitics were dead, and all that really mattered for US hegemony was the proliferation of McDonald’s franchises worldwide.

Friedman was wrong; he always is (Exhibit A: the 2003 Iraq War). Today, with a surprisingly – at least with his prominent base – popular president, Donald J. Trump, impeached in the House and just acquitted by the Senate for alleged crimes misleadingly summed up as “Ukraine-gate,” a look at the real issues at hand in Eastern Europe and Central Asia, demonstrate that, for better or (probably) worse, the ghost of Mackinder still haunts the scene. For today, I’d argue, the proxy battle over Ukraine between the U.S. and its allied-coup-empowered government – which includes some neo-nazi political and military elements – and Russian-backed separatists in the country’s east, reflects a return to the battle for Eurasian resource and geographic predominance.

Neither Russia nor the United States is wholly innocent in fueling and escalating the ongoing Ukrainian Civil War. The difference is, that in post-Russiagate farce, chronically (especially among mainstream Democrat) alleged Russia-threat-obsessed America, reports of Moscow’s ostensible guilt literally saturate the media space. The reporting from Washington? Not so much.

The truth is that a generation of prominent "liberal" American, born-again Russia-hawks – Hillary Clinton, Joe Biden, the whole DNC apparatus, and the MSNBC corporate media crowd – wielded State Department, NGO, and economic pressure to help catalyze a pro-Western coup in Ukraine during and after 2014. Their opportunism seemed, to them, simple, and relatively cost-free, at the time, but has turned implacably messy in the ensuing years.

In the process, the Democrats haven’t done themselves any political favors, further sullying what’s left of their reputation by – in some cases – colluding with Ukrainians to undermine key Trump officials; and consorting with nefarious far-right nationalist local bigots (who may have conspired to kill protesters in the Maidan "massacre," as a means to instigate further Western support for the coup). What’s more, while much of the conspiratorial Trump-team spin on direct, or illegal, Biden family criminality has proven false, neither Joe nor son Hunter, are exactly "clean." The Democratic establishment, Biden specifically, may, according to an excellent recent Guardian editorial, have a serious "corruption problem" – no least of which involves explaining exactly why a then sitting vice president’s son, who had no serious diplomatic or energy sector experience, was paid $50,000 a month to serve on the board of a Ukrainian gas company.

Fear not, the "Never-Trump" Republicans, and establishment Democrats seemingly intent on drumming up a new – presumably politically profitable – Cold War have already explanation. They’ve dug up the long ago discredited, but still publicly palatable, justification that the US must be prepared to fight Russia "over there," before it has no choice but to battle them "over here" (though its long been unclear where "here" is, or how, exactly, that fantasy comes to pass). First, there’s the distance factor: though several thousands of miles away from the East Coast of North America, Ukraine is in Russia’s near-abroad. After all, it was long – across many different generational political/imperial structures – part of the Soviet Union or other Russian empires. A large subsection of the populace, especially in the East, speaks, and considers itself, in part, culturally, Russian.

Furthermore, the Russian threat, in 2020, is highly exaggerated. Putin is not Stalin. The Russian Federation is not the Soviet Union; and, hell, even the Soviet (non-nuclear) military threat and geopolitical ambitions were embellished throughout Cold War "Classic." A simple comparative “tale-of-the-tape” illustrates as much. Economically and demographically, Russia is demonstrably an empirically declining power – its economy, in fact, about the size of Spain’s.

Nor is the defense of an imposed, pro-Western, Ukrainian proxy state a vital American national security interest worth bleeding, or risking nuclear war, over. As MIT’s Barry Posen has argued, "Vital interests affect the safety, sovereignty, territorial integrity, and power position of the United States," and, "If, in the worst case, all Ukraine were to ‘fall’ to Russia, it would have little impact on the security of the United States." Furthermore, as retired US Army colonel, and president of the restraint-based Quincy Institute, Andrew Bacevich, has advised, the best policy, if discomfiting, is to "tacitly acknowledge[e] the existence of a Russian sphere of influence." After all, Washington would expect, actually demand, the same acquiescence of Moscow in Mexico, Canada, or, for that matter, the entire Americas.

Unfortunately, no such restrained prudence is likely, so long as the bipartisan American national security state continues to subscribe to some vague version of the Mackinder theory. Quietly, except among wonky regional experts and investigative reporters on the scene, the US has, before, but especially since the "opportunity" of the 9/11 attacks, entered full-tilt into a competition with Russia and China for physical, economic, and resource dominance from Central Asia to the borderlands of Eastern Europe. That’s why, as a student at the Army’s Command and General Staff College in 2016-17, all us officers focused almost exclusively on planning fictitious, but highly realistic, combat missions in the Caucasus region. It also partly explains why the US military, after 18+ years, remains ensconced in potentially $3 trillion resource-rich Afghanistan, which, not coincidentally, is America’s one serious physical foothold in land-locked Central Asia.

Anecdotally, but instructively, I remember well my four brief stops at the once ubiquitous US Air Force way-station into Afghanistan – Manas Airbase – in Bishkek, Kyrgyzstan. Off-base "liberty" – even for permanent party airmen – was rare, in part, because the Russian military had a mirror base just across the city. What’s more, the previous, earlier stopover spot for Afghanistan – Uzbekistan – kicked out the US military in 2005, in part, due to Russian political and economic pressure to do so.

Central Asia and East Europe are also contested spaces regarding the control of competing – Western vs. Russian vs. Chinese – oil and natural gas pipeline routes and trade corridors. Remember, that China’s massive “One Belt – One Road” infrastructure investment program is mostly self-serving, if sometimes mutually beneficial. The plan means to link Chinese manufacturing to the vast consumerist European market mainly through transportation, pipeline, diplomatic, and military connections running through where? You guessed it: Central Asia, the Caucasus, and on through Eastern Europe.

Like it or not, America isn’t poised to win this battle, and its feeble efforts to do so in these remarkably distant locales smacks of global hegemonic ambitions and foolhardy, mostly risk, nearly no reward, behavior. Russia has a solid army in close proximity, a hefty nuclear arsenal, as well as physical and historical connections to the Eurasian Heartland; China has an even better, more balanced, military, enough nukes, and boasts a far more powerful, spendthrift-capable, economy. As for the US, though still militarily and (for now) economically powerful, it lacks proximity, faces difficult logistical / expeditionary challenges, and has lost much legitimacy and squandered oodles of good will with the regional countries being vied for. Odds are, that while war may not be inevitable, Washington’s weak hand and probable failure, nearly is.

Let us table, for the purposes of this article, questions regarding any environmental effects of the great powers’ quest for, extraction, and use of many of these regional resources. My central points are two-fold:

  • first, that Ukraine – which represents an early stage in Washington’s rededication to chauvinist, Mackinder geostrategy – as a proxy state for war with Russia is not an advisable or vital interest;

  • second, that Uncle Sam’s larger quest to compete with the big two (Eur)Asian powers is likely to fail and symptomatic of imperial confusion and desperation.

As the U.S. enters an increasingly bipolar phase of world affairs, powerful national security leaders fear its diminishing power. Washington’s is, like it or not, an empire in decline; and, as we know from history, such entities behave badly on the downslope of hegemony. Call me cynical, but I’m apt to believe that the United States, as perhaps the most powerful imperial body of all time, is apt, and set, to act poorest of all.

The proxy fight in Ukraine, battle for Central Asia in general – to say nothing of related American aggression and provocations in Iran and the Persian Gulf – could be the World War III catalyst that the Evangelical militarist nuts, Vice President Pence and Secretary of State Mike Pompeo, unwilling to wait on Jesus Christ’s eschatological timeline, have long waited for. These characters seemingly possess the heretical temerity to believe man – white American men, to be exact – can and should incite or stimulate Armageddon and the Rapture.

If they’re proved “right” or have their way – and the Mikes just might – then nuclear cataclysm will have defied the Vegas odds and beat the house on the expected human extinction timeline. Only contra to the bloody prophecy set forth in the New Testament book of Revelations, it won’t be Jesus wielding his vengeful sword on the back of a white horse, but – tragic and absurdly – the perfect Antichrist stooge, pressing the red button, who does the apocalyptic deed.

*  *  *

Danny Sjursen is a retired US Army officer and regular contributor to His work has appeared in the LA Times, The Nation, Huff Post, The Hill, Salon, Truthdig, Tom Dispatch, among other publications. He served combat tours with reconnaissance units in Iraq and Afghanistan and later taught history at his alma mater, West Point. He is the author of a memoir and critical analysis of the Iraq War, Ghostriders of Baghdad: Soldiers, Civilians, and the Myth of the Surge. His forthcoming book, Patriotic Dissent: America in the Age of Endless War, is available for preorder on Amazon. Follow him on Twitter at @SkepticalVet. Check out his professional website for contact info, scheduling speeches, and/or access to the full corpus of his writing and media appearances.

Tyler Durden Sat, 02/08/2020 - 00:05
Published:2/7/2020 11:12:27 PM
[Markets] "Shoot The Messenger": What We Can Say Publicly About Coronavirus & What We Can't "Shoot The Messenger": What We Can Say Publicly About Coronavirus & What We Can't

Authored by Chris Martenson via,

It’s Time…

If you’ve been watching our Youtube video series on the Wuhan Coronavirus (2019nCoV) pandemic, you know that it’s time to prepare.

Yes, we can always hope that the latest unconfirmed potential treatment marks an actual turning point (i.e. treating patients with HIV protease inhibitor drugs) . But it’s much better to be safe than sorry.

You’re probably reading this because you tend to think critically, and you trust your own judgment.  Weirdly, that sets you apart from the masses.

And so here you are.  Not because you’re weird, but because it’s weird that common sense and prudent caution are so uncommon.

For a whole host of reasons that extend well beyond this emerging pandemic, we think being prepared is a selfless and prudent thing to do.  Everyone should seek to be as resilient as possible. Our book Prosper! covers this in much greater detail. It encourages readers to build capital.

Yes, build up your financial capital. But don’t ignore social, knowledge, time, material, living, cultural and emotional capital.  If you have depth in each of these, you will be truly wealthy, happy and fulfilled — no matter what the universe throws your way.

A pandemic is a hard kick in the pants that will propel many people to finally begin preparing. If you’re one of them, don’t ignore this important call to action.

For those who are already in good shape — Congratulations! Use this opportunity to re-evaluate your planning, inventory your preps, and then improve upon both if needed.

What We Can Say Publicly & What We Can’t

As with our coverage of the Fukushima nuclear disaster back in 2011, we believe it is our duty to make our gifts of sleuthing, clarifying, and decoding freely available to the world.  That’s what we’ve done in the past, and we’re doing it in spades now — releasing at least one video every day for the past 13 days, keeping the public updated on the evolving coronavirus threat.

But there’s certain content that we cannot put out into the public realm.

Some of it can put a target on our back for the media to use in accusing us of being “alarmists” or “fearmongers”.

Other content may not be sufficiently proven, but we feel is important to consider and monitor as more data comes in.  But it’s too half-baked to put out to a public audience where some folks might accept it as gospel simply because we shared it.

Often, we just go deeper into a subject than the general public has any interest in going. But our insight-hungry subscribers value this greatly. One thing Peak Prosperity subscribers share in common is that we’re all curious, committed life-long learners.

Cutting to the chase: subscriptions are how Adam and I support and run this site.  Without our premium subscribers there would be no site at all.

Google is a monopoly and shares less and less advertising revenue with the content creators that use its platform. The advertising check Peak Prosperity receives are really so tiny as to be laughable.  There’s no possible way to support this site via ad revenue.  If we relied on ad revenue — of which the monthly check could buy us a nice dinner and little else — this would become a hobby site. Adam and I would have to earn a living other ways, and maybe write a single article once of twice as month as we could get to it. The experience would be vastly different from the daily publishing programming we have, not to mention the even more valuable vibrant community of intelligent thinkers that is fostered here.

I feel odd having to spell this out. But you’d be surprised how many people decry that we have a revenue model that funds this site’s existence.  Some of these critics are journalists, too; which is odd to me, because they’re in the same business —  except a parent company cuts their paycheck.

Denying Ammunition To The Haters

In fast-moving situations like the coronavirus outbreak, the unknowns outweigh the knowns.  Quite often the most useful and most actionable material is in the ‘unknowns.’

This is where our super-power comes into play: sifting through vast piles of snippets and fragments and assembling them into a coherent (if still incomplete) picture.  One with actionable insights to help you make important life decisions.

Sometimes we simply have to avoid handing weapons to our enemies.  Early, fast-changing information can (and often is) taken out of context to try to “shoot the messenger”.  Throughout this pandemic so far, the vast majority of attention we’ve gotten from the established media has accused us of whipping up fear or being opportunists.

Not a single one of these critics has yet sought to engage in debate on the data we’ve provided in any of our writings or videos to argue “here’s something you got wrong.”

Why not?  Because they have no interest in whether we have the facts right or wrong.

Instead, they’re interested in pushing a narrative that says “don’t worry, everything is just fine”. In their eyes, our sin is that we happen to think some of the facts ARE indeed worrying. Or at least too important to simply take on faith.  It’s the oldest trick in the book – when you can’t beat the message, attack the messenger.

Just last night, my Wikipedia page, up for more than a decade, was deleted by Wikipedia’s editors.  I guess if you feel that shooting the messenger isn’t enough, try to expunge him from history.

Again, this is all just part of the territory.  Like the trolls who sometimes show up in this site’s comments section, armed with the latest talking points (“no worse than the flu!”) and seeking to swamp or derail the conversation.

Behind our paywall, there are no trolls.  Well, maybe once in a blue moon, but we have a rapid and inspiring tribal antibody response that detects and ejects such entrants, so they don’t last long.  Which means we’re free to engage in very open and intelligent wide-ranging conversations.

In our brand new report for our premium subscribers, Adam and I share our own personal preparations for the coronavirus which — for reasons of not arming our critics with more ammunition for  “fear mongering” charges, and for our family’s personal safety, and given the fact that what works for us may not be appropriate for everyone — are not things we’re willing to broadcast to the public.

Finally, we’ve learned that when we recommend specific actions that can have an actual impact on supplies, we shoulder an ethical responsibility.  We trust our subscribers to avoid hoarding and be otherwise responsible in their purchases, only securing what they need and thereby also being in position to support others should things become dicey.

On that note, let’s review this passage from our book Prosper! because it’s important framing for everything that comes next:

Selfless Not Selfish

Another objection we hear to the prospect of preparing and becoming more resilient is that those actions could be seen as being selfish. Instead we see them as being selfless. Those who are not prepared when an emergency strikes are a drain on critical resources, while those who are prepared can be of assistance.

To be among those who can be in a position to render assistance, or at least need none of their own, means that your prior acts of preparation have selflessly removed you from the minus column and placed you on the plus side.

The first steps towards preparedness usually involve addressing your own needs or those of your loved ones, but many people then go beyond that and prepare for others who may not be able to do so, or have not done so, or maybe even will not do so.

But let us put an important qualifier on that; preparing before a crisis hits is responsible and selfless, but trying to accumulate necessary items during a crisis is an act of hoarding. We do not and never will advocate hoarding. Responsible preparations begin long before any trouble appears. Anything else stands a good chance of making things worse, not better.

The news has been full of stories of how people behave when scarcity strikes and they are generally not pretty. People in Boston fought over bottled water just hours after a water main broke in 2010. Nasty fights, too. In Venezuela, as of the writing of this book, desperate people are attempting to buy anything and everything that might remain in the stores as their national currency devalues by the day. This is bringing forth all sorts of government-mandated counter measures that make it impossible for many families to buy essential items.

We mentioned earlier that time may well be your most valuable asset in becoming resilient. Be aware that many things that are easily available now may be difficult to obtain later. Now, before any big crises have hit, it’s very easy to pick up the phone, or click a mouse button, and have the big brown truck of happiness roll up to your doorstep a few days later. Everything you could ever want to buy is currently available and stores are abundantly stocked in most countries. However, we can imagine a large number of possible futures where such easy access to consumer goods and desired items is either much more difficult or impossible.

The Time To Prepare Is *NOW*

It’s time to begin preparing.  Well, honestly, given the demonstrated threat of the Wuhan coronavirus, it’s past time — which means it’s time to begin preparing responsibly (no hoarding of items already in short supply like face masks, please).

This is especially true if you live in a country with substandard health care or a weak hospital infrastructure.

There’s room for hope that this pandemic will be limited by aggressive containment efforts. A vaccine at some point is highly likely.

But there’s no guarantee either will happen. Or even if they do, that help will arrive before the virus hits your community.

The odds of the virus threat are more than sufficient to cause me to take prudent defensible precautions now, to follow the developing news like a hawk, and to advise people to prepare today should they soon need to remain at home for days to weeks during an outbreak.

In this new report for our premium subscribers, How We’re Personally Preparing Against The Coronavirus, Adam and I share the steps we’re taking to protect our own families.

We cover both what we’re prioritizing BEFORE the virus hits our towns, and what we plan to do AFTER it does.

For those who choose not to subscribe, for whatever reason, that’s fine. We’ll continue our daily work here scouring the world of news for you and issuing as many videos, articles and podcasts as we can to distill the key insights we feel are most important for you to know about this swiftly-unfolding situation.

Click here to read Part 2 of this report (free executive summary, enrollment required for full access).

Tyler Durden Thu, 02/06/2020 - 16:25
Published:2/6/2020 3:31:19 PM
[Entertainment] Mary Higgins Clark Dead at 92  Mary Higgins ClarkMary Higgins Clark is dead at the age of 92. The bestselling author of books like You Don't Own Me, Where Are the Children? and more died on Friday of natural causes, according to...
Published:1/31/2020 10:26:59 PM
[Markets] Dow books more than 600-point loss as coronavirus fears intensify Dow books more than 600-point loss as coronavirus fears intensify Published:1/31/2020 3:26:31 PM
[Markets] Second-Order Effects: The Unexpectedly Slippery Path To Dow 10,000 Second-Order Effects: The Unexpectedly Slippery Path To Dow 10,000

Authored by Charles Hugh Smith via OfTwoMinds blog,

Dow 30,000 is "unsinkable," just like the Titanic.

A recent Barrons cover celebrating the euphoric inevitability of Dow 30,000 captured the mainstream zeitgeist perfectly: Corporate America is firing on all cylinders, the Federal Reserve's god-like powers will push stocks higher regardless of any other reality, blah blah blah.

While the financial media looked elsewhere for its amusement, the coronavirus epidemic in China just poured fentanyl in the Dow 30,000 punchbowl. The mainstream continues to guzzle down the punch, oblivious to the fentanyl, confident that the coronavirus will quickly fade and China will soon return to its winning role of growth chariot pulling the global economy to ever greater heights.

As I noted in Could the Coronavirus Epidemic Be the Tipping Point in the Supply Chain Leaving China?, there's a factor few of the sublimely confident Bulls consider: second-order effectsfirst order, every action has a consequence. Second order, every consequence has its own consequence.

The media's focus is solely on the first-order consequences: the number of infected people and fatalities, government responses such as quarantines, and so on. The general expectation is these first-order consequences will dissipate shortly and life will return to its pre-epidemic status with virtually no significant changes.

If we consider second-order effects carefully, we draw a much different conclusion: China will experience social unrest and economic dislocation that will unleash self-reinforcing chaos in global markets. This is not a mainstream opinion, of course, because the mainstream assumes second-order effects simply won't matter, i.e. they don't exist. As I describe in my latest book, Will You Be Richer or Poorer?, acting as if inconvenient realities don't exist doesn't make them actually vanish. Ignoring realities that are difficult to measure or that don't fit the happy story is ultimately suicidal.

Though China Bulls will never admit it, China's economy has become increasingly fragile in a process of diminishing returns reflected in the chart of China's S-Curve below. What worked in the boost phase (picking the low-hanging fruit of development) no longer works.

The conventional view in the West is that the Chinese people are docile and obedient, obeying the central government's edicts without question. The idea that the working class in China could refuse to comply is not even on the margins of Western understanding.

But if we consider the thousands of spontaneous protests and wildcat strikes against authority that have occurred in China in recent years, we realise it's Americans who are docile and obedient, slavishly worshiping at the altar of the Federal Reserve / Dow 30,000 while their "billionaire betters" pile up fortunes and political influence, reducing the vaunted American middle-class to passive, beaten debt-serfs and tax donkeys.

Despite the paper-thin veneer of official Communist rhetoric, the social contract in China is entirely financial: you (the ruling elites) make us more prosperous every month and we'll obey. Prosperity is of course financial--higher wages, more social benefits, higher real estate valuations, and so on-- but it also includes intangible forms of capital such as greater security, cleaner air and water, wider avenues of social mobility, etc.

The official mishandling of the coronavirus epidemic from the top down tells the Chinese people the unfortunate reality: you don't count, you don't matter. All that matters is the leadership saving face, and if millions of working-class Chinese people are sacrificed or needlessly put in harm's way to save the leadership's face, then the masses should quietly accept their completely needless losses and suffering.

This is a complete abrogation of the implicit social contract China's people have come to expect of their leadership. The masses have accepted systemic corruption that enriches the few (Party leaders and crony developers, etc.) at the expense of the many because the many were gaining greater prosperity and security. But that advance has stalled in recent years as the costs of essentials have soared and wages haven't kept pace.

The favored elites have of course kept pace, and since they control the media and machinery of governance, the unhappy slippage has been successfully buried beneath bogus official statistics and relentless suppression of any leakage or dissent.

(Note that doctors who attempted to go public with their fears of the coronavirus in early January were reportedly arrested to shut them up--par for the course for anyone who doesn't comply with face-saving official prevarication.)

But being exposed to a potentially fatal virus because it pleased the leadership to suppress the facts will trigger second-order effects that will not dissipate. The same can be said of economic and financial second-order effects that will disrupt supply chains and China's precariously over-leveraged shadow banking system.

Those expecting the Chinese workers to be cowed by 100,000 security cameras will be surprised when workers tear down every single camera and the police and People's Liberation Army soldiers decline to kill their fellow citizens.

Nobody expects China's social order or economy to unravel as a second-order effect of the epidemic, and that in itself is a sound reason to not dismiss the possibility too readily. Second-order effects: consequences have their own consequences.

Meanwhile, back on the Corporate America Ranch, Second-order effects may upset all the happy-story assumptions of Chinese suppliers magically being unaffected and workers whose jobs have vanished accepting their downward mobility without complaint.

