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[Markets] Everything Is Broken Everything Is Broken

Authored by Charles Hugh Smith via OfTwoMinds blog,

I'd say more about Big Tech but since they've 'privatized totalitarianism', I fear being 'digitally disappeared' if I dare criticize Big Tech.

Mr. Bob Dylan was once again prescient: Everything Is Broken. You may think I'm referring to the political system or Big Tech or the Corporate Media, and certainly all those are very broken indeed, but I'm actually referring to everyday life systems that once worked fairly well. I could mention bridges that take decades to build that sport cost-overruns in the billions and the general decline in the quality of goods and services, but let's just stick to critical digital systems for now.

One shared trait of these broken service systems is that they're all digital and all online. Wasn't everything supposed to become faster, better, easier and cheaper when it was digitized and put at our fingertips via websites and mobile phone apps? The opposite is often the case: the digital systems are broken and nobody on either end--staff or customer--can figure out why or how to fix what's broken.

You'd think the government would make special efforts to make it easy to pay one's estimated taxes online. You'd be wrong. Like many others who've been filing tax returns and paying taxes for 50+ years, I decided to withdraw a few bucks from my 401K "retirement" account (in quotes because who can retire on their 401K?).

The plan manager recommended I pay the estimated taxes due via the Electronic Federal Tax Payment System (EFTPS), which is presented as the "easy way to pay your taxes." Wow, the cat's meow--I completed the online form with great anticipation. As a security measure, the EFTPS snail-mails a code to the physical address that's on record with the IRS.

Alas, the EFTPS rejected my application--something didn't align with the information on record at the IRS. My wife's application went through without a hitch, and so after an hour on hold and a long conversation with an EFTPS staffer--who I sincerely believe was doing his best to assist me--I re-applied, attributing the failure to some detail such as typing "Street" instead of "St". I carefully entered the name, address, etc. on my 2019 tax return and submitted the application again.

This second application was also rejected for the same reason: a discrepancy between the IRS records and what I entered on the form. Since i'd entered the data exactly as shown on my 2019 return, what was the problem?

After another long wait on hold and another fruitless conversation with an IRS staffer who did her best but could shed no light on the problem, and I took her recommendation and decided to pay the estimated tax on the regular IRS website: Direct Pay.

OK, this should be easy, right? Wrong again. Part of the process is you have to select a tax year, not for payment but for alignment with the IRS records. I kept trying 2019 to no avail. The IRS website kept rejecting my name, address and Social Security number no matter how carefully I entered the data. After numerous rejections and another painfully long wait on hold and useless conversation with a helpful staffer, I tried selecting a tax year before 2019 to match the IRS records. 2018--failure. 2017--failure. 2016--bingo, we have a winner! The IRS ignored the address I'd used in 2017, 2018 and 2019, abut kept the PO box address I'd used in 2016. How is a taxpayer supposed to know which tax year is the "correct one"? Was there nothing the staffers could see or do to rectify the guessing game?

Evidently, none of the IRS or EFTPS staff could access this data or suggest trying a previous tax year. I'd like to think I am the only one who's experienced these kinds of needless travails with the IRS interfaces, but alas, I've heard from friends who were trying to sort out their elderly Mom's tax refund, etc., that after excruciatingly long waits on hold, they got zip, zero, nada in the way of resolution.

It's not the staff, it's the digital systems that are broken. I can easily imagine the frustrations of the staffers trying to fix taxpayers' problems with a kludgy system.

Next up: healthcare. Over the past few decades, as a self-employed worker I've paid tens of thousands of dollars in healthcare premiums to my healthcare provider because I'm my own employer, and I don't qualify for government subsidies (Medicaid).

The task: switch my coverage from one state to another state. The wait time rivaled that of the IRS, and when I finally spoke with a human, the process took almost an hour--much of it related to compliance with regulations designed to make regulators and Corporate America look like they care (they don't). "Do you acknowledge that if you drop dead during this phone call that you were treated fairly before you expired?" etc.

I set up my online account without issue, and a few days later received emails prompting me to "view and pay my bill." Nice, except when I logged in, "no documents found." I had to wait for my credit card statement to see if the autopay setup worked. I could have tried calling, but I'd expended my patience for long waits and near-zero odds of resolution.

Meanwhile, my wife had made the mistake of contacting the provider for information on their plans, and they assumed they had a "live one," i.e. a potential customer--so they aggressively robo-called her phone every day even after she spoke with a human and explained that she was already a customer so there would be no sale and commission.

So if you're looking for aggressive marketing, Corporate America has got you covered. If you want service--hello, developing-world, minus the work-around of a bribe.

It's worth glancing at your Social Security statement/account every once in a while, because your earnings for 2019 might be listed as zero. OK, so the Social Security Administration (SSA) somehow failed to pick up my 2019 earnings from the IRS. A quick phone call should remedy the problem, right? Wrong. The wait time was short but the call stretched on for an hour as the staffer attempted one thing after another.

How difficult is it to strip out the taxpayers' name, Social Security number and the earnings they paid Social Security taxes on and send that data to the SSA? Most years it works, this year it didn't. There is apparently no digital fix, as I was eventually instructed to send paper copies of our 2019 tax returns to the local SSA office.

You might attribute these flubs to government services or quasi-government services, but that overlooks one important point: private-sector Big Tech appears to work because its task is simple: privatize customer data and sell adverts. Try getting Big Tech to resolve real-world problems, and you'll find it's extremely difficult to get a human to help, and the odds of the human fixing your issue are near-zero. Big Tech's expertise is in acknowledging there is a problem and then ignoring it until you give up.

I'd say more about Big Tech but since they've privatized totalitarianism, I fear being digitally disappeared if I dare criticize Big Tech. A couple years of being shadow-banned were enough to give me a taste of Big Tech's privatized totalitarianism, thank you very much. That alone tells you our entire system is broken.

Say it again, Bobby: Everything Is Broken. Just don't say it too loud unless you have lobbyists and lawyers in excess.

*  *  *

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

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My recent books:

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World (Kindle $5, print $10, audiobook) Read the first section for free (PDF).

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($5 (Kindle), $10 (print), ( audiobook): Read the first section for free (PDF).

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

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

Tyler Durden Tue, 01/26/2021 - 13:45
Published:1/26/2021 1:04:08 PM
[Entertainment] Conquer ‘Moby-Dick,’ finish ‘Infinite Jest’: Avid readers share their resolutions for 2021 The most common resolution involves not just spending more time reading but reaching a specific number of books. Published:1/26/2021 12:33:29 PM
[Markets] On Avoiding Expensive Mistakes… On Avoiding Expensive Mistakes…

Submitted by Adventures in Capitalism

Let me throw this out there; the investing game is mind-numbingly easy. You buy good businesses for less than fair value. Sure, we can all argue about fair value. There are always surprises in the future trajectory of a business. This game has some wrinkles and drama, but at the most basic level, it’s easy. In fact, done correctly, it only involves a handful of decisions each year.

If it’s so easy, why aren’t I wealthier? It’s because I’ve tried to complicate things from time to time and made some very expensive mistakes along the way. Look, I’m human. Fortunately, I learn fast and usually avoid making the same mistake twice. I like to joke that my career is nothing more than two decades of finding creative ways to lose money. That’s not to say that the markets haven’t been good to me—the markets have been amazingly rewarding to me.

When I look back on my career thus far, I don’t dwell too much on the winners—remember how I said buying something cheap is easy? Nor do I think about the ones that didn’t go anywhere, while tying up my precious capital. Instead, I repeatedly relive my most expensive mistakes. Over a decade later, I still ask myself how could I have been so foolish to keep shorting more Research in Motion (currently BB – USA) as it went parabolic? On one hand, I was right about the iPhone displacing the Blackberry. On the other hand, it didn’t matter because I was a year early. I was stubborn and it was my most expensive loss ever. (Thankfully I took the loss when I did, as it more than doubled from where I eventually covered my short).

Over the years, I have learned that it is never the boring compounder that really hurts you—it’s the leverage, the complexity and the shorting that gets you—especially the shorting. There’s a reason that I rarely ever short these days. I even penned a piece on the topic; Stop Shorting “Project Zimbabwe” as I wanted to warn my friends that the market is suddenly quite different from what we were all accustomed to. Having been run over in the past, I have a reasonably good perspective on when other situations can run people over—heck, I sometimes even join in the fun on the long side. Looking back to Tesla, it was obvious to get out when I did. I feel bad that so many friends didn’t listen. I feel even worse that I didn’t reverse long—it was that obvious.

I bring this all up while watching the drama at GameStop. Let me start by saying that I don’t care how confident you are that a company will go to zero, when there are more shares short than outstanding, you’re just asking for people to play games with you. When word gets out that a few large funds are individually short 8-figure positions, you know that someone will try for the kill-shot. r/WallStreetBets gets the attention, but there are killer whales out there, silently doing the real work. There’s a price where these shorts will puke it up and the market has a funny way of finding that price.

I don’t want to focus too much on GameStop. I had an Event-Driven long position because July 4th is always more fun when you buy your own fireworks. I tossed it at $92.50 premarket for a nice score. I’ve also written a pile of puts as implied volatility has experienced a supernova event, but this is still boring GameStop after all. However, this article isn’t about what will happen at GME; my guess is as good as yours. Rather, I want to point out that you have to be a special sort of stupid to stay short when there are more shares short than outstanding. Hubris is dangerous in the investing game. Shorts are extra dangerous. There are landmines everywhere. I don’t care how small the position is, when a short position goes up 25-fold in six months, it’s going to hurt badly. If you didn’t realize that was a risk, you really weren’t paying attention.

Remember how easy this game is? Buy cheap stocks and go to the beach. I’d be a whole lot wealthier today if I had done more of that when I was younger. Instead, we all like to add complexity because we think we’re smarter than the market. We like to add leverage because 50% more of a good thing tends to make it better. We often forget that one big mistake on the short side can bankrupt you. The first rule of investing is to never put yourself in a position where you can lose it all. Having been burnt in the past, I focus inordinate attention today on how I can get hurt; not on where I can make the most money—that part is easy. I like to think that the shift in my focus means that I have matured as an investor. Trust me, I know how frustrating it is to dig out of a self-created hole. As a result, I’m amazed that so many people blindly dismiss the risks out there. That is just asking for trouble.

“Project Zimbabwe” is a brave new world for everyone. Please stop, review your portfolio, stress test everything, think through the implications of 100-sigma events happening each day. No one is ready for what’s about to happen, as it’s mostly right-tail risk—except if you have a financialized book, in which case a move in interest rates may detonate your left tail first. As others blow up their books, your version of complexity may end up as collateral damage. Stop. Think it through. Be extra careful. No one expected GameStop to become a momentum stock. What else does no one expect? What else can happen? Be careful out there. Stop being stupid. A large fund with a great track record, is not immune to these rules—if anything, their position sizing makes them more vulnerable. A lot of rules that we’ve all taken for granted are about to be re-written. NEVER put yourself in a position where you can lose it all.

The shorts at GameStop are probably thinking that Friday was the blow-off top. Instead, they should be asking themselves, “was Friday a base-camp on the way to the real blow-off top?” Remember, in today’s world, any asset can trade at any price. The price of oil went negative. No one thought that was possible, yet trillions of bonds at negative yields should have been a warning that the old rules no longer applied. I want to repeat again for the third time; NEVER put yourself in a position where you can lose it all. The rules for “Project Zimbabwe” are being re-written and they will be full of surprises. In particular, be careful on the short side. GameStop isn’t the first supernova squeeze of this decade and it surely won’t be the last.


Tyler Durden Mon, 01/25/2021 - 20:50
Published:1/25/2021 7:58:14 PM
[Middle Column] New York Times touts book titled: ‘How to Blow Up A Pipeline’ as a ‘new way to think’ – Book argues that ‘strategic acceptance of property destruction & violence has been the only route for revolutionary change’

NYT's Tatiana Schlossberg (the daughter of Caroline Kennedy): How to Blow Up a Pipeline author Andreas Malm "argues that there should be room for tactics other than strict nonviolence and peaceful demonstrations — indeed, he is a bit contemptuous of those who offer strategic pacifism as a solution — and notes that fetishizing nonviolence in past protest movements sanitizes history, removing agency from the people who fought, sometimes violently, for justice, freedom and equality. Sure. But the problem with violence, even if it’s meant only to destroy “fossil capital,” is that ultimately it’s impossible to control."


Climate Depot note: The website of the publisher of the book, Verso books, asks, "why haven’t we moved beyond peaceful protest?" The publisher website explains: "[How to Blow Up a Pipeline author Andreas] Malm argues that the strategic acceptance of property destruction and violence has been the only route for revolutionary change."

"Andreas Malm makes an impassioned call for the climate movement to escalate its tactics in the face of ecological collapse. We need, he argues, to force fossil fuel extraction to stop—with our actions, with our bodies, and by defusing and destroying its tools. We need, in short, to start blowing up some oil pipelines."

New York Magazine climate reporter David Wallace-Wells, also provided a featured review of Malm's book: “If a livable world requires an all-over transformation, where and when and how do we start? Perhaps with this book, a provocative manifesto from the pioneering theorist of the climate age.” – David Wallace-Wells, author of The Uninhabitable Earth

In 2010, NASA's former lead climate scientist also endorsed a similar sounding book. See: James Hansen declared author 'has it right...the system is the problem' -- Book proposes 'razing cities to the ground, blowing up dams and switching off the greenhouse gas emissions machine'

2013: Video: Eco-Terror Threats Issued at Rally: Climate Depot attended: ‘We will dismantle the Pipeline’ sign prominently displayed at rally — ‘By any means necessary’

Published:1/25/2021 3:58:03 PM
[Markets] About That Guy Who Can't Access His Bitcoins About That Guy Who Can't Access His Bitcoins

Authored by Omid Malekan via,

A lot of people have forwarded me this story, with some finding it as a reason to remain skeptical of crypto. It makes for an excellent teaching moment.

First, let’s review some events that have happened throughout history:

The owner of something highly valuable, like a diamond, buried it in the woods for safekeeping. He wrote the location on a piece of paper but lost that paper and could never find his loot again.

A ship carrying gold and silver across the ocean ran into a squall and sank. The treasure was gone forever.

A rare first edition book was accidentally sold to an unsuspecting reader at a garage sale. The buyer was just looking for a cheap read and never learned the true value.

An original print of the Declaration of Independence was hidden inside a random painting. It would ultimately be bought for $4 at a flea market by someone who needed a cheap frame.

Millions and millions of people have lost their wallet, and the cash in it.

Now, having heard these stories, do you believe that diamonds, gold, rare books, original prints and cash are somehow suboptimal? Do you believe that the fact that they can be lost, stolen, accidentally sold or forgotten somehow makes them poorly designed, or even worthless?

Of course not. If anything, you believe the opposite.

The fact that these things can be lost or stolen - and not easily replaced - is what makes them valuable in the first place. It proves they are scarce, and scarcity is important. It’s one of the principle organizing functions of any society, from the most primitive to the most advanced. Only that which is scarce can have lasting value.

But scarcity also implies risk. If there’s no risk, then there’s no lasting value. Ringo Starr’s original copy of the Beatles White Album sold at an auction for close to a million dollars. Being a physical object, it can easily be damaged, lost or stolen. The streaming version of that album on YouTube can’t. That’s why the streaming version is free.

Bitcoins are also scarce. Not just because the underlying protocol is programmed to eventually stop making new ones, but because the ones that are already out there can be lost or stolen. Bitcoin is the first scarce digital asset in history. That’s really important. Lack of digital scarcity has ruined the internet. Just ask any musician whose music streams online.

Since Bitcoins are scarce, and you can’t just call Satoshi Inc. to get a replacement if you lose access to yours, then owning them is risky - as it should be. You can hire someone to help you protect your coins or access them through an intermediary like PayPal, but it’s important that someone along the ownership chain is taking the risk of loss or theft.

Without that risk there’d be no value.

That’s the point that the skeptics who’ve written hundreds of mocking comments underneath that article don’t get. Their schadenfreude is misplaced. Every story like this carries an important subtext: Bitcoins can be lost or stolen, and that loss hurts, because the coins can’t be replaced. So Bitcoins are scarce, like diamonds, physical cash and vinyl records. That means Bitcoins are valuable.

My heart goes out to the guy who lost his key backup and forgot his password, many of us have been there at some point. But the virality of his story is actually bullish for crypto. The skeptics who keep spreading it are doing the rest of us a favor, delivering the subliminal message that this thing that they don’t like and don’t understand must be valuable.

Years from now, our children will have no qualms about any of this. To them, a digitally scarce item will be as logical (and valuable) as a physically scarce one. Their history books will include a chapter on the dark decades between the invention of digital and the achievement of digital scarcity, when everything sucked. The only thing they’ll be confused about is why their parents didn’t buy any crypto when it was still cheap — the same way I feel about the people in my parent’s generation who didn’t keep their original vinyl records.

Tyler Durden Sun, 01/24/2021 - 13:47
Published:1/24/2021 12:49:37 PM
[Markets] How The Fed Fails How The Fed Fails

Authored by Charles Hugh Smith via OfTwoMinds blog,

The Fed has a binary choice: preserve America's global hegemony or further enrich the billionaires. You can't have both.

The Fed will fail as a result of two dynamics: diminishing returns and the U.S. dollar's role as a global reserve currency. The Fed's reign as the godhead of financier-banker supremacy has been fun and games for the past 12 years of stock market euphoria, but that's about to change.

All those expecting the Fed to sink the USD to near-zero to "save the stock market" don't seem to realize that they're also expecting the U.S. to surrender its global hegemony, which rests entirely on the U.S. dollar. The USD is the world's dominant reserve currency--please examine the chart below. The USD dwarfs the next largest reserve currency, the euro. The Chinese yuan--due to its peg to the USD, essentially a proxy for the USD--is a tiny sliver of global reserves.

The owner of a reserve currency can create "money" out of thin air and trade it for autos, oil, semiconductors--real-world goods that were not created out of thin air. All these real-world goods required tremendous investment and significant costs to be produced and transported.

No wonder trading something for nothing--a remarkably good deal--is termed an exorbitant privilege.

It is not an exaggeration to say that the ability to create "money" out of thin air and trade it for real-world goods is the foundation of America's global power. If the Fed prints USD to near-infinity and the USD loses value relative other reserve currencies, the U.S. loses its exorbitant privilege of trading "money" created out of thin air for real-world goods.

So everyone expecting the Fed to "print" the USD to zero is claiming the Fed is consciously choosing to lay waste to the foundation of American power--just to boost Big Tech Robber Barons and zombie global stock markets.

Recall that the Fed is not the Empire, it is the handmaiden of the Empire. The Fed's dual mandate-- for PR purposes, stable employment and prices--is actually balancing the conflicting demands of a global and domestic currency--Triffin's Paradox writ large.

The inherent problem with a reserve currency is that it must meet global economic needs and domestic needs, and these are intrinsically in conflict. America's billionaires and pension funds want the US stock market to loft higher on the back of a declining USD, but that diminishes the global purchasing power of the USD--a trend spiraling down to economic ruin.

The Fed's balancing act has run out of runway. It's either destroy American hegemony by crushing the USD or secure hegemony and let the stock market function as a "market" rather than as a device to further enrich the top .01%. (Recall that "nearly half of the new income generated since the global financial crisis of 2008 has gone to the wealthiest one percent of U.S. citizens. The richest three Americans collectively have more wealth than the poorest 160 million Americans." The Dangerously Diminishing Returns on Monetary and Fiscal Stimulus)

As for diminishing returns: consider what the Fed "bought" by handing $1 trillion to financiers, banks and billionaires in 2008-09 and what it "bought" with $3 trillion last March. The Fed's balance sheet shot up from $925 billion on 9/9/08 to $2.08 trillion on 9/9/09-- an injection of $1.16 trillion to "save" the global financial system (and the U.S. stock and debt markets) from complete meltdown.

The Fed continued goosing markets higher, adding another $1 trillion by 2013 (balance sheet $2.96 trillion). So the Fed "bought" a five-year rally in global risk assets--a rally that sent wealth and income inequality into orbit--for a mere $2 trillion.

Last year the Fed had to print over $3 trillion in three months to "save the markets" from a reckoning with reality. Take a quick look at the chart below. Notice how the Fed's "saves" are tracking a near-parabolic curve. So will the next "save" require $5 trillion, or will it be $7 trillion? And what are the consequences for such insanity on the U.S. dollar's global hegemony?

So the Fed has a binary choice: preserve America's global hegemony or further enrich the billionaires. You can't have both. Hegemony requires a currency that's increasing its value relative to other currencies, not plummeting to near-zero.

If the Fed chooses to further enrich the billionaires and top .01%, then the skyrocketing wealth-income inequality will unravel the domestic social and political orders. There is no way that will be a "win" for the Fed, as the resulting backlash against the Fed's stripmining the nation to enrich the top .01% will have consequences for the Fed as well as the nation.

So the Fed will fail. If it spews endless trillions to further enrich the billionaires it will destroy the exorbitant privilege of the reserve currency and the global hegemony that privilege enables. If it preserves global dollar hegemony by not spewing endless trillions, global stock and debt markets will experience the equivalent of a financial tsunami, earthquake and hurricane hitting all at the same time.

It's either/or--there is no win-win. Choose wisely, Fed.

*  *  *

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

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My recent books:

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World (Kindle $5, print $10, audiobook) Read the first section for free (PDF).

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($5 (Kindle), $10 (print), ( audiobook): Read the first section for free (PDF).

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

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

Tyler Durden Fri, 01/22/2021 - 17:00
Published:1/22/2021 4:06:13 PM
[Quick Takes] Professors Urge Publishers Not to Publish Books by Trump Administration Officials

"those who enabled, promulgated, and covered up crimes against the American people should not be enriched through the coffers of publishing"

The post Professors Urge Publishers Not to Publish Books by Trump Administration Officials first appeared on Le·gal In·sur·rec·tion.
Published:1/22/2021 9:04:34 AM
[Markets] Watch Live: Joe Biden Inaugurated As The 46th President Of The United States Watch Live: Joe Biden Inaugurated As The 46th President Of The United States

Pomp, circumstance, (some) former presidents, and Hollywood celebs will all be primed and ready to celebrate in front of no crowds (because 'security' and social-distancing) as Joe Biden will be sworn in as the 46th president of the United States under the theme "America United".

As was the case with previous inaugurations, most of Congress and the Supreme Court are expected to be in attendance, as are some former presidents. Barack Obama, George W. Bush and Bill Clinton are all set to attend, as are former first ladies Michelle Obama, Laura Bush and Hillary Clinton. Jimmy Carter, the country's oldest living former president, at 96, and former first lady Rosalynn Carter will not be there, but they sent their "best wishes." The inauguration is the first they have missed since Carter was sworn in in 1977.

Also absent will be Trump, making him the first president to skip his successor's inauguration since Andrew Johnson in 1869. He flew to Florida on Air Force One for the last time on Wednesday morning. Vice President Mike Pence will attend the inauguration.

A new day indeed...

Watch Live (events are due to start at 11amET):

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Here's what to expect: (via NBC News):

The proceedings will begin with an invocation by the Rev. Leo J. O'Donovan, a Jesuit priest who is the former president of Georgetown University and a close friend of the Biden family. Andrea Hall, the first African American female firefighter to become captain of the Fire Rescue Department in South Fulton, Georgia, will recite the Pledge of Allegiance.

Lady Gaga - who teamed with Biden on domestic violence issues when he was vice president and campaigned for him in the 2020 election — will sing the national anthem.

Amanda Gorman, who became the country's first Youth Poet Laureate in 2017, will read a poem she has written for the occasion called "The Hill We Climb." Like Biden, Gorman had a speech impediment that she has worked hard to overcome. She has also announced plans to run for president herself in 2036 — the first election she'll be old enough to do so.

Gorman will be followed by a performance by Jennifer Lopez, like Gaga a former Super Bowl performer. Brooks, who played Obama's inauguration in 2009, will also perform.

A longtime friend of the Biden family, the Rev. Silvester Beaman, pastor of Bethel African Methodist Episcopal Church in Wilmington, Delaware, will deliver a benediction.

As is tradition, the Supreme Court's chief justice, John Roberts, will administer the oath of office to Biden just after the clock strikes 12. Biden will take the oath with his hand on top of his 127-year-old, 5-inch-thick family Bible, which will be held by his wife, Jill Biden.

In an address after he’s sworn in, Biden will call on Americans to bring the country together during an unprecedented crisis, according to advisers to the president-elect who asked not to be identified ahead of the speech. He’ll ask every citizen to meet what the advisers called an extraordinary challenge facing the nation, in a speech they said would be built around the theme of unity. The address will be 20 to 30 minutes long, according to a person familiar with the matter who also asked not to be identified.

What will be most evident, aside from the lack of crowds, will be the plethora of security. Historically, inaugurations have always seen heavy security but Washington has never experienced an operation on this scale before. Around 8,000 Guard members were deployed for Trump's inauguration ceremony in 2016 in addition to the regular Secret Service and law enforcement presence. Biden's inauguration, on the other hand, has a stunning 25,000-plus National Guard members - that's five times the troop levels in Iraq and Afghanistan combined where approximately 2,500 service members are still serving, according to a recent Department of Defense announcement. 900 U.S. troops are aso reportedly still on the ground in Syria.

Infographic: D.C. Troop Levels Five Times As High As Iraq & Afghanistan | Statista

You will find more infographics at Statista

As shocking as these security arrangements are, however, they do graphically illustrate the scale of division in the U.S. today as the country prepares for the first term of President Biden.

“It has been the most tense, contentious transition since the post-Civil War era,” said Brandon Rottinghaus, a politics professor at the University of Houston.

“The expectation of the political system is that there be a smooth transition and minimal friction. We’ve obviously seen that shattered.”

But, as Biden said above "it's a new day" right?

Tyler Durden Wed, 01/20/2021 - 10:50
Published:1/20/2021 10:05:33 AM
[Markets] Boeing, Boeing, Gone... Again Boeing, Boeing, Gone... Again

Authored by Bill Blain via,

Boeing’s stock prices continues to languish in the wake of the B-737 Max crashes in 2018 and 19. In December 2020 the jinxed plane was finally allowed to fly again after a tortuous programme to re-write and improve its control systems and regulatory oversight. The stock didn’t move much. Nor should it have. 

I’ve mentioned many times I have massive issues with the US duopoly plane-maker. I am not a fan. Last week it signed a $2.5 billion deferred settlement with the US Department of Justice which some think puts it on the road to recovery. The deal makes me seethe – it’s a massive victory for Boeing’s corporate legal team over corporate social responsibility, natural justice and just about every positive aspect of stakeholder capitalism and ESG investment. 

What riles me is the degree of hypocricy in the market’s reaction to Boeing. It seems to “fly” in the face of decency, yet a client asked me yesterday – after I mentioned the settlement in yesterday’ comment – about whether it’s now time to buy Boeing? After all, it’s been tried, found wanting, modestly fined and is on a three-year deferred settlement parole. It can put the problems behind itself. In the next three years air-travel demand will see a dramatic resurgence as repressed travel resumes. He’s looking for opportunities in distressed aviation markets and assets – and maybe Boeing is part of that? 

Boeing has a long way still to go.. 

He’s probably right about air travel though. Aviation will get very interesting in coming months as the global economy squeaks open again, but it’s also going to be increasingly stressed as cash strapped plane owners try to avoid the tipping point. Too much money looking for opportunity could well result in non-optimal pricing – and bigger losses down the line. I would simply say to potential buyers – be careful. 

Over 5000 of the 25000 aircraft in service in 2019 are unlikely to ever fly again – especially the larger twin aisles. Thousands more aircraft are stored in desert boneyards – and although that’s better than leaving them standing on a dank airfield parking lots in the Cotswolds, they will take considerable time to clean, restore and recertify. 

Let me get back to my problems with Boeing. I suspect cleaning up the firm is going to take a decade or more. It’s got a large number of issues to reconcile. It looks torn between the reputational damage it’s suffered, its importance to the US economy, dismal labour relations, its place in the duopoly of aircraft suppliers, and its lack of cash to solve the problem of introducing new environmentally climate friendly aircraft. Try solving that equation without momentarily picturing a dinosaur looking to hide under a tree from the meteor.. 

Boeing fans say it’s taken its punishment – its number one product grounded for near enough two years and only now slowly re-entering service. It’s been crushed in the plane delivery race by Airbus (which delivered 560 planes in 2020 vs 157 from Boeing!) It lost over 600 Max orders – and its only consolation was a large order from Ryan Air, and you can bet Michael O’Leary would have demanded a substantial discount on the lowest feasible economic price for them. It still faces multiple legal actions – as much as $2 bln in civil lawsuits yet to come. 