U.S. companies may find their products are not available in the expected quantities and at the expected prices. Since 90% of American wage-earners have stagnant incomes, Corporate America has no pricing power, i.e. ability to raise prices and make them stick, so profits will be slashed as sales stagnate along with wages.

The hubris-soaked fantasy that the Fed will jack up stock valuations forever regardless of sales and profits will run aground on the unforgiving shoals of reality and all the hidden fragilities in America's economy will emerge: too much leverage, too many zombie companies kept alive by debt, too much debt and not enough collateral, too many small businesses one tiny tipping-point away from closing for good and laying off all employees--the list is nearly endless.

Once all the second-order effects have erupted and triggered their own chaotic consequences, we'll look back at the complacent euphoria that America is both dependent on Chinese labor and production yet magnificently detached from any consequences of China's downward spiral and marvel at the herd's self-congratulatory hubris, willful blindness and unforgivable negligence.

Down this slippery path lies Dow 10,000. Dow 30,000 is "unsinkable," just like the Titanic.

*  *  *

My recent books:

Audiobook edition now available:
Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World ($13)
(Kindle $6.95, print $11.95) Read the first section for free (PDF).

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

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

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

*  *  *

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

Tyler Durden Fri, 01/31/2020 - 07:21
Published:1/31/2020 6:24:48 AM
[Sport Headlines] Cristiano Ronaldo Scores Seventh Hat-trick In As Many Games Former Manchester United star, Cristiano Ronaldo, is tearing up the record books in Italy, where, on Sunday, he scored three goals in a match for the seventh consecutive game, Juventus losing 2-1 to Napoli. Last week, Juventus beat Roma 3-1 to to... Published:1/29/2020 5:07:58 PM
[Markets] Could The Coronavirus Epidemic Be The Tipping Point In Supply Chain Leaving China? Could The Coronavirus Epidemic Be The Tipping Point In Supply Chain Leaving China?

Authored by Charles Hugh Smith via OfTwoMinds blog,

Everyone expecting a quick resolution to the epidemic and a rapid return to pre-epidemic conditions would be well-served by looking beyond first-order effects.

While the media naturally focuses on the immediate effects of the coronavirus epidemic, the possible second-order effects receive little attention: first order, every action has a consequence. Second order, every consequence has its own consequence.

So the media's focus is the first-order consequences: the number of infected people and fatalities, government responses such as quarantines, and so on. The general expectation is these first-order consequences will dissipate shortly and life will return to its pre-epidemic status with virtually no significant changes.

Second-order effects caution: not so fast. Second-order consequences may play out for months or even years even if the epidemic ends as quickly as the consensus expects.

The under-appreciated dynamic here is the tipping point, the imprecise point at which a decision to make fundamental changes tips from "maybe" to "yes."

These tipping points are often influenced by exhaustion or frustration. Take a small business that's been hit with tax increases, additional fees, more regulatory compliance requirements, etc. When the next fee increase arrives, the onlooker might declare that the sum is relatively modest and the business owner can afford to pay it, but the onlooker is only considering first-order effects: the size of the fee and and the owner's ability to pay it.

To the surprise of the onlooker focusing only on first-order effects, the second-order effect is the owner closes the business and moves away. Invisible to everyone focusing solely on first-order effects, the owner's sense of powerlessness and weakening resolve to continue despite soaring costs and declining profits has slowly been moving up to a tipping point.

Beneath the surface, every new fee, every tax increase and every new regulation has pushed the owner closer to "I've had it, I'm out."

When the owner shuts the business, onlookers can't understand how one little extra fee could trigger such a fundamental change. The observer is only looking at the new fee as a single cause with a single consequence. In the real world, each new fee, tax increase and regulation was another link in a causal chain of consequences generating consequences.

Turning to the possible second-order effects of the epidemic in China, let's start with the decision to keep supply chains in China. The reasons to keep supply chains in China have been dwindling for years: wages and other costs have been rising, the central government has increased demands for technology sharing, the general sense that foreigners and foreign companies are no longer needed or wanted, and the trade war, which is more or less in a truce phase rather than over.

One common belief is that it's "impossible" to move supply chains out of China. This is a classic first-order effect analysis. When the supply chain gets disrupted for one reason or another and alternatives must be found, alternatives are found. What becomes "impossible" isn't moving the supply chain from China but keeping it in China.

The mistake made by those only considering first-order effects is that a modest effect "should" only generate modest consequences. For the observer focused solely on first-order effects, if the coronavirus epidemic blows over as expected, then supply chains "should" be unaffected because the effect is quantitatively modest.

But once we start considering cumulative second-order effects and potential tipping points, then the disruption of supply chains caused by the epidemic, no matter how modest, could be "the last straw" to those who had beneath the surface already shifted from "never leave China" to "maybe leave China." The epidemic could tip the decision process into "must leave China."

Consider two executives, one who looked at the longer term consequences of being dependent on production in China and began establishing alternative suppliers at the start of the trade war 18 months ago, and another exec who looked at the first-order hassles and expenses of moving out of China and stayed put to minimize short-term expenses.

Individual decisions add up to trend changes, and these charts reflect a trend change in globalization and China's share of global exports. Globalization and China's share of global exports have both plateaued and are now entering the stagnation / decline phase of the S-Curve.

Everyone expecting a quick resolution to the epidemic and a rapid return to pre-epidemic conditions would be well-served by looking beyond first-order effects and easy assumptions that the consequences of the epidemic will be near-zero.

Here are some informative science-based links on the coronavirus, courtesy of longtime correspondent Cheryl A.:

Another Decade, Another Coronavirus

New coronavirus can cause infections with no symptoms and sicken otherwise healthy people, studies show

Map of Global Case of Wuhan Coronavirus

Coronavirus contagious even in incubation stage, China’s health authority says

Preliminary Risk Assessment of Coronavirus Spreading

Preliminary estimation of the basic reproduction number of novel coronavirus (2019-nCoV) in China, from 2019 to 2020

Containing new coronavirus may not be feasible, experts say, as they warn of possible sustained global spread

How fast can biotech come up with a vaccine for the latest outbreak?

DNA sleuths read the coronavirus genome, tracing its origins and looking for dangerous mutations

*  *  *

My recent books:

Audiobook edition now available:
Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World ($13)
(Kindle $6.95, print $11.95) Read the first section for free (PDF).

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

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

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

*  *  *

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

Tyler Durden Tue, 01/28/2020 - 16:55
Published:1/28/2020 4:09:51 PM
[Artificial Intelligence] Modified HoloLens helps teach kids with vision impairment to navigate the social world Growing up with blindness or low vision can be difficult for kids, not just because they can’t read the same books or play the same games as their sighted peers; Vision is also a big part of social interaction and conversation. This Microsoft research project uses augmented reality to help kids with vision impairment “see” […] Published:1/28/2020 2:07:47 PM
[Markets] Is The Market Grossly Underestimating The Potential Impact Of The Coronavirus Epidemic? Is The Market Grossly Underestimating The Potential Impact Of The Coronavirus Epidemic?

Authored by Charles Hugh Smith via OfTwoMinds blog,

The potential for a consequential disruption in China's supply chains appears to be vastly under-appreciated.

Despite the current drop in stocks (less than 1.5% as this is written), there's a tremendous reservoir of complacency about the economic and financial impact of the coronavirus epidemic. The zeitgeist reflects an implicit confidence that the coronavirus will blow over like the SARS scare a few years ago and the impact on the global economy will be essentially zero.

Have all the risks already been fully discounted? Here are some of the reasons why the assumption that this will have little effect on the U.S. economy and stock market may be misguided:

1. Patient One (the first reported case of 2019-ncov) on 31 December was unlikely to be the person in which the mutation enabling person-to-person contagion occurred. The latest genetic analysis suggests the virus first mutated into its present form sometime between late October and late November.

It's thus highly likely the virus had already been spreading for at least a month before 31 December. The symptoms of this new virus are not that different from typical flu strains, so why would authorities spend the time and money searching for a novel flu in a patient? The only reason authorities become involved would be a cluster of flu/ pneumonia patients dying.

Hundreds of thousands of people die of the flu every year, between 12,000 and 50,000 in the U.S. alone, so the death of a patient with flu-like symptoms is not uncommon enough to trigger an official investigation.

This line of reasoning suggests there was already an expanding pool of virus carriers long before officials discovered the new virus and began acting to limit its spread.

If this is the case, then the virus may have spread outside Wuhan before officials reacted.

2. This virus is a new type, and this makes it especially dangerous as humanity may have limited immunity to viruses that are sufficiently different from existing variations.

There are several bits of evidence that this novel flu is both contagious and dangerous. One is that health workers have caught the flu from patients despite all precautions and anecdotal evidence that the disease has spread from one family member to everyone else in the household.

The other is the relatively high death rate. Based on data from Chinese authorities (likely incomplete) , about 3% of the patients have died. The great flu pandemic of 1918-19 killed about 2.5% of its victims, and since it was highly contagious, it's estimated 50 to 60 million people died in that pandemic--often young healthy people.

3. The incubation period for this flu may be up to 14 days, and someone who has it may be asymptomatic (display no symptoms) for 5 or 6 days. This means screening passengers for fever is essentially useless.

Even more alarming, the new virus doesn't always cause a fever, making screening for fever even less effective.

Despite these data points, the American populace is being assured that screening is effective and so it's perfectly safe to travel as usual. This complacent confidence appears to be unfounded.

4. The Chinese populace is highly mobile within China and the world. Hundreds of thousands of Chinese work in other nations, and a significant percentage of these offshore workers returned home for Lunar New Year and will be returning to their jobs in the U.S., Europe, Africa, Southeast Asia, the Mideast, etc. next week.

To assume that none of these returning workers are asymptomatic carriers of the flu is a stretch.

5. Researchers are busy developing a flu shot to offer some immunity, but if this virus is virulently contagious, the question becomes: can authorities outrace the spread of the virus? Realistic estimates of how long it will take to develop and test a vaccine are 6 to 7 months, and that's if everything works perfectly, i.e. the virus doesn't mutate, etc. Producing hundreds of millions of doses and administering the vaccine to hundreds of millions of people will take additional time.

6. The implicit model for this coronavirus in the mainstream is SARS, which was isolated and contained. But this new virus may be much more contagious and so the relatively rapid and successful isolation of SARS may be a misleading model.

7. Authorities seem to prioritize "don't panic" messages, as if fear of this flu is irrational. But fear of a risk that cannot be assessed with any confidence is entirely rational. The smart strategy is to lay low and wait for more evidence on the nature of the risk.

8. The potential economic impact of this virus is grossly underestimated. The Chinese economy is particularly vulnerable now for a number of reasons. In essence, all the low-hanging fruit of rapid development have been picked, and adding more debt to boost building and consumption is no longer as effective now that debt has soared.

The world has depended on China's skyrocketing consumption for growth for the past 30 years. Should China's economy actually contract due to the knock-on effects of the virus, the global economy will soon follow.

How fear triggers a domino-like effect in an economy is poorly understood. In an economy that's already teetering on recession, quarantines, disruption of travel and commerce and a generalized "circle the wagons" response to uncertainty will push the precarious economy over the cliff.

Once tourists cancel trips, incomes plummet and businesses are forced to close. There's no guarantee that they will re-open after months of recession.

If you fear catching a potentially life-threatening flu, you're unlikely to go shopping for a new car or furniture; you'll put that off if at all possible.

Then if you read about layoffs and recession, you decide the car and furniture can wait indefinitely.

This is how the transition from complacency and confidence to fear and caution ripples through the economy, as the initial impact unleashes knock-on effects that increase caution which then reinforces reduced spending and investment.

9. Confidence in the truthfulness and effectiveness of authorities is already low in China, and this loss of confidence will likely spread to other nations as people awaken to the authorities' obsession with "keeping the economy going" by discounting the risks with false assurances that "everything is under control."

When people realize everything is not under control and they've been misled to grease the wheels of commerce, the legitimacy of the state may come into question: if they downplayed the flu, putting me and my family at risk, why should I trust them about anything else? The epidemic has the potential to trigger a political crisis as well as a severe economic slump.

10. The potential for a downward spiral of confidence is high as authorities will be pressured to increase their reassurances that all is well at every new wave of evidence that the virus is spreading despite their efforts. Doubling down on "don't panic" as the virus spreads will eventually backfire and unleash the very panic they feared.

11. Global stock markets are at all-time highs or near-term highs, on the euphoric belief that central bank stimulus will push stocks higher essentially forever. The virus has to potential to refocus attention on sales, profits and future risks, and that could change the general mood from complacent confidence to uncertainty, which is Kryptonite to market confidence.

The virus might be the needle that will pop all the speculative bubbles, regardless of central banks' stimulus.

12. History suggests that this virus may rise in two waves. The initial wave may die down and everyone sighs with relief, assuming it's like SARS: everything's fixed, risk is back to zero. Restrictions are eased, travel bans lifted, etc. Then the second and much more virulent wave rises, catching everyone by surprise.

13. The potential for future mutations which increase the lethality of the virus are not being factored into current risk assessments. Assuming the virus will retain its current configuration is a leap of faith.

The potential for a consequential disruption in China's supply chains appears to be vastly under-appreciated. Again, the working assumption is that any disruption will be temporary and everyone in China will be back to work as usual in a few weeks. The market has yet to discount the possibility that China's supply chains will be disrupted for months, with all the ripple effects that would generate throughout the global economy.

The market also has yet to discount the possibility that China's consumption could crater (buying an iPhone 11 is no longer a priority, etc.) and knock-on effects in its currency and debt markets could disrupt global financial markets, potentially triggering insolvencies in overleveraged companies not just in China, but in the developing and developed economies as well.

While it's too early to predict global depression, it's also too early to predict a rapid return to pre-epidemic normalcy.

Here are some informative science-based links on the coronavirus, courtesy of longtime correspondent Cheryl A.:

*  *  *

My recent books:

Audiobook edition now available:
Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World ($13)
(Kindle $6.95, print $11.95) Read the first section for free (PDF).

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

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

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

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

Tyler Durden Mon, 01/27/2020 - 16:25
Published:1/27/2020 3:31:56 PM
[Entertainment] Jerry Craft, Kadir Nelson win honors for children’s books The American Library Association has announced its top honors for children’s books, the John Newbery Medal and the Randolph Caldecott Medal Published:1/27/2020 10:59:58 AM
[Markets] 'This Looks Like A Tactic To Sell Books': GOP Senators Pan 11th Hour Bolton Leak While Romney And Collins Play Ball 'This Looks Like A Tactic To Sell Books': GOP Senators Pan 11th Hour Bolton Leak While Romney And Collins Play Ball

Republican Senator Susan Collins of Maine supported comments made by Sen. Mitt Romney (R-UT) over whether former National Security Adviser John Bolton should testify in President Trump's impeachment trial, after a manuscript of his upcoming book was leaked to the New York Times which claims that President Trump explicitly linked a hold on Ukraine aid to an investigation of the Bidens.

"The reports about John Bolton's book strengthen the case for witnesses and have prompted a number of conversations among my colleagues," said Collins.

Collins echoed Monday comments by Romney, who said "it is increasingly apparent that it would be important to hear from John Bolton," adding that it is "increasingly likely" that other GOP senators would join the 11th hour call.

Other GOP Senators disagree - including Majority Whip John Thune, who said "I don't think it changes the facts ... I don't personally see it as a game changer."

Sen. John Cornyn (R-TX) said "This looks like a marketing tactic to sell books is what it looks like to me."

Of course, if Bolton doesn't testify, they'll call it a cover up.

Tyler Durden Mon, 01/27/2020 - 11:55
Published:1/27/2020 10:59:58 AM
[Markets] Some Practical Questions About The Coronavirus Epidemic Some Practical Questions About The Coronavirus Epidemic

Authored by Charles Hugh Smith via OfTwoMinds blog,

Restrictions that allow a significant number of people to move about, either with official approval or unsanctioned "black market" activity, cannot stop the spread of contagious diseases.

Like everyone else, I've been reading the mainstream media reports on the Coronavirus epidemic. I haven't found any information about the practicalities that immediately occur to me, such as:

1. When public transportation is halted and commerce grinds to a halt as people avoid public places and gatherings, thousands of employees no longer go to work. Who pays their wages while the city is locked down? The employers? Then who compensates the employers, since their income has also gone to zero?

Does China have a universal unemployment insurance system that can quickly issue payments to all people who are no longer going to work and getting a paycheck from an employer?

What about the thousands of migrant workers who don't have regular employers? Who pays them? If they're technically not officially sanctioned residents of the city, they don't exist in government records.

2. If people idled by the lockdown are supposed to live off savings, what about all the marginal workers with few resources? What are they going to live on once their meager savings are gone?

3. Given the choice of obeying the lockdown rules and starving or slipping out of the city to find paid work somewhere else, how many migrant workers will choose to slip away?

4. Unlike the developed West, many people in China still have ancestral villages to return to, rural towns where their grandparents or or other close relatives live. If work has dried up and you're fearful of catching a potentially lethal virus, wouldn't it make sense to slip out of the city and make your way back to the village where you can hunker down until the epidemic blows over?

Since people who caught the virus may not know they're a carrier, how will this migration not spread the disease to rural areas with few medical resources?

5. The typical city has about a week's supply of food, fuel, etc. at best. If the lockdown runs longer than a few days, scarcities of essentials will ignite hoarding, and remaining supplies will be snapped up.

Since the city's residents need food, fuel, etc., it must be brought in regardless of the lockdown. This brings outside workers into the city and provides residents desperate to flee avenues to escape the lockdown. Every individual involved in this system is potentially exposed to the virus or is a potential asymptomatic carrier of the virus leaving the city.

These realities leave officials with an impossible choice: either truly isolate the city, which isn't possible for more than a few days, or allow the stupendous flow of goods required to sustain millions of city residents, thereby creating uncontrollable avenues for the virus to spread beyond the city as transport workers and those fleeing the lockdown travel to other cities.

6. The only way to end a contagion is to identify every carrier of the disease and immediately isolate them in full hazmat mode, and then track down every individual they had contact with during the incubation/asymptomatic period of the disease--up to two weeks--and isolate all these individuals until they either develop the disease or pass through the crisis unharmed.

This was the basic procedure used to end the SARS epidemic in 2003. As this article from the The New England Journal of Medicine explains (Another Decade, Another Coronavirus, (via correspondent Cheryl A.), the Wuhan Coronavirus shares characteristics with SARS and cannot be dismissed as just another run-of-the-mill flu virus.

During this process of isolating / quarantining everyone with the disease and everyone they had close contact with, all healthcare workers caring for these people must also remain isolated from the general populace lest they become infected and spread the disease outside the quarantine.

Treating people in crowded hospitals where hundreds of people are coming and going and moving freely into the rest of the city won't stop a contagion from spreading.

If the only way to end a contagion is to identify every carrier of the disease and immediately isolate them, and then track down every individual they had contact with during the incubation/asymptomatic period of the disease--is this even possible in China now?

Please study the map below before claiming it's still possible.

7. China is making a big show about sending 1,000 doctors to Wuhan, but precisely what medical treatments are available for this virus, how effective are these treatments, and do they require a physician to be administered? If the answers are: there are no effective targeted medical treatments for this virus, and doctors are not required to administer what is available, then why expose a scarce resource--physicians--to the disease since they really can't do much to halt it or heal the patients?

Isn't sending 1,000 doctors to Wuhan more a PR move than anything else? And if it's basically a PR stunt to appear to be "doing something," doesn't that call the entire official response into question?

If there is no targeted treatment available, then the recovery of the patient is a function of their immune system. Building tent hospitals that are porous--healthcare workers returning home after their shift, relatives visiting the stricken, workers moving supplies in and out of other facilities, etc.--will do little to isolate carriers and potential carriers. And since complete isolation is the only way to stem the contagion, these porous tent hospitals won't do much to limit the contagion.

8. Are the travel bans on tours and other travel restriction measures 100%, in other words, not a single individual is being allowed in or out? If the travel restrictions are haphazard, then what's stopping asymptomatic carriers of the virus from traveling freely around the world?

There are many other practical questions about the epidemic and China's response that aren't being addressed in the conventional media. While we don't know precisely how contagious and lethal the virus is at this point--and it could mutate into a more contagious and lethal variation within a carrier at any moment--we do know complete isolation of every carrier and everyone they had close contact with is the only way to end the contagion.

We also know cities can't truly be isolated for longer than a few days, and we know people can't live without food, water, fuel, etc. and money to buy these essentials. We also know that restrictions that allow a significant number of people to move about, either with official approval or unsanctioned "black market" activity, cannot stop the spread of contagious diseases.

*  *  *

My recent books:

Audiobook edition now available:
Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World ($13)
(Kindle $6.95, print $11.95) Read the first section for free (PDF).

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

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

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

*  *  *

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

Tyler Durden Sun, 01/26/2020 - 20:05
Published:1/26/2020 7:25:26 PM
[Entertainment] Librarians honor books by Luiselli and Higginbotham Two of last year’s most acclaimed books have been honored by the country’s librarians Published:1/26/2020 6:25:34 PM
[Markets] CTA And Managed Futures Primer CTA And Managed Futures Primer

Authored and courtesy of Ryan Fitzmaurice and Christian Lawrence of Rabobank


  • Global markets are becoming increasingly intertwined as systematic flows from CTAs and passive investments gain more and more market share from active discretionary managers.
  • Equity markets have passed an inflection point with passive investing AUM surpassing active investments for the first time in history. This has major ramifications for asset price action.
  • CTAs typically implement similar trend and momentum strategies across asset classes using liquid futures contracts in fixed income, equity, commodities, and FX markets
  • The majority of CTAs are doing the same thing but perhaps on different timeframes or with different leverage profiles.

The “Long and short of it” rationale…

On these pages is the first release of “The long and short of it“ – a new series of reports from RaboResearch focusing on cross asset and systematic investing. Given this is the first cross-asset report of its kind from RaboResearch, we will begin the series with a number of primers covering a range of topics from systematic CTA flows to factor investing and beyond. Of course, cross-asset analysis is nothing new but shifts in the structure of the market and the rise of systematic trading and passive investment have major implications for more traditional forms of asset management and in turn for market price action.

In short, the idea behind our cross-asset reports is to tie together different asset classes in a world where no market is an island and reflexivity and interconnectedness are key. The core thesis behind our analysis is that global markets are becoming increasingly intertwined as systematic flows from more ‘rules based’ investors such as CTAs (Commodity Trading Advisors) and passive investments such as index funds and smart beta ETFs gain more and more market share from active discretionary managers. In fact, as of summer of last year, passive investments surpassed active investments in the equity space for the first time in history and this trend shows no sign of letting up. We are certainly not suggesting that active management is disappearing altogether, but discretionary management is certainly losing market share and the rise of passive investment is shaping the structure of markets. While it is not the case that the rise of passive investment is the root cause of the continued decline of volatility over recent years, it has been a key part of the vicious/virtuous cycle that continues to compress financial market volatility despite rising real world risks. Indeed, a flood of liquidity from central banks and monetary policy that seemingly provides somewhat of a backstop to asset prices, coupled with a changing regulatory landscape are probably the main drivers behind the structural short volatility dynamic we see across markets. That environment, alongside advances in technology and computing power, have helped the proliferation and success of passive investment which in turn has helped suppress volatility further.

That said, while passive investment has risen, so has systematic ‘rules based’ investing and it is in this area that we can extract some valuable insights that allow for more accurate forecasting and more successful risk management.

It is not just equity markets that have undergone this transformation - other asset classes have followed suit, and given the rules-based nature of these funds and strategies, trading behavior and market flows are becoming more predictable for astute market practitioners. While our aim is to cover the wide universe of systematic strategies – our initial focus will be on CTAs given our deep understanding and knowledge of this particular "strategy”.

In our view, forecasting and understanding market flows from CTAs can provide a strong edge in today’s highly systematized markets and our goal here is to help our readers understand these dynamics to help navigate market risks more effectively. As the name suggests, CTAs have long been key in understanding price action in commodity markets but their role in other asset classes is still important. Even for markets such as the government bonds and FX, while at first glance it might appear the futures market is so small in comparison to the cash market as to be irrelevant, in fact, the futures market is highly leveraged and so the volumes at stake are much larger than the notional amounts imply – at the margin there can be some valuable information gleaned from CTA positioning and flows. Of course, the US Treasury market and the FX market are two of the deepest, most liquid markets in the world and US Treasuries are heavily impacted by structural dynamics such as regulatory requirements, but at the margin, even in this market, CTA flows can provide some interesting insights. These two markets are the most extreme example but for smaller markets, the role of CTA flows can be significant. Furthermore, CTAs are one of the most dynamic categories of traders in their approach and therefore can be a powerful force on the margin and especially when looking at shorter term moves where there is no clear fundamental catalyst at play. At the very least, readers should understand what it is that CTAs do, the strategies that they employ, and their potential market impact across sectors and asset classes.

To that end, in “The long and short of it” reports we will look to highlight “crowded” trades, forecast weekly flows using a theoretical CTA model, and identify key market inflection points where we expect the herd of CTAs will likely reverse positions.

CTAs and Managed Futures

As previously noted, CTA stands for commodity trading advisor, however, that is a bit of a misnomer given that CTAs trade not only commodities but also other major asset classes spanning the global futures markets. CTAs or “Managed Futures” programs as they are also known, are often dressed up as a magic black box full of secret sauce but they typically  implement similar trend and momentum strategies across fixed income, equities, commodities, and FX markets. Indeed, despite fancy pitch books suggesting otherwise – most CTAs are doing the same thing but perhaps on different timeframes or with different leverage profiles. While a full understanding of CTA strategies is well beyond the scope of this primer – what we will say is that the strategies generally trigger off of price movements such as moving average crossovers or percentage returns over a predetermined lookback period and no fundamental inputs or information is taken into account. The fact of the matter is that there is only so many ways to trade trend or momentum which results in herd-like behavior. This is very apparent when looking at the correlation of publicly available CTA funds and Managed Futures programs which is quite high as is clear from the chart below. It is precisely this herd-like behaviour that can move markets in the short-term and especially in a “short” covering or “long” liquidation scenario when the “crowd” is caught wrong-footed in the market and forced to reverse positions. We will look to capitalize on this behaviour in our new “Long and short of it” report and we detail in the pages below exactly how we intend to do that.

The Rise and Fall

While CTAs have been around for decades, they rose to the forefront after the global financial crisis of 2008 when they performed extremely well in the face of sharply falling markets and then gained further fanfare in 2014 after another standout year. Since then, however, market conditions have been sub-optimal for this type of strategy given the low interest rate environment, central bank intervention, and a host of other factors which have led to poor performance and investor outflows. Further compounding the struggle for CTAs has been the fact that global equity markets have performed extremely well over this same period. This steady increase in equities with very little in the way of sustained pullbacks has led investors to pull money out of actively managed funds and into passive index funds that generally cost a fraction of the fees that active managers charge. While this strategy has largely worked up until now, it is worth remembering that most of these passive investments have only existed during periods of low interest rates, low volatility, and generally stable markets while CTAs, on the other hand, have traded through many market cycles. The real test for passive investing will come when the current trading regime changes, as it always does. When it does in fact change, we suspect CTAs will rise to the forefront yet again and investor dollars will follow as they have in the past. For this reason, we see CTAs as a powerful force with the potential to gain more market share and influence as we look ahead and especially if the slowdown in US and global economic activity that our own Philip Marey, Rabobank’s Senior US Strategist, is forecasting for 2020 is realized.

Market flows

Despite the reduction in assets under management in recent years, CTAs and “Managed Futures” programs continue to play a very dominant role in terms of speculative positioning in global futures markets which is quite apparent from the charts included below. Figure 6 overlays the positioning from our theoretical CTA trading model for both WTI Crude oil and Soybeans with the corresponding positioning data from the “Managed Money” category of the CFTC’s Commitment of Traders report.

For clarity - our theoretical CTA trading model is a proprietary quantitative model that is run in real-time across asset classes. The model incorporates various asset-weighted trend and momentum strategies that include volatility adjusted position sizing and daily rebalancing - modelling the behaviour of real-money CTA funds. The model uses historical price data for signal generation and no fundamental inputs are incorporated.

Back-testing our model has shown it to be a good fit to reality and it has performed especially well at key inflection points. To be clear, the CTA model is not expected to account for all of the variations in positioning from the “Managed Money” crowd given that CTAs only make up a portion of the traders included in the category but the fit implies that the role of CTAs in this category is absolutely critical. Perhaps unsurprisingly, this is especially true in commodities markets where our CTA model tracks the speculative positioning data extremely well as can be seen in Figure 6 below. The same can be said for other asset classes as well, however, the data can be a bit noisier given the large number of players involved as well as the nuances of each sector.

Given that our CTA model is a good fit to the realized behavior of “Managed Money” futures traders, we can use it to predict weekly trading flows, identify “crowded” trades, and perhaps most importantly, detect key areas where CTAs are likely to reverse direction. On top of our CTA model, we will also use other tools such as correlation analysis to identify key positions that CTAs currently hold. An example of this can be seen in Figure 7 below, running correlations of CTA performance against equity indices implies that CTAs accumulated a sizable “long” position through November and December of 2019 and are now starting the new year off with outsized exposure to global equities given the strong positive correlations to the aggregate CTA index.

Looking Forward

We have focused on providing a primer on the role CTAs play in financial markets and how they can be used to provide insights as to potential direction of price action across asset classes. This is just the first in a series of primers that cover topics we think can provide additional insight into market dynamics and give our readers an edge in navigating financial markets. Going forward, we will publish more primers covering our new toolkit including risk premium strategies, factor investing, volatility strategies, smart Beta ETFs, as well as other systematic trading programs. More importantly, we will of course update our readers with the results of our models both in terms of forecasts and risk signals.

Tyler Durden Sun, 01/26/2020 - 18:13
Published:1/26/2020 5:25:47 PM
[Markets] Davos Man - Misbegotten Progeny Of Keynesian Central Bankers Davos Man - Misbegotten Progeny Of Keynesian Central Bankers

Authored by David Stockman via,

There were a reported 119 billionaires attending the Davos confab this year – plus the Donald, who took a day off from Impeachment to address this august gathering of the world’s movers and shakers.

There was also 1500 private jets crowding the surrounding airports – plus the notable train-traveling 17-year old expert on planetary climate science, Greta Thunberg.

Also, among the 10 billionaires in attendance from communist China is Ren Zhenfei, founder of Huawei and father of its CFO, Meng Wanzhou. Even as dad courts the rich and famous on the slopes, daughter languishes in a Canadian jail waiting extradition to the US because she had the audacity to do business with Iran against Washington’s instructions and Trump’s latest fatwa against the Tehran government.

These odd juxtapositions plus countless more got us to thinking about Davos Man himself and the ultimate juxtaposition of our times.

To wit, the combined net worth of the world’s billionaires in the year 2000 was $1 trillion, according to Forbes, but at this bublicious moment that number is reckoned at just under $10 trillion. So the 2,150 members of the Billionaires Club now have more net worth than 60% of the world’s population combined. That’s 4.6 billion people!

In so noting, of course, we are not joining the Bernie Sanders/AOC/Pocahontas brigade. In a world of free markets, honest money and de minimis government, the more billionaires the better. But what we sincerely doubt is that there was an honest and sustainable basis for a 10X gain in the net worth of the Billionaires Club over a two decade period when the world’s nominal GDP only rose from $35 trillion to $85 trillion, or by 2.4X.

After all, the predominately financial assets comprising the world’s net worth are merely the capitalization of its underlying income or GDP. And there is no basis in either sound economics or basic math for the former to grow nearly four times faster than the latter for two decades running.

Stated differently, unless the age-old laws of sound money have been repealed by the economic gods themselves, Davos Man is fixing to become nearly as rare as Neanderthal Man or, more to the point, has been a case of Piltdown Man all along.

Recall that the latter had been touted by some British scoundrels in 1912 to be a 500,000 year-old homo sapiens and evolution’s missing link. Alas, it was actually a ho-hum 50,000 year-old human skeleton fused with the jawbone and teeth of a modern orangutan.

Billionaire Haven

As it happened, it took the world about three decades to figure out that Piltdown Man was a hoax, but the hoax attendant to Davos Man is already plain as day. That’s because by even tolerating Greta’s impending extinction hysteria and the Donald’s hideous Greatest Ever Economy boasts, the assembled billionaires are demonstrating that they are not 4X geniuses after all – just bubble riders on the great central banking hoax of the 21st century.

Indeed, we would suppose that some kind of guilt-tripping would account for the grandly named World Economic Forum’s (WEF) solicitude for the global warming scam and its intellectually pre-pubescent poster girl, Greta. But why in the world would the purported deep thinkers of the WEF not laugh the Donald’s malarkey right off the stage?

On the way to Switzerland he tweeted a superlative that would be the envy of the biggest braggart in the school yard:

“We are now NUMBER ONE in the Universe, by FAR!!…….

And then he thickened the goo while at the podium in Davos:

America’s newfound prosperity is undeniable, unprecedented and unmatched anywhere in the world…America made this stunning turnaround not by making minor changes to a handful of policies but by adopting a whole new approach. Every decision we make…is focused on improving the lives of every day Americans. We are determined to create the highest standard of living that anyone can imagine.

Folks, that’s just blithering poppycock. We are at the end of the longest and weakest business cycle expansion in history (month # 127), yet real median household income has barely returned to where it stood two decades ago.

The idea that Trump-O-Nomics has anything to do with paving the way for the “highest standard of living that anyone can imagine” is just content free bluster.

The facts actually show that the US standard of living has been stagnant for two decades, rising and falling with the business cycle, but gaining on average the grand sum of $87 per year (2018 $) since 1999.

That’s right. As shown in the graph below, the $63,179 median reported for 2018 is undoubtedly the high water mark for years to come, yet it represented a mere 2.7% gain from the $61,526 level (2018 $) posted way back in 1999.

While the data for 2019 is not yet available, it is evident that the various categories of income gain last year barely kept up with inflation, meaning that real median family income was flat. So the coming recession in the early 2020s will send the black bars in the chart sliding lower as they did during and after each of the recessions marked by the white space.

Here’s the thing. The Donald’s policies have immensely harmed the foundations on which today’s tepidly expanding business cycle rests. Yet there has been no short-run benefit in terms of accelerating overall GDP growth, and actually a sharp deceleration of business investment and export growth.

Likewise, the vaunted 70% of GDP attributable to personal consumption spending (PCE) is been essentially kept alive by borrowing.

Nearly 67% of the gain in personal consumption expenditures since Q4 2012, when the US economy had fully recovered from the Great Recession, has been accounted for by household debt growth. The latter (purple bars) is up by a fully $2.4 trillion to a record $16 trillion compared to personal consumption (PCE) growth of just $3.6 trillion during the same 81 month period.

What the “strong economy” gummers forget, of course, is that sooner or later you have to pay the piper when the economy becomes as debt-ridden as today’s world. You are supposed to actually pay down debt during the up-phase of the cycle, but self-evidently that has not remotely happened this time around the barn.

So you can boast about the Greatest Economy Ever if you are the Donald and reassure about a “solid” economy if you are stock-options rich Davos Man, but that doesn’t gainsay the unsustainable economic and monetary rot upon which it is all based.

At the end of the day, what the Donald is crowing about is simply the residual momentum of the debt-ridden, growth-impaired economy he inherited, and what the geniuses gathered at Davos are calling a “strong” economy is actually a mere simulacrum of a real business boom – a fiction slathered in artificially and irrationally soaring share prices and stock options

The truth is, we are heading into the strum-und-drang of the Turbulent Twenties, but the alleged adults in the room at Davos don’t have a clue. They apparently think America’s three-decade long fantasy of free lunch economics and unhinged partisan warfare is sustainable indefinitely.

It’s not.

If you are sitting on phantasmagorical stock market paper values and not sweating bullets about the implications of the central banks’ $25 trillion balance sheet, the world’s $255 trillion of debt, the Red Ponzi’s monumental malinvestment, the Donald’s war on trade, immigrants and fiscal sanity, the bipartisan war on constitutional government in America, the Empire’s claim to global extraterritoriality and the statist grab for power in the name of a phony climate crisis, then you are not paying attention.

Each and every one of these force vectors are bearing down ominously upon the pathway ahead. But the malignancies of runaway debt and egregiously inflated financial bubbles stand front and center.

Here is a graph of US net worth versus national income (GDP) gains since Q4 2000, and it speaks for itself. To wit:

  • The net worth of the top 1% (brown line) has soared from $11.8 trillion to $34.5 trillion or by 193%;

  • The nominal GDP has risen from $10.5 trillion to $21.5 trillion or by 106%; and,

  • The net worth of the bottom 50% has crept up from $1.4 trillion to $1.7 trillion or by just 17%.

Needless to say, when the wealth of the top 1% (1.3 million households) is growing at nearly twice the rate of national income and by 11X more than the bottom half of households ( 63.5 million), there is absolutely nothing sustainable about it.

In fact, it’s the reason why the real extinction threat at this week’s confab in Switzerland is not the one Greta is scolding her elders about, but of Davos Man himself.

And if they cannot tell that Trump is the greatest economic charlatan to ever grace high office in the world’s largest economy, they surely well and truly deserve their fate.

*  *  *

Former Congressman David A. Stockman was Reagan's OMB director, which he wrote about in his best-selling book, The Triumph of Politics. His latest books are The Great Deformation: The Corruption of Capitalism in America and Peak Trump: The Undrainable Swamp And The Fantasy Of MAGA. He's the editor and publisher of the new David Stockman's Contra Corner. He was an original partner in the Blackstone Group, and reads LRC the first thing every morning.

Tyler Durden Sat, 01/25/2020 - 12:00
Published:1/25/2020 11:21:14 AM
[Markets] Don't Be Too Sure... Don't Be Too Sure...

Authored by Charles Hugh Smith via OfTwoMinds blog,

Don't be too sure that the coronavirus will blow over and have no effect on global growth.

If there is anything that characterizes this moment in history, it's complacency: everyone's so sure that current trend lines will continue, onward and upward, and risk has been tamed for the foreseeable future.

Don't be too sure.

1. Don't be too sure that the coronavirus will blow over and have no effect on global growth.

2. Don't be too sure that "the Fed has our back" so stocks will always resume their steady climb after every spot of bother.

3. Don't be too sure that the official Chinese pronouncements that the coronavirus is contained are actually accurate.

4. Don't be too sure that there won't be a second and far more lethal advance of the coronavirus once all the overseas Chinese who went home for Lunar New Year return to their jobs in the U.S., Europe, Southeast Asia, etc.

5. Don't be too sure that people will respond to the natural fears of the coronavirus by rushing out to buy a new iPhone, vehicle, etc.

6. Don't be too sure that bubbles in over-valued stocks and housing won't pop.

7. Don't be too sure that global tourism won't take a body-blow from the spread of the coronavirus.

8. Don't be too sure that the risks of the coronavirus spreading can be assessed by anyone with any accuracy.

9. Don't be too sure that the U.S. economy is bullet-proof and so President Trump is a shoo-in for re-election in November 2020.

10. Don't be too sure that the citizenry's tolerance for Fed-driven wealth-income inequality is as limitless as the Fed's balance sheet.

11. Don't be too sure that the super-low unemployment rate is a reliable measure of business confidence or the health of millions of small businesses.

12. Don't be too sure that the Fed's vaunted "wealth effect" won't reverse.

13. Don't be too sure that all risks are known and have been discounted.

14. Don't be too sure that the global health system is capable of dealing with the spread of the coronavirus.

15. Don't be too sure that central banks' lowering interest rates is going to reverse a global recession.

16. Don't be too sure your favored tech stock won't crater as over-valuation mania is replaced by fear.

*  *  *

My recent books:

Audiobook edition now available:
Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World ($13)
(Kindle $6.95, print $11.95) Read the first section for free (PDF).

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

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

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

*  *  *

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

Tyler Durden Sat, 01/25/2020 - 11:00
Published:1/25/2020 10:19:58 AM
[Markets] Queen Elizabeth Beats Hollywood & The Stumblebum Sussexes Queen Elizabeth Beats Hollywood & The Stumblebum Sussexes

Authored by Ilana Mercer via The Unz Review,

His wife, a hero of sorts only in the TV series “Suits,” had hightailed it to Canada, leaving Harry Windsor, formerly known as Prince Harry, to deliver a concession speech.

Make no mistake—no matter the moola they rake in, Harry and Meghan Markle have been sorely defeated and deflated.

Earlier in January 2020, the stumblebum Sussexes had smugly announced to the public that they “planned to carve out a progressive new role within this institution.” The unavoidable implication of that sleight-of-hand was that “this institution” (the monarchy) was just not woke enough for the two’s exquisitely honed sensibilities.

Gallantly has Harry tried, since, to make his subjects believe that it is he, not Meghan Markle—his meddlesome, divisive, American wife—who had attempted, and failed miserably, to outsmart Queen Elizabeth II.

But the crass and callous rollout production, lacking in etiquette and contemptuous of royal protocol, fell flat.

So deeply silly was the Sussexes Instagram statement, that it had brainy royal correspondents and members of the Queen’s Bench snickering that Harry and his Hollywood wife must have been getting bad advice from friends across the Atlantic, who knew nothing about the workings of the British monarchy.

A woman of impeccable class, HM the Queen, aged 93, handled the Markle tantrum with great kindness—even though the couple had informed the world of their antics, before apprising the queen and other members of the Royal Family.

Wrapping up Markle’s failed brinkmanship, Harry unleashed a load of bafflegab, peppered with oddly fatalistic phrases such as, “after so many years of challenges,” “there really was no other option,” and, sadly, “it had come to” this.

Translated: After two years of royal toil, my wife had had enough. She cracked under the duress of being dressed to the nines, served the food of her fancy, watched over and catered to, housed in a palace of her own design, and showered with her heart’s desire and a title.

These were paltry rewards for Markle’s herculean efforts.

In a word, Meghan prefers the life of a celebrity to the life of a public servant.

Despite two years of torturous toil, Harry and his “hardworking” bride were prepared “to continue serving the Queen.” Alas, rambled Harry, that “unfortunately, … wasn’t possible.” The Queen was having none of it.

No wonder. Her Royal Majesty embodies mettle. She has lived a life of dedication and duty. Still in her teens, before being crowned, Elizabeth had joined the military, during World War II, where she “drove a military truck while she served.”

Translated, again: Meghan and Harry (the man of the house comes first) had hoped to serve the queen on their own terms. Her Highness went hardline, the outcome of which is that, for mindlessly following Meghan, Harry and his boorish bride have been stripped of their status as “working members” of the Royal Family, have forfeited their HRH titles and the honor of travelling on behalf of the queen. Their names have been expunged from the court circular. The Sussexes are also in the bad books of the prince of Wales. Prince Charles, after all, pays for his sons’ lavish lifestyle.

According to Alastair Bruce, ABC News’ royalty consultant, and himself a military man, Prince Harry will also lose his honorific military patronages and titles, including “his title as Captain General Royal Marines,” which was especially dear to Harry.

Granted, life at Frogmore Cottage, in Windsor, a place beyond picturesque, didn’t quite cut it for Meghan. But, since it was renovated largely at public expense, down to a yoga studio, a staircase for Meghan’s grand entrances and original paintings from the queen’s own collection—the pair will have to reimburse the Sovereign Grant fund.

That the British monarchy stands for the last vestiges of ancient English tradition is not in dispute. But what do the Duke and Duchess of Sussex stand for in this tawdry saga? The Economist magazine, whose sources crown Meghan Markle as the “principal agent of the current debacle,” tethers “Harry and Meghan to … Marx”:

Markle is a “product of an entertainment business that has done more than any other industry to fulfil Marx’s prediction that ‘all that is sacred’ would be ‘profaned’ and ‘all that is solid’ would ‘melt into air.’”

“The Communist Manifesto” predicted and celebrated that crass commercialism would subject national institutions “to the revolutionary logic of the global market.” “The Sussexes,” muses the Economist’s Bagehot Column, “are … embracing capitalism in its rawest, most modern form: global rather than national, virtual rather than solid, driven, by its ineluctable logic, to constantly produce new fads and fashions.” [Emphasis added.]

“In 21st-century capitalism you accumulate followers in order to monetize them. … In a 21st-century-capitalist society you are propelled around the world in pursuit of the latest marketing opportunity.”

To date, the queen has foiled Meghan’s mindless plan to brand the term “Sussex Royal.”

Believe it or not, the two twits had gone and hired a branding agency—the same one that caters to the children’s channel Nickelodeon—and had tried to trademark a Sussex Royal logo.

No doubt the Queen’s Bench has put Meghan and her American pettifoggers in their proper place.

Once upon a time, a dolt from Tinseltown imagined she was a match for the queen of England.

The End.