But, the key thing is Boeing survived. As Mr Trump often told us – he’s willing to support the plane maker because it’s such a critical part of US industry. It’s also a key part of the US military-industrial complex.  

Yet, in a market that claims to focus on Environmental, Social and Governance (ESG) standards above all else – it’s difficult to see on what basis Boeing meets any of these critical criteria?

In last week’s settlement Boeing admits two of its employees misled US regulators about the safety of the B-737 Max aircraft. 2 planes crashed – killing 346 people. Boeing effectively said two employees lied to the regulator, but their behaviour does not reflect the high standards and values of the company as a whole. It’s doesn’t reflect any responsibility by Boeing’s management. Amazingly the settlement specifically exonerates Boeing’s bosses: “the misconduct was neither pervasive across the organisation, not undertaken by a large number of employees, nor facilitated by senior management

If I had a bucket, I’d retch into it. Boeing has become a classic gutted fish. Bad companies rot from the head down.  

Let’s just remind ourselves how Boeing has covered itself in glory over the B-737. (Imagine fadeaway to 2010s….)

Rather than spend $25-30 bln developing a whole new regional jet to replace the aging B-737 classic design from the early 1960s, in 2011 the accountants who run Boeing (ever since McDonnell-Douglas famously bought the firm with Boeing’s money in a spectacular reverse takeover), overruled the engineers, and decided to stretch the 50-year old design just a little bit more, put on bigger engines and call it something sexy and imaginative. Max. yeah.. that works… To the Max.. Cool. 

As a rejig of an older design it offered numerous advantages; airlines would be familiar with the airframe, operation and maintenance, and Boeing realised it would be an easy sell to cost conscious buyers on the basis crews would need little or no retraining on the new type. At that point the rising tide of environmental climate protest was seen as insignificant – it wasn’t seen as a real threat to Boeing’s business to ignore it. 

If Boeing had built a new environmentally friendly plane that would have ushered in a new era of cleaner flight – I’d have given them the “E” of ESG. Instead, they they made an economic call to stick with older, dirtier tech. The downside of making the plane larger reduced its flyability, and because it needed bigger engines it became less stable. Boeing were confident a new flight control system would resolve any issues – they famously outsourced the software engineering to India at $10 an hour. 

If they’d decided to develop a wholly new plane, it would have produced something lighter, more economical, more appealing to environmentally conscious passengers offering higher cabin comfort, and better operational costs to airlines. Boeing’s last all-new plane – the 787 Dreamliner utilised the new technologies and was proving a massive hit with passengers. Launching a new design would cost billions, but would leap-frog the firm ahead of rival Airbus and allowed Boeing to claim the “E” high-ground. 

The decision to stretch the Max looked to be working as bottom-line focused airlines placed thousands of orders for the new plane, confident air travel would continue to expand, and cheap tickets were the way forward. Boeing relaxed. No need to take risk developing an expensive new plane. 

Anyway, Boeing’s C-Suite had found something far better to do with the cash it was farming from the Jumbo and long-established B-737 programme than risk it on new aircraft projects: 

They discovered the twin benefits of stock buybacks. First, buybacks pushed up the stockprice, and second, a higher stock price meant the management could pay themselves higher bonuses and watch their stock options soar in value. At the point Boeing was no longer being run for the benefit of stockholders, customers or its employees. The bosses lived big. At this point I’m looking at possible fails on the G of ESG. It’s a classic example of why Stakeholder capitalism is coming to the fore in CSR and ESG investing.

When the automated flight controls rigged up to make the Max flyable started to go wrong, a cascade of failures and unwelcome disclosures hit the firm. Boeing hadn’t put the MCAS system in the plane manuals or told pilots about how the flight stabilisation worked. When it failed it pointed the plane into the ground to avoid stalling. Pilots had little warning on how to react. When planes started crashing Boeing blamed the pilots until it became clear it was a systems problem. 

Over the past two years, whatever the settlement with the DOJ says, its increasingly clear Boeing knew exactly what had gone wrong. They had effectively staged an institutional capture of the regulator, the FAA, and were getting away with doing their own diligence on their own products. It hid the details of the MCAS to keep the cost down. The CEO/Chairman Dennis Muilenurg finally got sacked.. but months after the events. He was replaced…. by another company insider. 

The deal Boeing just ground out with the DOJ is mostly ($1.77 bln) compensation to airlines whose new planes were grounded. A further $500 mm will go into a fund to compensate passenger families – but it actually reduces the chance these families will ever be able to claim punitive damages. As a US congressman described it: “a slap on the wrist”. 

The actual fine is tiny - $243 million. It’s a massive fail on the G (Governance) factor. Companies should be punished for poor governance. 

Meanwhile, Boeing’s management were not only investing profits in buybacks to pay themselves more, but were cutting staff to the bone. That’s now coming back to haunt them. It’s reflected in hearsay and rumours about the increasing poor quality of finished planes and rising fault numbers at plants where disaffected workers are producing such shoddily built planes some airlines are refusing to accept them. Whatever, its perilous employee relations and costs scores a fail on the S (Social) factor in ESG. 

While Airbus is now talking about launching hydrogen fuelled green planes in the next 15 years… Boeing doesn’t have cash to invest and launch any kind of new model to appeal to customers who increasingly want green flight. Lets just call that a double fail on the E factor as well.. 

I bet many large fund managers reading this have Boeing somewhere on the books. The same fund managers will be telling me the metallurgical coal mine I want to finance in Cumbria is impossible because it’s an obvious ESG fail. It might be creating good long-term jobs, it might cut the costs of European steel production (thus making renewables cheaper), and it might reduce the amount of coking coal we import from Australia at enormous cost and carbon miles… but none of that matters because coal is an absolute ESG fail… 

Yet… Boeing is ok? Lord preserve us. 

Tyler Durden Wed, 01/20/2021 - 05:00
Published:1/20/2021 4:06:46 AM
[Markets] Is Asset-Inflation Really "Unstoppable & Forever"? Is Asset-Inflation Really "Unstoppable & Forever"?

Authored by Charles Hugh Smith via OfTwoMinds blog,

The consensus is that asset inflation is unstoppable and forever. History begs to differ.

Not unsurprisingly, people want a binary option: do we get deflation or inflation? Unfortunately, reality is messy.

Broadly speaking, globalization is deflationary as capital seeks the lowest cost labor, parts and materials, the least stringent environmental standards and the most corrupt governance to maximize profits by any means available (in this case, exploitation and corruption).

Wages lose purchasing power as every labor force competes with the cheapest available pool of global labor, and domestic companies must lower prices or face obliteration by the global corporations.

Broadly speaking, financialization is inflationary as the costs of services increase as financialization enables monopolies and cartels to dominate entire sectors. Once they control the sector, they increase prices while lowering quality to maximize profits by any means available (in this case, monopoly, cartels and political corruption). As the profits gush in, corporate monopolies and cartels can "invest in corruption" by using a sliver of their profits to buy political favors and protection.

Financialization lowers the cost of credit to corporations and financiers, giving the largest entities an unmatchable competitive advantage: they can borrow immense sums at near-zero cost and use this money (or newly issued stock) to buy competitors, insuring their monopoly won't be challenged by either regulations (since politicos and bureaucrats have been bought off) or competitors (all bought out with "free money".)

While many hold that inflation is always a monetary phenomenon, real-world scarcities are also inflationary. If you were waiting in a long line at a gas station in 1973, hoping to get a tank of gas at only double the price of a month earlier, you'll know that scarcity is absolutely marvelous at sending price soaring regardless of what's happening with the money supply.

So inflation can be driven by either or both monetary and scarcity dynamics.

Enter the pandemic. Needless to say, restrictions in travel and gatherings are deflationary in travel-leisure-dining sectors as airlines lower prices to compete for a shrinking pool of passengers and surviving restaurants suppress prices to attract scarce customers.

As millions of workers lose their jobs and depend on unemployment, the insecurity of future income weighs on overall consumption.

Lowering the cost of credit does little for these sectors while rocket-boosting speculation and financialization. The monetary "solution" to deflation is always the same: lower interest rates to zero and flood the financial sector with unlimited liquidity. The resulting stock market bubble and corporate orgy of borrowing and stock issuance are predictable results of unfettered, near-infinite financialization.

But lowering the cost of credit and incentivizing monopolies and cartels to expand their control doesn't actually help the economy. Enabling rapacious monopolies and cartels is systemically inflationary, while lowering the cost and availability of credit also increases the attractiveness of automation as a means of lowering labor costs, a dynamic that is deflationary as lower wages equals lower consumption.

The reality is relatively few gig economy workers earn a middle-class income working 40 hours a week. The large-scale reduction of wage and benefit security--i.e. the transition to a precariat work force--is highly deflationary in terms of wages and consumption, as precariats cannot count on future earnings being reliable or sufficient.

The political "solution" is Universal Basic Income (UBI) as a means of supporting consumption. But supporting the consumption of essentials doesn't magically incentivize innovation or the expansion of capacity and real-world production.

Meanwhile, the Federal Reserve will continue giving unlimited "free money" to corporations and financiers to increase the concentration of financial and political power in the hands of the few at the expense of the many. This fuels the dominance of corporations and financiers and increases the risks of monetary over-reach, which introduces the potential for a non-linear sudden and unpredictable explosion of monetary-driven inflation.

All of this sets the stage for both monetary and scarcity inflation. Monopolies and cartels are free to exploit their stranglehold on the nation by jacking up prices and reducing quality (while the bought-and-paid-for political class theatrically wrings their hands while skimming millions in campaign contributions). This is rabidly inflationary.

Since there are few incentives to expand real-world capacity and production, this sets the stage for scarcities in essentials and non-essentials alike. With Peak Globalization in the rearview mirror, the deflationary forces of globalization are ebbing.

The fly in the ointment is speculative bubbles always pop. All the inflation in the system has flowed into excessive speculation, which has inflated unprecedented bubbles across most asset classes. When these all pop, the results are deflationary as the wealth effect reverses and over-leveraged corporations default and/or go bankrupt.

I marked up this chart of the S&P 500 about a year ago, and since then the market crashed and then soared to new highs (SPX 3,826). The basic message here is extremes get more extreme until the rocket runs out of fuel--something the consensus now claims is "impossible." The consensus is that asset inflation is unstoppable and forever. History begs to differ.

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Tyler Durden Tue, 01/19/2021 - 12:40
Published:1/19/2021 11:51:12 AM
[Markets] An OrWELLSian Purge? Why H.G. Wells' "The Shape Of Things To Come" Has Arrived Today An OrWELLSian Purge? Why H.G. Wells' "The Shape Of Things To Come" Has Arrived Today

Authored by Cynthia Chung via The Strategic Culture Foundation,

It is no coincidence that our entertainment industry today, so heavily saturated with the influence of Wells’ propaganda, is obsessed with the theme of a post-apocalyptic world...

“It has become apparent that whole masses of human population are, as a whole, inferior in their claim upon the future, to other masses, that they cannot be given opportunities or trusted with power as the superior peoples are trusted, that their characteristic weaknesses are contagious and detrimental to the civilizing fabric, and that their range of incapacity tempts and demoralizes the strong. To give them equality is to sink to their level, to protect and cherish them is to be swamped in their fecundity. “

– H.G. Wells’ in “Anticipations of the Reaction of Mechanical and Scientific Progress upon Human Life and Thought” 1901

In “The Shape of Things to Come: The Ultimate Revolution” (published in 1933), H.G. Wells writes of the future predicting, rather optimistically, that there will be another world war in just a few years, followed by epidemic and famine. In this fictional future, war continues for thirty years into the 1960s, despite the people having forgotten why they started fighting. Humanity enters a new Dark Age. In a last bid for victory, the enemy deploys a biological weapon resulting in the “wandering sickness,” producing the first zombies, and by 1970 the global population has dropped to a little under one billion.

Though this is depicted as horrific, it is at the same time depicted as a necessity – a “great reset,” to restore the “balance” so to speak. It is only with this reduced population size that the world can begin to build itself back together from the chaos that it was, and enter into its new phase of evolution as a biologically superior species (the inferior having been culled by war and disease), managed by a bureaucratic system under the form of a world government.

This is the sci-fi fantasy of H.G. Wells and is the central theme to everything he wrote including his works of non-fiction. The subject on ways to reduce the world population was a troubling dilemma for Wells…not the reducing part, but the thought that there would be those so foolish as to forbid it.

You see, it was considered by some that the human species had found itself in a crisis by the 1900s. Europe, up until the 17th century had a population size that never exceeded roughly 100 million. But nearly doubled to 180 million in the 18th century, and doubled again to 390 million in the 19thcentury. H.G. Wells wrote of this “the extravagant swarm of new births” as “the essential disaster of the nineteenth century.” Not war, not disease, not starvation, not abject poverty, but population growth was determined as the disaster of an entire century.

Today the world population is 7.9 billion people, a far cry from Wells’ hopeful 1 billion. However, there is good news! The site predicts a decreasing net change in population growth, such that by year 2050 the yearly change will be 0.50% of what it is now! In other words, the rate of population growth will be cut in half 29 years from now! Those are striking projections and would entail a massive cap on growth! Obviously, this is a projection based off of the presumed success of “educational reforms.” Though I do wonder…what will we do if not all of the individuals agree to abide by these reforms? And what will we do if not all of the nations agree to abide by these reforms? Will we enforce it nonetheless, and if so…by what methods?

The Ghosts of Wells’ Past

“The knowledge of today is the ignorance of tomorrow”

- H.G. Wells

The Wells that we have come to know today started his journey as a young boy winning a scholarship to study at the prestigious Normal School of Science (now called the Royal College of Science). His subject of choice was biology and his teacher, and quickly thereafter mentor, was none other than Thomas Huxley, otherwise known as “Darwin’s bulldog” (his words).

Through Huxley, Wells’ conception of the nature of humankind was formed with its foundation built upon the philosophies of Charles Darwin and Thomas Malthus.

Because Wells is so very influenced by these men, in fact they form the very basis for his ethics; I thought it apt to share with you a few quotes.

In Thomas Malthus’ “Essay on the Principle of Population” (1799), he wrote:

We should facilitate, instead of foolishly and vainly endeavoring to impede, the operations of nature in producing this mortality; and if we dread the too frequent visitation of the horrid form of famine, we should sedulously encourage the other forms of destruction, which we compel nature to use. In our towns we should make the streets narrower, crowd more people into the houses, and court the return of the plague.” [emphasis added]

This approach seems not too different from a proposal to crowd people into a building with kindling and then proceed to light it on fire. After all, fire is a natural phenomenon. A much quicker and more effective remedy, I would think, if one is to take such an approach…

In Charles Darwin’s “The Descent of Man” (no not his autobiography! Though he was very much spiritually conflicted with the social consequences of his philosophies…) stated his thoughts on directed breeding as such:

No one who has attended to the breeding of domestic animals will doubt that this must be highly injurious to the race of man. It is surprising how soon a want of care, or care wrongly directed, leads to the degeneration of a domestic race; but excepting in the case of man itself, hardly any one is so ignorant as to allow his worst animals to breed.” [emphasis added]

To the credit of Darwin (though the damage was already done), he included a disclaimer in his “The Descent of Man,” that if humankind were to take upon itself the enforcement of the so-called “forces of nature,” it would be at the cost of our “most noble qualities”, as Darwin states:

Nor could we check our sympathy, even at the urging of hard reason, without deterioration in the noblest part of our nature. The surgeon may harden himself whilst performing an operation, for he knows that he is acting for the good of his patient; but if we were intentionally to neglect the weak and helpless, it could only be for a contingent benefit, with an overwhelming present evil.” [emphasis added]

Out of Malthus, Huxley and Wells, Darwin was by far the most troubled by the social consequences of what he believed to be an unavoidable necessity. Yet he could never resolve why something necessary could be so morally destructive and this failure to rectify the two opposing veins of thought would cost him dearly. In his later years he described his spiritual crippling inability to find joy in anything he once did, as he states in his autobiography:

I have said that in one respect my mind has changed during the last twenty or thirty years. Up to the age of thirty, or beyond it, poetry of many kinds…gave me great pleasure, and even as a schoolboy I took intense delight in Shakespeare, especially in the historical plays…music [was a] very great delight. But now for many years I cannot endure to read a line of poetry: I have tried lately to read Shakespeare, and found it so intolerably dull that it nauseated me. I have also almost lost my taste for…music…My mind seems to have become a kind of machine for grinding general laws out of large collections of facts, but why this should have caused the atrophy of that part of the brain alone, on which the higher tastes depend, I cannot conceive… The loss of these tastes is a loss of happiness, and may possibly be injurious to the intellect, and more probably to the moral character, by enfeebling the emotional part of our nature.”

What is the value of life, if in striving for our supposed “survival” we lose our most noble qualities? Why should we sacrifice our best qualities in a humiliating trade-off for a “contingent benefit” and “an overwhelming evil”?

Britain’s Ministry of Propaganda

Soon after the outbreak of the First World War (1914), the British government discovered that Germany had a Propaganda Agency- and thus it was only reasonable that a British War Propaganda Bureau be established. David Lloyd George, the Chancellor of the Exchequer was to head the task.

On Sept. 2nd, 1914, H.G. Wells (who was 48 by then) was invited amongst twelve other participants (including Arthur Conan Doyle and Rudyard Kipling) to discuss ways of best promoting Britain’s interests during the war. All the writers present at the conference agreed to the utmost secrecy and it was not until 1935 that the activities of the War Propaganda Bureau became known to the general public. It was agreed that pamphlets and books would be written to promote the government’s view of the situation.

Other than writing books for the Ministry of Propaganda, Wells also did some dabbling as a journalist under the supervision of Lord Northcliffe, the owner of The Times and the Daily Mail (the largest circulating newspaper in the early 20th century), among other newspapers.

Northcliffe’s newspapers propagandized for creating a Minister of Munitions, which was held first by David Lloyd George (1915), and played an instrumental role in getting him appointed as Prime Minister of Britain in 1916. Lloyd George then appointed Lord Northcliffe as Director of Propaganda.

Thus, H.G. Wells not only participated in the British War Propaganda Bureau but worked directly under the Director of Propaganda. And thus, much of his writing from 1914 on, should be regarded in service (and certainly not counter) to the interests of the British Empire.

Among the plethora of books Wells wrote, was “The New World Order,” (1940). It appears that Wells was indeed the first to pioneer the now-infamous term.

Wells’ Vision for a New Republic vs the People of the Abyss

In Wells’ “Anticipations” published in 1901, he writes the “vicious, helpless and pauper masses” have appeared, spreading as the railway systems have spread, and representing an integral part of the process of industrialization, like the waste product of a healthy organism. For these “great useless masses of people” he adopts the term “People of the Abyss” and he predicts that the “nation that most resolutely picks over, educates, sterilizes, exports or poisons its People of the Abyss” will be in the ascendant.

The ethical system laid out in Wells’ New Republic forbids the further growth of the “People of the Abyss”. In the past, Nature killed these off, and in some cases killing will still be necessary. And we should not be appalled by this task, as per Mr. Wells. Death for such people will mean merely “the end of the bitterness of failure, the merciful obliteration of weak and silly and pointless things.” Clearly the effecting of this will be morally justifiable according to Wells:

The new ethics will hold life to be a privilege and a responsibility, not a sort of night refuge for base spirits out of the void; and the alternative in right conduct between living fully, beautifully and efficiently will be to die. For a multitude of contemptible and silly creatures, fear-driven and helpless and useless, unhappy or hateful happy in the midst of squalid dishonour, feeble, ugly, inefficient, born of unrestrained lusts, and increasing and multiplying through sheer incontinence and stupidity, the men of the New Republic will have little pity and less benevolence.” (5) [emphasis added]

If “the whole tenor of a man’s actions” shows him to be unfit to live, the New Republicans will exterminate him. They will not be squeamish about inflicting death because they will have a fuller sense of the possibilities of life.

“They will have an ideal that will make killing worth the while.” The killing, Wells explains, will not be needlessly brutal. “All such killing will be done with an opiate.”

Whether this will be administered forcibly or whether the victim will be persuaded to swallow it, he does not reveal. Selected criminals will be destroyed by the same means. The death penalty will also be used to prevent the transmission of genetic disorders. People suffering from genetically transmissible diseases will be forbidden to propagate, and will be killed if they do.

As for the “swarms of black, and brown, and dirty-white, and yellow people”, who do not meet the new needs of efficiency, will, he insists “have to go”. It is “their portion to die out and disappear”.

In 1938, Wells’ “War of the Worlds” was broadcasted as a radio drama and narrated by Orson Welles. Apparently, during the broadcast it had not made itself clear to its audience that it was in fact a radio drama and not the actual news. Suffice to say the reporting of a man-eating alien invasion caused quite the panic in its London boroughs, and I am sure the British Propaganda Bureau got quite the chuckle out of it. It was great news for them, for it showed how easy it would be to control the narrative even if it were to be carried out to an absurd degree. It confirmed to them that the public will believe anything.

Wells wrote of the panic caused by the radio drama in the London boroughs:

If one could have hung that June morning in a balloon in the blazing blue above London, every northward and eastward road running out of the infinite tangle of streets would have seemed stippled black with the streaming fugitives, each dot a human agony of terror and physical distress…Never before in the history of the world had such a mass of human beings moved and suffered together…without order and with a goal, six million people, unarmed and unprovisioned, driving headlong. It was the beginning of the rout of civilization, of the massacre of mankind.” [emphasis added]

I think it no coincidence that our entertainment industry today, so heavily saturated with the influence of Wells’ propaganda, is obsessed with the theme of a post-apocalyptic world, the ever-revolving death game where its avatars are tested on their ability to survive at all cost. Through these adventures, we the audience are brought along and are taught how to feel the thrill of the hunt, the catharsis of the bludgeoning, the release that comes from mayhem. For we are the children of the ultimate revolution… the dawn of the great Purge.

Modern Religion: A Collective Orwellian Mind

In H.G. Wells’ “Open Conspiracy: Blue Prints for a World Revolution”, he makes no qualms in declaring his trilogy: “The Outline of History” (1919), “The Science of Life” (1929), and “The Work, Wealth, and Happiness of Mankind” (1932) as the new Bible:

I have told already how I have schemed out a group of writings to embody the necessary ideas of the new time in a form adapted to the current reading public; I have made a sort of provisional “Bible,” so to speak, for some factors at least in the Open Conspiracy.

The reader should be aware that Julius Huxley was a co-author of “The Science of Life”. Julian was also a prominent member of the British Eugenics Society, serving as its Vice-President from 1937-1944 and its President from 1959-1962. Interesting life choices from the authors of the new Bible.

Of Wells’ vision for a “Modern Religion” he wrote:

…if religion is to develop unifying and directive power in the present confusion of human affairs it must adapt itself to this forward-looking, individuality-analyzing turn of mind; it must divest itself of its sacred historiesThe desire for service, for subordination, for permanent effect, for an escape from the distressful pettiness and mortality of the individual life, is the undying element in every religious system.

The time has come to strip religion right down to that [service and subordination is all Wells wants to keep of the old relic of religion]The explanation of why things are is an unnecessary effort…The essential fact…is the desire for religion and not how it came about…The first sentence in the modern creed must be, not “I believe,” but “I give myself.” ‘ [emphasis added]

And to what are we to “give ourselves” to without any questions asked, but with a blind faith to worship what we are told is the good?

Wells explains it to us thus:

The character of the Open Conspiracy will now be plainly displayed. It will have become a great world movement as wide-spread and evident as socialism or communism. It will have taken the place of these movements very largely. It will be more than they were, it will be frankly a world religion. This large, loose assimilatory mass of movements, groups, and societies will be definitely and obviously attempting to swallow up the entire population of the world and become the new human community.


In Alfred Hitchcock’s film “The Rope” (1948), two Harvard students murder one of their friends as an experiment in committing the “perfect murder” and a display of their intellectual superiority. They stuff the body in a large chest in the middle of the dining room and hold a party, the idea being that all of their guests will be too daft as to figure out that they are dinning in a room with a fresh corpse, that is, everyone except Rupert Cadell (played by James Stewart), a former teacher of theirs. Rupert, they recognise will be their real challenge and their greatest proof of intellectual superiority if they succeed in pulling the wool over his eyes.

In fact, it was Rupert who taught the two men this manner of thinking that “murder is a crime for most men, but a privilege for the few.” This is reasoned by the belief that “moral concepts of good and evil do not pertain to the superior being.”

This subject is discussed at the dinner party, the guests think at first Rupert is kidding, but he assures them that the world would be a better place if the superior were permitted to commit murder, and that such a murder would be an “art form.” He states “think of what this would mean for unemployment, poverty, waiting in long lines.” He thinks open season for murder would be too much, and suggests shorter durations such as “cut a throat week” or “strangulation day.”

As the evening progresses, Rupert, the astute man that he is, observes a series of odd behaviour from the two men. David (the murdered young man) was in fact invited to the party, his father and his fiancé are amongst the guests and there is a growing concern for why David has not shown up.

Long story short – after all the guests had left, only Rupert and the two young killers remain in the apartment. Rupert discovers that they have murdered David (who was also a student of Rupert’s), and he opens the chest to find the body. Horrified and disgusted, he asks “why did you do it?” They of course responded, “we simply acted out what you always talked about.”

Confronted with the reality of his words, Rupert is ashamed at being partially responsible for this macabre scene. However, Rupert states, “there was always something deep within me that prevented me from ever acting out my words,” in other words, he never thought it possible that anyone would actually have it in them to act them out.

It is in this moment that Rupert realises that it is not in fact the superior being who is capable of committing murder, but the criminally insane. That the idea of purging the world of its “inferiors,” would in fact rid the world of its most loving and moral beings, their traits regarded as intolerably foolish and weak.

In the end, we would be left with the worst of humankind, a human race that had cannibalised itself.

Tyler Durden Sat, 01/16/2021 - 22:00
Published:1/16/2021 9:29:12 PM
[Markets] Biden's Banana Republic Biden's Banana Republic

Authored by Egon von Greyerz via,

Donald Trump is probably the luckiest presidential candidate in history to have lost an election. He doesn’t realise it yet as he suffers from a self-inflicted wound in the final moments of his presidency. Nor does Biden yet realise how unlucky he is to have won. But that will soon change as his presidency goes from crisis to crisis in all areas from monetary to fiscal to social and political. Very little will go right during his presidency.

The next four years could easily be four years of hell for Biden (if he stays the course for the whole four years), for the US and thus for the world.


When Trump won the election in November 2016 I wrote an article, dated Nov 18, 2016, called “Trump Will Grow US Debt Exponentially” .

The article also contained the following graph. In the article I predicted that US debt would double by 2025 to $40 trillion and that it would be $28t in January 2021 at the end of the four years.

Well, surprise, surprise, the debt is today $27.77t which can easily be rounded up to $28t.

I am certainly no forecasting genius, nor was the forecast just luck.

No, it was applying the best method that we have all been given but that few apply or understand.

This method is called HISTORY.


US debt had on average doubled every 8 years since Reagan took over in 1981. So as Trump became president in Jan 2017, he inherited a debt of $20t. Easy then to forecast that 8 years later the debt would be $40t. The $28t forecast for Jan 2021 is just the mathematical in-between point between $20t and $40t.

Even worse than the debt explosion is the the lack of tax revenue to finance the escalating and chronic budget deficits. As the graph above shows, debt has grown 31x since 1981 whilst tax revenues have only grown 6x.

The US deficit is currently $3.3t which is virtually equal to total tax revenue of $3.4t. This means that 50% of annual government spending needs to be borrowed.


The US economy now clearly fits the definition of a Banana republic.

A brief description is:

“In political science, the term banana republic describes a politically unstable country with an economy dependent upon the exportation of a limited-resource product, such as bananas or minerals.”

In the case of the US, the product they export is of course dollars printed out of thin air – a wonderful export item since supply is unlimited.

Further description is:

“Typically, a banana republic has a society of extremely stratified social classes, usually a large impoverished working class and a ruling class plutocracy, composed of the business, political, and military elites of that society.”

Like all Banana Republics, the US economy and social structure is now on the way to perdition with virtually nil chance for Biden & Co to reverse the inevitable course of events.


So back to history – History is what has formed us and history doesn’t just rhyme as Mark Twain said but it often repeats itself. The debt explosion is another good example.

If more people studied and understood history, they would not just recognise the utmost importance of what lies behind us but also that history will teach us about what lies in front of us.

But very few scholars and no journalists study history. Instead we are now in an era when both the media and universities worldwide want to erase history and rewrite the history books. This shows us the total lack of understanding of the utmost importance of history in the evolution of the world.