Tyler Durden Sat, 01/25/2020 - 07:00
Published:1/25/2020 6:17:53 AM
[Markets] Absurdistan: MO Librarians Face Year In Jail For Not Banning "Prurient" Books Absurdistan: MO Librarians Face Year In Jail For Not Banning "Prurient" Books

Authored by Simon Black via,

Are you ready for this week’s absurdity? Here’s our Friday roll-up of the most ridiculous stories from around the world that are threats to your liberty, your finances, and your prosperity.

Which specific body parts can women expose before being sex offenders?

After installing fiberglass insulation, Tilli Buchanan and her husband stripped off their shirts in the garage for safety reasons.

They didn’t want to track any of the debris into the house. While walking topless to the shower, Tilli’s stepchildren saw her bare chested.

Two years later, the children’s biological mother reported the incident to authorities.

Tilli was charged with “child sex abuse” under Utah criminal code 76-9-702.5(2)(a)(ii)(B) for exposing “the female breast below the top of the areola. . .”

Rather than argue that this specific incident was not sexual, Tilli opted to challenge the entire law.

She claimed that the law is unconstitutional under the equal protection clause of the 14th Amendment. She and her husband were in the exact same state of undress, but she was charged with a crime, and he was not.

What has unfolded in the courts is a lengthy and ridiculous discussion about male and female body parts, and what constitutes lewdness.

Unfortunately for Tilli, the judge ruled against her, and she could face prison time, plus ten years on the sex offender registry.

Click here to read the full ruling.

*  *  *

Missouri bill proposes imprisonment for librarians who don’t ban books

A Missouri bill would create “community oversight boards,” (i.e. censorship boards) to decide what books are appropriate for certain ages.

The bill says children should not have access to any book which includes descriptions of sexual content that “appeals to the prurient interest of minors.”

And according to the bill, sexual content includes even mere mentions of nudity.

Bear in mind– we’re not just talking about the Game of Thrones books, which are pretty clearly intended for adult audiences.

This applies to even classics like Bram Stoker’s Dracula, DH Lawrence’s Lady Chatterly’s Lover, F. Scott Fitzgerald’s The Great Gatsby, James Joyce’s Ulysses, Hemingway’s The Garden of Eden, Margaret Mitchell’s Gone with the Wind, and of course, Shakespeare’s Romeo and Juliet. 

There are dozens more.

The ban would be in effect at all town libraries across the state. And if librarians don’t aggressively enforce the book ban, they could face a year in prison.

Just imagine A YEAR IN PRISON because some eighth grader was reading Shakespeare.

What’s even more interesting is that the bill doesn’t seem to think violence is inappropriate.

So the murder of two children in Lord of the Flies would be fine, but not the innocent skinny-dipping in the lagoon.

Click here for the full story.

*  *  *

County threatens to demolish Amish homes for code violations

Amish people are exercising their religious freedom to live a simple life without any technology. And most state and local governments tend to leave them alone.

But for some reason, a Michigan county decided to pick a fight with the local Amish community.

County officials posted notices on several Amish houses that their homes were unfit for human occupation because they did not have modern plumbing.

The county says unless they are brought up to code, the houses will be demolished.

Click here for the full story.

*  *  *

12 years in prison for possession of phone

Willie Nash was booked on a misdemeanor charge and spent some time in a Mississippi jail.

During the booking process, the jail staff failed to take the man’s phone.

Willie clearly didn’t know that there was a ban on phones, or else didn’t think it was a huge deal, because he asked a jailer to charge the phone for him.

The jailer confiscated the phone, reported the incident, and Willie was charged with possession of a phone in jail.

In Mississippi, the possession of a phone while in jail carries a prison sentence of 3 to 15 YEARS.

The judge, feeling especially lenient, magnanimously opted to sentence the man to a patry TWELVE years instead of the maximum fifteen.

For having a phone. Because the jail staff’s failure during booking.

Willie appealed, and the Mississippi Supreme Court ruled that the twelve year sentence was perfectly reasonable.

Click here for the full story.

*  *  *

And to continue learning how to ensure you thrive no matter what happens next in the world, I encourage you to download our free Perfect Plan B Guide.

Tyler Durden Fri, 01/24/2020 - 17:45
Published:1/24/2020 5:13:48 PM
[Markets] Putin Calls For A New System Guided By UN Charter... But Is It Possible? Putin Calls For A New System Guided By UN Charter... But Is It Possible?

Authored by Matthew Ehret via The Strategic Culture Foundation,

Anyone looking with sober eyes upon today’s world and the feeble economic and geopolitical underpinnings holding the system together must accept the fact that a new system WILL be created.

This is not an opinion, but a fact. We are moving towards eight billion lives on this globe and the means of productive powers to sustain that growing population (at least in the west) has been permitted to decay terribly over the recent half century while monetary values have grown like a hyperinflationary cancer to unimaginable proportions. Derivatives speculation alone under the deregulated “too big to fail” banking system has resulted in over $1.5 quadrillion in nominal values which have ZERO connection to the real world (GDP globally barely accounts for $80 trillion). Over the past 5 months $415 billion of QE bailouts have been released into the bankrupt banks to prevent a collapse. So, economically it’s foundation of sand.

Militarily, the west has followed the earlier Roman empire of yesteryear by overextending itself beyond capacity creating situations of global turmoil, death and unbounded resentment at the dominant Anglo American powers controlling NATO and the Military industrial complex. The recent near-war with Iran at the start of 2020 put the world on a fast track towards a nuclear war with Iran’s allies Russia and China.

Culturally, the disconnection from the traditional values that gave western civilization it’s moral fitness to survive and grow has resulted in a post-truth age now spanning over three generations (from the baby boomers to today’s young adults) who have become the most confused class of people in modern history losing all discrimination of “needs” vs “wants”, “right” vs “wrong”, “beauty” vs “ugliness” or even “male” and “female”.

Without ranting on anymore, it suffices to say that this thing is not sustainable.

So the question is not “will we get a new system?” but rather “whom will this new system serve?”

Will this new system serve an oligarchical agenda at the expense of the nations and people of the earth or will it serve the interests of the nations and people of the earth at the expense of the oligarchy?

Putin Revives a Forgotten Vision

President Putin’s January 15 State of the Union was a breath of fresh air for this reason, as the world leader who has closely allied his nation’s destiny to China’s Belt and Road Initiative, laid out a call for a new system to be created by the five largest nuclear powers as common allies under a multi-polar paradigm.

After speaking about Russia’s vision for internal improvements, Putin shifted towards the international arena saying:

“I am convinced that it is high time for a serious and direct discussion about the basic principles of a stable world order and the most acute problems that humanity is facing. It is necessary to show political will, wisdom and courage. The time demands an awareness of our shared responsibility and real actions.”

Calling for Russia, the USA, UK, China and France to organize a new architecture that goes far beyond merely military affairs, Putin stated:

“The founding countries of the United Nations should set an example. It is the five nuclear powers that bear a special responsibility for the conservation and sustainable development of humankind. These five nations should first of all start with measures to remove the prerequisites for a global war and develop updated approaches to ensuring stability on the planet that would fully take into account the political, economic and military aspects of modern international relations.”

Putin’s emphasis that “the United Nations should set an example” is not naïve fantasy, nor “crypto globalist rhetoric” as some of his critics have stated.

Putin knows that the UN has been misused by anti-nation state ideologues for a very long time. He also knows his history better than his critics and is aware that the original mandate of the United Nations was premised upon the defense of the sovereign nation state. Article 2.1 of the charter clearly says: “The Organization is based on the principle of the sovereign equality of all its Members.”

For readers who are perhaps rightfully cynical that such organizations as the UN could ever play a truly positive role in world affairs, it is important to recall that the UN was never intended to have any unilateral authority over nation states, or military power unto itself when was created in 1945. Its purpose was intended to provide a platform for dialogue where sovereign nation states could harmonize their policies and overcome misunderstanding with the aim of protecting the general welfare of the people of the earth. Articles 1.3-4 state clearly that the UN’s is designed “to achieve international co-operation in solving international problems of an economic, social, cultural, or humanitarian character, and in promoting and encouraging respect for human rights and for fundamental freedoms for all without distinction as to race, sex, language, or religion and to be a centre for harmonizing the actions of nations in the attainment of these common ends.”

If the United Nations principles as enunciated in its pre-amble and core articles were to ever be followed (just like America’s own admirable constitution): then wars of aggression and regime change would not be possible. Article 2.4 directly addresses this saying: “All Members shall refrain in their international relations from the threat or use of force against the territorial integrity or political independence of any state”.

These principles stand in stark contrast to the earlier 1919 Round Table/RIIA-orchestrated attempt at a post-national world order under the failed League of Nations which was rightfully put out of its misery by nationalists of the 1920s. FDR’s 1944 vision, as Putin is well aware, was based not on “world government”, but rather upon the concept of a community of sovereign nations collaborating on vast development and infrastructure projects which were intended to be the effect of an “internationalization” of the New Deal that transformed America in the years following the Great Depression. The closest approximation to this spirit in practice in our modern age is found in China’s Belt and Road Initiative.

Thousands of Asian, African and South American engineers and statesmen were invited to visit the USA during the 1930s and early 1940s to study the Tennessee Valley Authority and other great New Deal water, agriculture and energy projects in order to bring those ideas back to their countries as a driver to break out of the shackles of colonialism both politically, culturally and economically. In opposition to FDR, Churchill the unrepentant racist was okay with offering political independence, but never the cultural or economic means to achieve it.

Although the world devolved into an Anglo-American alliance with FDR’s death in 1945, the other Bretton Woods Institutions which were meant to provide international productive credit to those large scale infrastructure projects to end colonialism were taken over by FDR’s enemies who purged the IMF and World Bank of all loyalists to FDR’s international New Deal vision throughout the years of the red scare. Whether these corrupt financing institutions can be brought back to their original intention or whether they must simply be replaced with new lending mechanisms such as the Asia Infrastructure Investment Bank, BRICS New Development Bank or Silk Road Investment Fund remains to be seen.

What is vital to keep in mind is that Putin (just like FDR before him) knows that neither Britain nor Britain’s Deep State loyalists in America can be trusted. Yet, in spite of their mistrust, they both knew that a durable world order could only be accomplished if these forces were reined in under a higher law imposed by the authority of truly sovereign nations, and this is why FDR’s post-war plans involved a USA-Russia-China-UK partnership to provide the impetus to global development initiatives and achieve the goals of the Atlantic Charter. This partnership was sabotaged over FDR’s dead body as the Cold War and Truman Doctrine broke that alliance. The goal of ending colonialism had to wait another 80 years.

At the 2007 Munich Security Conference, Putin had already laid his insight into history clearly on the table when he said:

“This universal, indivisible character of security is expressed as the basic principle that “security for one is security for all”. As Franklin D. Roosevelt said during the first few days that the Second World War was breaking out: “When peace has been broken anywhere, the peace of all countries everywhere is in danger… I consider that the unipolar model is not only unacceptable but also impossible in today’s world. And this is not only because if there was individual leadership in today’s – and precisely in today’s – world, then the military, political and economic resources would not suffice. What is even more important is that the model itself is flawed because at its basis there is and can be no moral foundations for modern civilisation.”

Putin is not naïve to call for the United Nations charter to serve as the guiding light of a new military, political, economic architecture. Nor is he naïve to think that such untrustworthy nations as the USA, UK and France should serve in partnership with Russia and China since Putin knows that it will be Russia and China shaping the terms of the new system and not the collapsing basket-cases of the west whose excess bluff and bluster betrays a losing hand, which is why certain forces have been so desperate to overthrow the poker table over the past few years. The fact that Putin, Xi and their growing allies have not permitted this chaos agenda to unfold has not only driven “end of history” imperialists into rage fits but also gives FDR’s vision for a community of sovereign nation states a second chance at life.

Tyler Durden Fri, 01/24/2020 - 02:00
Published:1/24/2020 1:24:10 AM
[] Tonight's ONT Has Everything! Hello. I'm Jerry Hathaway, with Everything. Want to know everything? There are the only 2 books you need to read:... Published:1/23/2020 9:09:23 PM
[Markets] 10 Major Trends In IRS Audits 10 Major Trends In IRS Audits

Authored by Bob Williams via Alhambra Investments,

What feeling do you have when you hear IRS? Is there a sick feeling in the pit of your stomach or do you just roll your eyes knowing that April 15th will be here all too quickly? Throw in the word audit and emotions and blood pressure can reach levels you never dreamed of.

CPA Jim Buttonow has 30 years of experience in tax technology and representing people before the IRS. He’s written this article outlining 10 major trends he sees in IRS audits.

Most taxpayers envision Internal Revenue Service audits as intrusive investigations resulting in criminal sentences. Today, nothing could be farther than the truth: The IRS’s auditing power has been greatly diminished in the past decade. IRS audit resources have been reduced by 28 percent in the last decade and the audit rate has dropped from 0.9 percent in 2010 to 0.5 percent in 2018. In fact, the number of IRS audits in 2018 (991,168) dropped by almost half compared to 2010 (1.735 million).

Since 2010, the IRS has been tasked with doing more with less resources, but the reality is that the IRS cannot do more audits with less resources. The IRS audit data reveals 10 trends from the past decade that have become the new realities for current state of IRS audits.

1. Most audits are done by mail

This trend started with IRS reforms in the late 1990s. In 1998, just before IRS reforms, the service audited 47 percent of taxpayers by mail. In the past decade, IRS data shows that the service prefers the less-intrusive mail audit. Today, three out of four audits of individual taxpayers are done by mail — a ratio that has held since 2010. These audits usually challenge small amounts of credits or deductions on a return, and require only a mail response, with documentation, to an IRS central campus location.

2. The main issue in audits: The EITC

Fifty percent of all individual audits involve a taxpayer who is claiming the Earned Income Tax Credit. IRS efforts to curb EITC errors largely rely on audits to hold a questionable EITC claim on a return. Politicians have criticized the IRS in the past for picking on low-income taxpayers, and the EITC audit rate is their main evidence. Compared to other taxpayer profiles, the IRS clearly has the propensity to address the EITC taxpayer more than other issues, even the small-business individual taxpayers. (See below for the trend on high wealth audits.)

3. An alarming amount of people do not respond to an audit

There is linkage here to the EITC mail audit. The Taxpayer Advocate reports that almost two-thirds of all mail audits go without response or are assessed by taxpayer default. That is, the IRS just assesses the additional tax without the taxpayer contesting the service’s determination. Only one in five taxpayers agree to their mail audit adjustment — and likely, from the data, they don’t understand how to appeal. This mess leads to many audit reconsiderations (i.e., an audit “re-do” request). Again, more question marks here for the targets of mail audits — the low-income population.

4. The most common IRS challenge to a return is not an audit

The dreaded CP2000 Automated Underreporter notice is current three times more prevalent than an IRS audit. The CP2000 program utilizes IRS information returns (W-2s and 1099s) to match them against the filed return to discover discrepancies. A discrepancy may result in a CP2000 notice proposing additional tax (and possibly penalties) to the return. Most taxpayers do not realize (or care, for that matter) that a CP2000 is not an audit. The CP2000 is less intrusive than an audit because the IRS is not allowed to examine the taxpayer’s books and records. For most taxpayers, however, the difference does not matter: The average amount owed for a CP2000 notice in 2018 was $1,773.

However, there is good news for taxpayers: Even the mostly automated underreporter process has been cut back due to lack of IRS resources.

5. The IRS knows who to audit

The audit change rate was 89 percent for all taxpayer types in 2018. In fact, the audit change rate has been between 81 percent and 89 percent since 2005. When the IRS selects a return for audit, they pretty much know it will likely result in an adjustment.

6. Field audits are rare, but expensive

In 2018, the IRS hit an all-time low for the number of field audits conducted. Field audits are the most comprehensive, and are saved for complex taxpayers and situations — like businesses and tax avoidance schemes. The IRS has said that their audits have a great return on investment and reduction of audit results in large amounts lost to the U.S. Treasury. The numbers support the IRS. In 2018, the average amount owed in a field audit was $85,400. Luckily for taxpayers, the IRS only conducted just under a quarter of a million field audits in 2018.

7. Want your business to escape audit? Be an S corp or partnership

The IRS continues to struggle to audit S corp and partnership returns. This situation is likely to get worse as the more experienced IRS business auditors continue to retire. Audit rates for S corps and partnerships are both 0.22 percent — or, put another way, one in every 455 passthrough entities were examined in 2018. It is no wonder that the number of S corporations have increased by 38 percent from 2005 to 2018 (3.5 million in 2005 versus 4.85 million in 2018).

8. Audits on the wealthy are still popular, but have dropped

In 2011, one out of every eight taxpayers who earned more than $1 million in income were audited. In 2018, the number dropped to one in every 31 taxpayers. However, those who earn more than $1 million are still among the most popular audit profiles.

9. Audits have dropped, but penalties are still prevalent

The total volume of individual audits and CP2000 notices has dropped from 4 million in 2005 to 3.9 million in 2018. However, in 2018, 606,121 individual taxpayers were assessed the accuracy penalty for making an error on a tax return (audit or CP2000 notice). In 2005, that number was only 58,366. The moral here is if the IRS has to audit or send a CP2000 notice, it will now look to penalize errors to deter future noncompliance. The number of individual taxpayers with an accuracy penalty from an audit/CP2000 notice has increased 10 times since 2005.

10. Tax evasion prosecutions are low

Finally, the “fear of an audit” myth buster. The IRS does not like to publish this statistic. In 2018, there were only 636 indictments of legal source tax crimes. IRS tax evasion criminal investigation cases have dropped by 58 percent since 2013. The main source of IRS legal source tax crime cases are IRS field auditors and criminal investigators, i.e., revenue agents and special agents. From 2013 to 2018, the numbers of revenue agents and special agents have decreased by 26 percent and 21 percent, respectively. As a result, the number of criminal investigations and indictments continue to decline.

Fear of an audit has always been a main driver for compliance with the IRS. The 2018 Realities and the IRS ability to close the tax gap. Comprehensive Taxpayer Attitude Survey continued to show that 63 percent of taxpayers cited fear of an audit as an influential behavioral factor for correctly filing and timely paying their taxes. The tax gap, as currently measured on 2011-2013 returns, shows that the Treasury loses $352 billion a year due to inaccurate tax returns. With the fear of an audit becoming a myth, how will the IRS close the tax gap?

As the fear of an audit motivator becomes less of a reality, the IRS must seek to simulate the audit by touching as many taxpayers as they can. For now, that looks like sending a lot of non-audit notices to taxpayers. Recently, the Treasury Inspector General for Tax Administration reported that the IRS sent over 219 million notices annually to taxpayers. In 2001, the number of notices sent was only 30 million. With the IRS’s current resources, the IRS notice may be the only means the IRS has to let taxpayers know that they are still there.

Tyler Durden Thu, 01/23/2020 - 18:25
Published:1/23/2020 5:37:57 PM
[Politics] Alan Dershowitz to Newsmax TV: I'm Prepared for Trial 'Right Now' Finally taking his nose out of dusty constitutional law books, legal expert Dershowitz told Newsmax TV he is now ready to present his case against impeachment of President Donald Trump, but he expects Democrats to push him to Saturday. ... Published:1/22/2020 7:32:25 PM
[Markets] "No Chinese Allowed": Hysteria Grips Asia As Millions Travel Amid Viral Outbreak "No Chinese Allowed": Hysteria Grips Asia As Millions Travel Amid Viral Outbreak

On Wednesday, health officials in China once again announced a sharp increase in the number of reported cases of the mysterious new coronavirus that is now confirmed to have caused at least nine deaths, as we reported last night.

As hundreds of millions of Chinese leave the country for vacation destinations abroad - all part of what the NYT described as the largest human migration on Earth - the hysteria has reached a fever pitch.

In Japan, one shopkeeper in the mountain town of Hakone (a popular vacation destination) has been heavily criticized for hanging a sign outside his door reading 'no Chinese allowed'. The full message displayed on the sign (pictured below) reads: "No Chinese are allowed to enter the store...I do not want to spread the virus."

According to the SCMP, the as-yet-unidentified owner of the confectionery store told the Asahi newspaper that he used a translation application to write the message in Chinese, adding, "I want to protect myself from the virus and I don’t want Chinese people to enter the store."

Japanese tourism officials apologized for the shopkeepers' actions after he was roundly criticized on social media.

Shin Hae-bong, a professor of law at Aoyama Gakuen University, said the store owner was not breaking the law, as Japan doesn't have any laws against discrimination on the books.

And while Chinese tourists could try to take him to court, that would take some time.

"This is obviously wrong, but the only thing that could be done would be for a suit to be filed as many Japanese courts have in recent years ruled against places that bar people based on their nationality," she said.

"The courts have, in those cases, used the International Convention on the Elimination of All Forms of Racial Discrimination for the basis of their rulings."

Meanwhile, back in Wuhan, Chinese officials are taking drastic measures to try and contain the spread of the virus from the city where it was first discovered. Stocks steadied as China’s National Health Commission detailed its plan of action for stopping the virus's spread. According to Bloomberg, health officials said China has stepped up monitoring of transportation links and ordered a near-complete shutdown of the central city of Wuhan, where the virus originated. Officials acknowledged, however, that they’re still grappling to understand the pathogen, which has infected multiple medical workers.

"We are still on a learning curve," said Gao Fu, head of Chinese Center for Disease Control and Prevention. "The disease will continue to develop," he said, adding that it has already changed from its early stages of detection.

However, while Beijing continues with its transparency act to try and calm the panic, China's Weibo users have been expressing their disappointment in their government in unusually blunt terms (considering the amount of censorship that goes on). Users on Weibo and WeChat complained about being left in the dark, and accused the government of endangering lives by waiting to disclose that the virus can travel between humans.

Overnight, the first instances of the virus were reported in Macau, and according to the SCMP, health authorities in Hong Kong are carrying out their third test to confirm that a patient from Wuhan is indeed infected with the virus.

Some 440 cases of the SARS-like virus have been confirmed so far across 13 Chinese provinces. China's medical authorities have 1,394 patients are under medical observation.

All of the deaths so far have been from Wuhan, a city of 11 million people at the center of the outbreak. They include eight men, aged 61 to 87, and one 48-year-old woman. Almost all of those who have succumbed to the virus had preexisting medical conditions.

The most up-to-date map from the NYT (which still doesn't reflect all of the known cases) illustrates just how far the virus has spread both within China, and abroad.

Following confirmation from the CDC that the first case of the virus had been diagnosed in the US, President Trump said during an interview from Davos that his administration has everything "totally under control."

We're still waiting to see if the WHO, which is meeting Wednesday, will declare the outbreak a dangerous pandemic. The outbreak began in a seafood and poultry market in Wuhan, a city of 11 million in central China. Nine have died already. But how many more will succumb before this latest viral plague is contained?

Tyler Durden Wed, 01/22/2020 - 06:03
Published:1/22/2020 5:29:38 AM
[Markets] Pope Francis Calls For Marxist Economic Summit Pope Francis Calls For Marxist Economic Summit

Authored by Antonius Aquinas,

As if there needs to be further evidence that the current occupant of St. Peter’s Chair in Rome is a Marxist, the announcement of an upcoming conference at Assisi entitled the “Economy of Francesco” should convince any skeptic otherwise.

In his invitation letter to “young economists and entrepreneurs worldwide,” Bergoglio sets the agenda for the Leftist confab quite clearly which is virulently anti-market, a call for massive redistribution of wealth, and a reordering of the current economic systems of the world with a healthy dose of climate change nonesense:

...a different kind of economy: one that brings life not death, one that is inclusive and not exclusive, humane and not dehumanizing, one that cares for the environment and does not despoil it.

While Bergoglio’s Marxist credentials have been firmly established, his blasphemous actions and words has a growing number outside of “sedevacantist circles” calling him a heretic.  The legitimacy of “Pope Francis,” however, is more fundamental than him being a manifest heretic, but his standing as a legitimate pope is invalid since his ordination as a priest and his consecration as a bishop came under the new rites of Holy Orders instituted in the wake of the Second Vatican anti-Council (1962-1965).

The mastermind behind Bergoglio’s summit is professor Luigino Bruni and from his comments he sounds more radical than the Argentine Apostate, if that is possible.  Professor Bruni wants to use taxation as a weapon to “redistribute income and wealth from the rich to the poor.”

Bruni, a professor of political economy at the Italian University, LUMSA, and the author of a number of books, basis his advocacy for redistribution of wealth on the Scriptures:

[T]he Bible has many words to offer our economic life and ideas [with] the transformation of wealth into well-being.

It appears that the good professor’s Bible is missing the Seventh Commandment of the Decalogue which solemnly states: THOU SHALL NOT STEAL!  In no legitimate commentary ever written on this Commandment is there an exception made for the confiscation of wealth from the well-to-do to be given to the poor.  Probably just an oversight on the Professor’s part.

Because they are blinded by socialistic ideology, Bruni, Bergoglio, and the likes of Bernie Sanders cannot see that the growing wealth inequality which they complain about is not the result of “capitalism,” but is the outcome of the monetary policy of the world’s central banks.  This, along with tax policies which hamper innovation and shield the entrenched financial class from competition, is why financial elites are able to maintain and increase their power.

Central bank policy of suppressing interest rates and of money printing allow banks and financial institutions to receive “free money” which they can invest and speculate with at zero cost.  The boom (actually a bubble) in asset prices on Wall Street is a demonstration of how wealth disparity takes place.

If Bergoglio really meant to reform the present system, he would call for the abolition of central banking and a return to “hard money.”  Under such an order, banks and financial institutions become wealthy on their ability to make prudent investment decisions subjected to profit and loss.  A free market in banking is the antithesis of the current system of credit expansion and money printing.

Not only have Bergoglio and his cohorts abandoned the Faith, but they have also overturned the Church’s long-held condemnation of socialism and have ignored many of its own outstanding thinkers on financial matters.  From the Scholastics to the School of Salamanca through the Jesuits and the great Cardinal Cajetan, who finally taught the proper doctrine on interest rates, the Church has produced scores of eminent economic thinkers in its long history.

School of Salamanca

Ever since socialism reared its ugly head as a social system of thought, the Church has warned of its dangers even its more milder forms as Pope Pius XII wrote, “No Catholic could subscribe even to moderate socialism.” 

Since Vatican II and especially under Bergoglio’s regime, however, Leftist ideas of all sorts have been warmly embraced.

At the heart of socialism, be it Marxism or its equally pernicious variants, lies envy which became a part of the human condition with the fall of man.  While once condemned, envy has been turned into a virtue by the likes of Bergoglio.

While such ideas may sound appealing to human sensibilities, they will not pass the Divine Judge who knows the thoughts and souls of all His creatures even those of supposed popes.

Tyler Durden Wed, 01/22/2020 - 02:00
Published:1/22/2020 1:00:50 AM
[Markets] Did Google Assassinate Wife Of Whistleblower Who Exposed The Search Engine? Did Google Assassinate Wife Of Whistleblower Who Exposed The Search Engine?


A high-profile Google whistleblower who back in July testified before Congress that the search engine meddled in the 2016 presidential election on behalf of Hillary Clinton is now suggesting that the fatal car crash that killed his wife last month may not have been an accident.

Did Google assassinate whistleblower’s wife who exposed the search engine?

Google Whistleblower Dr. Robert Epstein

Robert Epstein is an American psychologist, professor, author, and journalist. He earned his Ph.D. in psychology at Harvard University in 1981, was editor in chief of Psychology Today, a visiting scholar at the University of California, San Diego, and the founder and director emeritus of the Cambridge Center for Behavioral Studies in Concord, MA.

Criticism of Google

In 2013, Epstein wrote in Time magazine that Google had “a fundamentally deceptive business model”. In 2015, he said that Google could rig the 2016 US presidential election and that search engine manipulation was “a serious threat to the democratic system of government”.

According to Epstein,Perhaps the most effective way to wield political influence in today’s high-tech world is to donate money to a candidate and then to use technology to make sure he or she wins. The technology guarantees the win, and the donation guarantees allegiance, which Google has certainly tapped in recent years with the Obama administration.”

In a 2017 article, Epstein criticized efforts by companies such as Google and Facebook to suppress fake news through algorithms, noting “the dangers in allowing big technology companies to decide which news stories are legitimate”.

Other journalists and researchers have expressed concerns similar to Epstein’s. Safiya Noble cited Epstein’s research about search engine bias in her 2018 book Algorithms of Oppression, although she has expressed doubt that search engines ought to counter-balance the content of large, well-resourced and highly trained newsrooms with what she called “disinformation sites” and “propaganda outlets”.

Ramesh Srinivasan, a professor of information studies at UCLA focusing on “the relationships between technology and politics”, agreed with Epstein that “the larger issue” of how search engines can shape users’ views is “extremely important”, but questioned how many undecided voters are using Google to them help decide who to vote for.

Senate Judiciary Committee

In July 2019, Epstein presented his research to the Senate Judiciary Committee, claiming that Google could manipulate “upwards of 15 million votes” in 2020 and recommending that Google’s search index be made public.

In a clarification to a question asked by Ted Cruz he also said that “2.6 million is a rock bottom minimum” for how many votes Google might have swung towards Hillary Clinton in the 2016 US presidential election, and that “the range is between 2.6 million and up to 10.4 million votes”.

Google dismissed Epstein’s research as “nothing more than a poorly constructed conspiracy theory”.

Death of Misti Epstein

In December, Epstein, 66, announced that his wife – 29-year-old Misti Vaughn – was killed when her car spun out of control in inclement weather in Escondido, Calif., located in San Diego County. The California Highway Patrol said Vaughn lost control of her Ford Ranger in the rain and careened into oncoming traffic, crashing into a big rig and an SUV, San Diego’s KNSD reported.

Epstein also shared an image of the badly damaged vehicle his wife was driving at the time of the wreck. “#Misti’s awesome Ford Ranger was broadsided by a Freightliner semi towing 2 loads of cement. I had my ear to her heart for most of the last 100 minutes of her life. I heard her take her last breath, & heard the last beat of her heart. Mine is broken,” he tweeted on Jan. 11.

Dr. Robert Epstein in a sensational tweet last Sunday suggested that the fatal car crash that killed his wife last month may not have been an accident. He said, “Last year, after I briefed a group of state AGs about #Google’s power to rig elections, one of them said, “I think you’re going to die in an accident in a few months,” he tweeted. “A few months later, my beautiful wife #Misti died a violent death. Makes you wonder.”

Investigation against Google in India

The Competition Commission of India (CCI) has launched a probe against Google for leveraging its dominant market position. If found guilty Google might be looking at a fine that could exceed Rs 136 crore (almost 10 million dollars).

Google also had a role to play in 2008 Mumbai Attacks. One of the terrorist involved in Mumbai attacks closely monitored by British GCHQ was technology chief of Lashkar-e-Taiba Zarrar Shah. Top Secret US NSA document on Mumbai Attacks show that Mr. Shah, the technology chief of Lashkar-e-Taiba, the Pakistani terror group, and fellow conspirators used Google Earth to show militants the routes to their targets in the city. He set up an Internet phone system to disguise his location by routing his calls through New Jersey.

It is no secret that technology giants Google, Microsoft and the likes works for the US military. Under the provisions of the USA Patriot Act, 2001 and the Foreign Intelligence Surveillance Act, 1978 the US Government and Intelligence Agencies can legally require a US based corporation to handover information that it either owns or has access to.

And recently the CEO of Google, Sundar Pichai personally assured the US President Donald Trump about “Google’s commitment to the US military”. In the words of Snowden, “the rebranding of Surveillance as Social Media is the most successful deception since the Department of War became the Department of Defense.”

Tyler Durden Wed, 01/22/2020 - 00:05
Published:1/21/2020 11:28:01 PM
[Opinion] Hubs And Heartlands: The Battlegrounds Of The New Class War

By Michael Lind -

The following is an excerpt from The New Class War: Saving Democracy from the Managerial Elite, out today from Penguin Books. On a map of the United States color-coded by party, big cities and university towns and a few regions with large immigrant and racial minority populations are a chain ...

Hubs And Heartlands: The Battlegrounds Of The New Class War 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:1/21/2020 9:05:34 PM
[World] A look back at Joseph Wambaugh's 'The Onion Field'

Joseph Wambaugh, a former LAPD detective sergeant and the author of classic police novels such as “The New Centurions,” “The Blue Knight” and “The Choir Boys,” turns 83 on Jan. 22.

Mr. Wambaugh has also written classic true crime books such as “Echoes in the Darkness” and “The Blooding,” but ... Published:1/21/2020 1:53:55 PM

[Markets] "The Max Brand Is Damaged": Key Boeing Client Joins Trump In Demanding Renaming Of 737 Max "The Max Brand Is Damaged": Key Boeing Client Joins Trump In Demanding Renaming Of 737 Max

Back in December, we tweeted "Boeing 737 MAX renamed to Boeing 420; flight certificate secured," while "Boeing 420" might not be the new name -- there are new calls from a major aircraft leasing company for Boeing to drop the name "MAX." 

President Trump first suggested Boeing rebrand MAX after a faulty flight control system led to two deadly crashes, killing 346 people. The planes have been grounded since March 2019. 

On Monday, Air Lease demanded Boeing drop the "damaged" label of its MAX brand to avoid undermining the value of its 150 MAX jets, reported Reuters

"We've asked Boeing to get rid of that word MAX. I think that word MAX should go down in the history books as a bad name for an aircraft," Steven Udvar-Hazy told the Airline Economics aviation finance conference in Dublin. "The MAX brand is damaged, and there is really no reason for it."

Hazy warned even with a name change – it's not clear if customers would forget about the two fatal crashes.

The name "MAX" has been tarnished with the blood of 346 lives. Press from around the world covered the disaster and any updates via Boeing's progress in attempting to unground the planes. MAX could develop the same negative vibes as the name "Hindenburg." Even after 80 years, Hindenburg is widely recognized as an air disaster that killed lots of people. There's also a technical indicator called the "Hindenburg Omen" – designed to spot stock market tops. 

With the MAX brand severely damaged, a recent report via BofA Defense Outlook and Commercial Aerospace noted that there are increasing concerns about whether the MAX will return to service. 

BofA anticipates the MAX could return to service by May 2020, but notes "the path to normalization for the 737 MAX may take longer than expected." 

"For the production rate to ramp-up back to 52 per month, Boeing will still need to get the 387 737 MAX grounded aircraft that were already delivered to airlines to get back in the air and "depickle" and deliver the ~400 undelivered, parked 737 MAX aircraft. Additionally, Boeing will need to synchronize its entire supply chain back to harmony. Getting back to 57 per month may be unlikely." 

BofA notes, "the key bottlenecks for aircraft delivery" has been Boeing's ability to issue airworthiness certificates has been stripped and is now up to the Federal Aviation Administration (FAA). This could further delay the jets returning to the skies. 

"Before the 737 MAX grounding, Boeing had expected to ramp up to 57 per month by 2H19. Boeing ability to issue airworthiness certificates and export certificates of airworthiness One of the key bottlenecks for aircraft delivery is that Boeing is no longer allowed to issue airworthiness certificates and export certificates of airworthiness for 737 MAX aircraft. The Federal Aviation Administration (FAA) will be the sole issuer of these certificates."

Boeing peaked at 69 MAX deliveries in December 2018. Boeing delivered 580 737 aircraft in 2018, which averages about 48 aircraft per month. Before the grounding and now production halt, Boeing delivered 34 737s in January 2019, 32 in February 2019, and 23 in March 2019.


And with the production of the MAX halted and no clear timetable of when the planes could return to the skies – the peak commercial jet bubble has started to unravel. This will could trigger a deepening of the U.S. manufacturing recession in 1H20. 

As for the branding, President Trump was right, Boeing must drop MAX and rebrand the troubled planes. 


Tyler Durden Mon, 01/20/2020 - 13:35
Published:1/20/2020 12:52:45 PM
[Artificial Intelligence] Fable Studio founder Edward Saatchi on designing virtual beings In films, TV shows and books — and even in video games where characters are designed to respond to user behavior — we don’t perceive characters as beings with whom we can establish two-way relationships. But that’s poised to change, at least in some use cases. Interactive characters — fictional, virtual personas capable of personalized […] Published:1/20/2020 11:17:35 AM
[Artificial Intelligence] Shadows’ Dylan Flinn and Kombo’s Kevin Gould on the business of ‘virtual influencers’ In films, TV shows and books — and even in video games where characters are designed to respond to user behavior — we don’t perceive characters as beings with whom we can establish two-way relationships. But that’s poised to change, at least in some use cases. Interactive characters — fictional, virtual personas capable of personalized […] Published:1/19/2020 11:13:10 AM
[Markets] Why Is Western Media Not Questioning The Mysterious Death Of Australian Youth Activist Wilson Gavin? Why Is Western Media Not Questioning The Mysterious Death Of Australian Youth Activist Wilson Gavin?

Authored by Robert Bridge via The Strategic Culture Foundation,

Following a protest against a ‘drag queen story time’ at a library in Australia, Wilson Gavin, 21, the president of the University of Queensland Liberal National Club, was found dead the next morning at a train station.

Local media, while going out its way to portray Gavin and his fellow protesters as hell-raisers, has yet to ask any serious questions with regards to the young man’s alleged suicide – at a time when he was reportedly house-sitting for a Liberal National Party Senator.

If ever there was a story that epitomizes exactly how low Western media has sunk, the story involving the events leading up to the tragic death of Wilson Gavin would have to rank very high.

On Sunday, Gavin and about fifteen members of the University of Queensland’s Liberal National Club (UQLNC) walked into the Brisbane Square Library where a ‘Drag Queen Story Hour’ event for children was in full swing. Gavin went face-to-face with the star of the show, drag queen Johnny Valkyrie, aka Queenie, as the group began to chant “drag queens are not for kids.” No violence, no broken chairs, just a group of university students expressing their displeasure with a controversial event that is sponsored by the local government, i.e. the taxpayers.

What happened next was as predictable as winter in Russia. Social media lit up with thousands of people providing their personal commentary on the incident. An extra big log was tossed on the fire as the popular Australian band, The Veronicas, shared footage of the incident on Instagram, with the smug remark, ‘bigotry is alive in Brisbane today.’

The New Zealand Herald described the social media backlash that ensued against Wilson Gavin by quoting a friend, who wished to remain anonymous (“out of fear of becoming a target” too, the paper explained): “Gavin was relentlessly trolled with vile insults and taunts, and … received some messages with an encouragement that he die.”

“Some members of his family, classmates and friends were tracked down and contacted, while his school, The University of Queensland, was publicly encouraged to kick him out.”

The between-the-line message here seems to be, ‘see what happens to people who protest too much?’

As the media went to great lengths to demonstrate the public wrath Gavin had incurred for daring to speak his mind at a library event (The Herald exhausted the bulk of its article discussing the “dangers of mob rule” on social media and “public shaming”), it failed to show the tremendous outpouring of support that he and his fellow students had received. The comments on social media were divided into two camps, which is normally the case involving any controversial subject. After all, millions of people are vigorously opposed to the idea of drag queens reading stories to children at public libraries, or at any other venue for that matter. Yet the media seriously downplayed that side of the debate, pushing the idea that “public shaming” led to Gavin’s decision to end his life. More on that later.

Another particularly inexplicable aspect about the media coverage is that every single publication sympathized with the drag queens and their ‘storytelling’ to very young children, as if nothing could be more natural. What books were the queens reading from? We are never told, but somehow I doubt it was Jack and Jill, unless one or both of them had undergone a sex-change operation along the way. But I digress.

The main message the media strove to deliver was that the young protesters were mean brutes, intimidating the performers and frightening staff and children, as if the sight of well-dressed college students chanting a slogan was the worst possible thing that could happen to them. Meanwhile, there was zero discussion about the possible psychological effects a child may experience when confronted with drag queens, as well as their personal choice of fine literature. No discussion as to why there needs to be a Drag Queen Story Time for children – paid for out of the public purse – in the first place. No comments provided by respectable psychologists about the possible mental side effects these children could face down the road. Instead, the media pushed the ridiculous narrative that the families suffered the very worst ordeal.

ABC Australia, for example, interviewed Jenny Griffin, a mother of two children, ages 6 and 8, who commented, “I was worried, I was concerned for my kids’ safety,” she said. “This was their first introduction to this more violent homophobia.”

Valkyrie, aka Queenie, said, “There were children crying, families distressed and of course, [fellow drag queen] Diamond (whose full stage name is ‘Diamond Good-rim,’ a clear allusion to a sexual act that should be considered inappropriate for children) and I were victim to vilification, harassment and nuisance.”

After several minutes of publicly expressing their criticism, the Queensland students peacefully exited the building, escorted by a single security guard.

End of story? Unfortunately not.

Early the next morning, Wilson Gavin was found dead at a train station as the result of “critical injuries.” Within a matter of hours the media was calling his death a suicide. Before continuing, a few necessary words about Mr. Gavin.

Wilson Gavin, as president of the LNC at his university, courted controversy on numerous occasions in the course of his short life. At the age of 19, Gavin, and despite being homosexual, voiced his opposition to gay marriages by organizing a ‘You Can Say No’ rally and making several appearances on national television.

On another occasion, Gavin brilliantly defended the British monarchy on an episode of “Outsiders,” a political talk show.

“I’m a lover of all things traditional. I’m a lover of all things beautiful,” he said on the show.

“And there’s nothing more traditional in this country than the monarchy.”

Judging by Gavin’s extremely confident demeanor in those past interviews, and at the library protest, he did not come across as a person who could be easily upset by hurtful remarks over social media. Indeed, just the opposite. He seemed to relish the opportunity to prove his detractors wrong. In short, he was a young intelligent man with a successful future ahead of him, and that fact may have unsettled his enemies. Although it is impossible to know what is going on inside of any person’s head, the fact that Gavin’s alleged suicide has shocked so many people is telling.

According to the Star Observer (“Setting Australia’s LGBTI agenda since 1979,” it declares in its masthead), “Gavin was found dead at Chelmer Railway Station this morning at 7:07am. Ambulance officers who attended say he died from critical injuries, but have provided no further details.”

On Thursday, The Guardian provided one short sentence regarding police accounts of the death: “Police did not treat his death as suspicious.”

In place of hard-hitting questions, the article provided the number for a suicide hotline as if the case was already closed. While a nice gesture that is not the sort of information the public needs from the media. Journalists need to be asking how a young man met his early demise at a train station in the wee hours of the morning following a protest that triggered a lot of controversy on social media. The public deserves to know more about the circumstances of the alleged suicide considering the context of events prior to that tragic moment Why is the possibility of foul play not mentioned – not even within the context to deny it, as if this were some sort of impossibility – as a matter of protocol in such a case?

One more note. As mentioned earlier, on the weekend of his death, Gavin had been minding the home of a politician, who has been identified as federal Liberal National Party Senator Paul Scarr, the Daily Mail Australia reported. Yet Liberal National politicians have said they have been disaffiliated from the UQLNC that Gavin headed since last month. Now, considering how media rarely shies away from sensational stories, the fact that it is not following up on this bit of information is, at the very least, strange.

Since the death of Wilson Gavin and the protest he organized, two petitions have been started on Brisbane City Council’s website to ban the Drag Queen Story Time events.

Tyler Durden Sat, 01/18/2020 - 23:30
Published:1/18/2020 10:39:48 PM
[Markets] Why Laws Against Hate Speech Are Dangerous Why Laws Against Hate Speech Are Dangerous

Authored by Fjordman via The Gatestone Institute,

In November 2019, Germans celebrated the collapse of the Berlin Wall and the reunification of Germany 30 years earlier. That same month, Chancellor Angela Merkel, in a speech to the German federal parliament (Bundestag), advocated more restrictions on free speech for all Germans. She warned that free speech has limits:

"Those limits begin where hatred is spread. They begin where the dignity of other people is violated. This house will and must oppose extreme speech. Otherwise, our society will no longer be the free society that it was."

Merkel received great applause.

Critics, however, would claim that curtailing freedom in order to protect freedom sounds a bit Orwellian. One of the first acts of any tyrant or repressive regime is usually to abolish freedom of speech. Merkel should know this: she lived under a repressive regime -- in the communist dictatorship of East Germany, where she studied at Karl Marx University.

The First Amendment to the United States Constitution protects freedom of speech, specifically speech critical of the government, and prohibits the state from limiting free speech. The First Amendment was placed first in the Bill of Rights because the American Founding Fathers realized that freedom of speech is fundamental to a free society. US President George Washington said:

"For if Men are to be precluded from offering their Sentiments on a matter, which may involve the most serious and alarming consequences... reason is of no use to us; the freedom of Speech may be taken away, and, dumb and silent we may be led, like sheep, to the Slaughter."

Without freedom of speech, you cannot truly be free. Freedom of speech exists precisely to protect the minority from the tyranny of the majority.

What exactly is "hate speech," and who gets to define it? Those who love justice usually also hate injustice. But what is justice? Social justice? Economic justice? Ecological justice? Religious fundamentalist justice? Climate justice?