But this is part of the total decadence and denial that we see at the end of major eras or cycles. The current cycle, whether it is just a 300 year cycle or a 2,000 year old cycle is now coming to an end. These changes clearly don’t happen overnight but the first phase of the fall can be dramatic. And that phase is likely to be starting very soon.


So what will Biden and his masters do? Well Biden has already called for $ trillions of further support.

He also said: “If we don’t act now, things are going to get much worse and harder to get out of a hole later.”

Well we always knew that Biden really only had one trick up his sleeve – TO PRINT MORE than any president has done in history. To beat Trump is not hard, he only printed $8t in 4 years!

Let’s just remind ourselves that it took 200 years (1808-2008) to increase the US debt from $65 million to $10 trillion.

When Obama took over in Jan 2009 he inherited a $8t debt. Eight years later he handed over a $20t batten to Trump.

In 8 years Obama printed and borrowed more money than the previous presidents had achieved in the course of 200 years!

So will Biden print more than $10t?


Will he do it in 4 years? Most probably!

As I forecasted in my article in 2016, the debt will be at least $40t in Jan 2025, a $12t increase from today.

But no one should believe that Biden will stop at $40t. The US economy is already leaking like a sieve. And the problems have just started.

The problems in the currently semi-paralysed US economy will escalate at a rapid rate and the Biden team will attempt to plug every hole at all levels from a minimum wage to saving major corporations.

But sadly, Banana Republics don’t survive by printing worthless money.


Still, we mustn’t forget what started the latest phase of problems in the US economy.

It wasn’t Covid back in February 2020. No, that was a mere catalyst. The underlying disaster was a lot deeper. The real problem started back in Aug-Sep 2019. This is when the problems in the financial system became acute and both the ECB and Fed started flooding the system with money. But not real money of course but just worthless paper money created with just pushing a button.

Between the Fed and the ECB just under $8t of “fake” money has been created digitally since Sep 2019. It must obviously be called fake since nobody had to perform any work or produce any goods or services against this money.

It is really scandalous to call it money since it is no different from the Monopoly game money.


The printed $8 trillion at $15 per hour (Biden’s new minimum wage) equals 60 million man hours. But in the modern MMT (Money Market Theory) paradigm, you don’t need to work for the money. Whatever the world needs, central banks and governments can just create out of nothing.

That is until the music stops. And Biden or Harris are the likely conductors who will preside over the music stopping and the whole edifice collapsing.

The wise will obviously find a chair already now because when the music stops there will be no chairs free and all hell will break loose.

By that time debt will not just be in the $trillions or $100s of trillions. No, the printing will have reached $ and EUR quadrillions as not only most collapsing debt will need to be bought by central banks but also derivatives which probably amount to $2 quadrillion or more.

In addition, medical care, social security and unfunded pensions will probably exceed $1 quadrillion globally and add to the demise of the financial system.

Could I be wrong. Maybe. A close friend gave me once a T-shirt with the inscription:

“I AM NOT ALWAYS RIGHT – But I am never wrong”!

The gift must have been a subtle hint – Hmmm

Still, in my humble view I don’t believe that any orderly reset will change the inevitable course of events. So as far as I am concerned, it is not IF but WHEN.

A professional life of over half a century has taught me that even the most evident events can take longer to develop than you think.

But as I see risk at an extreme, now is the time to prepare.


So to finish, let’s have a quick look at where I see markets. I know forecasting is a mug’s game and I am not really interested in how markets move in the short term more than from an observational point of view.

In the next few years it is all about economic survival and wealth preservation rather than worrying about where the Dow or the Dax is going next.


During 2020, I wrote and spoke about a potential Meltup in markets before a crash. The latest article was called “LIFTOFF & COLLAPSE” published in Oct 2020. Well, the liftoff is happening and the Dow is up almost 5,000 points since then and the Dax 2,500 points.

The meltup could go a lot higher like exuberant markets often do before they collapse. But due to the extreme overvaluation base on many criteria, the market could turn at any point.

So whether we see a top in the next few weeks or months is irrelevant. The risk is to the downside. When markets crash it will be long and violent. A 90%+ fall in real terms is likely over 2-5 years.

Therefore it is much more important to safeguard the position now rather than to go for the final 10-25%. Once the market starts falling, it will be virtually impossible to get out for most investors.


Da Boyz were at it again on Friday the 8th at 9.00am European time. Gold was $1,905 at the time and moved down $30 in one move.

According to our sources, a sell order for 1.4 million ounces (43 tonnes) went through Comex with a value of $2.7 billion.

This was most clearly one of the bullion banks acting with the BIS (Bank for International Settlements) in Basel.

No sane trader would ever dump 1.4 million oz of gold in one go in an illiquid market. If he did, he would be fired on the spot.

So this was clear manipulation. The big short position of the bullion banks clearly necessitated a lower gold price.

This is what the chart looks like at that time:

This last move may feel even more frightening since gold came from $1,960 just two days earlier.

But this has no effect on gold’s long term uptrend since 1999. We have seen manipulation before and the quarterly chart below shows what looks like manipulation on a long term basis.


Back in February 2019 I wrote an article about the Gold Maginot Line which had held as a resistance for gold at $1,350 since 2013. I also forecasted that the Maginot line would be broken within the following 3 months which happened.

In the article I questioned if the BIS had been intervening for 6 years. Looking at the quarterly chart below, this seems very likely. Between 2013 and 2018 gold highest quarterly closes were five times within $12 of each other. (2013 – $1,327, 2014 – $1,327, 2016 – $1315, 2018 – $1,325).

It can hardly be a coincidence that gold never had a quarterly close above $1,327 between 2013 and 2018 and stopped between $1,315 and $1,327 at five quarter ends.

Some invisible hand seems to have been at work.

When the current correction finishes which shouldn’t take too long, gold will start the journey to much, much higher levels. Next week I will discuss why Gresham’s law will support gold as it moves on into the $2,000s.

But although it is always interesting to talk about the price of gold, it is really quite meaningless.

Because we must remember that physical gold is held for wealth preservation purposes only. To measure its value in increasingly worthless fiat money serves very little purpose.

The state of the world necessitates holding gold as life insurance.

Whether gold reaches $2,000, $20,000 or $200 trillion has nothing to do with the value of gold but all to do with a bankrupt financial system and worthless fiat currencies.

Tyler Durden Thu, 01/14/2021 - 17:00
Published:1/14/2021 4:13:53 PM
[Apps] Medium acquires social book reading app Glose Medium is acquiring Paris-based startup Glose for an undisclosed amount. Glose has been building iOS, Android and web apps that let you buy, download and read books on your devices. The company has turned reading into a multiplayer experience as you can build a bookshelf, share notes with your followers and start conversations in the […] Published:1/14/2021 1:12:24 PM
[Markets] A Nation Imploding: Digital Tyranny, Insurrection, And Martial Law A Nation Imploding: Digital Tyranny, Insurrection, And Martial Law

Authored by John Whitehead and Nisha Whitehead via The Rutherford Institute,

“In this difficult day, in this difficult time for the United States, it is perhaps well to ask what kind of a nation we are and what direction we want to move in. [Y]ou can be filled with bitterness, with hatred, and a desire for revenge. We can move in that direction as a country, in great polarization…filled with hatred toward one another. Or we can make an effort … to understand and to comprehend, and to replace that violence, that stain of bloodshed that has spread across our land, with an effort to understand with compassion and love… What we need in the United States is not division; what we need in the United States is not hatred; what we need in the United States is not violence or lawlessness; but love and wisdom, and compassion toward one another, and a feeling of justice toward those who still suffer within our country, whether they be white or they be black.”

- Robert F. Kennedy on the assassination of Martin Luther King, Jr.

This is what we have been reduced to: A violent mob. A nation on the brink of martial law. A populace under house arrest. A techno-corporate state wielding its power to immobilize huge swaths of the country. And a Constitution in tatters.

We are imploding on multiple fronts, all at once.

This is what happens when ego, greed and power are allowed to take precedence over liberty, equality and justice.

Just to be clear, however: this is not a revolution.

This is a ticking time bomb.

There is absolutely no excuse for the violence that took place at the Capitol on January 6, 2021.

Yet no matter which way you look at it, the fallout from this attempted coup could make this worrisome state of affairs even worse.

First, you’ve got the president, who has been accused of inciting a riot and now faces a second impeachment and a scandal that could permanently mar his legacy. While the impeachment process itself is a political beast, the question of whether President Trump incited his followers to riot is one that has even the best legal experts debating. Yet as First Amendment scholar David Hudson Jr. explains, for Trump’s rhetoric to be stripped of its free speech protections, “The speaker must intend to and actually use words that rally people to take illegal action. The danger must be imminent - not in the indefinite future. And the words must be uttered in a situation in which violence is likely to happen.”

At a minimum, Trump’s actions and words - unstatesmanlike and reckless, by any standards - over the course of his presidency and on Jan. 6 helped cause a simmering pot to boil over.

Second, there were the so-called “patriots” who took to the streets because the jailer of their choice didn’t get chosen to knock heads for another four years. Those “Stop the Steal” protesters may have deluded themselves (or been deluded) into believing they were standing for freedom when they stormed the Capitol. However, all they really did was give the Deep State and its corporate partners a chance to pull back the curtain and reveal how little freedom we really have. There is nothing that can be said to justify the actions of those who, armed with metal pipes, chemical irritants, stun guns, and other types of weapons, assaulted and stampeded those in their path.

There are limits to what can be done in the so-called name of liberty, and this level of violence—no matter who wields it or what brand of politics or zealotry motivate them—crossed the line.

Third, you’ve got the tech giants, who meted out their own version of social justice by way of digital tyranny and corporate censorship. Yet there can be no freedom of speech if social media giants can muzzle whomever they want, whenever they want, on whatever pretext they want in the absence of any real due process, review or appeal. As Edward Snowden warned, whether it was warranted or not, the social media ban on President Trump signaled a turning point in the battle for control over digital speech. And that is exactly what is playing out as users, including those who have no ties to the Capitol riots, begin to experience lock outs, suspensions and even deletions of their social media accounts.

Remember, the First Amendment is a steam valve. It allows people to peacefully air viewpoints, vent frustrations, debate and disagree, and generally work through the problems of self-governance. Without that safety mechanism in place, self-censorship increases, discontent festers, foment brews, and violence becomes the default response for resolving disputes, whether with the government or each other. At a minimum, we need more robust protections in place to protect digital expression and a formalized process for challenging digital censorship.

Unfortunately, digital censorship is just the beginning. Once you start using social media scores coupled with surveillance capitalism to determine who is worthy enough to be part of society, anything goes. In China, which has been traveling this road for years now, millions of individuals and businesses, blacklisted as “unworthy” based on social media credit scores that grade them based on whether they are “good” citizens, have been banned from accessing financial markets, buying real estate or travelling by air or train.

Fourth, you’ve got the police, who normally exceed the constitutional limits restraining them from brutality, surveillance and other excesses. Only this time, despite intelligence indicating that some of the rioters were planning for mayhem, police were outnumbered and ill prepared to deal with the incursion. Investigations underway suggest that some police may even have colluded with the rioters.

Certainly, the lack of protocols adopted by the Capitol Police bear an unnerving resemblance to the lack of protocols in Charlottesville, Va., in 2017, when police who were supposed to uphold the law and prevent violence failed to do either. In fact, as the Washington Post reports, police “seemed to watch as groups beat each other with sticks and bludgeoned one another with shields… At one point, police appeared to retreat and then watch the beatings before eventually moving in to end the free-for-all, make arrests and tend to the injured.” Incredibly, when the first signs of open violence broke out, it was reported that the police chief allegedly instructed his staff to “let them fight, it will make it easier to declare an unlawful assembly.”

There’s a pattern emerging if you pay close enough attention: Instead of restoring order, local police stand down. Without fail, what should be an exercise in how to peacefully disagree turns ugly the moment looting, vandalism, violence, intimidation tactics and rioting are introduced into the equation. Tensions rise, violence escalates, and federal armies move in.

All that was missing on Jan. 6 was a declaration of martial law.

Which brings us to the fifth point, martial law. Given that the nation has been dancing around the fringes of martial law with each national crisis, it won’t take much more to push the country over the edge to a declaration and military lockdown. The rumblings of armed protests at all 50 state capitals and in Washington, D.C., will only serve to heighten tensions, double down on the government’s military response, and light a match to a powder keg state of affairs. With tens of thousands of National Guard troops and federal law enforcement personnel mobilized to lock down Washington, DC, in the wake of the Jan. 6 riots and in advance of the Jan. 20 inauguration, this could be the largest military show-of-force in recent years.

So where do we go from here?

That all of these events are coming to a head around Martin Luther King Jr. Day is telling.

More than 50 years after King was assassinated, America has become a ticking time bomb of racial unrest and injustice, police militarization, surveillance, government corruption and ineptitude, the blowback from a battlefield mindset and endless wars abroad, and a growing economic inequality between the haves and have nots

Making matters worse, modern America has compounded the evils of racism, materialism and militarism with ignorance, intolerance and fear.

Callousness, cruelty, meanness, immorality, ignorance, hatred, intolerance and injustice have become hallmarks of our modern age, magnified by an echo chamber of nasty tweets and government-sanctioned brutality.

“Despite efforts to curb hate speech, eradicate bullying and extend tolerance, a culture of nastiness has metastasized in which meanness is routinely rewarded, and common decency and civility are brushed aside,” observed Teddy Wayne in a New York Times piece on “The Culture of Nastiness.”

Every time I read a news headline or flip on the television or open up an email or glance at social media, I run headlong into people consumed with back-biting, partisan politics, sniping, toxic hate, meanness and materialism. Donald Trump is, in many ways, the embodiment of this culture of meanness. Yet as Wayne points out, “Trump is less enabler in chief than a symptom of a free-for-all environment that prizes cutting smears… Social media has normalized casual cruelty.”

Whether it’s unfriending or blocking someone on Facebook, tweeting taunts and barbs on Twitter, or merely using cyberspace to bully someone or peddle in gossip, we have become masters in the art of meanness.

This culture of meanness has come to characterize many aspects of the nation’s governmental and social policies.

“Meanness today is a state of mind,” writes professor Nicolaus Mills in his book The Triumph of Meanness, “the product of a culture of spite and cruelty that has had an enormous impact on us.”

This casual cruelty is made possible by a growing polarization within the populace that emphasizes what divides us—race, religion, economic status, sexuality, ancestry, politics, etc.—rather than what unites us: we are all human.

This is what writer Anna Quindlen refers to as “the politics of exclusion, what might be thought of as the cult of otherness… It divides the country as surely as the Mason-Dixon line once did. And it makes for mean-spirited and punitive politics and social policy.”

This is more than meanness, however.

This is the psychopathic mindset adopted by the architects of the Deep State, and it applies equally whether you’re talking about Democrats or Republicans.

Beware, because this kind of psychopathology can spread like a virus among the populace.

As an academic study into pathocracy concluded, “[T]yranny does not flourish because perpetuators are helpless and ignorant of their actions. It flourishes because they actively identify with those who promote vicious acts as virtuous.”

People don’t simply line up and salute. It is through one’s own personal identification with a given leader, party or social order that they become agents of good or evil. To this end, “we the people” have become “we the police state.”

By failing to actively take a stand for good, we become agents of evil. It’s not the person in charge who is solely to blame for the carnage. It’s the populace that looks away from the injustice, that empowers the totalitarian regime, that welcomes the building blocks of tyranny.

This realization hit me full-force a few years ago. I had stopped into a bookstore and was struck by all of the books on Hitler, everywhere I turned. Yet had there been no Hitler, there still would have been a Nazi regime. There still would have been gas chambers and concentration camps and a Holocaust.

Hitler wasn’t the architect of the Holocaust. He was merely the figurehead. Same goes for the American police state: had there been no Trump or Obama or Bush, there still would have been a police state. There still would have been police shootings and private prisons and endless wars and government pathocracy.

Why? Because “we the people” have paved the way for this tyranny to prevail.

By turning Hitler into a super-villain who singlehandedly terrorized the world - not so different from how Trump is often depicted - historians have given Hitler’s accomplices (the German government, the citizens that opted for security and order over liberty, the religious institutions that failed to speak out against evil, the individuals who followed orders even when it meant a death sentence for their fellow citizens) a free pass.

This is how tyranny rises and freedom falls.

None of us who remain silent and impassive in the face of evil, racism, extreme materialism, meanness, intolerance, cruelty, injustice and ignorance get a free pass.

Those among us who follow figureheads without question, who turn a blind eye to injustice and turn their backs on need, who march in lockstep with tyrants and bigots, who allow politics to trump principle, who give in to meanness and greed, and who fail to be outraged by the many wrongs being perpetrated in our midst, it is these individuals who must shoulder the blame when the darkness wins.

Darkness cannot drive out darkness; only light can do that. Hate cannot drive out hate, only love can do that,” Martin Luther King Jr. sermonized.

The darkness is winning

It’s not just on the world stage we must worry about the darkness winning

The darkness is winning in our communities. It’s winning in our homes, our neighborhoods, our churches and synagogues, and our government bodies. It’s winning in the hearts of men and women the world over who are embracing hatred over love. It’s winning in every new generation that is being raised to care only for themselves, without any sense of moral or civic duty to stand for freedom.

John F. Kennedy, killed by an assassin’s bullet five years before King would be similarly executed, spoke of a torch that had been “passed to a new generation of Americans—born in this century, tempered by war, disciplined by a hard and bitter peace, proud of our ancient heritage—and unwilling to witness or permit the slow undoing of those human rights to which this nation has always been committed, and to which we are committed today at home and around the world.

Once again, a torch is being passed to a new generation, but this torch is setting the world on fire, burning down the foundations put in place by our ancestors, and igniting all of the ugliest sentiments in our hearts.

This fire is not liberating; it is destroying.

We are teaching our children all the wrong things: we are teaching them to hate, teaching them to worship false idols (materialism, celebrity, technology, politics), teaching them to prize vain pursuits and superficial ideals over kindness, goodness and depth.

We are on the wrong side of the revolution.

“If we are to get on to the right side of the world revolution,” advised King, “we as a nation must undergo a radical revolution of values. We must rapidly begin the shift from a thing-oriented society to a person-oriented society.

Freedom demands responsibility.

Freedom demands that we stop thinking as Democrats and Republicans and start thinking like human beings, or at the very least, Americans.

Martin Luther King Jr. dared to dream of a world in which all Americans “would be guaranteed the unalienable rights of life, liberty, and the pursuit of happiness.”

He didn’t live to see that dream become a reality. It’s still not a reality. We haven’t dared to dream that dream in such a long time.

But imagine…

Imagine what this country would be like if Americans put aside their differences and dared to stand up—united—for freedom…

Imagine what this country would be like if Americans put aside their differences and dared to speak out—with one voice—against injustice…

Imagine what this country would be like if Americans put aside their differences and dared to push back—with the full force of our collective numbers—against the evils of government despotism.

As I make clear in my book Battlefield America: The War on the American People, tyranny wouldn’t stand a chance.

Tyler Durden Thu, 01/14/2021 - 00:05
Published:1/13/2021 11:08:32 PM
[Politics] How family separation inspired a children's book about a fearless girl

"Rebeldita la Alegre en el País de los Ogros," by Oriel María Siu, was inspired by the glaring gap between her family's experiences and the children's books she saw on library shelves.

Published:1/13/2021 9:39:13 AM
[Markets] Five "Interesting" Financial Tidbits Five "Interesting" Financial Tidbits

Authored by Charles Hugh Smith via OfTwoMinds blog,

Is that a red flashing light on the control panel of "the man behind the curtain"?

Among the many "interesting" (a safe word to use in perilous times) signs and portents swirling around us, here are five financial tidbits "of interest." What do they mean? The answer is of course nothing. There are many "interesting" things with no discernible meaning. Being "interesting" is enough.

1. Just like in 2000, proponents claim "this time it's different." Back then, the claim was that since the Internet would be growing for decades, dot-com stocks could go to the moon and beyond.

The claim the the Internet would continue growing was sound, but the prediction that this growth would drive stock valuations into a never-ending bubble was unsound.

Once again we hear reasonable-sounding claims being used to support predictions of a never-ending rise in stock valuations. Some observers find this "interesting."

2. Similarity in 2000/2021 stock charts. Technical analyst Sven Henrich posted charts of Cisco Systems in early 2000 and Tesla in early 2021: Clear and Present Danger. The similarity is, well, "interesting."

3. Similarity in 2000/2021 NASDAQ volume spikes. Technical analyst Tom McClellan posted a chart of NASDAQ volume in a ratio with New York Stock Exchange (NYSE) volume. Extreme Point for Nasdaq Volume. Notice the recent spike into dot-com era territory. Hmm, "interesting."

4. Financial assets as a percentage of Gross Domestic Product (GDP) hit an all-time extreme. Note that in the "Glorious Thirty" postwar years (1946-1975) of broad-based prosperity, financial assets were around three times GDP. Now financial assets are over six time the GDP.

This ratio increased with every one of the three bubbles since the mid-1990s: the dot-com bubble in 1999-2000, the Global Financial Meltdown in 2008-09 and now the bubble of 2020-21. That financial assets are now six times the size of the "real economy" (GDP) is an "interesting" data point

5. Despite assurances that "this time it's different," all speculative bubbles pop because they are based in human emotions. We attempt to rationalize the bubble by invoking the real world, but bubbles are manifestations of human emotions and the feedback of being in a herd of social animals. I'm not sure if this even qualifies as "interesting" or not; perhaps it's too "obvious" to be "interesting."

Is that a red flashing light on the control panel of the man behind the curtain? Probably nothing, pay no attention....

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Tyler Durden Wed, 01/13/2021 - 09:55
Published:1/13/2021 9:05:00 AM
[Finance] Capchase nabs $60M in credit to help founders avoid dilution No one likes dilution, and that’s why every founder is looking for alternatives to traditional equity investing by venture capitalists. Financial entrepreneurs have launched a number of products, from SaaS securitization to debt-based financing, to help founders avoid that dilution, particularly when they have recurring revenues clocked on the books. SaaS securitization will disrupt VC’s […] Published:1/12/2021 12:03:00 PM
[Markets] Natelson: There Is No Constitutional Ground For Impeachment Of President Trump Natelson: There Is No Constitutional Ground For Impeachment Of President Trump

Authored by Rob Natelson, op-ed via The Epoch Times,

Any effort to impeach the president for comments made to Washington demonstrators would be flatly unconstitutional...

The Constitution permits impeachment and removal of the president for “Treason, Bribery, or other high Crimes and Misdemeanors.”

There’s no reasonable claim that President Donald Trump’s speech, which largely focused on disputed, but credible, claims of election irregularities, was treasonous or involved a bribe. And in the absence of proof of deliberate incitement to riot, it wasn’t a “high Crime.”

So, as in the former Trump impeachment, the only potential basis for removal from office would be commission of a “high … Misdemeanor.” (We know from founding-era evidence that in the Constitution the adjective “high” modifies “Misdemeanor” as well as “Crime.”)

The previous impeachment proceedings were marked by a debate over the meaning of the phrase “high misdemeanor.” Each of the four academic experts who testified at the House of Representatives Judiciary Committee offered their own definitions. The prosecutors and the president’s defense team offered their own definitions, too.

This disagreement reflected an academic dispute that had been going on for many years. Based on incomplete surveys of the founding-era record and on British impeachment trials, researchers had reached very different conclusions about the meaning of “high misdemeanor.”

Unfortunately, however, almost no researcher (including me) had thought to examine the sources that might define the phrase authoritatively. Those sources were 18th century English and American law books.

The Constitution is first and foremost a legal document—the “supreme Law of the Land.” Most of its framers were lawyers, as were most of those who explained it to the general public. Moreover, at the time the American general public was unusually knowledgeable about law.

Thus, if the phrase “high misdemeanors” had a clear legal meaning and no other clear meaning, then we would expect the legal meaning to control. In this respect, the phrase “high misdemeanors” would be like other recognized legal terms in the Constitution: “Habeas Corpus,” “Equity,” “bail,” “Privileges and Immunities,” and so forth.

The Trump impeachment proceedings inspired me to undertake a comprehensive survey of founding-era legal sources to see if  “high misdemeanors” had a defined legal meaning. If it did, that would resolve the long-standing debate.

In constitutional research, the sources frequently don’t yield overwhelming, one-sided evidence for an indisputable result. But it happened here. I was very surprised by this outcome, which contradicted what I had written previously. Nevertheless, I quickly admitted my mistake and duly published (pdf) the new findings.

It turns out that “high misdemeanor” was in fact a precisely defined legal term: It meant “serious crimes not meriting the death penalty.”

Here’s the background:

In 18th century England and America, the legal word “misdemeanor” technically included all crimes of any level of gravity. The most serious misdemeanors were denominated felonies (or high crimes). Felonies traditionally were punishable by death. The most serious felony was treason, and a person convicted of treason usually suffered a particularly horrible death: a man was drawn and quartered; a woman was drawn and burnt.

Lesser felonies—at common law there were nine of them—traditionally were punished by hanging. Examples are murder, rape, burglary, and robbery. (Happily, I can report that by the time of the founding, first offenders often received more lenient sentences.)

Serious offenses other than treason and felony were punished by prison time and by heavy fines rather than by death. These offenses included, among others, bribery, attempted murder, assisting a duel, certain kinds of blackmail, and so forth. Offenses in this category were called great misdemeanors, great misprisions, or high misdemeanors.

Lesser offenses were simply called “misdemeanors.”

This criminal-law usage arose in England, but it was followed in America as well. For example, in my research I uncovered several congressional statutes passed in the 1790s that designated serious crimes as “high misdemeanors” and imposed penalties accordingly. As in England, Congress labeled lesser crimes merely as “misdemeanors.”

So a “high misdemeanor” was a serious crime not meriting the death penalty. The icing on the cake from this conclusion was that it resolved some other questions that had puzzled scholars as well. And it explained the structure of the Constitution’s Impeachment Clause: the words “Treason, Bribery, or other high Crimes and Misdemeanors” provide one example of a high crime (treason), one example of a high misdemeanor (bribery), and include generic clauses covering other crimes in the same two categories.

Observe what is excluded from the grounds for impeachment. Congress may not impeach and remove for a minor crime. Nor may it do so because an officer is reckless, negligent, or has obnoxious political opinions. The constitutional penalty for those breaches is, for lesser officers, removal by the president and, for the president and vice-president, re-election defeat.

It’s significant that in the biennium since these findings were published, no scholar has even attempted to rebut them. Nor can they be convincingly rebutted, given the volume and consistency of the evidence.

While debate over the meaning of the term continued, the House of Representatives could reasonably assume that non-criminal behavior could constitute a “high misdemeanor.” But that’s no longer true. Now we can say unequivocally that whatever you may think of the president’s speech, it’s not a basis for impeachment.

*  *  *

Robert G. Natelson is a leading originalist scholar who served as a law professor for 25 years. He is a senior fellow in constitutional jurisprudence at the Independence Institute in Denver. His research articles on the Constitution’s meaning have been cited repeatedly by justices and parties in the Supreme Court.

Tyler Durden Sun, 01/10/2021 - 11:00
Published:1/10/2021 10:17:15 AM
[Books] The Man In Milan (John Hinderaker) I get a fair number of books in the mail, but I generally don’t read them, especially if they are political. But a few days ago I got a copy of The Man In Milan, by Vito Racanelli. Vito is a Power Line fan, and the book was inscribed to me and accompanied by a nice letter. So I gave it a try. Racanelli, to begin with, is a knowledgeable Published:1/9/2021 8:47:54 PM
[Markets] Turley: I Hate Federal Commissions, But Americans Need One To Look Into The 2020 Election Turley: I Hate Federal Commissions, But Americans Need One To Look Into The 2020 Election

Authored by Jonathan Turley,

Below is my column in USA Today on the need for a federal commission on the 2020 election. While I opposed the challenge and the call for the ten-day commission, I do believe that a real commission is warranted.  Indeed, the violence yesterday only further shows the deep divisions in this country over these lingering questions. However, there must be the commitment to a real commission - not another placebo commission...

Here is the column:

I hate federal commissions. I have always hated federal commissions. Federal commissions are Washington’s way of managing scandals. They work like placebos for political fevers, convincing voters that answers and change are on the way.

That is why it is so difficult for me to utter these words: We need a federal election commission. Not the one proposed by some Senate Republicans. And not like past placebo commissions. An honest-to-God, no-holds-barred federal commission to look into the 2020 presidential election.

With the challenge to the certification of election votes, some Republican members of Congress are calling to delay the proceedings for 10 days and impanel a commission to “audit” the results. There is precedent for such a commission. Just not good precedent. Indeed, citing the Electoral Commission of 1877 as a model of good constitutional process is like citing the Titanic as a model of good maritime navigation. The commission was an utter disaster.