Hate may be a negative emotion, but you cannot ban emotions. Envy and jealousy are also widely considered negative feelings. Yet we do not ban them. Envy of people who are wealthier than you is arguably a component of Socialist and Marxist political parties everywhere.

The concept of a "hate crime" is also flawed. If you rob, assault or murder people, that is equally injurious regardless of the motivation of the assailant or of who the victim is. We should not have different penalties depending upon whether the victim is a gay black man, a straight white man, a Muslim woman or a Christian nun, or we will end up with a kind of a legal caste system.

Although the legal system should not be based on feelings or emotions, we see an increasing tendency toward this subjectivity. There is a tendency to censor certain viewpoints because they might "offend" others. The problem is, it is not the inoffensive things that need protecting; it is only the offensive things that do. When, in the US, the National Socialist Party of America wanted to march though Skokie, Illinois, home to many Holocaust survivors, the Supreme Court decided that the Nazis' right of free speech overrode suppressing the marchers. According to the Bill of Rights Institute:

"In these cases, National Socialist Party of America v. Village of Skokie (1977), and Brandenburg v. Ohio (1968), the Supreme Court held that the First Amendment protects individuals' rights to express their views, even if those views are considered extremely offensive by most people...

"American writer Noam Chomsky said 'If we don't believe in freedom of expression for people we despise, we don't believe in it at all.' Individuals who express unpopular opinions are protected by the First Amendment. The First Amendment prevents majorities from silencing views with which they do not agree—even views that the majority of people find offensive to their very core. "

Possibly many things people say will be considered offensive to somebody, somewhere. In 1600, Giordano Bruno was burned alive at the stake as a heretic for saying that the universe has no center, and stars are suns, surrounded by planets and moons. The findings of Charles Darwin were challenged by the "Scopes Monkey Trial" in 1925, when a high-school teacher in Tennessee, John T. Scopes, was charged with violating state law by teaching the theory of human evolution.

Just a few years ago, it was uncontroversial to state that there are only two biological sexes. After all, this is a fact that would seem pretty straightforward. Yet recently, even this simple statement has become explosive. When the tennis champion Martina Navratilova questioned the fairness of having transgender men compete in sports again women, but was eventually driven to "apologize."

In the UK, a physician, David Mackereth, recently lost his government job as a medical assessor after more than three decades for refusing to renounce his view that gender is determined at birth.

People who claim to combat "hate" often seem to be quite full of hate themselves. Some Americans claim that US President Donald J. Trump is a racist, yet themselves express open hatred toward Trump, and those who vote for him. They do not object to hating. They just seem to believe that their hate is the only legitimate one.

In 2013, the American scholar Robert Spencer was banned by British authorities from entering the UK. Spencer the author of many books about Islam and runs the website Jihad Watch.

The Koran sura 9:5 has verse stating:

"When the sacred months are over slay the idolaters wherever you find them. Arrest them, besiege them, and lie in ambush everywhere for them. If they repent and take to prayer and render the alms levy, allow them to go their way. God is forgiving and merciful."

The exact translation of this verse can be debated, but the Arabic verb qatala generally means to kill, slay or murder somebody. How come it is all right to publish the original source, prescribing murder, but that it is "hate speech" to point out that quote?

Robert Spencer and others have observed, for instance, that verse 9:5 and other intolerant verses in the Koran have been quoted repeatedly by militant Muslims to justify jihad attacks and violence (for instance herehere and here). Although other religious books also contain violence, as the scholar Bruce Bawer points out:

"Sometimes, when one points out these rules, people will respond: 'Well, the Bible says such-and-such.' The point is not that these things are written in Islamic scripture, but that people still live by them."

Muslims in Britain and other Western nations are free to spread teachings that are hateful towards non-Muslims. Yet because non-Muslims such as Robert Spencer pointed out that some teachings are hateful and have inspired actual atrocities, UK authorities banned Spencer for spreading "hate."

One sees, then, that restrictions against "hate speech" often do not really ban hate speech; instead they may actually be protecting certain forms of hate speech against legitimate inquiry.

Laws against "hate speech" and "racism" always lead to political censorship, because the definition of what constitutes "hate" is always influenced by politics and ideology. Laws against hate speech or racism should therefore be removed. No person has the right "not to be offended." Freedom of speech means saying and hearing things with which you may disagree. What remains important is to be able to say and hear them.

Tyler Durden Sat, 01/18/2020 - 20:00
Published:1/18/2020 7:07:21 PM
[Artificial Intelligence] Compound’s Mike Dempsey on virtual influencers and AI characters In films, TV shows and books — and even in video games where characters are designed to respond to user behavior — we don’t perceive characters as beings with whom we can establish two-way relationships. But that’s poised to change, at least in some use cases. Interactive characters — fictional, virtual personas capable of personalized […] Published:1/18/2020 10:41:39 AM
[Markets] Living On Borrowed Time Living On Borrowed Time

Authored by MN Gordon via,

Practically the entirety of Congress now believes that the ability to pay should not limit the ability to promise people whatever they want.  There’s no poll of members of Congress to support this assertion.  We base it on what they’ve communicated by real, material actions.

Remember, per the Constitution, Congress – and in particular, the House of Representatives – is vested with the “power of the purse.”  They retain the authority to tax and spend public money for the federal government.  Over the last 50 years Congress has demonstrated they give less than half a rip about the government’s ability to pay.

Congress may be good at taxing.  But they’re even better at spending.  According to the Treasury Department, the annual budget deficit, the shortfall between tax receipts and spending, for the 2019 calendar year topped $1.02 trillion.  But that’s nothing…

The budget deficit for the first three months of the 2020 fiscal year, which started in October, is up 12 percent over this time last year.  Specifically, the deficit for the first three months of the 2020 fiscal year is $357 billion.  At this rate, the annual 2020 fiscal year deficit will eclipse $1.4 trillion.

The deficit, of course, is funded with Treasury debt.  And since mid-October, nearly half the Treasury debt has been purchased by the Federal Reserve.  If you recall, starting in mid-October, the Fed began conjuring money out of thin air at a rate of $60 billion a month for the sole purpose of buying Treasuries.

Over the next decade, as debt and deficits go vertical, more and more of the Treasury’s borrowing will be financed via the printing press.  Here’s why…

Inverted Pyramid

New U.S. Census Bureau figures show that the U.S. population is growing at an annual rate of 0.48 percent.  If it wasn’t for immigrants, which are entering the USA at a reduced rate, the U.S. population would be in decline.  Business Insider offered several anecdotes:

“The census data capped 10 years of sluggish US population growth.  The 2010s may enter the record books as the slowest decade in population growth since the first Census in 1790….  And low fertility and an increase in deaths are projected to continue into the 2020s.

“The prospect of demographic stagnation is playing a critical role in projections of slower U.S. economic growth over the next decade, given smaller increases in the numbers of working-age Americans and as baby boomers continue retiring.  Going forward, a ballooning number of retirees would rely on a shrinking number of workers to power the economy.”

Quite frankly, this ‘going forward’ scenario is unworkable.

You see, when an economy’s supported by a young and growing demographic, the burden of public debt quickly dissipate.  At the local level, long term municipal bonds are issued, and then repaid by a larger and more prosperous tax base.  Public pension funds also work reasonably well when supported by a growing work force.

But as the economy ages, and growth stalls, the legacy costs become insurmountable.  In effect, the age demographic transitions from a well-functioning pyramid, with a large base of workers supporting a small tip of retirees, to a top heavy inverted pyramid.

By then the public grifters, like intestinal tapeworms, have taken control from the inside.  Rather than making a course correction, they devour their host.  That’s when the gig is finally up.

Local governments default.  Pensioners get the shaft.  Public services diminish.  Infrastructure falls to derelict, decay and disrepair.  And formerly grand properties degenerate to single room occupancy housing for the wicked…much like Los Angeles’s Hotel Alexandria in the 1990s.

Living On Borrowed Time

At the national level, the rules are a bit different.  With the Fed and Treasury working in concert with a fiat dollar, and Congress raising the debt ceiling with little reservation, it is impossible for the U.S. government to technically default.  However, to keep perpetuating more and more debt, the Fed and Treasury resort to mass currency debasement.

As noted above, the Fed is currently printing $60 billion a month and loaning it to the Treasury.  This is financing about 50 percent of the deficit through the first quarter of fiscal year 2020.  Moreover, this $60 billion a month is in addition to the nightly liquidity blasts of upwards of $80 billion the Fed applies to the overnight funding market to price fix the repo rate below 2 percent as part of its program of repo madness.

Without the Fed’s fake money intervention, Washington would be forced to raise taxes, reduce spending, accept a much higher interest rate, and default.  The progression would happen in short order.  Plus, the financial system would blowout to the extreme.

Yet there’s no turning back.  There’s no graceful way out.  There’s no backing away from QE or repo madness.

When it comes down to it, population and age demographics make it impossible to support the accumulated debt of yesterday’s spending.  The likelihood of growing our way out of this mess is next to none.

So what are we left with?  We’re left with debt financing by way of fake money from the Fed.

Make no mistake, we’re living on borrowed time.  The day will come when the costs of debt monetization exceeds any benefits.  That’s when those costs will be paid with ruinous price inflation.  And, as it happens, ruinous price inflation is very costly.

In the meantime, everything’s awesome.  Shares of Tesla are trading at over $500.  Somebody say amen.

Tyler Durden Sat, 01/18/2020 - 11:30
Published:1/18/2020 10:41:39 AM
[Markets] If Promoting Wealth Inequality & Social Breakdown Is Bad, The Fed Is Evil If Promoting Wealth Inequality & Social Breakdown Is Bad, The Fed Is Evil

Authored by Charles Hugh Smith via OfTwoMinds blog,

The Fed will destroy the nation by widening the wealth/income inequality that is breaking down the nation's social order.

President Reagan was widely mocked in America when he declared the Soviet Union an evil empire, but this calling things by their real name had a profound impact in the Eastern Bloc. The mockery stemmed from the secularized American view that there was precious little moral difference between the USSR and the US, that the USSR was a legitimate "alternative system," and that ramping up Cold war tensions was not just dangerous but useless, as the USSR was as permanent (or more so) than the US.

None of which turned out to be true. While all nation-states harbor multitudes of sins, the Soviet Empire was unique in its mass suppression of basic human rights, its economic failure to better the lives of its imprisoned populations while its military might soared, and the perverse union of a Kafkaesque bureaucracy and an Orwellian propaganda machine epitomized by the old Soviet-era joke that "we pretend to work and they pretend to pay us."

Fast-forward to today's USA where soaring wealth and income inequality is making a social breakdown all but inevitable. Wages for the majority of households have gone nowhere for the past two decades, while the incomes of the top 5% have skyrocketed, with the majority of the gains flowing to the top 0.1%. (See charts below.)

History shows that fast-widening gaps between the super-wealthy / top 5% and the rest of the citizenry inevitably generate social disorder and breakdown. This dynamic is already painfully visible in rising homelessness, suicide rates, opioid addictions, burnout, intolerance, etc.

While there are many dynamics in play that exacerbate wealth / income inequality, the primary driver is the Federal Reserve's near-infinite giveaways to the financial and corporate elites. If we examine why our economy has become a winner take most casino, we find the gaming tables are rigged to favor the few closest to the Fed's money spigots: when JP Morgan gets in trouble by leveraging socially parasitic bets, the Fed steps in and saves their gambles by printing hundreds of billions of dollars in repos.

As a result of the Fed backstop, JP Morgan reported blow-out earnings.

The net result of the Fed's goosing the stock market ever higher is soaring wealth inequality as the average US household gains precious little from record highs, and whatever gains they might have are sequestered in 401Ks and IRAs until they retire.

The Fed justifies its enrich the already rich policies by claiming some of this newly created wealth will trickle down to the masses via walking the wealthy's dogs, polishing their Mercedes, tutoring their over-scheduled kids, busing their tables at $100 per plate bistros and so on.

The stagnant wages of the masses are the trickle down. Average Carlos and Carlita don't get an unlimited line of credit from the Fed; only bankers, financiers and corporations get an unlimited line of credit from the Fed.

If an alien force was purposefully widening America's wealth / income gap to destabilize the nation's social order, would we hesitate to call this force evil? Would we rationalize this force as "no worse than any other force" and an "alternative system" with the same moral standing as free markets and democracy?

Ours is a moral universe, and the first necessary step is to call things by their real name: the Fed is evil. Any force that relentlessly promotes fast-widening wealth / income inequality, knowing full well that the inevitable result is social breakdown, is evil.

If this force were external, its evil nature would not be denied or defended. But because the Fed favors the wealthy and powerful, it masks its evil behind an Orwellian cloak of PR much like the former USSR.

The parallels with the Evil Empire don't stop there. While the Fed pillages the vast majority of Americans and diverts the nation's wealth to the top 0.1%, it claims, absurdly and speciously, to be "helping the commoner." This is as Orwellian as it gets.

The Fed will destroy the nation by widening the wealth/income inequality that is breaking down the nation's social order.

 Let's call things by their real name: the Fed is evil.

*  *  *

My recent books:

Audiobook edition now available:
Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World ($13)
(Kindle $6.95, print $11.95) Read the first section for free (PDF).

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

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

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

*  *  *

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

Tyler Durden Sat, 01/18/2020 - 10:30
Published:1/18/2020 9:37:06 AM
[Markets] Escobar Exposes America's Existential Battle To Stop Eurasian Integration Escobar Exposes America's Existential Battle To Stop Eurasian Integration

Authored by Pepe Escobar via The Saker blog,

Coming decade could see the US take on Russia, China and Iran over the New Silk Road connection

Iranian seamen salute the Russian Navy frigate Yaroslav Mudry while moored at Chabahar on the Gulf of Oman during Iran-Russia-China joint naval drills. The photo was provided by the Iranian Army office on December 27, 2019. Photo: AFP / HO / Iranian Army office

The Raging Twenties started with a bang with the targeted assassination of Iran’s General Qasem Soleimani.

Yet a bigger bang awaits us throughout the decade: the myriad declinations of the New Great Game in Eurasia, which pits the US against Russia, China and Iran, the three major nodes of Eurasia integration.

Every game-changing act in geopolitics and geoeconomics in the coming decade will have to be analyzed in connection to this epic clash.

The Deep State and crucial sectors of the US ruling class are absolutely terrified that China is already outpacing the “indispensable nation” economically and that Russia has outpaced it militarilyThe Pentagon officially designates the three Eurasian nodes as “threats.”

Hybrid War techniques – carrying inbuilt 24/7 demonization – will proliferate with the aim of containing China’s “threat,” Russian “aggression” and Iran’s “sponsorship of terrorism.” The myth of the “free market” will continue to drown under the imposition of a barrage of illegal sanctions, euphemistically defined as new trade “rules.”

Yet that will be hardly enough to derail the Russia-China strategic partnership. To unlock the deeper meaning of this partnership, we need to understand that Beijing defines it as rolling towards a “new era.” That implies strategic long-term planning – with the key date being 2049, the centennial of New China.

The horizon for the multiple projects of the Belt and Road Initiative – as in the China-driven New Silk Roads – is indeed the 2040s, when Beijing expects to have fully woven a new, multipolar paradigm of sovereign nations/partners across Eurasia and beyond, all connected by an interlocking maze of belts and roads.

The Russian project – Greater Eurasia – somewhat mirrors Belt & Road and will be integrated with it. Belt & Road, the Eurasia Economic Union, the Shanghai Cooperation Organization and the Asia Infrastructure Investment Bank are all converging towards the same vision.


So this “new era”, as defined by the Chinese, relies heavily on close Russia-China coordination, in every sector. Made in China 2025 is encompassing a series of techno/scientific breakthroughs. At the same time, Russia has established itself as an unparalleled technological resource for weapons and systems that the Chinese still cannot match.

At the latest BRICS summit in Brasilia, President Xi Jinping told Vladimir Putin that “the current international situation with rising instability and uncertainty urge China and Russia to establish closer strategic coordination.” Putin’s response: “Under the current situation, the two sides should continue to maintain close strategic communication.”

Russia is showing China how the West respects realpolitik power in any form, and Beijing is finally starting to use theirs. The result is that after five centuries of Western domination – which, incidentally, led to the decline of the Ancient Silk Roads – the Heartland is back, with a bang, asserting its preeminence.

On a personal note, my travels these past two years, from West Asia to Central Asia, and my conversations these past two months with analysts in Nur-Sultan, Moscow and Italy, have allowed me to get deeper into the intricacies of what sharp minds define as the Double Helix. We are all aware of the immense challenges ahead – while barely managing to track the stunning re-emergence of the Heartland in real-time.

In soft power terms, the sterling role of Russian diplomacy will become even more paramount – backed up by a Ministry of Defense led by Sergei Shoigu, a Tuvan from Siberia, and an intel arm that is capable of constructive dialogue with everybody: India/Pakistan, North/South Korea, Iran/Saudi Arabia, Afghanistan.

This apparatus does smooth (complex) geopolitical issues over in a manner that still eludes Beijing.

In parallel, virtually the whole Asia-Pacific – from the Eastern Mediterranean to the Indian Ocean – now takes into full consideration Russia-China as a counter-force to US naval and financial overreach.

Stakes in Southwest Asia

The targeted assassination of Soleimani, for all its long-term fallout, is just one move in the Southwest Asia chessboard. What’s ultimately at stake is a macro geoeconomic prize: a land bridge from the Persian Gulf to the Eastern Mediterranean.

Last summer, an Iran-Iraq-Syria trilateral established that “the goal of negotiations is to activate the Iranian-Iraqi-Syria load and transport corridor as part of a wider plan for reviving the Silk Road.”

There could not be a more strategic connectivity corridor, capable of simultaneously interlinking with the International North-South Transportation Corridor; the Iran-Central Asia-China connection all the way to the Pacific; and projecting Latakia towards the Mediterranean and the Atlantic.

What’s on the horizon is, in fact, a sub-sect of Belt & Road in Southwest Asia. Iran is a key node of Belt & Road; China will be heavily involved in the rebuilding of Syria; and Beijing-Baghdad signed multiple deals and set up an Iraqi-Chinese Reconstruction Fund (income from 300,000 barrels of oil a day in exchange for Chinese credit for Chinese companies rebuilding Iraqi infrastructure).

A quick look at the map reveals the “secret” of the US refusing to pack up and leave Iraq, as demanded by the Iraqi Parliament and Prime Minister: to prevent the emergence of this corridor by any means necessary. Especially when we see that all the roads that China is building across Central Asia – I navigated many of them in November and December – ultimately link China with Iran.

The final objective: to unite Shanghai to the Eastern Mediterranean – overland, across the Heartland.

As much as Gwadar port in the Arabian Sea is an essential node of the China-Pakistan Economic Corridor, and part of China’s multi-pronged “escape from Malacca” strategy, India also courted Iran to match Gwadar via the port of Chabahar in the Gulf of Oman.

So as much as Beijing wants to connect the Arabian Sea with Xinjiang, via the economic corridor, India wants to connect with Afghanistan and Central Asia via Iran.

Yet India’s investments in Chabahar may come to nothing, with New Delhi still mulling whether to become an active part of the US “Indo-Pacific” strategy, which would imply dropping Tehran.

The Russia-China-Iran joint naval exercise in late December, starting exactly from Chabahar, was a timely wake-up for New Delhi. India simply cannot afford to ignore Iran and end up losing its key connectivity node, Chabahar.

The immutable fact: everyone needs and wants Iran connectivity. For obvious reasons, since the Persian empire, this is the privileged hub for all Central Asian trade routes.

On top of it, Iran for China is a matter of national security. China is heavily invested in Iran’s energy industry. All bilateral trade will be settled in yuan or in a basket of currencies bypassing the US dollar.

US neocons, meanwhile, still dream of what the Cheney regime was aiming at in the past decade: regime change in Iran leading to the US dominating the Caspian Sea as a springboard to Central Asia, only one step away from Xinjiang and weaponization of anti-China sentiment. It could be seen as a New Silk Road in reverse to disrupt the Chinese vision.

Battle of the Ages

A new book, The Impact of China’s Belt and Road Initiative, by Jeremy Garlick of the University of Economics in Prague, carries the merit of admitting that, “making sense” of Belt & Road “is extremely difficult.”

This is an extremely serious attempt to theorize Belt & Road’s immense complexity – especially considering China’s flexible, syncretic approach to policymaking, quite bewildering for Westerners. To reach his goal, Garlick gets into Tang Shiping’s social evolution paradigm, delves into neo-Gramscian hegemony, and dissects the concept of “offensive mercantilism” – all that as part of an effort in “complex eclecticism.”

The contrast with the pedestrian Belt & Road demonization narrative emanating from US “analysts” is glaring. The book tackles in detail the multifaceted nature of Belt & Road’s trans-regionalism as an evolving, organic process.

Imperial policymakers won’t bother to understand how and why Belt & Road is setting a new global paradigm. The NATO summit in London last month offered a few pointers. NATO uncritically adopted three US priorities: even more aggressive policy towards Russia; containment of China (including military surveillance); and militarization of space – a spin-off from the 2002 Full Spectrum Dominance doctrine.

So NATO will be drawn into the “Indo-Pacific” strategy – which means containment of China. And as NATO is the EU’s weaponized arm, that implies the US interfering on how Europe does business with China – at every level.

Retired US Army Colonel Lawrence Wilkerson, Colin Powell’s chief of staff from 2001 to 2005, cuts to the chase: “America exists today to make war. How else do we interpret 19 straight years of war and no end in sight? It’s part of who we are. It’s part of what the American Empire is. We are going to lie, cheat and steal, as Pompeo is doing right now, as Trump is doing right now, as Esper is doing right now … and a host of other members of my political party, the Republicans, are doing right now. We are going to lie, cheat and steal to do whatever it is we have to do to continue this war complex. That’s the truth of it. And that’s the agony of it.”

Moscow, Beijing and Tehran are fully aware of the stakes. Diplomats and analysts are working on the trend, for the trio, to evolve a concerted effort to protect one another from all forms of hybrid war – sanctions included – launched against each of them.

For the US, this is indeed an existential battleagainst the whole Eurasia integration process, the New Silk Roads, the Russia-China strategic partnership, those Russian hypersonic weapons mixed with supple diplomacy, the profound disgust and revolt against US policies all across the Global South, the nearly inevitable collapse of the US dollar. What’s certain is that the Empire won’t go quietly into the night. We should all be ready for the battle of the ages.

Tyler Durden Fri, 01/17/2020 - 23:45
Published:1/17/2020 11:19:40 PM
[Markets] Now, Everyone Pays The Piper: The End Of China's Economic Miracle Now, Everyone Pays The Piper: The End Of China's Economic Miracle

Authored by Brett Redmayne-Titley via Watching Rome Burn blog,

In emulating the American economic raison d’etre, China has attempted to develop its unique capitalist model while ignoring that it too will soon suffer the same fate for the same reason: Unsustainable debt. When examining the recent realities of Chinese banking and finance over the past year it seems the steam that president Xi Jinping touts as powering the engine of his purported economic miracle of a master-planned economy is only a mirage, now almost completely evaporated before his eyes.

Like the many other similarly foolish western nations, China seeks only one path out of this fiscal death spiral, one that will likely spell doom and/or revolution in many countries soon: More debt.

China is becoming increasingly unable to continue to pay into the base of the world’s largest pyramid scheme of an economy and the cracks in the bubble are showing. This past year, saw three of the 4,279 Chinese lenders almost fail, if not for the massive intervention by the People’s Bank of China (PBoC) of immediate liquidity via more debt. The Chinese economic miracle is built on unsustainable debt-based infrastructure projects over the past two decades that have provided China with a face of prosperity to show the world, but this is only a mask to hide the limited countrywide success of the Chinese miracle into the rural areas. The injection of $Trillions in capital has seen China distribute these sums across the base of its economy creating a GDP that hit a high of 14.2 % in 2007 then averaged nearly 9% for the next decade before dropping yearly to 6.1% in 2018. All this growth had produced a personal affluence to a sub-set of Chinese society that has stoked this appearance of a flourishing economy.

This Chinese economic Keynesian trick of interjection of liquidity into national infrastructure is somewhat similar to the TVA and national works projects funded under Roosevelt’s depression-era New Deal. In this approach employment and therefore a growing tax base accelerated year after year as workers and corporations received the short-lived benefits of this massive windfall of available liquidity.

China’s method of stimulus is of course distinguished from today’s American model that merely shovels the injection of its own manufactured $Trillions by using multiple fiscal tricks to by-pass the citizenry and instead shovel the cash straight into the wallets of the already super-wealthy. Meanwhile, the US peasant once again pines in the “Hope” of yet another election.

The Metrics of a Failing Economy

Many analysts have for nearly a decade opined that China’s belief in national fixed-asset investment, the biggest engine of China’s economy, has long been the fundamental contributor to Chinese GDP growth, which was directly proportional to an ongoing increase in public and private debt. China has relied on export and debt-financed fixed asset investment for growth for over two decades,” said Ho-Fung Hung, Professor in political economy at the Johns Hopkins University.

But as the world economy slows while the metrics show a recession looming China’s economy is already cooling rapidly. “And as the central government and banking system keeps producing new loans to absorb the debt, it leads to the continuous debt buildup,” Maximilian Kärnfelt, an analyst with the Berlin-based Mercator Institute for China Studies, told news service DW, adding that infrastructure investment still largely drives China’s economic growth since fixed investment contributed to 45 per cent of China’s GDP in 2016.

In a sign of the disaster to come, the first Bank to almost fail was Baoshang Bank Co. in May 2019. In this instance, for the first time in twenty years, the government took over control and seized the bank. This progression next took form when Chinese regulators took a different approach by ordering three state-owned financial institutions to buy significant stakes in Bank of Jinzhou Co. When, Shandong-based Heng Feng Bank, which had failed to disclose its financial statements for two straight years, required a bail-out, the bank sold new shares for about $14 billion to a group of investors including a unit of China’s public sovereign wealth fund and a local government-backed asset management firm.

Although these were some of the smaller rural banks, as shown this past month in Chinese reports, their economy is following the world in a quantified slowdown that has seen GDP slip yearly since 2012. Making the matter worse a similar world slow-down in purchasing is already affecting China’s manufacturing-based economy. The three bank failures were only the tip of a huge iceberg.

China’s $40 Trillion banking system dwarfs the American system at double the size, with over 4,000 small, medium and massive, state-owned banks. The world’s four largest banks, including behemoth ICBC ($4TN), are all Chinese.

The failure of just three banks was important enough that Chinese regulators submitted Chinese banks to a stress test and the results were shocking. China’s central bank admitted that China’s banking sector is “showing signs of strain.” The stress tests had revealed that over 13% of China’s 4,379 lenders were designated “high risk” by the central bank’s report. With this amounting to over 570 banks, and thus multiplied by the three existing examples of bank bail-out funding, with the Chinese economy following the world into recession, the financial numbers and likelihood of any future series of bail-outs are truly biblical. If not, fiscally impossible.

Separately, the PBOC also stress-tested 30 medium- and large-sized banks in the first half of 2019. In the base-case scenario, assuming GDP growth dropped to 5.3% – or well above where China’s real GDP is now nine out of 30 major banks failed and saw their capital adequacy ratio drop to 13.47% from 14.43%. In the worst-case scenario, assuming GDP growth of 4.15%, or just 2% below the latest official Chinese GDP report, seventeen out of the thirty of these major banks failed the test. Separately, a liquidity stress test at 1,171 banks, representing nearly three-quarters of China’s banking sector by total assets, showed that ninety failed in the base-case and 159 in the worst-case scenario. The metrics of any collective bail-out indicates that China has upwards of an insurmountable $20 trillion problem rapidly approaching.

In reaction to these first three bank failures, the stress tests and poorer economic news China did what centrally planned economies do: Chinese policymakers focused on strengthening oversight and regulation by the PBoC and gave it authority to write new rules for much of the financial sector. The China Banking Regulatory Commission and the China Insurance Regulatory Commission will now be merged as part of an overhaul aimed at resolving existing problems such as unclear responsibilities and cross-regulation as well as closing regulatory loopholes and curbing risk in the $40-43 trillion (€34.78 trillion) banking and insurance industries.

With the metrics of China’s banking system already cause for considerable concern to the tune of $20 Trillion, this huge obligation is as much a mirage as the economy since it fails to add to the account the very large and un-tabulated Shadow Banking loans which would add $Trillions in debt to China’s already highly leveraged systemic banking risk. The International Monetary Fund (IMF), which provides- despite its predatory legacy- some excellent yearly analysis of worldwide economic developments has warned China’s problems could lead to “financial distress” in the world’s second-biggest economy. China is seen as one of the economies most vulnerable to a banking crisis, although Beijing has repeatedly assured that the risks are under control. In response to the PBoC reports, Chinese Finance Minister Xiao Jie echoed that the situation “was under control.”

China’s Economic Tricks of Sustainability.

As the world economic body politic runs out of any remaining gas to keep a pilot light under the rapidly cooling metrics that show their long forestalled recession is near and certain, China is also contracting.

The national debt of China, which is the total amount of money owed by the Chinese government and all organizations and branches stands at nearly CNY 38 Trillion ( $5.4 TN) and 54.44% of GDP.

Chinese debt has been accumulating ever more rapidly. The Institute for International Finance (IIF) reported that year-on-year, in Q1 of 2019 China’s corporate, household and government debt increased 6% more from 297% of GDP to an incredible 303%. However, this is also more than a 100% increase since 2008 and amounts to 15% of all global debt.

These figures do not include the off-the-books “Shadow Banking loans that some estimates predict would triple that debt percentage to much closer to $16 Trillion. The problems are most serious in China’s rural banking sector where an ever nervous public has reacted with two late-2019 bank runs at China’s Henan Yichuan Rural Commercial Bank and then at Yingkou Coastal Bank.

At the end of 2018, the budget deficit of the Chinese government was close to five per cent. However, if the off-balance-sheet (“shadow”) financing of local governments is taken into consideration, the budget deficit rises to over 11 per cent. However, at the end of 2014, the official government deficit stood at less than one per cent, but an accounting which includes local “shadow” funding was around five per cent.

China’s shadow banking system is so-called since this myriad of endemic lending trickery is believed to be massive in total and kept off the books. These risky, undisclosed loans entered China’s financial system in 2009 throwing open the doors to debt for a Chinese population hungry for investment in order to pay for all those Chinese and internationally made western goods.

The main kind of shadow deposit is generally offered as a wealth management product (WMPs). Chinese banks offer these via aggressive marketing of high-interest-rate accounts as their alternative to savings accounts which are regulated to a maximum return of 3 %. Since these sanctioned shadow loans advertise a return of as much as 8% or more, normal banking customers have been throwing their miraculously large paychecks into these funds by the billions.

One reason WMPs offer higher rates is that they are based on much riskier bank loans, much like the precursor to the late ’80s, early ’90’s American savings and loan meltdown. Incredibly, banks don’t hold these loans on their balance sheets or set aside capital against their potential defaults. Instead, they typically extend this debt via intermediaries called trust companies—firms that are not allowed to accept deposits or formally loan out money but are allowed to manage it. The trust companies create investment products like WMPs, which banks market for them in return for a commission.

With some smaller Chinese banks having already found themselves either getting bailed out or the subject of a bank run, one reason is that, like America, China’s interbank/repo rates have surged amid growing counterparty concerns of the many banks seeking depleting available liquidity. This has forced many banks to rely almost entirely on new deposits to fund themselves, forcing them to hike their deposit rates to keep their funding levels stable. Like any Ponzi trick in banking, new cash is required to sustain these thousands of lending pyramids. With the economy in decline, this need has lead to some desperate regional banks offering incentives for depositor’s cash that would make the long-ago American “free toaster” seem ordinary.

China has a massive pork famine that has seen disease wipe out 40% per cent of its pig population in 2019. With China being the world leader in pork consumption these bank’s desperations have created some interesting incentives to attract depositors. The SCMP reports that new clients who deposited 10,000 yuan (US$1,430) or more in a three-month time deposit at the Linhai Rural Commercial Bank in Duqiao in Zhejiang province were then eligible to enter a lottery to win a portion of pork ranging from 500 grams (18 ounces) to several kilograms. Other rural commercial banks in northern China’s Hebei province and western China’s Guizhou province have also launched similar pork rewards programs. Dushan Rural Commercial Bank, located in the remote mountainous county in Guizhou, offered a coupon for 10 yuan (US$1.4) worth of pork for every 10,000 yuan of new deposits.

This solution has been touted as uniquely beneficial to these banks since, instead of offering higher rates which only accelerate the bank’s insolvency due to requiring higher payouts on deposits, the bank is instead making a one-time payment, and the unusual incentive is enough to garner substantial new deposits.

PBoC cuts in its key lending rates in August ’19 designed to stimulate a slowing economy have only exacerbated net interest margin pressures on these banks. With less income from returns on their loans and without the many funding options available to China’s much larger banks, these increasingly high-interest rates that China’s smaller banks have to offer in order to attract new cash deposits could further lead to their insolvency.

It’s been over four years since the last official Chinese benchmark rate cut. With America leading the way across the globe with rate cuts aplenty and China still having a base rate of far higher than the US rate of < 1.5%, it was only a matter of time for China to also drop rates.

With the new authority given to the PBoC, this key Loan Prime Rate (LPR) has become the new Benchmark Reference Rate to be used by banks for lending. This, like most recent decisions are designed to interject further liquidity in the form of debt once again into a still failing economy by lowering borrowing costs for small businesses. This rate will be now set monthly (20th of every month) and will be linked to the Medium-term Lending Facility rate. The current 1 year LPR stands at 4.15% after its latest cut on Nov 30 versus the Benchmark Rate of 4.35%. This number is sure to continue to shrink and can be considered a key indicator of Chinese frustration at retaining needed annual GDP growth since the result of this one move lowered the costs of the roughly 152 trillion yuan ($21.7 trillion) in yuan-denominated outstanding loans held by financial institutions (that are actually on the books) in a further hopeful attempt to again boost economic growth.

Just mere days after the 20 bps cut the PBoC further highlighted its desperate need for capital, announcing that it will be lowering the required reserve ratio (RRR) – or the amount of money banks are required to have on hand – by 50bps for commercial lenders. Currently, the required reserve ratio is 13% for large banks and 11% for small banks. The cut, which is the first since September, will bring the blended reserve ratio for Chinese banks to the lowest level since October 2007. In doing so PBoC effectively released about 800 billion yuan ($115 billion) in instant liquidity from out of the already cash-strapped financial system.

All these adjustments by China and the PBoC do little to control or pay-off increasing debt and are designed to maintain the Chinese miracle of TVA style infrastructural improvements that has been the employment engine of its economic growth. China’s new development of the Belt and Road Initiative (BRI), although a masterstroke in Eurasian commerce, also serves to continue the illusion.

As traditional monetary policy becomes ineffective to boost the economy, Chinese President Xi has installed twelve former executives at the state-run financial institutions across the country who will support the communist government’s ability to combat banking and debt difficulties, reported Taipei Times.

These appointments are in response to growth collapsing to a three-decade low in 2019. New manufacturing orders did increase but this was in large- and medium-sized enterprises. Small enterprises continued deeper into contraction and new non-manufacturing orders slowed, pushing employment further into quantified contraction.

An easier to understand recessionary metric, passenger car vehicle sales, fell yet again in December, plunging 3.6% to 2.17 million units, according to the China Passenger Car Association. This marks the 18th drop in the past 19 months for the country. Sales fell 7.5% in 2019 and 6% in 2018. GM said that its sales were down 15% in China and said that pressure into 2020 would likely continue.

Meanwhile, local Chinese manufacturers’ numbers are also down. BYD Co. posted an 11% drop in 2019 sales and SAIC Motor reported a “similar decline”.

Worse, exports to the United States were down 23% from the prior year.

Running from the Piper’s Call

But, it seems that China has no choice but to carry on with the façade of financed infrastructure projects as the only path to survival. Said Victor Shih, an associate professor of political economy at the University of California in San Diego;

“Because it [infrastructure investment] already is a large contributor to growth, the slowing investment will substantially reduce growth rates. This is not what the leadership wants.”

Shih’s assertion seemed confirmed when last year, President Xi said Chinese banks would lend 380 billion yuan ($55.09 billion) to support Belt and Road cooperation, and Beijing would also inject 100 billion yuan into a Silk Road Fund. Some observers view the project as an instrument designed to help the Chinese economy, with state-owned companies in specific sectors expected to profit massively from its implementation.

But they still need funding and Chinese banks on their own volition may be reluctant to get involved when already having troubles of their own. Andrew Collier, managing director at Orient Capital Research, says

“The banks [may] remain leery of these projects because they doubt they will be profitable and they will be stuck with bad loan. In the end, we are going to see increasing defaults among smaller institutions, the collapse of private loans via wealth management products, and growing layoffs in areas of the country with less political power.”

Making matter worse, a study conducted by the Center for Global Development estimates that the initiative could increase debt sustainability-related banking problems in eight countries also involved in the BRI.

“I still think that if growth falls below a certain level, the top leadership will order a stimulus, which involves acceleration in debt growth,” said Victor Shih. “That is the only viable tool in China’s arsenal if the economy slows too much.”

As noted in a recent article by University of Helsinki economics professor Tuomas Malinen, China has stimulated its economy aggressively in Q1 and Q3 2019 but interestingly has not continued its past emphasis on infrastructure investments as in 2015/2016. Q3 of 2019 saw record-breaking stimulus programs, however, China concentrated instead on providing loose credit to enterprises through both conventional and “shadow” banks.

As Malinen forewarns:

“What is notable is that even with this record stimulus, China has kept its economy growing barely above the ‘official rate’. This tells us that the Chinese economy has reached or is very close to reaching the point of debt saturation, where households and corporations simply cannot absorb any more debt, and any new debt-issuance fails to stimulate the economy.”

Though a massive infrastructure-spending program could revive growth, the ability of China to issue fiscal stimulus is starting to be seriously limited. This effectively means that China is fiscally unable to underwrite massive infrastructure projects and so any new world-economy-saving stimulus from China, as in 2015/2016, will be practically impossible. New infrastructure initiatives- if recessionary metrics continue to deteriorate- could only be realized if those costs are directly monetized by the PBoC. This would be the weapon of last resort for China but , when considering a declining economy, may soon be inevitable.

As Goes China…?

China is just one more working example of the failure of the many globalist economies worldwide that are already similarly suffering in the grip of massive unsustainable- if not orchestrated- debt. Which country becomes the first to trigger the almost certainly pending domino effect of global economic collapse, is merely a rhetorical question at this point. As goes China…?

This week in an interview, former Reagan OMB director David Stockman highlighted the global economic link to China, saying,

“The world economy would be not nearly as good as it looks had the Chinese not been borrowing like there’s no tomorrow and building regardless of whether its efficient or profitable.”

Stockman added, in summation,

“The whole global economy is really dependent on China piling even more debt onto the $40 trillion pile they already have.”

China economically continues to play the financial role of Kenneth Lay to its American mentor’s Bernie Madoff. But in the last few months China has shown, like so many other so-called first world economies, that it too is now all-in at the casino and using only borrowed money in a desperate effort to stay at the table…or starve.

Worldwide, many countries already burn in political turmoil of their own debt-ridden making as their own primal forces of nature squeeze their populations with the resultant new mantra of ever increasing austerity while the IMF and World Bank waits in the wings, salivating to gobble-up the carcass.

Alas, when it comes to unsustainable national endemic debt one primal truth is now being heard clearly in China, as in other Central bank boardrooms across the globe, and the empty dinner plates of their public…

When the time comes to pay the piper, that debt will be paid, no matter…but the Piper will take, in lieu of payment, pork, flesh, blood, or… dreams!

Tyler Durden Fri, 01/17/2020 - 21:45
Published:1/17/2020 9:02:51 PM
[Markets] More Money Creation Won't Create More Economic Growth More Money Creation Won't Create More Economic Growth

Authored by Frank Shostak via The Mises Institute,

The view that more money can revive an economy is based on the belief that money transmits its stimulatory effect through aggregate expenditure. With more money in their pockets, people will be able to spend more and the rest will follow suit. Money, in this way of thinking, is a means of payment and funding.

Money, however, is not a means of payment but a medium of exchange. It only enables one producer to exchange his produce with another producer. The means of payment are always real goods and services, which pay for other goods and services. All that money does is facilitate these payments. It makes the payments for goods and services possible.

For instance, a baker exchanges his bread for money and then uses the money to buy shoes. He pays for shoes not with money, but with the bread he produced. Money just allows him to make this payment. (The baker's production of bread also gives rise to his demand for money.)

When we talk about demand for money, what we really mean here is the demand for money's purchasing power. After all, people do not want a greater amount of money in their pockets but greater purchasing power.

On this Mises wrote in Human Action,

The services money renders are conditioned by the height of its purchasing power. Nobody wants to have in his cash holding a definite number of pieces of money or a definite weight of money; he wants to keep a cash holding of a definite amount of purchasing power.

In a free market, the price of money is determined by supply and demand, similar to the way the prices of other goods are. If there is less money, its exchange value will increase. Conversely, the exchange value will fall when there is more money. Within the framework of a free market, there cannot be such thing as "too little" or "too much" money. As long as the market is allowed to clear, no shortage of money can emerge.

Once the market has chosen a particular commodity as money, the given stock of this commodity will always be sufficient to secure the services that money provides. Hence, in a free market, the whole idea of the optimum growth rate of money is absurd. According to Mises:

As the operation of the market tends to determine the final state of money's purchasing power at a height at which the supply of and the demand for money coincide, there can never be an excess or deficiency of money. Each individual and all individuals together always enjoy fully the advantages which they can derive from indirect exchange and the use of money, no matter whether the total quantity of money is great, or small. … the services which money renders can be neither improved nor repaired by changing the supply of money. … The quantity of money available in the whole economy is always sufficient to secure for everybody all that money does and can do.

In a market economy, the purpose of production is ultimately consumption. People produce and exchange goods and services in order to improve their lives and well-being — their ultimate purpose. This means that consumption cannot arise without production, while production without consumption would be a meaningless venture. Hence, in a free market economy consumption and production are in harmony. In a free market economy, consumption is fully backed by production.

What permits the baker to consume bread and shoes is his production of bread. A portion of his bread production is allocated to his direct consumption while the other portion is used to pay for shoes. His consumption is fully backed, i.e., paid by his production. Any attempt, then, to elevate consumption without the corresponding production leads to unbacked consumption, which must come at somebody else's expense.

This is precisely what monetary pumping does. It generates demand, which is not supported by any production. Once exercised, this type of demand undermines the flow of real savings and in turn weakens the formation of real capital, stifing rather than boosting economic growth.

It is real savings, not money, that fund and make possible the production of better tools and machinery. With better tools and machinery, it becomes possible to lift the production of final goods and services — this is what economic growth is all about.

The Real Source of Wealth

Contrary to the popular way of thinking, setting in motion an unbacked consumption through monetary pumping will only stifle, and not promote, economic growth. This is because unbacked consumption weakens the flow of real savings and thus drains the source that funds real economic growth. If it were otherwise, poverty in the world would have been eliminated a long time ago. After all, everybody knows how to demand and consume.

The only reason loose monetary policies may appear to grow the economy is because the pace of real savings generation is strong enough to absorb the increases in unbacked consumption.

Once the pace of unbacked consumption reaches a stage where the flow of real savings disappears altogether, however, the economy falls into an economic slump. Any attempt by the central bank to pull the economy out of the slump by means of more monetary pumping makes things much worse, for it only strengthens unbacked, or unproductive, consumption, destroying whatever is left of real savings.

The collapse in the sources of real economic growth exposes commercial banks’ fractional reserve lending and raises the risk of a run on banks. To protect themselves, banks curtail their creation of credit out of "thin air." Under these conditions, further monetary pumping cannot lift banks’ lending. On the contrary, more pumping destroys more real savings and destroys more businesses, which in turn makes banks reluctant to expand lending.

In these conditions, banks would likely agree to lend only to creditworthy businesses. However, as an economic slump deepens, it becomes much harder to find creditworthy businesses. Furthermore, because of loose monetary policy, the lower interest environment against the background of growing risk further diminishes banks’ willingness to extend credit. All this puts downward pressure on the stock of money.

Hence, the central bank may find that despite its attempt to inflate the economy, the money supply will start to fall. Obviously, the central bank could offset this fall through aggressive monetary pumping. The central bank could also monetize the government budget deficit. It could mail checks to every citizen. All this, however, would only further undermine real savings and devastate the real economy.

Tyler Durden Thu, 01/16/2020 - 13:16
Published:1/16/2020 12:23:57 PM
[Markets] On Taxpayers' Dime, Foreigners Get Free College In US On Taxpayers' Dime, Foreigners Get Free College In US

Authored by Eduardo Neret via,

As thousands of American college students struggle to afford the rising cost of college, the U.S. State Department is helping to fund community college for more than 300 foreign students, according to a recent report released by Senator Rand Paul (R-Ky.). 