The 1876 election commission

The commission was formed after the contested 1876 presidential election of Democrat Samuel Tilden and Rutherford Hayes. Tilden won the popular vote and was just one vote short of the electoral votes needed to win the White House. The election was marred by open fraud, including South Carolina certifying a vote of 101% of the eligible voters.

As a compromise, the commission was formed and consisted of 15 members: five Supreme Court justices and five members from each chamber of Congress. The key was that it was supposed to be composed of seven Democrats, seven Republicans and one independent. However, in a move that seemed calculated to secure his vote for Tilden, the Illinois legislature then moved to appoint the independent, Justice David Davis, to the Senate. If they wanted to buy his vote, it was a colossal failure when Davis decided to take the seat and leave the commission. He was replaced by a Republican, and the commission voted along strictly partisan lines to install Hayes, not Tilden.

In many ways, the Electoral Commission was a model for most federal commissions, which are designed for good politics and not good government.

An example is the 9/11 Commission, which was stacked with reliable allies to guarantee that no one — and no party — would be blamed for the negligence leading to up to the attacks.

The commission spent two years and millions of dollars. It went to almost a dozen countries, interviewed more than 1,000 people and archived over 2.5 million pages of documents. The result was a report that blamed no one specifically and since concluded that Presidents Bill Clinton and George W. Bush were “not well served,” in the words of the commission’s chairman, by the FBI and CIA.

You see, if everyone is responsible, no one is responsible. Despite showing that the attacks could have been prevented under existing laws and powers, the budgets and powers of both agencies were then massively increased.

That is not what we need. There are three reasons why the need for a real commission is needed:

?First, and most important, this was an unprecedented election in the reliance of mail-in voting and the use of new voting systems and procedures. We need to review how that worked down to the smallest precincts and hamlets.

?Second, possibly tens of millions of voters believe that this election was rigged and stolen. I am not one of them. However, the integrity of our elections depends on the faith of the electorate.

Roughly 40% of that electorate have lingering doubts about whether their votes actually matter. Most of the cases challenging the election were not decided on the merits. Indeed, it seems they haven’t even been allowed for discovery. Instead, they were largely dismissed on jurisdictional or standing groups or under the “laches” doctrine that they were brought too late. Those allegations need to be conclusively proven or disproven in the interests of the country.

?Third, there were problems. There was not proof of systemic fraud or irregularities, but there were problems of uncounted votes, loss of key custodial information and key differences in the rules governing voting and tabulations.

We have spent billions to achieve greater security and reliability after prior election controversies. Indeed, we had a prior election commission that failed to achieve those fundamental goals.

The importance of having a commission

A real commission will take a couple years to fully address these allegations. It will be meaningless if it’s stacked by the same reliable political cutouts used historically in federal commissions. It should be formed on a commitment of absolute transparency with public hearings and public archiving of underlying material before the issuance of any final report. That way, the public at large can analyze and contribute to the review of this evidence.

There is one other task for Congress. It should rescind and replace the Electoral Count Act passed after the Hayes-Tilden election. It is one of the worst conceived and crafted federal laws on the books. The constitutionality of that act has long been challenged, including some who argue that Congress has nothing but a purely ceremonial role in opening state certifications and counting them. 

Courts are likely to recognize that Congress has a more substantive role, particularly when rivaling sets of electors are presented or there is clear evidence of fraud. However, the validity of such electoral votes should be left largely to the courts in challenges in the given states. That is why the current challenge is unwarranted. There is no serious basis to challenge the validity of the electoral votes certified by the states.

The main challenge, however, remains the same: Whether Congress can appoint a real federal commission without rigging the result by appointing partisan members. In 1877, to quote from a speech of Ohio Sen. Allen Granberry Thurman, “It was perfectly clear that any bill that gave the least advantage, ay, the weight of the dust in the balance, to either party, could not become the law of the land.”

Nothing has changed. The stakes are too high to allow even a dust particle to tip the difference on the ultimate findings. The dust-free option requires a dependent, not independent, commission. Otherwise, the public will be the loser.

So, let’s have a commission, but let’s make it a real one.

Tyler Durden Thu, 01/07/2021 - 21:25
Published:1/7/2021 8:31:31 PM
[Entertainment] Eric Jerome Dickey, best-selling African American novelist, dies at 59 Described as ‘one of the few kings of popular African-American fiction for women,’ he wrote 29 books that together sold more than 7 million copies. Published:1/6/2021 7:52:12 PM
[Markets] Catastrophe Is All Around Us Catastrophe Is All Around Us

Authored by Jeffrey Tucker via The American Institute for Economic Research,

As a naturally optimistic person, it vexes me that the word catastrophe has echoed in my mind since early March 2020. It’s the word the great smallpox eradicator Donald Henderson used in his 2006 prediction of the consequences of lockdown, a word that wasn’t around then. His masterful article addressed the idea of travel restrictions, forced human separation, business and school closings, mask mandates, limits on public gatherings, quarantines, and the entire litany of brutality to which we’ve been subjected for nearly a year, all summed up in the word lockdown. 

Dr. Henderson warned against it all. This is not how you deal with disease, he said; at a minimum society needs to function so that medical professionals can do their work. Diseases are managed one person at a time, not with grand central plans. That was the old wisdom in any case. Under the influence of vainglorious modelers, ideological resetters, and politicians hoping to make names for themselves, most of the world tried the lockdown experiment anyway. 

Here we are nearly a year since I wrote my first article warning that governments presumed themselves to possess the quarantine power. They could use it if they wanted to. I didn’t expect they would. I wrote this piece as a “for your information” public service just to let people know how terrible governments could be. 

I had no idea that quarantines would be only the beginning. At this point we know what we did not know then. They are capable – by they I mean even governments in presumably civilized countries with functioning democracies – of the unthinkable, and they are capable of persisting in the unthinkable for an appalling amount of time. 

Now the lockdowns are our life in the US, unless you are lucky enough to live in Florida, Georgia, South Dakota, South Carolina, and perhaps a few other places. Here in these outposts of what we used to call civilization, life seems normal. Our readers in these states don’t even think about the virus much, and they read my articles and find them overwrought, like I’m describing life on another planet. 

The US seems to have two economies, one open and one closed. You see the difference on social media: people at the beach, malls, living life more or less normally. Meanwhile, in the lockdown states, businesses are shuttered, people are demoralized, fights over masks are breaking out in stores, the arts are wrecked, and multitudes are still cowering in their homes. The unemployment differences between the two reveal exactly what’s going on. 

We are experiencing what is a migratory demographic shift that could compare to 19th century legend. From what is being reported by U-Haul and other moving companies, people are fleeing from closed to open. Reports United Van Lines: “Among the top inbound states were South Carolina (64%), Oregon (63%), South Dakota (62%) and Arizona (62%), while New York (67%), Illinois (67%), Connecticut (63%) and California (59%) were among the states experiencing the largest exoduses.” And this all happened since the summer when it became unbearably obvious that the bastards were not going to stop tormenting their people. 

Moving, however, is not a panacea. Normal life seems to be breaking down. The government mails are running 2 to 3 weeks behind. Companies can’t even close their books because the tempo of life has dragged to a crawl. Tech support takes many hours on hold. Accountability for failure to deliver on services seems to be evaporating. Groceries experience sporadic shortages in unpredictable ways. We no longer know the rules and yet fear breaking them. 

Health care is not functioning normally, with non-Covid patients hurled out too soon while positive tests land you in ICU whether you need it or not. (My own 81-year-old mother was hospitalized with a serious condition and then thrown out because she didn’t test positive for SARS-CoV-2). Vaccine administration has been mostly chaos because society is not functioning normally. Weddings and funerals are still out. We are being socialized to treat everyone, including ourselves, as nothing but pathogenic disease vectors. 

The hatred and threats of violence in online venues are out of control. Society has never been more angry or divided in my lived experience. Tech giants are still censoring dissent, trying to force everyone to believe the pronouncements from the World Health Organization even though they change week to week, as if they are working hard to realize Orwell’s vision of the future. The blue check marks and people with access daily advocate trampling on the rights of those who can’t live their lives online. 

The mainstream media that most people once trusted continues to pretend as if this catastrophe is a result of the pandemic rather than the pandemic response. Just look at the number of headlines that begin “Pandemic Has Caused….” and then fill in the blank with any one of the many terrible things happening now: a third of restaurants bankrupt, opioid deaths, alcoholism, suicide ideation, female unemployment, demoralized and abused children missing a whole year of schooling, loved ones separated by borders, murder rates soaring, vaccinations missed, cancer screenings forgone, and so on. It’s all the pandemic, they say. 

Why won’t the media name the lockdowns as the culprit? It’s not just denialism. The implication is that we had no choice but to shatter life as we know it. Lockdown is just what one does in a pandemic. It’s utterly not. Nothing like this has ever taken place, never in history. This remains an egregious attack on fundamental rights, liberties, and the rule of law. The results are all around us. That the news media refuses to name the reason feels like gaslighting, except that we know they are lying, they know they are lying, and they know that we know they are lying. It’s just an unwritten rule in journalism now: never name the lockdowns (unless you bury it in the 13th paragraph of an otherwise boring article). 

And even after a full year, the public remains mostly deeply ignorant of the age/health gradient of Covid-19 fatalities, even though we’ve known this since February of last year! According to the CDC – even conceding the accuracy of testing and exigencies of fatality classification – it’s 99.997% for 0-19 years, 99.98% for 20-49 years, 99.5% for 50-69 years, and 94.6% for 70+ years. It’s nursing homes that have been a main vector for disease outcomes. The threat to school-age kids approaches zero. The more information we get the more normalized the SARS-CoV-2 pathogen seems, a respiratory and flu-like illness we have seen become pandemic before it became endemic just like another dozen times in the last hundred years. We didn’t shut down society, and, for that reason, we managed them just fine. 

Is it that numbers like the above are just too abstract to mean anything to people? More likely, the numbers mean something but that meaning is overwhelmed by the nonstop panic porn one sees on the media each day. People can no longer distinguish these various terms that media pundits throw around to signal how terrible this disease is: outbreaks, cases, outcomes, deaths, spread, infection rates, hospitalizations – it’s just a huge and blurry blizzard of terrible. 

Citing a bit of reality-based data cannot make a dent in the pathological Munchausen Syndrome that has been unleashed. Primal fear has swamped rationality for the better part of 10 months. So people douse themselves in sanitizer for fear of the enemy they cannot see, and presume everyone else is trying to infect them. They put up with attacks on their rights under the belief that it is for their own good. 

The fiscal and monetary policy response has been equally egregious, all premised on the idea that money printing and spending – it all goes together these days – can possibly be a substitute for private investment and actual people buying and selling things. That combined with continued protectionist measures in the last days of the Trump administration make for the worst combination of policy malpractice in generations, or perhaps ever. The pain of recovery will be monstrous. 

Many of us spend a good part of our days poring over the latest research, which reveals their terrible toll of the lockdowns, the inescapable horror that it is the lockdowns not the pandemic that has done this. It shows the absence of any relationship between lockdowns and lives saved. It shows that a significant number of excess deaths are due not to disease but to drug overdoses, depression, and suicide. It shows the tremendous problems with PCR testing, the nondriver of “asymptomatic transmission,” the incredible proliferation of disease misclassification, and the absurdity of the idea that political solutions can intimidate and arrest a virus. 

We do all this research every day, and then turn on the TV to find the nation’s top medical spokesman (a certain Dr. Fauci of fame and fortune) knows nothing and cares nothing for any of the research. He is a performance artist who just likes being on TV, being fawned over while he advocates the permanent overthrow of our rights and liberties. And yet even his colleagues and others in the profession, who know his long-running racket very well, dare not call him out for fear of losing grant money, being ostracized within their institutions, and trolled on Twitter. He is a scary man with the power to make or break careers, so rather than take the risk, others just shake their heads and turn the channel.

Sheer cowardice explains most of the dearth of dissent. It’s easy to forget how cravenly careerist people become when they are afraid. Most people would rather lie or be silent than risk facing disapproval of friends and colleagues. Cancel culture makes this worse. Doctors who dare talk about natural immunities or the talisman of masks and distancing find themselves investigated by medical boards. Academics who speak out are accused of encouraging superspreaders, blasted by colleagues including students. It’s way beyond witch hunts at this point. As a result, you can easily get the impression that everyone agrees with the desperate need to dismantle civilization as we know it. 

None of this is sustainable. When it was “14 days to flatten the curve,” I feared for the future of investment, public confidence in government, lost revenue for small and medium-sized businesses, and their permanent shock that would come from the realization that government can and will do something this horrible. Another two weeks went by and we were writing furiously to warn the world of the deadly consequences of this course. April 13 came and AIER released the most strongly worded editorial then in print: we need complete liberation now. The Wall Street Journal followed and said the same two days later. 

In those days, the prevailing theory of the virus was that you cannot stop it but you can slow it down. Tall or short, the area of the curve is the same. Why prolong the pain? The talking point at the time was to preserve hospital capacity. But over time, this plausible idea mutated into a full suppressionist agenda. Slow the spread became stop the spread. It was a small step until the “experts” defaulted to a medieval view of disease: run away! Actually, that’s too flattering: it was a gradeschool view of cooties that became the new and thoroughly fake science. 

Then we arrived at the current moment in which professional virus fighters, having failed miserably to suppress the virus, have turned against the public, blaming those who do not comply with complete enthusiasm. Fauci says some version of this daily on TV: if everyone would just comply, we won’t have to lock down anymore. Unless morale improves, the beatings will continue. 

After two weeks, there was still time to undo major parts of the damage of lockdowns. After 10 months, not so much. There will be loss of life for many years to come plus population-wide psychological, social, and economic damage. The catastrophe has not been averted. It is far worse than any of us could ever have imagined at this time last year. The world has shifted and drastically, and the pain and suffering are unspeakable. Our governments are the pathogens that have done this to us. They were aided and abetted by fake news, fake experts, fake intellectuals, fake science, and a fake view of life. 

At this late date, we’ve lost confidence in most of what we used to trust and think was normal. Despair is taking over. Many of those who were willing to fight in the spring and summer have given up, tired of writing, tired of protesting, tired of yelling. The attempt to demotivate the opposition is working. This is a huge error. 

What, then, is the path to the future? We can stay on the present catastrophic course or we can reverse it. The sooner governments wise up and stop hurting everyone like this the sooner the healing can begin. It will take years, decades, but a version of the rule of medicine from the ancient days pertains: first stop doing harm. 

Tyler Durden Wed, 01/06/2021 - 00:05
Published:1/5/2021 11:17:59 PM
[Markets] A Family Brawl In The House Of Trump A Family Brawl In The House Of Trump

Authored by Pat Buchanan via,

A week from today, Joe Biden will still be on his inexorable course to become the 46th president of the United States.

Why, then, the hysteria that has suddenly gripped this city?

The triggering event was the announcement by GOP Sen. Josh Hawley of Missouri.

Despite Leader Mitch McConnell’s plea, Hawley said he intended to challenge the electoral vote in at least one state during the Jan. 6 pro forma reading of the electoral vote count by Vice President (and Senate President) Mike Pence.

If Hawley holds firm, his vote will force the joint session to split up, with each house debating for two hours, and then voting on Hawley’s claim.

Hawley is certain to be defeated as the House is controlled by Nancy Pelosi’s Democrats. As for the Senate, GOP members have indicated they will join the 48 Democratic senators in opposing Hawley.

Yet, though his defeat is inevitable, Hawley is acting in accord with law and precedent. In January 2005, Sen. Barbara Boxer, to the cheers of Democratic colleagues, challenged George W. Bush’s electoral vote victory in Ohio.

Why, then, this panic?

Well, after Hawley announced his challenge and was attacked, even by admirers, Ted Cruz and 10 other GOP senators declared that they, too, would challenge the legitimacy of the electoral votes cast for Biden in swing states such as Georgia and Pennsylvania.

In effect, Cruz & Co. would vote to hold up validating Biden’s victory until a newly formed commission could complete a 10-day investigation of complaints that it was fraudulent or rigged.

And, at last count, 140 House Republicans had signed on to support challenges to Biden’s electoral vote majority.

Still, the certain end here is that all of these challenges will be rejected by majorities in both houses of Congress, and the electoral vote count of 306-232 for Joe Biden will stand.

As the challenges are certain to fail and as Biden’s path to the presidency will remain clear by week’s end, is there something else the Hawley-Cruz challenges are all about?

Indeed. They are also about the succession struggle inside the GOP, about who inherits the Trump estate if the president elects not to run again.

The Haley and Cruz challenges are signals to the Trump faithful that they stood by Trump when the faint of heart had abandoned him to do the establishment’s bidding.

As of today, disbelievers in the validity of Biden’s victory are legion.

According to a Reuters-Ipsos poll of Nov. 18, some 28% of all respondents and 59% of all Republicans said they were concerned that the result of the election had been “rigged.”

Mike Pence, another potential candidate in 2024, also supports the challenges to the electoral vote. Over the weekend his chief of staff Marc Short issued this statement:

“The Vice President shares the concerns of millions of Americans about voter fraud and irregularities in the last election (and) welcomes the efforts of members of the House and Senate to use the authority they have under the law to raise objections and bring forward evidence before the Congress and the American people on January 6.”

Arkansas’ Sen. Tom Cotton, also a potential candidate in 2024, is taking a public stand in opposition to Hawley and Cruz. In a news release Sunday, Cotton declared:

“The Founders entrusted our elections chiefly to the states — not Congress… They entrusted the election of our president to the people, acting through the Electoral College — not Congress. And they entrusted the adjudication of election disputes to the courts — not Congress.”

The Senate’s No. 2 Republican, John Thune of South Dakota, has said that any attempt by House conservatives to challenge the Electoral College’s results is “going down like a shot dog.”

An angry Trump tweeted in retort that he hoped to see “the great Governor of South Dakota @KristiNoem run against RINO @SenJohnThune.”

Noem replied that she considered Thune a “good friend” and will be running for reelection as governor in 2022.

Understandably, McConnell wants to avoid having his GOP majority split over a fruitless challenge to the legitimacy of Biden’s election and splintered among factions supporting presidential hopefuls.

Sunday, Chris Christie sided with McConnell and Cotton, saying that challenges to the electoral vote are going “nowhere… because there’s been no evidence of widespread fraud.”

Christie has called on the party to accept the validity of the election of 2020 and work with the new and legitimate president, Joe Biden.

Given the coronavirus changes in election laws, the extended periods for voting, the massive use of mail-in ballots, the widespread belief that the election was “rigged” and that a change in 35,000 votes out of 155 million cast could have altered the outcome — this belief is going to have a long shelf life in American politics.

The “corrupt bargain” of 1824 that robbed Andrew Jackson of the presidency is still remembered in America’s history books.

This one is going to be fought over for as long.

Tyler Durden Tue, 01/05/2021 - 12:05
Published:1/5/2021 11:12:57 AM
[Markets] 2020 Was A Snack, 2021 Is The Main Course 2020 Was A Snack, 2021 Is The Main Course

Authored by Charles Hugh Smith via OfTwoMinds blog,

One of the dishes at the banquet of consequences that will surprise a great many revelers is the systemic failure of the Federal Reserve's one-size-fits-all "solution" to every spot of bother: print another trillion dollars and give it to rapacious financiers and corporations.

Though 2020 is widely perceived as "the worst year ever," it was only a snack. The real banquet of consequences will be served in 2021. The reason 2020 was only a snack is that systems didn't break down in 2020. The reason 2021 is the main course is that systems will break down, and once broken, they cannot be restored.

I made the chart below to explain how systems fail and why they cannot be restored. 

Systems have numerous sources of potential fragility:

1. Systems can be tightly bound to other fragile systems, setting up the potential for a domino-like cascading collapse that starts with one system failure that then brings down every connected, interdependent system.

2. Systems can be hollowed out by self-interested insiders who mistakenly believe the system can survive endless looting.

3. Systems can be weakened by perverse incentives that provide strong incentives to under-invest in core functions and divert revenues to profiteering and extraction (stock buybacks, bonuses to managers, etc.)

4. Systems can appear robust to casual observers because insiders cloak the decay of function, accountability and transparency.

5. The decline of functionality / results can be hidden by bureaucratic obscurity (accounting statements in which all the important information is buried in footnotes starting on page 217, etc.) and by complexity thickets that reduce accountability to near-zero: no one is responsible for the decay of function, accountability and transparency.

6. Process replaces results as the Prime Directive of the system. Devoting resources to following processes rather than to getting results generates an illusion of functionality even as the ability to evolve and adapt is lost.

7. Buffers that enabled effective responses to crisis are stripped to the bone as redundancy and resilience are discounted as "hurting profits" or "needless expenses."

8. Insiders and the public / customers wrongly assume money can solve all of these systemic frailties. But money cannot buy trust, competence, institutional depth, productive incentives or anything else that is essential to robust, anti-fragile systems.

Americans are unprepared for the collapse of core systems. The secular faith holds that corporate ownership of core systems, centralized state control and the relentless pursuit of infinite greed will magically manifest the best of all possible worlds because self-enrichment by any means available is what perfects systems.

Unfortunately for America, this faith has it exactly backwards: self-enrichment by any means available is what hollows out and fatally weakens systems. The relentless pursuit of infinite greed ("investing" in stock buybacks, legalized looting, etc.) has destroyed the moral foundation of society and the economy: there is no civic virtue or public good left. These empty phrases cannot hide that America is a moral cesspool so corrupted by greed and self-interest that the nation can no longer even recognize its own moral dissolution.

The second graphic I prepared a decade ago depicts the lifecycle of bureaucracy which can be either private-sector or public: the initial purpose of the organization that inspired the innovators and initial managers is slowly replaced by self-interest, and those who were willing to sacrifice to serve this purpose quit in disgust or are marginalized as "threats" to self-serving insiders.

The competent leave or are forced out, leaving those of supreme incompetence in power, managers who've been selected for loyalty to the Prime Directive, protecting insider looting from outside interference via a mastery of public relations ("managing the narrative") and obfuscation.

The core function of the organization becomes masking dysfunction, ossification, sclerosis and the looting of insiders. The loss of function, accountability and transparency are hidden from prying eyes, and whistleblowers--the most dangerous threats to self-serving insiders--are hunted down and destroyed.

It is not coincidence that America's "growth sectors" are corruption and public relations ("managing the narrative") because the best way to cloak corruption and systemic failure is to manage the narrative by suppressing dissent and eradicating whistleblowers.

Unbeknownst to most Americans, many core systems are already in the first stages of collapse. No corporate sector does a better job of masking dysfunction and profiteering than healthcare, and so the collapse of healthcare systems will surprise everyone who swallowed the sector's glossy PR.

The entire financial system is hopelessly compromised, corrupt, self-serving and obsessed with maximizing personal gains by any means available. One of the dishes at the banquet of consequences that will surprise a great many revelers is the systemic failure of the Federal Reserve's one-size-fits-all "solution" to every spot of bother: print another trillion dollars and give it to rapacious financiers and corporations.

I suggest dining lightly on the feast of consequences because the courses of systemic failure will continue being served the entire year. So save some appetite for the really big systemic collapses that are only now being slid into the oven.

*  *  *

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

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My recent books:

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World (Kindle $5, print $10, audiobook) Read the first section for free (PDF).

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($5 (Kindle), $10 (print), ( audiobook): Read the first section for free (PDF).

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

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

Tyler Durden Mon, 01/04/2021 - 10:40
Published:1/4/2021 9:48:56 AM
[Society] Here Are 26 Books to Add to Your Reading List for 2021

If you are looking for some exciting book recommendations to help you ring in the new year, look no further. Our friends at The Heritage... Read More

The post Here Are 26 Books to Add to Your Reading List for 2021 appeared first on The Daily Signal.

Published:1/3/2021 10:10:28 AM
[Markets] Ethereum Erupts Higher, Bitcoin Nears $35k; What's Next? Ethereum Erupts Higher, Bitcoin Nears $35k; What's Next?

While Bitcoin has been stealing the headlines, it was Ethereum's turn overnight as the number 2 crypto spiked back above $900 for the first time since Feb 2018...

Source: Bloomberg

Ethereum still has over $400 to go to reach its record highs...

Source: Bloomberg

Bitcoin also pushed higher overnight, nearing $35,000, after correcting sharply to around $30,300 yesterday. But, within 24 hours, BTC has bounced back from $30,300 to as high as $34,778, a 14% rebound...

Source: Bloomberg

Ethereum's surge began as the BTC/ETH ratio topped 43x once again, and erased all the recent outperformance, back to 37x...

Source: Bloomberg

CoinTelegraph's Joseph Young asks, What triggered the Bitcoin and Ethereum rally?

When the price of Bitcoin surpassed $33,000 on Jan. 2, some whales and high-net-worth investors warned that a 150 BTC sell order could retrace the market.

A pseudonymous Bitcoin trader known as “” wrote:

“A 150 btc market sell would retrace this whole thing. lmao the higher price goes, the more retail gets prices out, the lower bid support will be.”

Within hours he pinpointed the risk of a Bitcoin correction due to thin order books, BTC sharply pulled back.

However, Bitcoin recovered quickly after the initial drop, rallying to a new record-high within 24 hours.

The main catalysts behind Bitcoin’s rally have been the institutional accumulation of BTC on Coinbase and the short squeeze on Binance Futures.

Throughout the past three days, Bitcoin has been trading much higher on Coinbase than on other major exchanges, as Cointelegraph reported.

This means that aggressive buyers on Coinbase were continuously accumulating BTC despite the premium.

Bitcoin surpasses past $34K with average trader returns at highs. Source: Santiment

In the meantime, many traders on Binance Futures were shorting BTC, possibly expecting Bitcoin to top out at around $30,000. When Coinbase buyers continued to push BTC upwards, a short squeeze occurred. Analysts at Santiment explained:

“For those expecting a #Bitcoin correction to kick off 2021, the $34,000 #AllTimeHigh achieved 10 mins ago is showing how painful it's been being a $BTC bear the past 10 months. Avg. trader returns haven't been this high across the board since June 2019.”

Ether price rallied off of Bitcoin’s strong technical momentum. ETH/USD rose past $800 for the first time since early May 2018, demonstrating renewed momentum after stagnating throughout December.

A pseudonymous cryptocurrency trader known as “Mayne” said on Jan. 2 before the Ether rally that ETH is likely heading to $800. He said:

“ETH thesis still on track, daily close thru $620 we'd head to $800. I built a large long position in December and assuming $ETHBTC can hold a higher low, I think it'll play out nicely. I should have had more BTC long exposure vs ETH in December, hoping ETH outperform for Jan.”

What happens next?

Ethereum has another major catalyst on the horizon as the CME futures exchange plans to launch ETH futures in February.

Considering the high level of institutional demand for Bitcoin since the first quarter of 2020, the demand could also boost Ether upon the listing.

Google searches for "Bitcoin." Source: Google Trends

Meanwhile, Bitcoin remains on an upward trajectory of price discovery, hitting new record highs on a daily basis. With a purported supply shortage and an institutional buying frenzy now spilling over into retail, the rally may still have a lot more room to run with $35,000 likely being the next psychological level to break. 

As Cointelegraph reported, six-figure predictions have become increasingly common in recent months, particularly as the rally has broken new all-time highs.

Tyler Durden Sun, 01/03/2021 - 10:21
Published:1/3/2021 9:42:00 AM
[Markets] 2021: Welcome To Post-Persuasion America 2021: Welcome To Post-Persuasion America

Authored by Jeff Deist via The Mises Institute,

Welcome to 2021 in post-persuasion America!  

I first heard this term used by Steve Bannon, architect of the surprising 2016 Trump campaign, in a PBS Frontline documentary titled "America's Great Divide." Speaking way back in the pre-Covid days of early 2020, Bannon asserted the information age makes us less curious and willing to consider worldviews unlike our own. We have access to virtually all of humanity's accumulated knowledge and history on devices in our pockets, but the sheer information overload causes us to dig in rather than open up.

Anyone who wants to change their mind can find a whole universe of alternative viewpoints online, but very few people do (especially beyond a certain age). For Bannon this meant the Trump campaign, and politics generally, was about mobilization rather than persuasion.

Because we can always find media sources which confirm our perspective and biases - and dismiss those which don't - the notion of politics by argument or consensus is almost entirely lost. And no matter what our political or cultural perspective, there is someone creating content tailored to suit us as stratified consumers. Thus liberals, conservatives, and people of every other ideological stripe live in vastly different digital media worlds, even when they live in close physical proximity.

This overwhelming amount of curated and segregated white noise comes at us every day, from 24 hour news to Facebook, Twitter, and YouTube. Idiotic platforms like TikTok and Discord vie with video games for the attention of our children.All of it leaves us numb and exhausted. Our attention spans suffer. We slowly lose our aptitude for deep thinking and serious reading. We attempt to replace wisdom and understanding with data and facts.

But because information is so abundant and readily available, it becomes worth less and less. Information is cheap, literally.

For our grandparents, knowledge was analog and came with a price. Gatekeepers, in the form of media, universities, libraries, and bookstores, acted as editors and filters. Walter Cronkite, the most trusted propagandist in America, delivered one version of the news every night. The local newspaper did the same every morning. Even just 30 years ago it was often no easy task, and no small cost, to obtain books and literature not easily found in local or university libraries. 

If someone today wants to read Austrian economics, for example, (a particular boogeyman of Bannon), they can do so at virtually no cost other than time. They don't even need to leave home. Their smart phone in their palm holds a lifetime of reading and learning in just this one discipline. No physical books, no college, no tuition, and no librarian required.  

So why don't more people do so? The short answer is: most people are beyond persuasion. 

This does not mean we should surrender to the forces of economic illiteracy, or give up trying to win hearts and minds for political liberty. On the contrary, we should redouble our efforts to cultivate anyone interested in civil society, real economics, markets, property, and peace—especially those under 30. But this is not a numbers game. We should focus on those who can be reached, not some mythical majority.  Our task is to reach some people narrowly and deeply, not a majority of people superficially. We stand in contrast to the white noise, and opposed to the superficiality and anti-intellectualism of our age. Mobilizing the few is far more important and far more effective than foolishly trying to persuade the many. 

HL Mencken was right about believing in liberty, but not believing in it enough to force it upon anyone. Just as we oppose foreign interventionism, we should stop trying to remake those US cities and states which are beyond help. We need to recognize that tens of millions of Americans are likely beyond persuasion in the direction of sensible political or economic views. Millions more are committed socialists who would readily agree to nationalize whole industries and radically redistribute property. By definition these are unreasonable views, so how does one use persuasion where reason is lacking?

Post-persuasion America requires us to think about how to separate and unyoke ourselves politically from DC. Our immediate future lies in hard federalism, which dovetails with the soft secession which is happening already as millions of Americans vote with their feet. Mobilization and separation, not persuasion, is the way forward.

Tyler Durden Sat, 01/02/2021 - 17:30
Published:1/2/2021 4:35:35 PM
[Markets] So Far, The Bulls Are Disappointed In "Santa" So Far, The Bulls Are Disappointed In "Santa"

Authored by Lance Roberts via,

Only Two-Days Left For Santa To Deliver

Today’s newsletter will be a short update as not much has changed during this holiday-shortened week.

Over the last month, we have discussed why we were positioning portfolios to participate in the traditional year-end “window dressing” rally. Such is also known as the “Santa Claus” rally.

As discussed last week in “All I Want For Christmas Is A Bull Market.”

“Whether optimism over a coming new year, holiday spending, traders on vacation, institutions squaring up their books before the holidays—or the holiday spirit—the bottom line is that bulls tend to believe in Santa Claus.” – Ryan Detrick

While the statistics suggested that the last week of December should have been a bullish one, it didn’t entirely turn out that way. Okay, let’s be honest, it was just a bit disappointing. Lot’s of chopping around all week and a final spurt at the close yesterday. Not exactly confidence-inspiring.

As shown in the chart below, the market closed just 0.87% higher than the previous all-time high set mid-month. However, the good news is the last high did hold as support. Such sets up the possibility for “Santa” to “deliver” on the New Year’s first two days.

Also, another bullish setup is that the short-term technical money-flow signals have gotten a bit oversold. From these levels, it would not be surprising for the market to stage a short-term rally during the first couple of weeks of January. Such was a point I made earlier this week:

It certainly seems as if there is no risk. But maybe that is the risk.

Everyone Is On The Same Side Of The Boat

Currently, every single analyst has the same story going into 2021.

  • Prepare for an economic boom.

  • Interest rates will rise.

  • Inflation is coming back.

  • The stock market is going to 4100-4500

  • Small-caps are the new “new trade.” 

You get the idea. Everyone is incredibly “bullish” about the coming year.

While that “wish list” could undoubtedly turn out to be the case, there is much that could go wrong. More importantly, there is also Bob Farrell’s truism, which is:

“When all experts agree, something else tends to happen.”

The biggest problem, of course, is the debt. If inflation does indeed rise, interest rates will also increase due to the surge in the money supply. Somewhere between 1-2% on the 10-year Treasury, the proverbial “wheels” come off the $86 Trillion debt “cart.” 

With the gap between economic growth and debt at the highest levels on record, even small increases in debt service costs have an immediate and negative impact on growth.

While analysts may indeed get what they wish for in the first half of 2021, they may well regret it by the second half.

With literally everyone “in the pool” and leveraged, the big surprise in 2021 could very well be the unwinding of over-confidence.

What Happens After A Third 10% Year Of Gains?

While working on this week’s newsletter, I stumbled across this piece of analysis from DataTrek Research:

Since 1928 (93 years), there have only been 5-times where markets returned 10% gains for 3 or more years in a row.

  • World War II (4 years): 1942 (+19%), 1943 (+25%), 1944 (+19%) and 1945 (+36%)

  • Korean War (4 years): 1949 (+18%), 1950 (+31%), 1951 (+24%) and 1952 (18%)

  • Start of Vietnam War (3 years): 1963 (+23%), 1964 (+16%), and 1965 (+12%)

  • Late 1990s Bull Market (5 years): 1995 (37%), 1996 (+23%), 1997 (+33%), 1998 (+28%) and 1999 (+21%)

  • Post-Financial/Greek Debt Crisis (3 years): 2012 (+16%), 2013 (+32%) and 2014 (14%)

That’s the whole list, across almost an entire century of US equity returns. The famous bull market of the 1980s did not see 3 consecutive +10 percent years. Nor did the 1970s, when the S&P 500 rose by 78 percent over that inflationary decade. Even the post-1932 snapback from the Great Depression bottom for US stocks failed to string together 3 years in a row of +10 percent returns in the 1930s.”

Could the S&P post another year of 10% gains in 2021? As noted above, this is the “consensus” view currently. Therefore, many things will need to go “right,” considering the extraordinarily high level of valuations already priced into the market.

However, the risk to investors, who are already long and leveraged, is what happens if something goes wrong? What if the vaccine rollout doesn’t happen as fast as many expect? Or, economic growth doesn’t come roaring back? What if corporate earnings don’t rebound as strongly as expected?

There are many “What if’s.”

For investors, in a grossly overbought, leveraged, extended, and bullish market, it only takes one “what if” to turn everything into “W.T.F.”

Portfolio Positioning Update

With the “Santa Claus” rally wrapping up next week, we are maintaining our long bias with reduced hedges at the moment. 

We made no changes to our portfolio mix during the past week except for adding a 5% weight of SPY to our current holdings. Once we pass the end of the next week, we will most likely reduce that position and rebalance the rest of our holdings.

With the stimulus bill passed, and checks going out, we won’t be surprised to see a short-term pop in economic activity. However, given the checks are 50% smaller than the first round, along with extended unemployment benefits, the economic bump will be short-lived. The real question going into 2021 is whether President Biden can spend further into debt to do more stimulus. Or, will a shift toward fiscal responsibility begin to take hold? Much will depend on the Senate run-off outcome in Georgia.

Regardless, the evidence is mounting that economic and earnings data will likely disappoint overly optimistic projections currently. Furthermore, investors are way too confident. Historically, such has always turned out to be a poor mix for a continued bull market advance in the short-term. 

We will continue to trade accordingly, but the extreme deviations in all markets from long-term fundamentals are unsustainable.

That is a problem the even the Fed can’t fix.

I wish you all a happy and prosperous New Year.

Tyler Durden Sat, 01/02/2021 - 10:30
Published:1/2/2021 9:44:18 AM
[Markets] The Most Hopeful Scenario For 2021 The Most Hopeful Scenario For 2021

Authored by Charles Hugh Smith via OfTwoMinds blog,

Choose wisely, America, or the options for a positive outcome will vanish like mist in Death Valley on a clear July afternoon.

From the point of view of evolution, the most hopeful scenario for 2021 is the sudden and complete collapse of everything that is obsolete, inefficient, ineffective and sclerotic. When obsolete systems and entities pass away quickly, the cost and pain are processed and absorbed quickly as well: enterprises go bankrupt and their assets are liquidated, failed ventures close, and schemes that didn't yield the desired benefits are scrapped.

This is the evolutionary process. Whatever has lost its selective advantages will succumb to selective pressures and fade away.

The problem arises when self-serving insiders siphon resources to keep their obsolete, inefficient, ineffective and sclerotic gravy-train protected from selective pressures. Keeping a terminally ill human alive is an analogy: it's possible to extend the life of a terminally ill person at enormous expense and effort, but the patient isn't restored to their previous health or vigor--that is no longer even a possibility. They are no longer their previous self, and this is why people choose to avoid extraordinary interventions in their final phase of life.

Economically obsolete / terminal entities, on the other hand, always choose extraordinary monetary interventions to keep their gravy-train alive, even if they bleed the rest of the economy dry in the process.

If the buggy-whip industry existed today, Congress would grant it billions of dollars in low-interest loans, tax breaks and direct subsidies so those who made fortunes in the buggy-whip industry would continue to prosper, not from a productive activity but from subsidies and loans that ultimately weaken the entire economy and society.

The problem here is that it's effortless and initially costless to conjure trillions of dollars out of thin air and use it to keep obsolete, inefficient, ineffective and sclerotic industries, sectors, agencies and schemes on life support. The eventual costs, consequences and risks are transferred to the entire economy, all to keep politically protected insiders and schemes well-funded even as their fundamental value proposition has collapsed.

This politically expedient "solution"--printing / borrowing trillions to stave off Natural Selection--is inevitably the first choice of corrupt, failed governments and central banks, and just as inevitably, this expedient "fix" eventually brings the entire economy to its knees.

Recall that risk cannot be made to vanish, it can only be transferred to others. By printing / borrowing trillions of dollars to prop up doomed zombies, the state and central bank (the Federal Reserve) have transferred the soaring risks of their mismanagement to the entire economy and society.

This politically expedient "solution"--saving the most inefficient and costly sectors because of the political power of insiders-- is always the first choice of weak and/or corrupt leadership, for whom this is isn't just the first choice, it's the only choice.

History is emphatic: over-borrowing and devaluing the currency by over-issuing "money" leads to decay and collapse. The lucky few decay into tourist destinations as the remnants of their past glory retain a nostalgic glow of artistry and power.

The unfortunate many simply decay and collapse. Thus the most hopeful scenario for 2021 is that the obsolete, inefficient, ineffective and sclerotic sectors and agencies, no matter how sacrosanct, collapse or downsize quickly. This drastically reduces the cost and pain to levels that the economy as a whole can absorb.

The worst-case scenario is our weak and/or corrupt government and central bank keep all the doomed zombies on life support, a process that bleeds the economy of adaptability, flexibility, innovation and resilience. The path of least resistance, the politically expedient path--over-borrowing and devaluing the currency by over-issuing "money"--leads to decay and collapse. There is no other possible result, no other possible outcome.

Choose wisely, America, or the options for a positive outcome will vanish like mist in Death Valley on a clear July afternoon.

*  *  *

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

*  *  *

My recent books:

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World (Kindle $5, print $10, audiobook) Read the first section for free (PDF).

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($5 (Kindle), $10 (print), ( audiobook): Read the first section for free (PDF).

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

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

Tyler Durden Fri, 01/01/2021 - 12:30
Published:1/1/2021 12:00:22 PM
[Markets] 2020, The "Worst Year Ever"?... You're Joking, Right?! 2020, The "Worst Year Ever"?... You're Joking, Right?!

Authored by Charles Hugh Smith via OfTwoMinds blog,

So party on, because "the worst year ever" is ending and the rebound of financial markets, already the greatest in recorded history, will only become more fabulous.


Of the lavish banquet of absurdities laid out in 2020, one of the most delectable is Time magazine's December 14 cover declaring that 2020 was the "worst year ever." You're joking, right? In history's immense tapestry of human misery, it's not even in the top 100 worst years.

Consider 1177 B.C., when many of the great civilizations of the Mediterranean Sea and Mideast collapsed, and the survivors struggled through a pre-modern Dark Ages. This book assembles what is known about this catastrophic era: 1177 B.C.: The Year Civilization Collapsed.

Then there's 1644 A.D., when the Ming Dynasty was overthrown by the Manchu invasion, a series of self-reinforcing misfortunes stemming from extremes of climate (a.k.a. The Little Ice Age) that left millions hungry and vulnerable to disease and the predation of roving bandit armies.

The Little Ice Age and the famine, conflicts, civil wars, coups, revolts and rebellions it launched killed between a quarter and a third of Eurasia's population. Entire villages melted away as starvation drove the survivors to desperation. The misery stretched from western Europe to China, and lasted for decades.

This fascinating history lays it all out: Global Crisis: War, Climate Change, & Catastrophe in the Seventeenth Century.

Though it is now relegated to a footnote in history, the Antonine Plague of 165 - 180 A.D. decimated the Mediterranean, Mideast, North African and Eurasian regions, toppling regimes that had endured for ages and very nearly brought the Roman Empire to an inglorious end. Roughly one-fourth of the population died as the novel disease was distributed along Rome's numerous trade routes, which stretched from Northern Europe to Africa and India.

Western Rome's eventual decline and fall was also the result of pandemics and climate change as well as the usual suspects of war, political in-fighting, overtaxation and the stranglehold of self-serving elites: The Fate of Rome: Climate, Disease, and the End of an Empire.

Europe's inhabitants circa 1350 A.D. would have chosen the years 1347 - 1351 as "the worst ever" as the Black Plague took the lives of a third of the population: The Black Death: Natural and Human Disaster in Medieval Europe.

The inhabitants of North and South America would have selected the years following 1492 and the arrival of Europeans carrying novel diseases as the worst years ever as the diseases carried away between 50% and 90% of the people who were alive in 1491: 1491: New Revelations of the Americas Before Columbus.

Declaring 2020 "the worst year ever" reveals much about the psychology of our delusional state of affairs. It reflects an absolutely abysmal grasp of human history and a self-absorbed desire to exaggerate the calamity so the rebound will be gloriously triumphant.

It also embodies our delusional addiction to measuring the well-being of the human populace with financial markets: as long as stocks are hitting new highs, we're all doing wonderfully.

So party on, because "the worst year ever" is ending and the rebound of financial markets, already the greatest in recorded history, will only become more fabulous.

*  *  *

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

*  *  *

My recent books:

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World (Kindle $5, print $10, audiobook) Read the first section for free (PDF).

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($5 (Kindle), $10 (print), ( audiobook): Read the first section for free (PDF).

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

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

Tyler Durden Tue, 12/29/2020 - 22:05
Published:12/29/2020 9:10:18 PM
[Books] When it comes to the books on my shelves, I’ve read them

With word out that TV pundits are buying books by the yard, I thought I’d better confirm my book bona fides. If I’d kept all the books I’ve bought over the years, I guesstimate that I would have two or three thousand books. I didn’t keep them, though. Books are

The post When it comes to the books on my shelves, I’ve read them appeared first on Bookworm Room.

Published:12/28/2020 11:00:59 PM
[Markets] The Banality Of Bill Barr The Banality Of Bill Barr

Authored by Thomas J. Farnan via The National Pulse

In June, Attorney General Bill Barr sat for an interview in CNN’s Situation Room with Wolf Blitzer and predicted widespread fraud with mail in voting.

He said: “People trying to change the rules to this, to this methodology – which, as a matter of logic, is very open to fraud and coercion – is reckless and dangerous and people are playing with fire.” 

At the time, Barr was the nation’s top law enforcement officer with an obligation to prevent election fraud under a bevy of federal statutes

What Barr Could’ve Done.

Maybe an investigation of Silicon Valley billionaires ballot harvesting in black neighborhoods, for starters, and then a warrant for surveillance cameras at counting facilities in Philadelphia, Milwaukee, Atlanta and Detroit, with federal agents on hand to double check the chain of custody of boxes coming through the back door.

Instead, election integrity was preserved with federal investigations to prevent nonexistent seditious activity emanating from dubious white militias. The “reckless and dangerous” mail-in ballot operation the Attorney General warned about was ignored. 

Trump’s political rise is because our institutions no longer work for the common good and instead serve the idiosyncratic preferences of the sclerotic establishment. Picking a bombastic outsider is the only way that 75-million Americans know to tell them to cut it out.

Barr, A Typical Washingtonian Creature.

In private practice, Barr was a highly compensated conduit to power, because being the former Attorney General, or ex-FBI Director, or alum of any office that confers a vendable credential pays big bucks in DC. 

He is sufficiently deluded by beltway noise that he does not realize his pandering to shallow political interests as George H.W. Bush’s Attorney General – for instance by authoring in 1992 The Case for More Incarceration – was simply grist for the outrage mill that perpetuates the swindle.

Barr and Biden in Washington D.C.

Based on the musings of General Barr, Senator Joe Biden spearheaded a crime bill in 1993. He sold the bill as a way to take “predators” who were “beyond the pale” off the streets.

Because that’s how Washington works.

Insiders on both sides help one another perform their Kabuki dance as public servants for the next election even as they pocket a Delaware mansion’s worth of foreign money.

H.L. Mencken observed that, “The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary.”

The Shill Continues.

Barr was appointed AG the second time because he penned a 20-page memo proposing that when the president protests against a ridiculous investigation into whether he colluded with Vladimir Putin to steal an election, he is not obstructing justice.  

You know, like how nobody is suggesting that Joe Biden’s protests against election fraud investigations means he should get indicted for obstruction under 18 U.S. Code CHAPTER 73.

Any first year law student could tell you that. If you were a warm body willing to help Trump escape a frivolous criminal charge, though, you got a promotion from the practice squad straight into the starting lineup.

As Trump’s Attorney General, Barr served the same cadre of Washington insiders as he did the first time, many of whom were still there because the game works so flawlessly.

The Hard Drive From Hell.

Weeks before the 2020 election, a concerned citizen turned over to federal authorities a laptop that had irrefutable evidence of a Biden family operation to sell influence in China, with 10 percent of the take going to “the big guy” – who happened to be the democratic candidate then running for president.

The nation’s intelligence agencies mobilized on behalf of the Biden family to call the concerned citizen a Russian stooge, and the contents of the laptop Russian disinformation.

At the time – we didn’t know it – the Justice Department had been investigating the very activities confirmed in the laptop.

A copy of Hunter’s hard drive from hell (Image: Stuart Mitchell)

Barr knew, obviously, that the slander against the concerned citizen was just deep state tripe to protect the Bidens.

Yet Barr sat on his hands, kept his mouth shut, and let the whistleblower suffer vicious public attack, because Washington insiders put the establishment first even against the heroic decency of the little guy.

The Russia Lie.

For two years Barr had investigated the greatest political scandal in American history.  

The Washington establishment, along with the FBI, the CIA, and foreign intelligence services, ran protection for the democratic candidate in 2016 by calling embarrassing disclosures about her Russian disinformation – and, when that dirty trick somehow did not get her elected, carrying the hoax into the Trump presidency to cause maximum political damage.

For more on that, please do yourself a favor and read about the sordid scandal in my short ebook, The Russia Lie. I propose in the book that the scam was a political operation to vilify Donald Trump by falsely claiming Russian election interference.

A week after publication, the DNI released notes John Brennan took of a meeting with Barack Obama that confirmed my controversial take. 

Brennan wrote that Hillary Clinton was planning to “vilify Donald Trump by stirring up a scandal claiming interference by the Russian security service.” 

Yeah, but I said it better. 

If someone like me sitting at a desk in Pittsburgh can figure this out, then the Attorney General’s head-in-the-sand failure to expose the lie amounts to an intentional cover-up sourced in deliberate indifference. 

As with the Biden laptop, Barr’s first impulse investigating the investigators was to protect his friends and neighbors in Washington, the Republic be damned.  Some minor flunky at the FBI will go to jail, and everyone else is going to escape to their lucrative cable television deals.  

Because the fix, as always, was in. 

Now What?

The 75-million who voted for Trump feel cheated but they’re not going anywhere. Their ranks will increase as Washington’s Rube Goldberg-ian governance wreaks havoc and the dissatisfied look for an alternative.

Our side should win the next few election cycles. That would be a “will definitely win” except Republican officials in various key states passed permanent mail-in voting laws ostensibly to address the short-term contingencies of a temporary pandemic. 

Yes, the Republican Party is staffed with a bunch of “bilbars” (inventing a word here) at the highest levels.

The “reckless and dangerous playing with fire” will continue, with Republican hopes pinned on electing conscientious candidates even though state elections will be fixed by vote harvesting and back door shenanigans into the foreseeable future.

Stop the Steal protests around the United States

It is dire but hopeful. Popular movements are best when they overcome even official corruption.    

When Trump wins in 2024, he must avoid hiring swamp dwellers to drain the swamp. Of all the things I’ve written about Trumpism in the last four or so years, my favorite is this – nailed the problem a few months into the presidency.

There’s got to be a law professor in Ohio who actually voted for Trump who can be tapped for the position of Attorney General next time. 

No more bilbars, please. As Hannah Arendt knew, beholden insiders who prefer prestige to principle is the banality of evil.

Oh, and whoever came up with the idea of landing Air Force One and Marine One at small airports to hold rallies, give that person whatever job he or she wants.

It contributed to one of the greatest landslides in American presidential history.

Tyler Durden Mon, 12/28/2020 - 17:40
Published:12/28/2020 4:59:20 PM
[Markets] E-commerce Sales Jump Nearly 50% This Holiday Season E-commerce Sales Jump Nearly 50% This Holiday Season

Submitted by Market Crumbs,

With the holiday shopping season now officially in the books, Mastercard on Saturday gave a look into what consumers shopped for this year.

Using aggregate sales activity in the Mastercard payments network and survey-based estimates for other payment forms such as cash and check, MasterCard SpendingPulse found that U.S. retail sales excluding automotive and gasoline jumped 3% during this year's holiday shopping season, which ran from October 11 through December 24.

With many people continuing to stay at home as a result of Covid-19, it's not surprising that online sales jumped by 49% compared to last year. E-commerce accounted for 19.7% of overall retail sales during this year's holiday shopping season compared to 13.4% in 2019.

Given people are spending so much time at home, home furniture and furnishings was the biggest winner, showing the largest growth of any sector as sales jumped by more than 16% from last year. Home improvement also saw a boost as sales increased by more than 14% from last year as e-commerce sales jumped by nearly 80%.

"American consumers turned the holiday season on its head, redefining 'home for the holidays' in a uniquely 2020 way. They shopped from home for the home, leading to record e-commerce growth," Mastercard senior advisor Steve Sadove said. "And, consumers shopped earlier than ever before. Across our expanded 75-day holiday shopping season, sales were up 3.0%, a testament to the holiday season and strength of retailers and consumers alike."

Department stores continue to lose their luster as sales fell by more than 10% from last year. Department stores saw their e-commerce sales grow by just over 3% compared to 2019.

Despite seeing overall sales decline by more than 16% from last year, Black Friday remained the top shopping day of the season by spend while the day after came in the second spot. December 12 and 11 rounded out the next two spots as consumers rushed to take advantage of "guaranteed by Christmas" offers.

Consumers appeared to have their shopping done early this year, as the Monday before Christmas didn't even make the top 10 this year after being the third-biggest shopping day in 2019.

With Mastercard providing a glimpse into this year's holiday shopping season, investors will now look forward to earnings season to see which companies were the big winners this year.

Tyler Durden Mon, 12/28/2020 - 12:05
Published:12/28/2020 11:27:43 AM
[] Company That Rents Books By the Foot For Decor Purposes Sees Business Boom As Washington DC Talking Heads Call Them Up to Rent Books for the Backgrounds of Their Zoom Calls The Smartest People in America (TM) don't have real books for the background of their Zoom calls. They have to rent them as props. In a place like Washington--small, interconnected, erudite, gossipy--being well-read can create certain advantages. So, too, can... Published:12/28/2020 11:27:43 AM
[Markets] Unipolar Vs Multipolar: The Death Of McKinley & The Loss Of America's Soul Unipolar Vs Multipolar: The Death Of McKinley & The Loss Of America's Soul

Authored by Matthew Ehret via The Saker blog,

On December 17, 2020, a new US Maritime strategy was unveiled putting into practice the regressive concepts first outlined in the early National Defense Strategy 2020 doctrine which target China and Russia as the primary enemies of the USA and demanding that the USA be capable to “defeat our adversaries while we accelerate development of a modernized integrated all-domain naval force of the future”.

The Pentagon’s Advantages at Sea: Prevailing with Integrated All-Domain Naval Power continued by saying “China’s and Russia’s revisionist approaches in the maritime environment threaten US interests, undermine alliances and partnerships and degrade the free and open international order… moreover, China’s and Russia’s aggressive naval growth and modernization are eroding US institutional advantages.”

The document continued to describe that “we must operate more assertively to prevail in day-to-day competition as we uphold the rules-based order and deter our competitors from pursuing armed aggression… ready, forward-deployed naval forces will adopt a more assertive posture in day to day operations”

For anyone who has been paying attention to the vast growth of the Pentagon’s Full Spectrum containment policy around China’s perimeter begun with Obama’s Asia Pivot, it may appear as though these words are not new, but just a continuation of American unipolar agenda, Pacific war games, and psychological projection onto perceived enemies, that have been underway for years. While this is certainly true, it must be noted that they are occurring at a time that NATO 2030 has enshrined an anti-China military posture into the Trans Atlantic security doctrine which had formerly channeled most of its hate purely onto Russia.

The fact is those unipolar zombies programmed to think in no other terms but global post-nation state dominance are deathly afraid of the Russia-China bond of survival which has created a uniquely viable foundation for an alternative economic/security architecture for the world. This model is based on a system of finance that defines money not in speculative but rather long-term development of the real economic foundations of life. It also features a strong emphasis on win-win cooperation as opposed to Hobbesian zero-sum logic dominant among western powers, and it also finds itself driven by OPEN system economic practices shaped by unbounded scientific and technological progress that once upon a time guided America’s better traditions.

With the obvious threat of nuclear war breaking out between a collapsing unipolar order in the west and an emergent Multipolar alliance, it is important to review what possible latent policy traditions may yet be revived within America’s history which certain forces have worked very hard to scrub out of the historical record and memory. This study will take us to the incredible fights that arose over America’s identity at the turn of the 20th century during the period of President William McKinley and the treasonous anglophile President of vice, Theodore Roosevelt.

Munroe Doctrine or Empire?

As Martin Sieff eloquently laid out in his recent article, President McKinley himself was an peacemaker, anti-imperialist of a higher order than most people realize. McKinley was also a strong supporter of two complementary policies: 1) Internally, he was a defender of Lincoln’s “American system” of protectionism, internal improvements and black suffrage and 2) Externally, he was a defender of the Munroe Doctrine that defined America’s anti-imperial foreign policy since 1823.

The Munroe Doctrine’s architect John Quincy Adams laid out this principle eloquently on July 4, 1821:

“After fifty years the United States has, without a single exception, respected the independence of other nations, while asserting and maintaining her own.

That the United States does not go abroad in search of monsters to destroy. She is the well-wisher to the freedom and independence of all. She is the champion and vindicator only of her own.

That by involving itself in the internal affairs of other nations, the United States would destroy its own reason of existence; the fundamental maxims of her policy would become, then, no different than the empire America’s revolution defeated. It would be, then, no longer the ruler of itself, but the dictator of the world.”

America’s march is the march of mind, not of conquest.

Colonial establishments are engines of wrong, and that in the progress of social improvement it will be the duty of the human family to abolish them”.

It was an aging John Quincy Adams whom a young Abraham Lincoln collaborated with in ending the imperial Mexican-American war under Wall Street stooge James Polk in 1846. When Adams died in 1848, Lincoln picked up the torch he left behind as the London-directed “proto deep state” of the 19th century worked to dissolve the republic from within. The foreign policy conception laid out by Adams ensured that America’s only concern was “staying out of foreign imperial entanglements” as Washington had earlier warned and keeping foreign imperial interests out of the Americas. The idea of projecting power onto the weak or subduing other cultures was anathema to this genuinely American principle.

A major battle which has been intentionally obscured from history books took place in the wake of Lincoln’s murder and the re-ascension of the City of London-backed slave power during the decades after the Union victory of 1865. On the one hand America’s role in the emerging global family of nations was being shaped by followers of Lincoln who wished to usher in an age of win-win cooperation. Such an anti-Darwinian system which Adams called “a community of principle” asserted that each nation had the right to sovereign banking controls over private finance, productive credit emissions tied to internal improvements with a focus on continental (rail/road) development, industrial progress and full spectrum economies. Adherents of this program included Russia’s Sergei Witte and Alexander II, Germany’s Otto von Bismarck, France’s Sadi Carnot, and leading figures within Japan’s Meiji Restoration.