The program, called the Community College Initiative Program (CCI), received $15,825,000 in the 2019 fiscal year to pay for community college costs for foreign students from up to as many as 12 different countries. 

CCI provides scholarships for visa assistance, round-trip travel to and from the United States for program dates, one year of community college tuition and fees, meals, books, housing, and other incidentals. Students are only eligible for one year of studies.

According to a State Department website, students will “return home with new skills and expertise to help them contribute to the economic growth and development of their country.”

The CCI website lists a number of requirements which include: being 18 years of age, having a “basic knowledge of English,” and have a diploma from a secondary school. 

Participants can also select from several field areas, such as: “agriculture, applied engineering, business management and administration, early childhood education, information technology, media, public safety, and tourism and hospitality management.”

Paul’s office also used tuition estimates from Community College Review to note that the CCI’s full funding could be used to fund one year of community college for more than 3,000 American students.

David North, a resident scholar on the interaction between education and migration at the Center for Immigration Studies, told Campus Reform that while the CCI is an example of waste, he wishes Paul would focus on the Optional Practice Training (OPT) program for foreign students.

“Dealing with foreign students, and more important [sic], foreign alumni in the U.S. labor market. The Senator should focus his sights on the $3 billion spent every year in the OPT program, every bit of this money, taken from the Social Security and Medicare Trust Funds, subsidizes employers who have decided to hire an alien, not an American, in a post-college position.”

Campus Reform has previously reported on the OPT program.

Tyler Durden Wed, 01/15/2020 - 21:05
Published:1/15/2020 8:20:17 PM
[Markets] No Matter How Much Money The Fed Prints, We Still Can't Afford Nice Things No Matter How Much Money The Fed Prints, We Still Can't Afford Nice Things

Authored by Charles Hugh Smith via OfTwoMinds blog,

When will the American wage-earner finally tire of the skims, scams, fraud and lies that are now the foundations of everyday life?

You'd think that with the Federal Reserve printing trillions of dollars since 2008, we'd all be able to afford nice things. But you'd be wrong: after 11 years of Fed money-printing, nice things are even more out of reach for all but the favored few who've received the Fed's bounty of freshly created currency.

The Fed's trillions were supposed to trickle down into the real economy, but they never did. All those trillions boosted asset prices and the wealth of the $100 million yachts and private jets elite.

Instead costs have soared while wages have stagnated. If this widening gap between wages and costs were accurately presented, there would a political revolt against the Fed and those few who have benefited so immensely from Fed money-printing: the banks, financiers, corporations buying back their own shares, the owners of high-frequency trading computers, etc.

Despite the best efforts of the government's "suppress all evidence of runaway cost inflation" functionaries, a few facts have slipped through. Let's start with income from 1980 to the present, as per the Congressional Budget Office (CBO). Note that this is all pre-government-transfer (Social Security, food stamps, etc.) income, both earned (wages) and unearned (investment income).

The top households have done very, very well in the past 20 years of Fed largesse, while the incomes of the bottom 80% have gone nowhere.

Meanwhile, big-ticket costs of living such as rent have skyrocketed: so how do we buy nice things if our wages are stagnant but the cost of essentials is rising? We borrow more money.

Exhibit A for borrowing trillions of dollars to afford nice things is student loan debt. A college degree has long been worshiped as the ultimate Nice Thing everyone who aspires to middle class Nice Things must have, and thanks to cartels and financialization, student debt-serfs now labor under a crushing load of debt:

Healthcare is also a Nice Thing that is no longer affordable. Wages nudge up a few pennies while healthcare costs continue soaring.

A new vehicle is another Nice Thing that's increasingly out of reach unless you borrow a small fortune. My colleague Bill Rice Jr. did the grunt work of comparing apples to apples on the least expensive autos and discovered a massive divergence between "official inflation" and real-world inflation: according to the BLS, inflation in the category of "New Vehicles" has been practically non-existent for decades, while the real-world cost of new autos has risen by over 200%. No, Autos Are Not "Cheaper Now" (June 28, 2019)

Yes, autos are safer, but are they "better"? Just wait until the electronic motherboard of your Nice Thing vehicle goes out and the repair bill totals thousands of dollars. There goes your "rainy day fund" if you have one, and few do.

The real-world costs are masked or buried until The Moment of Truth: the co-pays of your healthcare are arcane and obscure until the soul-crushing bill arrives, and then your next stop is bankruptcy court.

Meanwhile, the financial assets of the Fed's Favored Few have grown to the point that they now dominate the economic and political order. Corporations can borrow billions to buy back their own shares, further enriching the already-rich, while in the real world we watch other shoppers returning items to the supermarket shelves--they're no longer affordable and so the customer has to put the Nice Thing back on the shelf.

While Apple stock soars to new heights, those outside the the Fed's Favored Few are happy to get a 5-year old hand-me-down iPhone since their old iPhone or Windows OS phone died.

While Mr. Softee (Microsoft) stock soars to new heights, tens of millions of their customers with Windows 7 computers received a notice that Microsoft will no longer support Windows 7, and Mr. Softee "recommends" buying a new computer with Windows 10. Windows 7 is a perfectly adequate operating system, but like the rest of America's tottering economy, "growth" comes only as a result of planned obsolescence, not actual improvements.

When will the American wage-earner finally tire of the skims, scams, fraud and lies that are now the foundations of everyday life? Probably never, until the toll is paid in failed health and breakdown. Tax donkeys and debt-serfs can be whipped to continue for only so long, and then they break down and cannot go on any longer. The trickle of tax donkeys and debt-serfs who can no longer go on will swell to a flood, and the Fed's Favored Few will finally face the life-changing consequences of the Fed's lopsided giveaway to the super-wealthy.

*  *  *

My recent books:

Audiobook edition now available:
Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World ($13)
(Kindle $6.95, print $11.95) Read the first section for free (PDF).

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

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

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

*  *  *

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

Tyler Durden Wed, 01/15/2020 - 15:30
Published:1/15/2020 2:48:00 PM
[Entertainment] The top 10 books on Apple’s iBooks-US Apple Books US bestseller list for week ending 01/12/20 Published:1/14/2020 12:44:22 PM
[] The blue state exodus is coming into focus Published:1/12/2020 11:41:11 AM
[] 'Their BIGGEST nightmare': Jason Beale's thread about what an objective reflection of Trump's presidency would look like just DESTROYS the Left Published:1/9/2020 11:44:18 AM
[Markets] The USA Has Been Bombing Iraq For 29 Years The USA Has Been Bombing Iraq For 29 Years

Over the past days while little real debate over the Iran crisis has happened in Washington or Congress (instead it's merely the default drones and "bombs away" as usual), the American public has been busy online and in living rooms debating the merits or lack thereof of escalation and potential war with Iran. 

However, like with many other instances of US foreign policy adventurism, this is typically a "debate" lacking in necessary recent historical context or appreciation for how the domino effect of disasters now facing American security were often brought on by prior US action in the first place. As a case in point, it's not recognized often enough in public discourse that it was the United States under the neocon Bush administration which handed Iraq over to "Iranian influence" and the Shia clerics in the first place.

It must be remembered that Saddam Hussein was a secular Sunni dictator presiding over a Shia majority population, and he was enemy #1 of Iran. Team USA's short-sighted and criminal 2003 invasion and overthrow of Saddam based on WMD lies had the immediate benefit to Tehran of handing the Ayatollah the greatest gift that Iran waged a nearly decade-long war to accomplish, but couldn't (the 1980-1988 Iran-Iraq War).

U.S. bombing of Baghdad in 2003. 

And the neocons within the bowels of the national security state have ever since been attempting to salvage their failed legacy in Iraq by the futile effort of trying to contain Iran and roll back Shia dominance in Baghdad, as Seymour Hersh detailed in his famous 2006 New Yorker piece The Redirection, which accurately predicted the 'long war' against the Hezbollah-Damascus-Baghdad-Tehran axis which would unfold, and did indeed unfold, especially in Syria of the past eight years. 

To "situate" the past week's dramatic events, it's also crucial to understand, as The Libertarian Institute's Scott Horton has pointed out, that "The U.S.A. has been bombing Iraq for 29 years. And it looks like it’s not over yet."

Below is an essential timeline compiled by Horton of that nearly three decade long history where Iraq has been consistently subject to American bombs and intervention — yet ironically (and some might say predictably) the situation is still getting worse, more unstable, and more dangerous.

* * *

The U.S.A. has been bombing Iraq for 29 years. And it looks like it’s not over yet:

Iraq War I: January—February 1991 (aka The Gulf War, Operation Desert Storm, liberation of Kuwait)

Iraq War I 1/2: February 1991—March 2003 (The rest of Bush I, Bill Clinton years, economic blockade and no-fly zone bombings)

Iraq War II: March 2003—December 2011 (aka Operation Iraqi Freedom, W. Bush’s invasion and war for the Shi’ite side)

Iraq War III: August 2014—December 2017 (aka Operation Inherent Resolve, the war against the Islamic State, which America had helped to build up in Syria but then launched this war to destroy, on behalf of the Shi’ite government in Baghdad, after ISIS had seized the predominately Sunni west of the country in the early summer of 2014 and declared the Islamic State “Caliphate”)

Iraq War III 1/2: December 2017—January 2020 (The “mopping-up” war against the remnants of ISIS which has had the U.S. still allied with the very same Shi’ite militias they fought Iraq War II and III for, but are now attacking)

Iraq War IV: Now—?

As Scott Horton suggests, the roots of the current crisis lie all the way back in the mid-20th century

In 1953, the American CIA overthrew the elected prime minister of Iran in favor of the Shah Reza Pahlavi who ruled a dictatorship there for 26 years until in 1979 a popular revolution overthrew his government and installed the Shi’ite Ayatollah Ruhollah Khomeini in power.

So in 1980, President Jimmy Carter’s government gave Iraq’s Saddam Hussein the green light to invade Iran, a war which the U.S. continued to support throughout the Ronald Reagan years, though they also sold weapons to the Iranian side at times.

But then in 1990, Iraq invaded Kuwait in a dispute over debts from the recent war with Iran, with some encouragement by the U.S. government, leading to America’s Iraq War I, aka the first Gulf War or Operation Desert Storm at the beginning of 1991.

And that was merely the very beginning. 

Read the rest of the story and the excellent brief history of how we got here over at The Libertarian Institute

Tyler Durden Wed, 01/08/2020 - 21:05
Published:1/8/2020 8:07:18 PM
[Markets] "Past Due": Court Declares Hunter Biden The Father Of Child In Arkansas "Past Due": Court Declares Hunter Biden The Father Of Child In Arkansas

Authored by Jonathan Turley,

In a long expected order, Arkansas Circuit Judge Holly Meyer has declared Hunter Biden, son of presidential candidate Joe Biden, to be the “biological and legal father” of a child he fathered with former GW student, 29-year-old Lunden Alexis Roberts.

Biden has long denied being the father and has refused to support the child. He has also refused to turn over information on his assets, part of discovery that Meyer referred to as “past due.” It was obviously not the only element past due for Biden with regard to this child.

Roberts, reportedly was a stripper at a Washington, D.C., club that Biden liked to party at while in Washington.

In the order, Meyer ordered the Arkansas Department of Health to issue a birth certificate listing Biden as the father.

Biden has children by at least three different women. Roberts filed papers that portrayed him as a deadbeat father, stating that Biden “had no involvement in the child’s life since the child’s birth, never interacted with the child, never parented the child,” and “could not identify the child out of a photo lineup.”

The next hearing is set for January 29th on child support. That could create some fireworks as Biden has resisted disclosures of his wealth — information that could reveal how much he received from dubious Ukrainian and Chinese contracts.

Ironically, Joe Biden has been attacked for a 1981 op-ed entitled “Congress is Subsidizing Deterioration of Family.”

In the column, Biden suggested that families with more income should not receive tax credits for child care because one parent should stay at home while the other works. Biden bemoaned the loss of “individual responsibility and said that day-care centers were “monuments to our growing unwillingness to accept personal responsibility.” Of course, that is particularly difficult when one of the parents not only does not support his child but denies that he ever had an intimate relationship with the mother.

When asked about the court previously ordering DNA tests confirming Biden’s status as the father, Joe Biden snapped at a reporter and said “No, that’s a private matter and I have no comment.”

He then told the Fox reporter “Only you would ask that. You’re a good man. You’re a good man. Classy.”

Joe Biden, like many presidential candidates, has long identified deadbeat dads as a major national problem.

He even used the issue to defend a controversial bankruptcy bill in 2001 when he was a senator. In a 2001 Senate floor speech, Biden defended the law by arguing that the bankruptcy bill would actually improve the situation for women and children.

By including a requirement that “deadbeat dads” who file for bankruptcy must make child support payments above nearly all other creditors, Biden insisted “this bill empowers women. It gives them a say in the bankruptcy proceedings relating to her absent spouse.”

Hunter Biden is also reportedly expecting a child with his new wife, Melissa Cohen Biden, whom he married this past May.

Tyler Durden Wed, 01/08/2020 - 18:05
Published:1/8/2020 5:07:20 PM
[Markets] Christians Beheaded For Christmas, The West Goes Back To Sleep Christians Beheaded For Christmas, The West Goes Back To Sleep

Authored by Giulio Meotti via The Gatestone Institute,

Martha Bulus, a Nigerian Catholic woman, was going to her bridal party when she was abducted by Islamic extremists of Boko Haram. Martha and her companions were beheaded and their execution filmed. The video of the brutal murders of these 11 Christians was released on December 26 to coincide with Christmas celebrations. It is reminiscent of the images of other Christians dressed in orange jumpsuits bent on their knees on a beach, each being held by a masked, black-clad jihadist holding a knife at their throats. Their bodies were discovered in a mass grave in Libya.

On the scale of Nigeria's anti-Christian persecution, Martha was less fortunate than another abducted girl, Leah Sharibu, who has now been in captivity nearly two years and just spent her second Christmas in the hands of Boko Haram. The reason? Leah refused to convert to Islam and deny her Christianity. Nigerian Christian leaders are also protesting the "continuous abduction of under-aged Christian girls by Muslim youths...". These girls "are forcefully converted to Islam and taken in for marriage without the consent of their parents".

Nigeria is experiencing an Islamist war of the extermination of Christians. So far, 900 churches in northern Nigeria have been destroyed by Boko Haram. U.S. President Donald J. Trump was informed that at least 16,000 Christians have been killed there since 2015. In one single Nigerian Catholic diocese, Maiduguri, 5,000 Christians were murdered. How much bigger and more extended must this war on Christians become before the West considers it a "genocide" and acts to prevent it?

The day after Christians were beheaded in Nigeria, Pope Francis admonished Western society. About beheaded Christians? No. "Put down your phones, talk during meals", the Pope said. He did not speak a single word about the horrific execution of his Christian brothers and sisters. A few days before that, Pope Francis hung a cross encircled by a life jacket in memory of migrants who lost their lives in the Mediterranean Sea. Last September, the Pope unveiled a monument to migrants in St. Peter's Square, but he did not commemorate the lives of Christians killed by Islamic extremists with even a mention.

Cardinal Robert Sarah, one of the very few Catholic Church leaders who mentioned the Islamic character of this massacre, wrote, "In Nigeria, the murder of 11 Christians by mad Islamists is a reminder of how many of my African brothers in Christ live faith at the risk of their own lives."

It is not only the Vatican that is silent. Not a single Western government found time to express horror and indignation at the beheading of Christians. "Where is the moral revulsion at this tragedy?", asked Nigerian Bishop Matthew Kukah after the Christmas massacre. "This is part of a much wider drama we are living with on a daily basis".

European leaders should follow the example of British Prime Minister Boris Johnson, who, in his first Christmas message to the nation said:

"Today of all days, I want us to remember those Christians around the world who are facing persecution. For them, Christmas Day will be marked in private, in secret, perhaps even in a prison cell".

German Chancellor Angela Merkel has said that her priority will be fighting climate change. She did not mention persecuted Christians. French President Emmanuel Macron in his mid-winter speech was not even able to say "Merry Christmas".

Meanwhile, The Economist wrote that Hungarian Prime Minister Viktor Orbán, a passionate defender of persecuted Christians, politically "exploits" the issue.

Europe's leaders failed to condemn the barbaric execution of Christians on Christmas Day: political correctness is corroding Western society from within.

At the beginning of December, another African bishop, Justin Kientega of Burkina Faso, said: "Nobody is listening to us. Evidently, the West are more concerned with protecting their own interests".

"Why is the world silent while Christians are being slaughtered in the Middle East and Africa?", wrote Ronald S. Lauder, president of the World Jewish Congress.

"In Europe and in the United States, we have witnessed demonstrations over the tragic deaths of Palestinians who have been used as human shields by Hamas, the terrorist organization that controls Gaza. The United Nations has held inquiries and focuses its anger on Israel for defending itself against that same terrorist organization. But the barbarous slaughter of thousands upon thousands of Christians is met with relative indifference".

Where were the Western governments when thousands of young Muslims entered Syria and Iraq to hunt and kill Christians and destroy their churches and communities? The West did nothing and suffered for its inaction. The Islamists started with Christians in the East and continued with "post-Christians" in the West. As the French medievalist Rémi Brague said, "The forces that want to drive Christians out of their ancestral lands would ask themselves, why not continue in the West a work so well begun in the East?".

There has been no outrage in the West about cutting off Christian heads, only silence, interrupted by "Allahu Akbar", gunshots and bombs. The history books of the future will not look kindly this Western betrayal -- depending on who writes them. The end of the Christians of the East will be a disaster for the Church in the West. They will no longer have anyone living in their own cradle of civilization.

What would we be reading if, for instance, Christian terrorists had stopped a bus, separated the passengers according to their faith, ordered the Muslims to convert to Christianity and then murdered 11 of them? The opposite just happened in Kenya. What did we read? Nothing. On December 10, the Islamic terrorist group Al Shabaab stopped a bus in northern Kenya, then murdered only those who were not Muslims. We Westerners are usually moved by the persecution of this or that minority; why never for our Christians?

The Christianophobia of the Muslim extremists who massacre Christians in Middle East and Africa is central to a totalitarian ideology that aims to unify the Muslims of the ummah (the Islamic community) into a Caliphate, after destroying the borders of national states and liquidating "unbelievers" -- Jews, Christians, and other minorities as well as "Muslim apostates". Nigeria is now at the forefront of that drama.

"Nigeria is now the deadliest place in the world to be a Christian", noted Emmanuel Ogebe, an attorney.

"What we have is a genocide. They are trying to displace the Christians, they are trying to possess their land and they are trying to impose their religion on the so-called infidels and pagans who they consider Christians to be".

The West goes back to sleep. "The West opened its borders without hesitation to refugees from Muslim countries fleeing war", wrote the economist Nathalie Elgrably-Lévy. "This seemingly virtuous Western solidarity is nevertheless selective and discriminatory". Persecuted Christians have been abandoned by the Western governments and public squares.

India's Prime Minister Narendra Modi has recently been besieged by Muslims protesting a new law that would offer citizenship to neighboring non-Muslims fleeing persecution. Tarek Fatah explained in the Toronto Sun that the Muslim outrage on the new Indian law comes from the fear "that allowing citizenship to persecuted Pakistani Christians, Hindus and Sikhs would increase the non-Muslim population of the country and thus dilute their veto power they've exercised in India for the last 70 years".

Where are the squares filled with Londoners or New Yorkers for the Christian refugees discriminated by the West? In the parts of Syria occupied by Islamists, Christians just spent a "special Christmas" -- without chime bells or lights and with many of their churches turned into stables.

The Khabour, the Syrian region where Assyrian Christians lived, is now called "dead valley". The former Archbishop of Canterbury, George Carey, recently wrote:

"War in Syria has reignited. Once again refugees fill its roads in need of our compassion. Yet those from the 'wrong faith' won't find it from the British Government. The UK's resettlement of 16,000 refugees from the earlier conflict saw hardly any from the most brutalised minorities reach safety in our land. Of the refugees who came here in 2015 under the Vulnerable Persons Scheme, only 1.6 per cent were Christians. That's despite this group being 10 per cent of the Syrian population".

Muslims fill Western squares for their own; but for our persecuted Christian brothers, these squares remain vacant.

Tyler Durden Mon, 01/06/2020 - 02:00
Published:1/6/2020 1:22:20 AM
[Markets] Alasdair Macleod's Gold Outlook For 2020 Alasdair Macleod's Gold Outlook For 2020

Authored by Alasdair Macleod via,

This article is an overview of the economic conditions that will drive the gold price in 2020 and beyond. The turn of the credit cycle, the effect on government deficits and how they are to be financed are addressed.

In the absence of foreign demand for new US Treasuries and of a rise in the savings rate the US budget deficit can only be financed by monetary inflation. This is bound to lead to higher bond yields as the dollar’s falling purchasing power accelerates due to the sheer quantity of new dollars entering circulation. The relationship between rising bond yields and the gold price is also discussed.

It may turn out that the recent extraordinary events on Comex, with the expansion of open interest failing to suppress the gold price, are an early recognition in some quarters of the US Government’s debt trap.

The strains leading to a crisis for fiat currencies are emerging into plain sight.


In 2019, priced in dollars gold rose 18.3% and silver by 15.1%. Or rather, and this is the more relevant way of putting it, priced in gold the dollar fell 15.5% and in silver 13%.

This is because the story of 2019, as it will be in 2020, was of the re-emergence of fiat currency debasement. Particularly in the last quarter, the Fed began aggressively injecting new money into a surprisingly illiquid banking system through repurchase agreements, whereby banks’ reserves at the Fed are credited with cash loaned in return for T-bills and coupon-bearing Treasuries as collateral. Furthermore, the ECB restarted quantitative easing in November, and the Bank of Japan stands ready to ease policy further “if the momentum towards its 2% inflation target comes under threat” (Kuroda – 26 December).

The Bank of Japan is still buying bonds, but at a pace which is expected to fall beneath redemptions of its existing holdings. Therefore, we enter 2020 with money supply being expanded by two, possibly all three of the major western central banks. Besides liquidity problems, the central bankers’ nightmare is the threat that the global economy will slide into recession, though no one will confess it openly because it would be an admission of policy failure. And policy makers are also terrified that if bankers get wind of a declining economy, they will withdraw loan facilities from businesses and make things much worse.

Of the latter concern central banks have good cause. A combination of the turn of the credit