On the other hand, “eastern establishment families” of the USA more loyal to the gods of money, hereditary institutions and the vast international empire of Britain saw America’s destiny tied to an imperial global partnership with the Mother country. These two opposing paradigms within America have defined two opposing views of “progress”, “value”, “self-interest” and “law” which have continued to shape the world over 150 years later.

William Gilpin vs Alfred Mahan: Two Paradigms Clash

A champion of the former traditionally American outlook who rose to the international scene was William Gilpin (1813-1894). Gilpin hailed from a patriotic family of nation builders whose patriarch Thomas Gilpin was a close ally of Benjamin Franklin and leading member of Franklin’s Philosophical Society. William Gilpin was famous for his advocacy of America’s trans continental railway whose construction he proselytized as early as 1845 (it was finally begun by Lincoln during the Civil War and completed in 1869 as I outlined in my previous paper How to Save a Dying Republic).

In his thousands of speeches and writings, Gilpin made it known that he understood America’s destiny to be inextricably tied to the ancient civilization of China- not to impose opium as the British and their American lackies were want to do, but to learn from and even emulate!

In 1852, Gilpin stated:

“Salvation must come to America from China, and this consists in the introduction of the “Chinese constitution” viz. the “patriarchal democracy of the Celestial Empire”. The political life of the United States is through European influences, in a state of complete demoralization, and the Chinese Constitution alone contains elements of regeneration. For this reason, a railroad to the Pacific is of such vast importance, since by its means the Chinese trade will be conducted straight across the North American continent. This trade must bring in its train Chinese civilization. All that is usually alleged against China is mere calumny spread purposefully, just like those calumnies which are circulated in Europe about the United States”.

With Lincoln’s 1861 presidential victory, Gilpin became Lincoln’s bodyguard and ensured the president survived his first assassination attempt en route to Washington from Illinois. During the Civil War, Gilpin was made Colorado’s first Governor where he successfully stopped the southern power from opening up a western front during the war of secession (applying Lincoln’s greenback system to finance his army on a state level) and winning the “Battle of Glorieta Pass”, thus saving the union.

After the war Gilpin became a leading advocate of the internationalization of the “American system of political economy” which Lincoln applied vigorously during his short-lived presidency. Citing the success of Lincoln’s system, Gilpin said: 

“No amount of argument will make America adopt old world theories… To rely upon herself, to develop her own resources, to manufacture everything that can possibly be manufactured within her territory- this is and has been the policy of the USA from the time of Alexander Hamilton to that of Henry Clay and thence to our own days”.

Throughout his speeches Gilpin emphasizes the role of a U.S.-Russia alliance: 

“It is a simple and plain proposition that Russia and the United States, each having broad, uninhabited areas and limitless undeveloped resources, would by the expenditure of 2 or 3 hundred millions apiece for a highway of the nations threw their now waste places, add a hundredfold to their wealth and power and influence”

And seeing in China’s potential the means to re-enliven the world- including the decadent and corrupt culture of Europe:

 “In Asia a civilization resting on a basis of remote antiquity has had, indeed, a long pause, but a certain civilization- although hitherto hermetically sealed up has continued to exist. The ancient Asiatic colossus, in a certain sense, needed only to be awakened to new life and European culture finds a basis there on which it can build future reforms.”

In opposition to the outdated British controls of “chock points” on the seas which kept the world under the clutches of the might of London, Gilpin advocated loudly for a system of internal improvements, rail development, and growth of the innate goodness of all cultures and people through scientific and technological progress. Once a global system of mutual development of rail were established, Gilpin stated “in the shipment of many kinds of raw and manufactured goods, it will largely supersede the ocean traffic of Great Britain, in whose hands is now carrying the trade of the world.”

Gilpin’s vision was most clearly laid out in his 1890 magnum opus “The Cosmopolitan Railway” which featured designs for development corridors across all continents united by a “community of principle”.

Echoing the win-win philosophy of Xi Jinping’s New Silk Road today, Gilpin stated:

“The cosmopolitan railway will make the whole world one community. It will reduce the separate nations to families of our great nation… From extended intercommunication will arise a wider intercourse of human ideas and as the result, logical and philosophical reciprocities, which will become the germs for innumerable new developments; for in the track of intercommunication, enterprise and invention invariably follow and whatever facilitates one stimulates every other agency of progress.”

Mahan Derails America’s Anti-Imperial Identity

Alfred Thayer Mahan (1840-1914) represented an opposing paradigm which true American statesmen like Lincoln, Secretary of State James Blaine, William Seward, President Grant, William Garfield, and McKinley detested. Sadly, with McKinley’s murder (run by an anarchist ring with ties to British Intelligence) and the rise of Teddy Roosevelt in 1901, it was not Gilpin’s but rather Mahan’s worldview which became the dominant foreign policy doctrine for the next 120 years (despite a few brief respites under FDR and JFK).

Mahan is commonly credited for being a co-founder of modern geopolitics and an inspiration for Halford Mackinder. Having graduated from West Point’s naval academy in 1859, Mahan soon became renowned as a total failure in actual combat having crashed warships repeatedly into moving and stationary objects during the Civil War. Since reality was not his forte, Mahan focused his post-war career on Ivory tower theorizing gushing over maps of the world and fawning over Britain’s power as a force of world history.

His “Influence of Sea Power Upon History 1660-1783 published in the same year that Gilpin published his Cosmopolitan Railway (1890) was a total break from the spirit of win-win cooperation that defined America’s foreign policy. According to the Diplomat, this book soon “became the bible for many navies around the world” with the Kaiser of Germany (now released from the influence of the great rail-loving statesman Otto von Bismarck whom he fired in 1890) demanding all of his offers read. Later Teddy Roosevelt ordered copies for every member of Congress. In Mahan’s book, the geopolitician continuously asserts his belief that it is America’s destiny to succeed the British Empire.

Taking the British imperial definition of “commerce” which uses free trade as a cover for the military dominance of weak nations (open borders and turning off protectionism simply makes a people easier to rob), Mahan attempts to argue that America need not continue to adhere to “outdated” habits like the Munroe doctrine since the new order of world empires demands America stay relevant in a world of sea power and empire. Mahan writes: “The advance of Russia in Asia, in the division of Africa, in the colonial ambitions of France and in the British idea of Imperial Federation, now fast assuming concrete shape in practical combined action in South Africa” demands that the USA act accordingly.

Attempting to refute the “outdated habits” of rail development which consume so many foolish statesmen around the globe, Mahan states: “a railway competes in vain with a river… because more facile and copious, water traffic is for equal distances much cheaper and because cheaper, more useful”. Like those attacking today’s Belt and Road Initiative, the power of railways is that their returns are not measurable by simple monetary terms, but are rather QUALITATIVE. The long-term construction of rail systems not only unite divided people, increase manufacturing and industrial corridors but also induce closer powers of association and interchange between agriculture and urban producers. These processes uplift national productive powers building full spectrum economies and also a culture’s capacity for creative thought.

The attempt made to justify sea traffic merely because “larger amounts of goods can be shipped” is purely quantitative and monetaristic sophistry devoid of any science of real value.

While Gilpin celebrates the successful awakening of China and other great nations of the world, in the Problem of Asia (1901) Mahan says:

 “It is scarcely desirable that so vast a proportion of mankind as the Chinese constitute should be animated by but one spirit”. Should China “burst her barriers eastward, it would be impossible to exaggerate the momentous issues dependant upon a firm hold of the Hawaiian islands by a great civilized maritime power.”

Mahan’s adherence to social Darwinism is present throughout his works as he defines the political differences of the 3 primary branches of humanity (Teutonic, Slavic and Asiatic) as purely rooted in the intrinsic inferiority or superiority of their race saying: “There are well recognized racial divergencies which find concrete expression in differences equally marked of political institution, of social progress and of individual development. These differences are… deep seated in the racial constitution and partly the result of the environment”. Mahan goes onto restate his belief that unlike the superior Teutonics “the Oriental, whether national or individual does not change” and “the East does not progress”.

Calling China a carcass to be devoured by an American eagle, Mahan writes: “If life departs, a carcass can be utilized only by dissection or for food; the gathering to it of the eagles is a natural law, of which it is bootless to complain… the onward movement of the world has to be accepted as a fact.”

Championing an Anglo American alliance needed to subdue and “civilize” China as part of the post-Boxer Rebellion, Mahan says “of all the nations we shall meet in the East, Great Britain is the one with which we have by far the most in common in the nature of our interests there and in our standards of law and justice”.

In case there was any doubt in the minds of Mahan’s readers as to the MEANS which America should assert its dominance onto China, Mahan makes clear his belief that progress is caused by 1) force and 2) war: 

“That such a process should be underlain by force… on the part of outside influences, force of opposition among the latter themselves [speaking of the colonial European monarchies racing to carve up China in 1901 -ed] may be regrettable, but it is only a repetition of all history… Every step forward in the march that has opened in China to trade has been gained by pressure; the most important have been the result of actual war.”

A Last Anti-Imperial Push

The chaos induced by the anti-foreigner Boxer Rebellion of 1899 which spread quickly across China resulted a heated battle between imperial and anti-imperial forces in both Russia and the USA. Where Transport Minister Sergei Witte who spearheaded the development of the Trans Siberian rail line (1890-1905) tried to avoid military entanglement, McKinley was busy doing the same.

The boxers soon attacked the Manchurian rail connecting Russia to China by land and Witte succumbed to pressure to finally send in troops. The reformers of China who attempted to modernize with American and Russian assistance under Emperor Kuang Hsu and Li Hung Chang fell from power as total anarchy reigned. The outcome of the Boxer chaos involved the imperial powers of France, Germany and England demanding immense financial reparations, ownership of Chinese territory and mass executions of the Boxers.

While McKinley is often blamed for America’s imperial turn, the reality is just the opposite.

The Spanish-American war begun in 1898 was actually launched unilaterally by Anglophilic racist Theodore Roosevelt who used the 4 hour window he had while Undersecretary of the Navy (while the actual Secretary was out of Washington) to send orders to Captain Dewey of the Pacific fleet to engage in a fight with the Spanish over their Philippine territories. McKinley had resisted the war hawks until that point but found himself finally bending to the momentum. In China, McKinley, like Witte worked desperately to reject taking territory resulting in great fears from the British oligarchy that a U.S.-Russia alliance led by McKinley and Witte was immanent.

The assassination of McKinley on September 18, 1901 catapulted Mahan-loving Vice President Teddy Roosevelt into high office, who enmeshed America into a new epoch of Anglo-American imperialism abroad, a growth of eugenics and segregation at home and the creation of an independent police state agency called the FBI.

As Sieff writes

“Roosevelt devoted his next eight years in the presidency and the rest of his life to integrating the United States and the British Empire into a seamless web of racial imperialist oppression that dominated Latin America, sub-Saharan Africa and Asia and that destroyed the cultural history and heritage of the Native North American nations.”

In Russia, the 1902 Anglo-Japan Treaty led to the disastrous Japan-Russo war of 1905 which devastated the Russian navy, ended the political career of Sergei Witte and threw Russia into chaos leading to the fall of the Romanovs (Czar Nicholas II was the last statesman occupying high office that this author is aware of to have actively promoted the Bering Strait Tunnel rail connection in 1906. It wasn’t until FDR’s Vice President Henry Wallace met with Foreign Minister Molotov in 1942 that the idea resurfaced once more).

In his Two Peoples One Friendship, Wallace described his discussions with Foreign Minister Molotov in 1942 saying:

Of all nations, Russia has the most powerful combination of a rapidly increasing population, great natural resources and immediate expansion in technological skills. Siberia and China will furnish the greatest frontier of tomorrow… When Molotov [Russia’s Foreign Minister] was in Washington in the spring of 1942 I spoke to him about the combined highway and airway which I hope someday will link Chicago and Moscow via Canada, Alaska and Siberia. Molotov, after observing that no one nation could do this job by itself, said that he and I would live to see the day of its accomplishment. It would mean much to the peace of the future if there could be some tangible link of this sort between the pioneer spirit of our own West and the frontier spirit of the Russian East.”

While the “open door” rape of the China was attempted by the Anglo-Americans, a fortunate rear guard maneuver orchestrated by another follower of Abraham Lincoln named Sun Yat-sen resulted in a surprise overthrow of the Manchu dynasty in 1911 and the institution of the Republic of China with Sun Yat-sen as the acting President. While Sun Yat-sen sided with Gilpin and Lincoln in opposition to the Mahanists on the issue of rail and industrial development (illustrated in his extraordinary 1920 International Development of China program which called for 160 000 km of rail, water diversion projects, ports and 1.5 million km of paved roads- illustrated below), the intrigues that sank the world into World War I made any hopes of this early development of China impossible in Sun Yat-sen’s lifetime.

Expressing his own deep understanding of these top down tactics of world history (and the recognition that the same British imperial forces that orchestrated the US Civil War were planning to do the same to China), Sun Yat-sen wrote in 1912:

“We understand too well that there are certain men of power—not to include for the present, certain nations—who would view with a greater or lesser satisfaction an internal rupture in the new Republic [of China]. They would welcome, as a move toward the accomplishment of their own ends and designs, a civil war between the provinces of the North and the South; just as, 50 years ago, there was applause in secret (in certain quarters) over the terrible civil strife in the United States.

Americans of today who were alive in those dark days of the great republic will remember the feelings in the hearts of the people—the bitter and painful thoughts that arose from the knowledge that foreigners were hoping and praying for the destruction of the American Union.

Had the war been successful from the South’s standpoint, and had two separate republics been established, is it not likely that perhaps half a dozen or more weak nations would have eventually been established? I believe that such would have been the result; and I further believe that with the one great nation divided politically and commercially, outsiders would have stepped in sooner or later and made of America their own. I do not believe that I am stating this too forcibly. If so, I have not read history nor studied men and nations intelligently.

And I feel that we have such enemies abroad as the American republic had; and that at certain capitals the most welcome announcement that would be made would be that of a rebellion in China against the constituted authorities.

This is a hard statement to make; but I believe in speaking the truth so that all the world may know and recognize it.”

Today’s Belt and Road Initiative, and strategic friendship established between Russia and China has re-awoken the forgotten vision of William Gilpin for a world of cooperating sovereign nation states. Does the USA have the moral ability to avoid disintegration by accepting a Russia-U.S.-China alliance needed to revive McKinley’s American System or will we slip into a new Great Reset and World War?

Tyler Durden Sat, 12/26/2020 - 23:30
Published:12/26/2020 10:47:49 PM
[Markets] Give Yourself A Gift Next Year: Agency Give Yourself A Gift Next Year: Agency

Authored by Charles Hugh Smith via OfTwoMinds blog,

We think we're powerless because we don't have wealth and power over others, but nothing could be further from the truth.

To have agency is to have power over your own life and control of your assets, options and resources. There are a great many things that influence our lives that we do not control, but there are also many things we could influence in our lives but do not.

The conventional view puts great weight on the agency created by money, as an abundance of money enables people to do a number of things that people with little money cannot do: live comfortably in costly locales, buy a larger home, buy a second home, buy a boat, pay for college with cash, pay for expensive medications not covered by insurance, take extended vacations and start enterprises without ceding power to outside investors, to name a few.

Our culture only has eyes for the agency of money, as this narrow band of agency is ceaselessly glorified. Yet what's striking is how little of importance money can buy. Not only can it not buy love, it cannot buy true friendship, trust, affection, community, emotional intelligence, wisdom, skills, purpose, meaning, health, confidence, creativity, conviction, self-discipline, resilience, self-expression, integrity, authenticity, faith or inner security.

What gift would you want for yourself in 2021? Whatever you identify as the gift you'd want to give yourself, the odds of obtaining it improve if you give yourself the gift of agency first. While money is a resource that can leverage certain kinds of agency, it isn't the foundation of agency; the foundations of taking control of one's life are internal.

I wrote an entire book about this process of taking control of one's life: Resistance, Revolution, Liberation: A Model for Positive Change.

My basic credo of liberation:

"I no longer care if the power centers of our society--the distant, fortified castles of our financial feudal system--are changed by my actions, for I am liberated by the act of resistance. I am no longer complicit in perpetuating fraudulent feudalism and the pathology of concentrated power. I no longer covet signifiers of membership in the Upper Caste that serves the plutocracy. I am liberated from self-destructive consumerist-State financialization and the delusion that debt servitude and obedience to sociopathological Elites serve my self-interests."

We think we're powerless because we don't have wealth and power over others, but nothing could be further from the truth. What we all seek are autonomy, mastery and purpose, and the source of all these are within us.

Money can't buy personal integrity or authenticity, and in that sense it cannot buy what matters most. To borrow Kierkegaard's phrase, we cannot use money to acquire ourself. That process cannot be bought at any price, for it is internal, intangible and hidden to all but ourselves.

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

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My recent books:

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World (Kindle $5, print $10, audiobook) Read the first section for free (PDF).

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($5 (Kindle), $10 (print), ( audiobook): Read the first section for free (PDF).

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

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

Tyler Durden Sat, 12/26/2020 - 21:30
Published:12/26/2020 8:46:08 PM
[] Books by the Foot helps dress up Washington, D.C. bookshelves to make better Zoom backdrops Published:12/26/2020 4:47:33 PM
[Markets] The 10 Most Important Changes Of The Past Year The 10 Most Important Changes Of The Past Year

Authored by Louis-Vincent Gave via Evergreen Gavekal blog,

"Time changes everything except something within us which is always surprised by change.”

- Thomas Hardy, English novelist and poet

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Editor's note: Due to the length of this week's missive, we've bolded sections that we believe will be particularly interesting to readers. 


Boy, what a year it has been. Between a global pandemic, a fiery election, societal unrest, wildfires, and an impeachment trial, the year 2020 will go down in the history books for its unapologetic disruption of normalcy. To make sense of the shocking series of events that occurred in 2020, Victoria Guida, a financial services reporter at Politico, even quipped that the origin of the common phrase “hindsight is 20/20” has always been profoundly misunderstood:

Most of us are excited to see the calendar year turn, where the distribution of several promising Covid vaccines have given us hope that a return to normal is on the horizon. But before looking forward to the year ahead, it’s important to look back on transformational changes that occurred in 2020. This week, we are presenting a very long newsletter (even by EVA standards) on 10 of these changes from Evergreen’s partner, Louis-Vincent Gave:

  1. A dramatic shift in Western economies’ fiscal policies

  2. The embrace of MMT (the magic money tree)

  3. China forging its own policy path

  4. A change in renminbi policy (China’s currency)

  5. A stop to Ricardian growth (more on what that means below)

  6. Taiwan emerging as the new geostrategic fault line

  7. The capital war between the US and China, and the Hong Kong takeover

  8. A rapidly shifting energy landscape

  9. Moving from a north-south European divide to a west-east divide

  10. Japan’s quiet bull market

Louis even throws in a “bonus” point at the end, so please grab a blanket, cozy up by the fire, and enjoy a look back at several important changes from 2020 before we leap together into the New Year.

As the year draws to a close, most financial market players like to project themselves forward and attempt to figure out what challenges, or surprises, the upcoming year may have in store. The aim of this piece is to do precisely the opposite: instead of looking forward, I propose to look backwards at the important changes of the past year. Some changes (especially the first couple) may seem obvious. Yet they are important enough to warrant a mention. Other important shifts in 2020 may have gone unnoticed (even if highlighted in our research!) and could end up casting a long shadow.

1. A dramatic shift in Western economies’ fiscal policies

In 2020, Western governments spent money like never before and promised to continue doing the same through 2021. Thus, for Keynesians, these are exciting times. And more broadly, too, for as my friend Jawad Mian recently wrote in his Stray Reflections piece:

“America’s response to the coronavirus pandemic revealed something true, says Astra Taylor, co-founder of Debt Collective, a debtors’ union fighting to cancel debts. “So many policies that our elected officials have long told us were impossible and impractical were eminently possible and practical all along.” Evictions are avoidable; there’s shelter for the homeless in government buildings; water and electricity need not be cut off for late payments; paid sick leave can be statutory for everyone; missing a mortgage payment shouldn’t result in foreclosure; and debtors can be granted relief. Political action is possible; it needs will. Multi-trillion-dollar programs were mobilized quickly in this emergency, and it will be near-impossible to put that spending genie back in the bottle…”.

The fiscal spending genie is indeed out of the bottle and there is no political will in the West to stop it from “working its magic”. Governments will thus keep spending other people’s money until they run out of it. With the “other people” being the central banks. Now importantly, in a recent must-read piece, my colleague Tan Kai Xian showed how, for all intents and purposes, US store shelves, along with procurement centers, are empty (which, on anecdotal evidence, feels broadly right as stores seem to be missing many items). And half-way across the world, my other colleague Dan Wang basically confirmed the same thing when talking to Chinese manufacturers. The Covid-linked disruption to supply chains has meant that in many industries, Chinese manufacturers are struggling to keep up with orders from Western clients. This may help explain China’s soaring export numbers, despite the renminbi having been strong.

Needless to say, empty shelves and stretched supply chains are not the typical backdrop for a recession. But even if we lack the “typical backdrop”, it seems pretty clear that policymakers can be relied upon to deliver the “typical recession answer”—namely print more money and expand budget deficits.

So what next? Runaway fiscal spending will keep most Western currencies under pressure, especially the US dollar since the US economy has seen the biggest rise in debt.

Initially, the weaker dollar will be reflationary for the rest of the world and generally welcomed with glee. At some point (given dislocated supply chains, maybe sooner than later), the weaker currencies will start to trigger higher inflation. Central banks with falling currencies will then face the choice of either letting their domestic currencies continue to bear the brunt of the above spending (and gradually sink into irrelevance), or choose to defend their currencies and trigger a bond market and broader asset price meltdown.

Interestingly, US inflation expectations are already rebounding (see left-hand chart below). So will the Federal Reserve be forced to reveal its hand earlier than most expect?

2. Embracing MMT (the magic money tree)

As the world ground to a halt in March, the Fed injected more than US$3trn into the US treasury market in a few weeks. For the first time, it also started directly buying US corporate bonds. Confronting these unprecedented actions, the obvious questions for investors is whether the Fed was aiming to (i) stop US growth from collapsing, (ii) stop the US equity market from collapsing, or (iii) stop the US bond market from collapsing.

Now granted, the answer is likely to be yes to all of the above. But if so, this marks a key difference from past cycles when, in a crisis, the government bond market would be strong and could be counted on to reduce portfolio volatility. In fact, for 40 years treasuries were the “anti-fragile” asset of choice. Then in mid-March they stopped doing the job that was expected of them (see right-hand chart below). In response, the Fed stepped in with unprecedented firepower.

All of which brings me to this interesting quote from Randal Quarles, the Fed Vice Chair for financial supervision:

“It may be that there is a simple macro fact that the treasury market being so much larger than it was even a few years ago… that the sheer volume there may have outpaced the ability of the private market infrastructure to support stress of any sort there… There is thus an open question about whether there will be an indefinite need for the Fed to participate as a purchaser to support market functioning.”

Of course, one could launch an interesting philosophical debate on whether a market that needs constant government intervention to function is really a market. I will spare readers that detour and instead conclude that current monetary policy means that the US bond market (along with its European and Japanese equivalents) survives due to the good grace and generosity of central banks. Which brings me to a fairly obvious conclusion: either central banks decide to remain generous, and bond returns should broadly flatline (as since early April 2020). Or alternatively, one day, central banks will decide that they now need to support their currencies instead of supporting their bond markets. In this scenario, bond markets will implode. In short, following the massive intervention of central banks, government bonds all across the Western world have now become “return-free” risks.

3. China blasts its own policy path

As the rest of the world becomes more Chinese (stay-at-home orders, smartphone tracking of individuals, church services closed and commercial banks forced to lend to firms on noncommercial terms), China’s response to the Covid crisis has been far less expansionary than its reaction to either the 2003 Sars outbreak, the 2008 global crisis and its own 2015 equity bubble burst. China’s response to the Covid crisis not only goes against the current of its own recent history, but also against the trend of all major Western countries.

Throughout the year, we have updated readers on the reasons behind this important policy paradigm shift, whose obvious immediate consequence is that China is now alone among major economies in offering global investors positive real interest rates.

Just as water flows downhill, capital tends to flow to where it is best rewarded. Foreign investors are buying more Chinese government bonds, with their ownership share of the market doubling from 1.5% to almost 3% in the last 18 months.

These inflows have helped push the renminbi higher. For this unfolding trend to stop (lest we forget, in financial markets, all too often, the trend is a friend), one of the following will likely have to occur:

  • A fall in Chinese real bond yields: This could follow a big leg down in global growth, which would trigger gains in Chinese bonds, or a sharp rise in Chinese inflation (unlikely given the strength of the renminbi).

  • A rise in Western real yields: This seems a low-odds scenario, with real yields more likely to fall further as year-on-year inflation comparisons in the upcoming spring and summer point to rising prices.

  • A tightening of capital controls in China: For now, things are going the other way, with China realizing that it needs to dramatically, and rapidly, reduce the dependency of its economy on the US dollar.

  • Imposition of capital controls by Western economies: Facing the Sophie’s Choice of having to sacrifice either their currency or their bond market, could Western policymakers chose instead to impose capital controls on their populations? After the events of 2020, who is to say what is inconceivable, and what is not.

4. A change in renminbi policy?

The renminbi is still a managed currency and, as such, has strong “trending” characteristics (see chart below). Another interesting feature is that it tends to “flat-line” when the outlook is uncertain. For example, after the 2008 US mortgage crisis—and until the world was clearly back on its feet by the summer of 2010—the exchange rate was fairly steady against the US dollar at around CNY6.82. A similar thing happened in the spring and summer of 2015 around the time that Shanghai’s equity market bubble burst (the renminbi flat-lined at around CNY6.2 to the US dollar). Yet, in the past six months, against an uncertain backdrop, the renminbi has registered its best six-month rebound on record.

This sharp rally raises the question: are we seeing an important change in the Chinese and global macro landscape? And if so, what are the investment implications.

5. A stop to Ricardian growth?

The thesis of Gavekal’s first book back in 2005 was that the ability to measure everything in real time meant successful companies would outsource all parts of their business processes in which they did not have the highest possible returns on invested capital. We used the term “platform company” to describe the firms of the future that focused mostly on design and/or sales, while outsourcing capital and labor intensive production to others. In such a world, supply chains would become ever more stretched across the globe.

The publication of Clash of Empires at the start of last year marked a bookend to that period. No longer would supply chains be stretched across the globe. Instead, the world would break into three separate economic zones, each with their own currency of reference (US dollar, euro and renminbi), financial capital (New York, London, Hong Kong), bond market (treasuries, bunds, Chinese government bonds) and their own supply chains.

But this breakdown would present challenges.

  • For Europe, it is the lack of an army, space program or serious tech center. Also, after Brexit, its financial center will be outside its immediate borders.

  • For the globally-integrated tech world, the problem is that the US has identified this as a key battlefield for confronting China.

But this tech war is now having broader consequences. In one of the best pieces we published this past year, Dan Wang makes the following point.

“Chinese companies shudder at the thought of suffering the same fate as Huawei, which at a stroke found that it could not procure many of the components it needed to make its products. That has shown Chinese companies in all industries that reliance on US supply is a potential risk… Because the US government has introduced the possibility that supplies might be cut off at any time, Chinese firms are starting to look more at US competitors, in China as well as the rest of Asia. One sales manager at a US chemicals company confessed anxiety about this trend, as the high quality of its products is no longer a guarantee that customers won’t switch to another vendor.”

To put this another way, for 20 years, every company’s procurement process was driven by the price-to-quality ratio: could a potential supplier produce an adequate product at a low enough price point. That was then. Today, after actions against Huawei, ZTE, Semiconductor Manufacturing International Corporation, the equation, at least in China (the world’s second largest economy) has changed. Above all else, what now matters most is the security of the supply and the price-to-quality ratio has slipped down the list of priorities.

This represents a paradigm shift as “Ricardian optimization” is no longer the be-all and end-all. A world that worries more about safety than low prices is one that will likely deliver lower productivity, and higher prices.

6. Taiwan as the new geostrategic fault line

Staying with the idea that semiconductors are the key battlefield in the unfolding US-China “cold war”, the past year saw two important events:

  • The global market capitalization of the semiconductor sector soared past that of the energy sector (see left-hand chart below). The market’s message was that chips are the commodity of the future while barrels of oil are the commodity of the past (whether the market is right on this is another debate).

  • A more important development came in July when Intel—the US firm that once ruled global semiconductor manufacturing—said it could not mass produce 7nm chips until 2023, some 18 months later than its guidance. Then just weeks later, Taiwan Semiconductor Manufacturing Corporation, which is already producing 7nm chips, confirmed that it will begin mass producing 3nm chips in 2022. In a nutshell, this means that the once-dominant Intel has lost its technological edge over TSMC, and is unlikely to regain it before 2025 at the earliest—if ever. Unsurprisingly, the market quickly adjusted to this new tech reality: the TSMC market cap more than doubled while the Intel market cap fell by more than a quarter (see right-hand chart below).

So to recap, the US has chosen to make semiconductors the battlefield in the unfolding Chinese Cold War at a moment when the US is losing its semiconductor manufacturing leadership, and to Taiwan, of all places!

This is a problem, as Taiwan has long been a source of potential instability in the US-China relationship. Even when the two countries sort of got along, and Taiwan produced plastic toys and bicycles, the disputed island state was a sore point in the relationship. Fast forward to today and the US and China no longer get along, while Taiwan is instrumental in producing the world’s most economically important commodity. The “passing of the baton” from Intel to TSMC could not have come at a worse time for the US!

In response the US is likely to sell Taiwan more weapons—which will infuriate Beijing and sour an already strained relationship. TSMC is being arm-twisted to move its wafer fabrication plants to the US and pressure is being applied to South Korea (the other key semiconductor producer) to pick a side between the US and China (interestingly, Seoul may decide that discretion is the better part of valor and move to become neutral—an Asian Switzerland of sorts).

Meanwhile, the first order of business for Beijing will be to continue investing in its domestic semiconductor industry in a bid to close the technology gap. Dan Wang and Matt Forney of Gavekal Fathom China have researched this in detail over the past year and published numerous papers on this topic. There are few reasons to think that the trend won’t accelerate since the ability to produce semiconductors domestically is no longer a business decision for China, but a national security one.

China’s second order of business will be to keep on investing in its military. There are solid historical correlations between strong military and a strong tech sector. The US has the world’s biggest defense budget and the largest tech sector. China has the second largest military and the second largest tech sector. Japan for years boasted the highest defense spending in Asia and is a credible tech player, as are Israel, South Korea and Taiwan, which are small countries that punch far above their weight in terms of military spending. In contrast, countries that used to spend on their military but no longer do, like France and the UK, have seen their tech sectors shrivel, with the eclipse of once proud national tech champions like Bull, Alcatel and Marconi.

The third order of business for China will be to ratchet up bellicose crossstraits rhetoric. The impact will be that both firms and individuals think twice about investing more in Taiwan, and may even reassess their dependence on components made in the island (i.e. the point above on supply chain security).

At the very least, these developments mean that a generation of geopolitical analysts who have spent their careers assessing every tiny shift in the greater Persian Gulf region will have to refocus on the Taiwan Strait instead. If only because each time the US cranks up the pressures on semiconductors, or its propping up of the Taiwanese military, China will likely respond by sending its ships through the Taiwan Straits and rattling its various sabers.

7. The financial front and the Hong Kong takeover

The other battlefront in the US-China Cold War is access to capital. In fact, the past year saw the following chain of events unfold: the US threatened China with an embargo of semiconductors that hold any US intellectual property (most semiconductors); China responded by launching naval maneuvers around Taiwan; the US reacted, saying that if China pushes too far, Chinese companies will be cut off from US capital markets or, worse, that Chinese banks will find themselves cut off from the US dollar system. This year also saw China respond by taking over Hong Kong.

The challenge for US policymakers is that kicking China off the dollar system would likely spur a global bust worse than the 2008 Lehman Brothers crisis. First, it would trigger a collapse in global trade (at a time when inventories are low). Second, many big US firms (Apple, Walmart, General Motors) rely on China for both production and final sales. And third because US corporates have invested over US$600bn in Chinese plants, property and equipment. Thus, kicking China off the US dollar system sounds like a hollow threat. It is one thing to kick off Iran, Venezuela or Sudan, all countries that, in the broader scheme of things, are roughly irrelevant to US corporations. To kick off China would be to invite an economic shock without precedent.

Still, because US policymakers have put such a course of action on the table, their Chinese counterparts must take it seriously. Hence the need to take control of the Hong Kong situation. After all, if Chinese firms are to lose access to US capital markets, Hong Kong can now present itself as the default choice to such orphans. Hence the need to internationalize the renminbi and present it as a credible alternative to the US dollar for trade settlement and reserve accumulation in Asia and across emerging economies more broadly.

Now, convincing China’s trade partners to drop the US dollar and embrace the renminbi is a tall order. And perhaps the best way to explain why is to return to the old Gavekal analogy of reserve currencies being akin to computer operating systems.

At Gavekal, we use Microsoft for two main reasons. First, most of our clients use it—and naturally, we want to be able to swap files with them. Second, because everyone else uses Microsoft, any new team member will be proficient in Word, Excel, PowerPoint and other products in the Microsoft suite. Thus, any new Gavekal hire is able to hit the ground running without a need for IT training. Hence, for Gavekal to switch from Microsoft to another operating system, the new system would have to be much more than marginally better; it would need to be so good that all our clients, and all our potential employees, would be compelled to make the switch in short order as well.

The parallels with the US dollar are obvious, as it is the Microsoft of the trading and reserve currency world. Everyone uses the dollar because everyone else uses the dollar. For any currency to replace it, the new currency would need to be not just marginally better, but many miles better. Today, nothing comes close, including the renminbi. Consequently, the US dollar remains the cornerstone of the global financial architecture.

In recent decades, Apple (and to a lesser extent Google) eroded Microsoft’s dominance in operating systems. Apple did so initially by focusing on niche markets. If you visit an architect’s studio or a web design firm, all the computers are likely to be Apple. But as Apple focused on capturing niches, it pretty much abandoned the big corporate IT system spend to Microsoft, which is why, back in 2005-06 Apple traded at eight times earnings. But then Apple blindsided Microsoft by launching the iPhone and creating a parallel operating system (iOS and apps) that did not need corporate IT departments’ backing to thrive. Instead, with iOS, Apple went straight to the consumer.

Why revisit this territory? Because if the US dollar is the Microsoft of global currencies, there is little doubt that in recent years China has tried to position the renminbi as its Apple. First, China tried to capture “niche” markets that were at best peripheral to the incumbent currency behemoth: financing intra-Asian trade, funding commodity imports into China, and financing infrastructure projects in places like Myanmar, Sri Lanka and Pakistan where, historically, infrastructure projects have struggled to attract funding. But owning niche markets only gets you so far.

So, let’s accept that the US dollar has too many advantages, like dominance of the SWIFT system, for the renminbi to challenge the US currency at its own game. Yet if we further assume that Xi Jinping is serious about establishing the renminbi as Asia’s main trade and reserve currency, China doesn’t have much of a choice: it must follow Apple’s example and build a parallel operating system that doesn’t try to compete with the US dollar on its own turf.

Which brings me to the drive shown by the People’s Bank of China to launch a digital renminbi and the clear attempt by the Chinese Communist Party to place fintech behemoths firmly under its control. Coincidences? Like Apple before them, the Alipays and Wepays of this world want to establish a new, parallel operating system that helps Chinese consumers (and increasingly consumers in other emerging economies) with payments and cash transfers that bypass SWIFT (and so US control). A digital renminbi will only boost this attempt further.

8. A rapidly shifting energy landscape

If a picture is worth a thousand words, few will be as space saving as the one below to describe energy investors’ year. Carbon energy companies and alternative energy companies produce the same thing: energy. The key difference is to be found in the way they do it. The former make it in dirty and reprehensible ways (or so the general consensus seems to go), while the latter produce it in the most virtuous manner (forget the needs for copper, lithium, cobalt, etc). This key difference is apparently enough to drive an unprecedented divergence in stock market performance between the two groups over the past nine months.

Another explanation for the performance divergence between green energy and carbon energy is linked to future government spending. As reviewed in Desperately Seeking Anti-Fragility (Part I), in a world in which government bonds are not the anti-fragile buffer of choice, investors face a bind. And the growth of green tech has appeared as a possible solution, with the following simple logic: the weaker economic growth is, the lower interest rates will be and the more Western governments will spend money to re-ignite activity. And spending billions on initiatives to stop climate change is an easy way to get money out the door, while also looking righteous. Better still, if green investments look like duds, governments can always increase regulation (no more carbon-driven cars) to ensure that money spent on green tech is not wasted, even if the result is a collapse in the broader economy’s productivity. After all, if growth ends up being weak because of new green regulations, interest rates will stay low, which then helps finance the next round of green investments. And if these investments underperform, governments can increase regulations to make sure that these investments appear wise, even at the cost of lower economic growth. Wash, rinse, repeat.

This impeccable logic has helped green tech become the new anti-fragile asset of choice, perhaps even replacing government bonds. But then, this likely means that green tech will, in the future, suffer a parallel fate to that of government bonds. For example, if interest rates across Western economies start to rise, will capital come out of the frothy green-tech space and return to the known shelter of bonds with yields (as opposed to the current shelter of bonds with no yields)? Or worse yet: what if governments find themselves in a situation where running multi-trillion deficits is no longer an option? Would green tech spending be the first sacrifice made?

For now, the rise of green-tech to anti-fragile status has helped contribute to the greatest ever underperformance by the energy sector of any broad S&P GSCI grouping. And following this underperformance, energy companies have little choice but to sharply reduce their footprint. Traditional energy firms are no longer rewarded by the market for delivering growth. The only thing they can do is return capital. To take a couple of examples:

  • Chevron recently unveiled a capital spending budget of US$14bn-16bn a year through 2025. It represents a -27% cut from the midpoint of the company’s prior forecasts and is half what it spent in 2014.

  • ExxonMobil said that its capital spending will fall to US$16-19bn next year, and US$20-25bn from 2022 to 2025. Those figures represent a -46% and -31% decline, respectively, from the previous capex guidance.

These are the capital spending plans of North America’s two largest oil companies. The picture gets darker as smaller companies are considered. The prevailing theme across the oil and gas sector is of sector consolidation, mergers and outright bankruptcies. Hence, it seems fairly clear that US oil production, which has already started to shrink, is set to fall further. This will have negative consequences for the US trade balance, and thus for the value of the US currency.

9. From a north-south European divide to a west-east divide

The Covid pandemic hit Italy early, and particularly hard. And as Austria and France, and then the rest of Europe closed their borders to Italy, it looked for a few weeks as if the Covid crisis might be the straw that broke the back of the eurozone camel (it is said that a camel is a horse designed by a committee and what is the euro if not a currency designed by a committee?). Still, snatching an apparent victory from the jaws of defeat, Europe seemed to embrace a common fiscal solution to match its common monetary policy. This promise of a fiscal backbone and the hope that Europe’s north-south economic divide might be seriously addressed helped push aside fears of the euro’s survival. In turn, this planted the seed for the common currency to mount an impressive rebound over the past six months.

Still, even as the north-south split appears to fade away into the background, a new division has emerged in Brussels. This time the split is more of a west-east cleavage and has less to do with economic divergences than different cultural outlooks. At the risk of over-simplifying, Hungary, Poland, the Czech Republic and Slovakia (known as the Visegrád group, but also the old Austro-Hungarian empire!) do not want to change their immigration policies to suit Brussels while also typically having different approaches to “family/personal matters” (the Visegrád countries are usually against homosexual marriage, sometimes against abortion and oppose notions of gender fluidity).

At first glance, such fights may appear rather unimportant for investors. After all, the Visegrád countries have kept their own currencies and so are not subject to direct euro break-up risk. Their financial markets are also fairly small (not many global investors are in Hungarian bonds or Slovakian equities) and finally, cultural issues seldom have clear investment impacts. Still, notwithstanding last week’s EU summit fudge over a Brussels threat to sanction countries deemed to have breached the “rule of law”, these eastern countries, if pushed, could still upend the great fiscal compromise on which so much of the euro’s rebound rests.

But perhaps most importantly, the growing tensions between west and east in Europe further remind us that Europe, with its bastard political structures, remains an uncertain place for foreign investors to deploy capital. For Europe remains just one bad electoral result away (perhaps France in 2022 or Italy in 2023) from the whole edifice coming down.

10. Japan’s quiet bull market

This year will mark the point when the patient foreign investor who got sucked in to the Japanese hype of the 1989 bull market finally broke even (in US dollar terms) and the Nikkei 225 got back to its all-time high (the left-hand chart below does not include dividends).

In fact, for all the Japan-bashing out there (in fairness, most foreign investors have stopped railing against Japan and now simply ignore the place), Japanese equity markets have had a very honorable past decade. This is especially true when one strips out financials.

The above charts may bring comfort to Western policymakers now set on a path (unprecedented budget deficits funded through massive expansions in central bank balance sheets) trailblazed by Japan after its epic real estate and stock market bubbles of the late 1980s burst. Time will tell whether Japan’s experiment gets replicated elsewhere, or remains an anomaly in the annals of economic experiments. Indeed, as Kenneth Rogoff and Carmen Reinhart reviewed in their book This Time It’s Different, when massive expansions in budget deficits led to increases in government debt beyond the 100% of GDP (arbitrary) mark, and were funded with big rises in monetary aggregates, then in almost every case that country experienced either a currency collapse and a surge in inflation, or a debt default. Every country, except for Japan.

One reason that Japan proved to be such an anomaly is that, when its crisis hit, oddly it was one of the world’s most efficient export producers (with world class companies like Toyota, Sony and Nintendo) and probably one of the world’s most inefficient developed economies in its domestic market. Anyone who traveled to Japan in the late 1980s, or even through the 1990s, will have memories of US$10 apples in grocery stores, US$300 cab rides, US$500 pairs of Nike shoes or US$1000 a head dinners at Tokyo restaurants. All this when dollars were worth a good bit more than they are today!

Fast forward to today and all these “excess prices” have, through a three decade long deflationary process, been squeezed out of a Japanese economy that now looks and feels far more “normal” than its predecessor. Going out for the evening in Tokyo no longer entails taking out a second mortgage. If anything crystallizes the fact that the cost structure in Japan has now normalized, it must be the tourism boom of recent years (until Covid obviously stopped foreign arrivals dead in their tracks, see left-hand chart below).

But while big rises in budget deficits, funded with central bank printing, ended up having little impact on domestic Japanese prices that were being compressed by the squeezing out of inefficiencies, will the same thing happen across Europe or the US? Suffice to say that no-one today is paying US$10 an apple in the supermarkets of Chicago, Los Angeles, Paris, or Berlin. Instead, the inefficiencies to be squeezed out are few and far between. And perhaps more worryingly, instead of being squeezed out, inefficiencies are set to increase if, as described above, the security of supply now trumps price, or quality, as the determining factor for capital allocation and procurement decisions.

Meanwhile, Japan may well continue to thrive, quietly and unbeknown to most investors, in such an environment.

A last one, for the road....

When 2019 started, 10-year treasury yields were falling (and trading below their 200-day moving average), oil prices were falling (and trading below their 200-day moving average) and the US dollar was rising (and trading above its 200-day moving average). Fast forward two years, and we have witnessed a reversal in all three of these key price trends.

I would argue that these key price reversals are linked to the above 10 developments. But whether this is right, or not, may be not be that relevant. What matters is that bond yields, energy prices and the US dollar are now moving in the opposite direction to the one investors grew used to in recent years. The times, they are a-changin’ but have portfolios?


An astute EVA reader pointed out an error in my interpretation of the below chart.  Coal plants under construction are shown on the right-hand scale and, contrary to what I wrote, China is not building more than are operating in the US (roughly 180 versus 500, respectively).  However, China is also planning or building 300 coal-fired plants throughout the developing world in addition to its own aggressive build-out plans.  Moreover, a growing number of coal plants in the US are being shut down.

Tyler Durden Sat, 12/26/2020 - 11:35
Published:12/26/2020 10:59:43 AM
[Markets] H.G. Wells' Dystopic Vision Comes Alive With The Great Reset Agenda H.G. Wells' Dystopic Vision Comes Alive With The Great Reset Agenda

Authored by Matthew Ehret via The Strategic Culture Foundation,

In the Time Machine, society one million years in the future has evolved into two separate species called Morlocks and Eloi. The Morlocks represent the ugly dirty producers who by this future age, all live under ground and run the world’s manufacturing. The Eloi are the effect of the inbreeding of the elite, who by this time are simple-minded, Aryan, above-ground dwellers living in idleness and consuming only what the Morlocks produce. What was the trade off?

The Morlocks periodically rise above ground in hunting parties to kidnap and eat unsuspecting Eloi in this symbiotically vicious circle of life.

This famous story was written by a young British writer in 1893 whose ideas and pioneering work in shaping new techniques of cultural warfare which profoundly affected the next 130 years of human history. These ideas led to the innovation of novel techniques of “predictive programming”, and to mass psychological warfare. In contrast to the optimistic views of mankind and the future potential envisioned by the great science fiction writer Jules Verne earlier, Wells’ misanthropic tales had the intended effect of reducing the creative potential and love of humanity that Verne’s work awoke.

To restate the technique more clearly: By shaping society’s imagination of the future, and embedding existential/nihilistic outcomes within his plotlines, Wells realized that the entire zeitgeist of humanity could be affected on a profound level than simple conscious reason would permit. Since he robed his poison in the cloth of “fiction” the minds of those receiving his stories would find their critical thinking faculties disengaged and would simply take in all trojan horses embedded in the stories into their unconsciousness. This has been an insight used for over a century by social engineers and intelligence agencies whose aim has always been the willing enslavement of all people of the earth.

While he is best known for such fiction works as The War of the Worlds, The World Set Free, The Invisible Man, The Island of Doctor Morrow, and The Time Machine, Wells’ lesser-known non-fiction writings like The Open Conspiracy, The New World Order, The Outline of History, The Science of Life and The World Brain served as guiding strategic blueprints for the entire 20th century war against sovereign nation states and the very idea of a society built on the premise of mankind made in the image of God.

Thomas Huxley’s Revolution

The members of the London-centered oligarchy to which Wells had devoted himself at an early age had found themselves stuck in a rut by the turn of the 19th century. These inbred families and retainers who managed the dying British Empire had long been encrusted by the vices of decadence by the time a young man of low breeding and high talent arose amidst the London-ghettos treating syphilis patients as a surgeon’s assistant. This young surgeon’s name was Thomas Huxley.

Huxley possessed a sardonic wit, a deep misanthropy, and an intelligence that were soon discovered by powerful patrons, and by his mid-20’s, this young man found himself a rising star in Britain’s Royal Academy of Science. Here he quickly became a leading creative force, shaping Britain’s powerful X Club, serving as Darwin’s bulldog promoting popular debates featuring himself against literalist members of the clergy. In these debates he argued for Darwin’s chaos-bound interpretation of evolution. He also founded Nature magazine as a propaganda instrument which has been used to enforce scientific consensus favorable to a world empire to this very day.

Huxley chose his opponents carefully, ensuring that he could easily and publicly obliterate the arguments of simple-minded Anglican clergy, and thus convince all onlookers that the only choice they had to account for the evolution of new species was either literal Biblical creationism or his brand of Darwinian evolution. The many alternative scientific theories of the 19th century (such as those found in the works of Karl Ernst von Baer, Georges Cuvier, Lamarck and James D. Dana) which accounted for both the evolution of species, and the harmonics of all parts to a whole, as well as creative leaps were forgotten amidst this false dichotomy which this author unpacked in a recent interview.

Wells Picks up Huxley’s Torch

During his later years, Huxley mentored a young H.G. Wells, together with a whole generation of new imperial practitioners of the arts of social engineering (and social Darwinism). This social engineering soon took the form of Galton’s eugenics quickly becoming an accepted science practiced across the western world.

Wells was himself the son of a lowly gardener, but, like Huxley, exhibited a strong misanthropic wit, passion and creativity lacking in the high nobility, and he was thus raised from the lower ranks of society into the order of oligarchical management by the 1890s. During this moment of vast potential- and – it cannot be restated enough- the oligarchical order that had grown overconfident during the 200+ years of hegemony were petrified to see the nations of the earth rapidly breaking free from this hegemony thanks to the under the international spread of Lincoln’s American System across Germany, Russia, Japan, South America, France, Canada and even China with Sun Yat-sen’s 1911 republican revolution.

As outlined in Cynthia Chung’s ‘Why Russia Saved the USA’, the oligarchy just no longer seemed to have the creative vitality and sophistication required to snuff out these revolutionary flames.

Wells described this problem in the following terms:

“The undeniable contraction of the British outlook in the opening decade of the new century is one that has exercised my mind very greatly… Gradually, the belief in the possible world leadership of England had been deflated by the economic development of America and the militant boldness of Germany. The long reign of Queen Victoria, so prosperous, progressive and effortless, had produced habits of political indolence and cheap assurance. As a people we had got out of training, and when the challenge of these new rivals became open, it took our breath away at once. We did not know how to meet it…”

The science of population control advanced by Huxley, Galton, Wells, Mackinder, Milner and Bertrand Russell was the basis for a new scientific priesthood and “world government” that would put a stop to the startling disequilibrium unleashed by the electric spread of sovereign nation states, protectionism and commitment to scientific and technological progress.

Fabians, Round Tablers and Coefficients: New Think Tanks Emerge

H.G Wells, Russell and other early social engineers of this new priesthood organized themselves in several interconnected think tanks known as 1) the Fabian Society of Sidney and Beatrice Webb which operated through the London School of Economics, 2) the Round Table Movement begun by the fortunes left to posterity by the racist diamond magnate Cecil Rhodes which also gave rise to the Rhodes Trust, and Rhodes Scholarship programs established to indoctrinate young talent in the halls of Oxford, and finally 3) the Co-Efficients Club of London. As noted by Georgetown Professor Carol Quigley, in his 1981 The Anglo-American Establishment, membership in all three organizations was virtually interchangeable.

Wells described the rise of these original think tanks and documented the inner elite’s inability to meet the challenge of the times saying:

“Our ruling class, protected in its advantages by a universal snobbery was broad-minded, easy going and profoundly lazy… Our liberalism was no longer a larger enterprise, it had become a generous indolence. But minds were waking up to this. Over our table at St Ermin’s Hotel wrangle Maxse, Bellairs, Hewins, Amery and Mackinder, all stung by the small but humiliating tale of disasters in the South African war, all sensitive to the threat of business recession, and all profoundly alarmed by the naval and military aggressiveness of Germany.”

Fearful of the prospect of a US-Russia-China alliance outlined in depth by Fabian/Roundtable members Halford Mackinder and Lord Alfred Milner, the solution was simple: kick over the chess board and get everyone to just slaughter each other. Accounts of the British imperial efforts to orchestrate this war have been told in many locations, but none as efficiently as the 2008 documentary 1932: Speak Not of Parties.

In the wake of the destruction which left 9 million dead on all sides and ruined countless lives, Wells, Russell and the Milner Roundtable became leading voices for world government under the League of Nations (c. 1919) advocating “enlightened cosmopolitanism” to replace the era of “selfish nation states”.

The Battle For World Government

A decade after its founding, the League was less successful than Wells and his co-thinkers would have liked, with nationalists from around the world recognizing the evil hand of empire lurking behind the apparent language of “liberal values and world peace”. Sun Yat-sen, among many others was among the anti-Wellsian voices and warned his fellow Chinese in 1924 not to fall into this trap saying:

“The nations which are employing imperialism to conquer others and which are trying to maintain their own favored positions as sovereign lords of the whole world are advocating cosmopolitanism [aka: global governance/globalization -ed] and want the world to join them… Nationalism is that precious possession by which humanity maintains its existence. If nationalism decays, then when cosmopolitanism flourishes we will be unable to survive and will be eliminated”.

In response to this patriotic resistance across the world, a new strategy had to be concocted. This took the form of H.G. Welles’ 1928 The Open Conspiracy: Blueprint for a World Revolution. This little-known book served as a guiding blueprint for the next century of imperial grand strategy calling for a new world religion and social order. According to Wells:

“The old faiths have become unconvincing, unsubstantial and insincere, and though there are clear intimations of a new faith in the world, it still awaits embodiment in formulae and organizations that will bring it into effective reaction upon human affairs as a whole.”

In his book, Welles outlines the need for a new scientific gospel to supersede the Judeo-Christian faiths of the western world. This new gospel consisted of a series of tomes which he and his colleague Julian Huxley composed, entitled: 1) The Outline of History (1920) where Wells re-wrote all of history wishing this analysis to replace the book of Genesis, 2)The Science of Life (1930), co-written with Sir Julian Huxley (Thomas Huxley’s Grandson who continued the family tradition along with Aldous), and 3) The Work, Wealth and Happiness of Mankind (1932).

Part of this immense project to create a new coherent synthetic religion to re-organize humanity involved a re-packaging of a Darwinism that was falling out of favor with many scientists of the 1920’s. They recognized its failure to account for obvious features of nature such as directionality in evolution, spirit, intention, ideas and design.

This re-packaging took the form of the “New Evolutionary Synthesis” which attempted to save Darwin’s theory and its eugenic corollaries using Jesuit priest Pierre Teilhard de Chardin’s doctrine of the “Omega Man”. De Chardin’s system synthesized the foundation of Darwinian assumptions with an acknowledgment of evolutionary directionality, the possibility of spirit, and the existence of mind as a force of nature. The destructive slight of hand used by Chardin was that all of these “transcendent” features of design- spirit, mind, reason, etc.- were: 1) bound to a finite future point of no change which dominated and guided all apparent change in living space time, and 2) binding the world of mind and spirit to the forces of the material world. The Chardin-Huxley-Wells remix kept Darwin’s laws relevant and kept science compatible with imperial modes of social organization.

Outlining the aims of The Open Conspiracy, Wells writes: “Firstly, the entirely provisional nature of all existing governments, and the entirely provisional nature therefore, of all loyalties associated therewith; Secondly, the supreme importance of population control in human biology and the possibility it affords us of a release from the pressure of the struggle for existence on ourselves; and Thirdly, the urgent necessity of protective resistance against the present traditional drift towards war.”

By 1933, the planned Bankers’ Dictatorship, meant to solve the four years’ long great depression and organized during the months-long London Conference, was on the verge of being sabotaged by the recently-elected American President Franklin Delano Roosevelt. It was then that Wells published a new manifesto in the form of a fiction book called ‘Shape of Things to Come: The Ultimate Revolution’. This book (soon made into a Hollywood movie), served as an early tool of mass predictive programming showcasing a world destroyed by decades of global war, pandemic, and anarchy- all caused by… sovereign nation states.

The “solution” to these dark ages took the form of a masonic society of social engineers who descended from planes (Wells’ ‘Benevolent Dictatorship of the Air’) to restore order under a world government. Wells had his main character (a social psychologist) state “while the World Council was fighting for and directing and carrying on the unified World State, the Educational Control was remoulding mankind”. The social psychologists managing the World Government were “becoming the whole literature, philosophy and general thought of the world… the reasoning soul in the body of the race.”

The greatest problem to overcome, stated Wells, was “the variability of mental resistance to direction and limits set by nature to the ideal of an acquiescent cooperative world.”

Wells’ hero, Gustav de Windt, was “pre-occupied by his gigantic schemes for world organization, had treated the ‘spirit of opposition’ as purely evil, as a vice to be guarded against, as a trouble in the machinery which was to be minimized as completely as possible.”

In 1932, Wells gave an Oxford speech championing a global order run by liberal fascists saying: “I am asking for liberal Fascisti, for enlightened Nazis”. This was not paradoxical when one realizes that the rise of fascism was never a “nationalist” phenomenon as popular history books have asserted for decades but rather was the artificial consequence of a supranational financier-oligarchy from above who wished to use “enforcers” to bend their societies to a higher will.

The World Brain

By the time World War II began, Wells’ ideas had evolved new insidious components that later gave rise to such mechanisms as Wikipedia and Twitter in the form of “The World Brain” (19937) where Wells calls for reducing the English language to a “basic English” of 850 accepted words which would make up a world language. In this book, Wells states that “thinkers of the forward-looking type whose ideas we are now considering, are beginning to realize that the most hopeful line for the development of our racial intelligence lies rather in the direction of creating a new world organ for the collection, indexing, summarizing and release of knowledge, than in any further tinkering with the highly conservative and resistant university system, local, national and traditional in texture, which already exits. These innovators, who may be dreamers today, but who hope to become very active organizers tomorrow, project a unified, if not centralized, world organ to pull the mind of the world together.”

By 1940, Wells wrote the The New World Order which again amplified his message. In writing this,  he coordinated his efforts with the many Fabians and Rhodes Scholars who had infiltrated western foreign policy establishments in order to shape the the war, but more importantly, the post-war global structure. These were the networks that hated Franklin Roosevelt, Vice-President Henry Wallace, Harry Hopkins and other genuine “New Dealers” who wanted nothing more than to destroy colonialism once and for all in the wake of the war.

Wells insists that the “new age of brotherhood” that must guide the new United Nations must not tolerate sovereign nation states as FDR dreamed (and as was formally enshrined in the UN Charter) but must rather be guided by his caste of social engineers pulling the levers of production and consumption within a system of mass “collectivization” saying:

“Collectivisation means the handling of the common affairs of mankind by a common control responsible to the whole community. It means the suppression of go-as-you-please in social and economic affairs just as much as in international affairs. It means the frank abolition of profit-seeking and of every device by which human beings contrive to be parasitic on their fellow man. It is the practical realisation of the brotherhood of man through a common control”.

If Wells’ outlines look similar to those ideas recently made public by the World Economic Forum’s Great Reset, then don’t be surprised.

Wells’ Death and the Continuity of a Bad Idea

With Wells’ 1946 death, other Fabians and social engineers continued his work during the Cold War. One of the leading figures here being Wells’ associate, Lord Bertrand Russell, who wrote in his 1952 The Impact of Science on Society:

“I think the subject which will be of most importance politically is mass psychology…. Its importance has been enormously increased by the growth of modern methods of propaganda. Of these the most influential is what is called ‘education’. Religion plays a part, though a diminishing one; the press, the cinema and the radio play an increasing part… it may be hoped that in time anybody will be able to persuade anybody of anything if he can catch the patient young and is provided by the state with money and equipment.”

“The subject will make great strides when it is taken up by scientists under a scientific dictatorship. The social psychologists of the future will have a number of classes of school children on whom they will try different methods of producing an unshakable conviction that snow is black. Various results will soon be arrived at. First that the influence of home is obstructive. Second that not much can be done unless indoctrination begins before the age of ten. Thirdly verses set to music and repeatedly intoned are very effective. Fourth that the opinion that snow is white must be held to show a morbid taste for eccentricity. But I anticipate. It is for future scientists to make these maxims precise and discover exactly how much it costs per head to make children believe that snow is black, and how much less it would cost to make them believe it is dark gray.”

Although the bodies of Wells, Russell and Huxley have long since rotted away, their rotten ideas continue to animate their disciples like Sir Henry Kissinger, George Soros, Klaus Schwab, Bill Gates, Lord Malloch-Brown (whose disturbing celebration of the Coronavirus as a golden opportunity to finally restructure civilization) should concern any thinking citizen. The idea of a “Great Reset” expounded by these modern mouthpieces of history’s bad ideas signals nothing more than a new Dark Age which should turn the stomach of any moral being.

It is here useful to hold the words of Kissinger in mind who had channeled the spectre of Wells telling a group of technocrats in Evian, France in 1992:

Today, America would be outraged if U.N. troops entered Los Angeles to restore order. Tomorrow they will be grateful! This is especially true if they were told that there were an outside threat from beyond whether real or promulgated, that threatened our very existence. It is then that all peoples of the world will plead to deliver them from this evil. The one thing every man fears is the unknown. When presented with this scenario, individual rights will be willingly relinquished for the guarantee of their well-being granted to them by the World Government.”

Tyler Durden Sat, 12/26/2020 - 00:00
Published:12/25/2020 11:09:49 PM
[Markets] Dreaming Of A Christmas Without Stuff Nobody Wants Or Needs Dreaming Of A Christmas Without Stuff Nobody Wants Or Needs

Authored by Charles Hugh Smith via OfTwoMinds blog,

Freeing ourselves of unwanted/unneeded gift-giving is not just heresy in a debt-funded consumerist economy... it is tantamount to treason.

Did you see the new "gotta-have" coffee-pod flavors this Christmas? Crayfish, Spanish Moss, Pumpkin Spicy Radish and Jungle Rot. Yowza, it doesn't get any better than this...

Future archeologists will marvel not just at the enormous quantity of stuff left by our late-oil-boom frenzy of consumption but by the peculiar concentrations of never-used stuff in closets, basements and strange (possibly religious in nature) immense structures comprised of endless rows of small rooms crammed to the ceiling with stuff without any apparent utility or value.

When can we finally admit that Christmas gift-giving no longer serves any purpose other than the purchase of vast quantities of stuff nobody wants or needs? Generations ago, before everyone could buy whatever they wanted on credit, Christmas was the one time when some portion of the savings that had been painfully accumulated by sacrifice would be doled out for small gifts, typically a consumable treat, modest toys for children or a necessity.

Compare that tradition with today's frantic frenzy to find something new that recipients don't need or want and retailers' equally frantic search for new markets: your gerbil doesn't have a plush new bed? Shame on you! Imagine its anguish when everyone else is surrounded by piles of shredded wrapping paper and your poor pet didn't get a single present... where's your Christmas spirit (and credit card)?.

The most appreciated gift you can give is a suggestion to end the obligation to exchange gifts. To state the honest truth--we don't want or need anything else, and don't have space for anything else, thank you--is a gift few are willing to risk saying, but everyone heaves a sigh of relief when one brave person asks to be relieved of the burden of buying another mountain of stuff nobody wants or needs.

There is a long tradition of consumable homemade gifts--Christmas cookies, fruitcake, etc.--that awaits rediscovery.

Freeing ourselves of unwanted/unneeded gift-giving is not just heresy in a debt-funded consumerist economy--it is tantamount to treason. (The lines from an old Errol Flynn movie come to mind: "You speak treason!" "Fluently.") But why should an honest appraisal qualify as both heresy and treason?

The honest truth is hearts don't leap with joy at receiving another unwanted, unneeded thing; hearts sink at the task of moving the gift into some corner of the already-stuffed closet or donating it. What was the point of all this costly frenzy again? To keep a debt-dependent consumer economy from imploding? Is that what Christmas has become?

What's scarce isn't more stuff. What's scarce is time, reflection and the generosity of spirit. We're so busy loading the conveyor belt of unwanted, unneeded stuff in and out of our homes that we have no time to actually spend on what is valuable.

But here, try this new coffee-pod flavor, miso-kumquat-kimchee, I got you the bulk quantity at Costco, you're gonna love it.

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Tyler Durden Fri, 12/25/2020 - 14:40
Published:12/25/2020 2:08:51 PM
[Markets] What If Jesus Had Been Born In The American Police State? What If Jesus Had Been Born In The American Police State?

Authored by John Whitehead via The Rutherford Institute,

“When the song of the angels is stilled, when the star in the sky is gone, when the kings and princes are home, when the shepherds are back with their flocks, the work of Christmas begins: to find the lost, to heal the broken, to feed the hungry, to release the prisoner, to rebuild the nations, to bring peace among the people, to make music in the heart.”

- Howard Thurman

The Christmas story of a baby born in a manger is a familiar one.

The Roman Empire, a police state in its own right, had ordered that a census be conducted. Joseph and his pregnant wife Mary traveled to the little town of Bethlehem so that they could be counted. There being no room for the couple at any of the inns, they stayed in a stable (a barn), where Mary gave birth to a baby boy, Jesus. Warned that the government planned to kill the baby, Jesus’ family fled with him to Egypt until it was safe to return to their native land.

Yet what if Jesus had been born 2,000 years later?

What if, instead of being born into the Roman police state, Jesus had been born at this moment in time? What kind of reception would Jesus and his family be given? Would we recognize the Christ child’s humanity, let alone his divinity? Would we treat him any differently than he was treated by the Roman Empire? If his family were forced to flee violence in their native country and sought refuge and asylum within our borders, what sanctuary would we offer them?

A singular number of churches across the country have asked those very questions in recent years, and their conclusions were depicted with unnerving accuracy by nativity scenes in which Jesus and his family are separated, segregated and caged in individual chain-link pens, topped by barbed wire fencing.

Those nativity scenes were a pointed attempt to remind the modern world that the narrative about the birth of Jesus is one that speaks on multiple fronts to a world that has allowed the life, teachings and crucifixion of Jesus to be drowned out by partisan politics, secularism, materialism and war, all driven by a manipulative shadow government called the Deep State.

The modern-day church has largely shied away from applying Jesus’ teachings to modern problems such as war, poverty, immigration, etc., but thankfully there have been individuals throughout history who ask themselves and the world: what would Jesus do?

What would Jesusthe baby born in Bethlehem who grew into an itinerant preacher and revolutionary activist, who not only died challenging the police state of his day (namely, the Roman Empire) but spent his adult life speaking truth to power, challenging the status quo of his day, and pushing back against the abuses of the Roman Empiredo about the injustices of our  modern age?

Dietrich Bonhoeffer asked himself what Jesus would have done about the horrors perpetrated by Hitler and his assassins. The answer: Bonhoeffer was executed by Hitler for attempting to undermine the tyranny at the heart of Nazi Germany.

Aleksandr Solzhenitsyn asked himself what Jesus would have done about the soul-destroying gulags and labor camps of the Soviet Union. The answer: Solzhenitsyn found his voice and used it to speak out about government oppression and brutality.

Martin Luther King Jr. asked himself what Jesus would have done about America’s warmongering. The answer: declaring “my conscience leaves me no other choice,” King risked widespread condemnation when he publicly opposed the Vietnam War on moral and economic grounds.

Even now, despite the popularity of the phrase “What Would Jesus Do?” (WWJD) in Christian circles, there remains a disconnect in the modern church between the teachings of Christ and the suffering of what Jesus in Matthew 25 refers to as the “least of these.”

Yet this is not a theological gray area: Jesus was unequivocal about his views on many things, not the least of which was charity, compassion, war, tyranny and love.

After all, Jesus—the revered preacher, teacher, radical and prophet—was born into a police state not unlike the growing menace of the American police state. When he grew up, he had powerful, profound things to say, things that would change how we view people, alter government policies and change the world. “Blessed are the merciful,” “Blessed are the peacemakers,” and “Love your enemies” are just a few examples of his most profound and revolutionary teachings.

When confronted by those in authority, Jesus did not shy away from speaking truth to power. Indeed, his teachings undermined the political and religious establishment of his day. It cost him his life. He was eventually crucified as a warning to others not to challenge the powers-that-be.

Can you imagine what Jesus’ life would have been like if, instead of being born into the Roman police state, he had been born and raised in the American police state?

Consider the following if you will.

Had Jesus been born in the era of the America police state, rather than traveling to Bethlehem for a census, Jesus’ parents would have been mailed a 28-page American Community Survey, mandatory government questionnaire documenting their habits, household inhabitants, work schedule, how many toilets are in your home, etc. The penalty for not responding to this invasive survey can go as high as $5,000.

Instead of being born in a manger, Jesus might have been born at home. Rather than wise men and shepherds bringing gifts, however, the baby’s parents might have been forced to ward off visits from state social workers intent on prosecuting them for the home birth. One couple in Washington had all three of their children removed after social services objected to the two youngest being birthed in an unassisted home delivery.

Had Jesus been born in a hospital, his blood and DNA would have been taken without his parents’ knowledge or consent and entered into a government biobank. While most states require newborn screening, a growing number are holding onto that genetic material long-term for research, analysis and purposes yet to be disclosed.

Then again, had Jesus’ parents been undocumented immigrants, they and the newborn baby might have been shuffled to a profit-driven, private prison for illegals where they first would have been separated from each other, the children detained in make-shift cages, and the parents eventually turned into cheap, forced laborers for corporations such as Starbucks, Microsoft, Walmart, and Victoria’s Secret. There’s quite a lot of money to be made from imprisoning immigrants, especially when taxpayers are footing the bill.

From the time he was old enough to attend school, Jesus would have been drilled in lessons of compliance and obedience to government authorities, while learning little about his own rights. Had he been daring enough to speak out against injustice while still in school, he might have found himself tasered or beaten by a school resource officer, or at the very least suspended under a school zero tolerance policy that punishes minor infractions as harshly as more serious offenses.

Had Jesus disappeared for a few hours let alone days as a 12-year-old, his parents would have been handcuffed, arrested and jailed for parental negligence. Parents across the country have been arrested for far less “offenses” such as allowing their children to walk to the park unaccompanied and play in their front yard alone.

Rather than disappearing from the history books from his early teenaged years to adulthood, Jesus’ movements and personal data—including his biometrics—would have been documented, tracked, monitored and filed by governmental agencies and corporations such as Google and Microsoft. Incredibly, 95 percent of school districts share their student records with outside companies that are contracted to manage data, which they then use to market products to us.

From the moment Jesus made contact with an “extremist” such as John the Baptist, he would have been flagged for surveillance because of his association with a prominent activist, peaceful or otherwise. Since 9/11, the FBI has actively carried out surveillance and intelligence-gathering operations on a broad range of activist groups, from animal rights groups to poverty relief, anti-war groups and other such “extremist” organizations.

Jesus’ anti-government views would certainly have resulted in him being labeled a domestic extremist. Law enforcement agencies are being trained to recognize signs of anti-government extremism during interactions with potential extremists who share a “belief in the approaching collapse of government and the economy.”

While traveling from community to community, Jesus might have been reported to government officials as “suspicious” under the Department of Homeland Security’s “See Something, Say Something” programs. Many states, including New York, are providing individuals with phone apps that allow them to take photos of suspicious activity and report them to their state Intelligence Center, where they are reviewed and forwarded to law-enforcement agencies.

Rather than being permitted to live as an itinerant preacher, Jesus might have found himself threatened with arrest for daring to live off the grid or sleeping outside. In fact, the number of cities that have resorted to criminalizing homelessness by enacting bans on camping, sleeping in vehicles, loitering and begging in public has doubled.

Viewed by the government as a dissident and a potential threat to its power, Jesus might have had government spies planted among his followers to monitor his activities, report on his movements, and entrap him into breaking the law. Such Judases today—called informants—often receive hefty paychecks from the government for their treachery.

Had Jesus used the internet to spread his radical message of peace and love, he might have found his blog posts infiltrated by government spies attempting to undermine his integrity, discredit him or plant incriminating information online about him. At the very least, he would have had his website hacked and his email monitored.

Had Jesus attempted to feed large crowds of people, he would have been threatened with arrest for violating various ordinances prohibiting the distribution of food without a permit. Florida officials arrested a 90-year-old man for feeding the homeless on a public beach.

Had Jesus spoken publicly about his 40 days in the desert and his conversations with the devil, he might have been labeled mentally ill and detained in a psych ward against his will for a mandatory involuntary psychiatric hold with no access to family or friends. One Virginia man was arrested, strip searched, handcuffed to a table, diagnosed as having “mental health issues,” and locked up for five days in a mental health facility against his will apparently because of his slurred speech and unsteady gait.

Without a doubt, had Jesus attempted to overturn tables in a Jewish temple and rage against the materialism of religious institutions, he would have been charged with a hate crime. Currently, 45 states and the federal government have hate crime laws on the books.

Had anyone reported Jesus to the police as being potentially dangerous, he might have found himself confronted—and killed—by police officers for whom any perceived act of non-compliance (a twitch, a question, a frown) can result in them shooting first and asking questions later.

Rather than having armed guards capture Jesus in a public place, government officials would have ordered that a SWAT team carry out a raid on Jesus and his followers, complete with flash-bang grenades and military equipment. There are upwards of 80,000 such SWAT team raids carried out every year, many on unsuspecting Americans who have no defense against such government invaders, even when such raids are done in error.

Instead of being detained by Roman guards, Jesus might have been made to “disappear” into a secret government detention center where he would have been interrogated, tortured and subjected to all manner of abuses. Chicago police have “disappeared” more than 7,000 people into a secret, off-the-books interrogation warehouse at Homan Square.

Charged with treason and labeled a domestic terrorist, Jesus might have been sentenced to a life-term in a private prison where he would have been forced to provide slave labor for corporations or put to death by way of the electric chair or a lethal mixture of drugs.

Indeed, as I show in my book Battlefield America: The War on the American People, given the nature of government then and now, it is painfully evident that whether Jesus had been born in our modern age or his own, he still would have died at the hands of a police state.

Thus, as we draw near to Christmas with its celebrations and gift-giving, we would do well to remember that what happened on that starry night in Bethlehem is only part of the story. That baby in the manger grew up to be a man who did not turn away from evil but instead spoke out against it, and we must do no less.

Tyler Durden Thu, 12/24/2020 - 22:30
Published:12/24/2020 9:32:31 PM
[Markets] Goldman's Four Lessons From 2020 Goldman's Four Lessons From 2020

In what is likely his last note of the year, Goldman's chief economist Jan Hatzius takes a look at what 2020 has taught him about the economy and the practice of economic forecasting, and writes that "at this early stage, we see four lessons with potentially more general implications. First, incorporating real-time data into a standard GDP and employment framework can yield large benefits, especially in a crisis. Second, forecasters need to be flexible and eclectic in order to add value, especially in a crisis. Third, Keynesian policy prescriptions have now triumphed in two successive crises [ZH translation: one can always "fix" debt with more debt, until one day everything comes crashing down]. Fourth, people and market economies have a remarkable capacity to adapt.

Amusingly, Hatzius starts off rather humble - for a change - admitting that pretty much everything he predicted a year ago would happen... was dead wrong:

We recently reviewed our ten questions for the US economy in 2020, the answers we gave a year ago, and what actually happened. Most of our answers were wrong because the pandemic pushed the economy into its deepest (though probably also shortest) recession on record.

Of course, to those managing money based on the bank's recos and forecasts, this admission will hardly help offset the losses, but just so the introspective Goldman chief economist can demonstrate his true contrition for having been wrong again, he has published a note in which he promises that he has learned his lesson. Or rather four:

... while holding ourselves accountable for last year’s predictions is always important, a more interesting question might be what we can learn from the way 2020 unfolded after the pandemic had appeared on the radar screen—from the earliest reported Chinese cases in January to the start of the global vaccination campaign in December.

At this early stage—and we emphasize that our conclusions might change once the pandemic is truly behind us—we see four lessons with broader implications for economic forecasting.

Said lessons are listed below, as follows:

1. The benefits of real-time data, which of course is actually useful compared to seasonally adjusted, goal-seeked and manipulated "government data" whose only purpose is political validation and propaganda.

When the pandemic hit China in January, we were slow to recognize its global scale. Well into February, we focused on the “spillover” effects from economic weakness in China on US growth, working through trade links, tourism, and supply chain disruptions. Only at the end of February—after the lockdowns in northern Italy—did we start to treat the virus like the global shock it was.

But that downgrade set the stage for a series of dramatic further cuts over the following month, as shown in Exhibit 1. At the same time, we held on to a relatively optimistic view of the shape of the rebound after the initial plunge, lifting our 2021 GDP growth forecast to far above-trend rates.

One key reason why we felt confident in slashing our Q2 GDP numbers so aggressively was the timely and granular information about the real-time performance of the economy from cellphone locations, credit and charge card transactions, worker panels, and other real-time data sets. This information was available publicly, but we invested a substantial amount of resources in making it compatible with standard economic measures such as GDP and payroll employment. Once the economy hit bottom in April, the framework confirmed that the recovery was proceeding swiftly in the short term, which also raised our confidence in the optimistic longer-term view, with a sharp rebound in Q3 and ongoing strength in 2021. The broader lesson is incorporating real-time data into a standard economic accounting framework can yield large benefits, especially in a crisis.

2. It’s better to be a fox than a hedgehog, or the "we get our best lessons from books" excuse.

Professor Philip Tetlock of the University of Pennsylvania is best known as the co-author of Superforecasting: The Art and Science of Prediction and the founder of the Good Judgment Project. In an earlier book on forecasting, he introduced his distinction between two forecaster archetypes, “hedgehogs” and “foxes”. Hedgehogs use a single model to explain the world across a large range of different states in a deductive manner. By contrast, foxes are inductive decisionmakers who don’t believe in an all-encompassing model, use several different approaches to analyze the situation, and then triangulate between them to come up with a view. Tetlock focuses on political predictions such as the fall of the Soviet Union and the end of Apartheid, and documents that foxes generally outperform hedgehogs.

We certainly have our share of strongly held views about how the economy works. We think that a financial deficit—an excess of total spending over total income—exposes the private sector to a greater risk of retrenchment in response to negative shocks. We think many financial market moves are driven by sentiment rather than economic fundamentals, which means that shocks to financial conditions are often exogenous drivers of growth and it makes sense to look at measures such as our FCI impulse. We adhere to the broadly Keynesian view that the ups and downs of the labor market often amplify business cycle impulses, reinforcing growth in a boom and constraining it in early recovery. And we think that fiscal tightening—especially in a zero-rate environment where it is harder for the Fed to react—often weighs heavily on growth in the short to medium term.

But 2020 was not a time to dig into these views like a hedgehog. In March, we took little comfort from the private sector surplus or the initially solid labor market momentum, as these positive forces paled in importance relative to the dramatic escalation of the pandemic. In April and May, we didn’t build a negative FCI impulse or self-feeding labor market weakness into our forecasts, as this would have made them too extrapolative at a time when the progress in containing the pandemic clearly dominated any driver of growth. And in August, we kept our concern about the growth effects of the fiscal tightening in check, reasoning that the exceptionally high personal saving rate would cushion the impact on spending. These decisions all proved correct (although more recently we seem to have overestimated the short-term impact of the renewed rise in infections on the economy).

3. Perhaps the funniest "lesson" according to Goldman is that what happened in 2020 was "another Keynesian triumph"; here Hatzius is either trolling his readers (again) or he is truly oblivious to the fact that the global economy is now constantly on the verge of collapse and needs constant central bank interventions precisely because of such "Keynesian triumphs" that will push global debt to surpass a third of a quadrillion dollars in the next few years, leaving central banks with hyperinflation as the only recourse to restore some normalcy to a world where money printing is now the norm.

Some forecasters who view themselves as Keynesian overemphasized the multiplier effects from the labor market collapse in April, as well as the growth hit from the fiscal tightening in the fall. But these misses should not obscure the fact that the 2020 crisis was another triumph for Keynesian economic policy—a framework that prescribes aggressive monetary and fiscal support in response to negative shocks, especially those that look clearly temporary. The extent to which policymakers turned to Keynesian solutions is probably best illustrated by Exhibit 2. In Q2, the combination of expanded unemployment insurance, tax rebates, and small business support delivered the biggest increase in real disposable income on record, in a quarter that also saw the biggest decline in real GDP on record.

Fears in some quarters that stimulus on such a scale would lead to a destabilizing increase in inflation expectations or a run on the currency proved unfounded; on the contrary, most commentators now think that these aggressive policies were essential for stabilizing both the financial markets and the real economy in a moment of extreme peril, and they prevented what otherwise would probably have been dramatically negative second-round effects. The 2020 crisis thus adds to the evidence from the 2008 crisis that monetary and fiscal policymakers should be very aggressive in delivering demand-side stimulus when faced with a major downturn.

Right, and just in case central banks should also inject a few trillion for good measure, not allowing a crisis to go to waste, and making the 0.1% the richest they have ever been.

Which brings us to Goldman's fourth and final lesson, one which we actually agree with:

4. People and market economies have a remarkable capacity to adapt.

The other economic lesson of 2020 has a more classical flavor: market economies are highly adaptable. The abrupt shift from office-based work to at-home work proved much less disruptive than anticipated, at least from the employer’s perspective (though many employees might beg to differ). The move from in-store shopping to online shopping was similarly seamless; indeed, US retail sales had returned to the pre-pandemic level as early as June, when in-store shopping was still down 35% relative to normal. The supply side of the economy has proven remarkably resilient so far, with fewer bankruptcies than feared, greater new business formations than before the crisis, and a rapid decline in joblessness so far (though labor market slack remains sizable). And each successive virus wave (scaled by the increase in new infections) has had a smaller—and smaller than expected—impact on economic activity. This is partly because improved treatments have gradually made the virus itself less lethal and partly because both governments and private individuals have gradually learned to restrict those activities that pose the highest risk of infection relative to their economic value and adjust others in ways that reduce risk, e.g., through mask mandates and better ventilation.

Such adaptation measures remain very important in the near term in view of the continued high level of infections. However, they will probably become less necessary next year as the population is successively vaccinated. If this process unfolds reasonably smoothly—obviously still a big if—the story of how the scientific and pharmaceutical community developed and distributed safe and effective vaccines so soon after the discovery of the virus will look like the biggest triumph of human adaptation and ingenuity in the entire story of the 2020 pandemic.

Tyler Durden Thu, 12/24/2020 - 18:30
Published:12/24/2020 5:31:37 PM
[Markets] Dave Collum's 2020 Year In Review, Part 1: "Willfully Ignorant" Dave Collum's 2020 Year In Review, Part 1: "Willfully Ignorant"

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

"David Collum is willfully ignorant."

~ Mountain Man (@Pjas77)

Every year, David Collum writes a detailed “Year in Review” synopsis full of keen perspective and plenty of wit. This year’s is no exception.


Imagine, if you will, a man wakes up from a year-long induced coma—a long hauler of a higher order—to a world gone mad. During his slumber, the President of the United States was impeached for colluding with the Russians using a dossier prepared by his political opponents, themselves colluding with the FBI, intelligence agencies, and the Russians. A pandemic that may have emanated from a Chinese virology laboratory swept the globe killing millions and is still on the loose. A controlled demolition of the global economy forced hundreds of millions into unemployment in a matter of weeks. Metropolitan hotels plummeted to 10% occupancy. The 10% of the global economy corresponding to hospitality and tourism had been smashed on the shoals and was foundering. The Federal Reserve has been buying junk corporate bonds in total desperation. A social movement of monumental proportions swept the US and the world, triggering months of rioting and looting while mayors, frozen in the headlights, were unable to fathom an appropriate response. The rise of neo-Marxism on college campuses and beyond had become palpable. The most contentious election in US history pitted the undeniably polarizing and irascible Donald Trump against the DNC A-Team including a 76-year-old showing early signs of dementia paired with a sassy neo-Marxist grifter with an undetectable moral compass. Many have lost faith in the fairness of the election as challenges hit the courts. Peering through the virus-induced brain fog the man sees CNBC playing on the TV with the scrolling Chiron stating, “S&P up 12% year to date. Nasdaq soars 36%.” The man has entered The Twilight Zone.

A nutty Chem prof from Cornell
Has interesting stories to tell
The year 2020
Had crazy-a-plenty
T’was a year that was crafted in hell

~ @TheLimerickKing

Figure 1. The one graphic that rules them all.

Figure 2. “Largely peaceful protest” meme at its inception.

Putting ideas on paper is the best way to organize them in one place, and getting everything in one place is essential to understanding ideas as more than the gut reactions they often hide as.

~ Morgan Housel (@morganhousel), columnist on why we write

Every year I ponder not writing a review. One of the voices in my head was pleading with me, “Don’t write it. There is nothing to be gained.” A much louder voice that chimes in seconds before every major decision that I make, however, was saying, “Fuck it. Let’s do it.” Someday I may drop the mic but not yet. I personally benefit because my life’s experiences and observations—those wild moments and funny-assed one-liners—don’t get shoved down (or up) the memory hole. I get boluses of serotonin. Mike “Mish” Shedlock referred to 2019’s version as “Satirical, Comedic, Insulting…” as part of a thorough Collumoscopy.ref 1 To the guy who keeps emailing me urging me to clean it up so his daughters can read it, save your breath. They are either too young, which means they should be reading the Harry Potter series written by that transgender-bashing cis white billionaire, or probably have long since rounded the bases and are getting kinky with their boyfriends in ways that would curdle your blood. I also write this for Gerry (and his kids)…

Collum is a whiny moron…You would interview someone like that, a Trump-supporting climate denier…he’s a total idiot who needs to FOAD [fuck off and die]. He simply refuses to acknowledge facts…

~ Gerry Muller, my most audacious hate mailer, responding to Jim Kunstler for his audacity.

The title is a takeoff on the website entitled, “WTF Happened in 1971”, which uses 50 graphics to document that the world changed abruptly in 1971.ref 2 (The gold bugs know why.) It is undeniable that 2020 will be a year of abrupt change as well—a phase change so to speak—but to what future is unclear. We all squandered inordinate kilos of ATP trying to understand events in ways that would not make us happier people and for which an answer key eventually would be forthcoming.

We have to be very careful about how we spend our time…be very careful about not being manipulated into narrative after narrative….The Eye of Sauron is focused on climate, covid, and race. I’m not going to get caught up in it…Everything we get distracted onto we don’t make better.

~ Douglas Murray (@DouglasKMurray), author of The Madness of Crowds

This year posed challenges writing the damned thing, some common and others unique. Of course, I don’t have the luxury of casually surveying a year. Ya can’t be Toobin’ all day and patch it together in your spare time. Ya gotta Stephen-King the mother. Why not write it quarterly? Simple: it takes my beautiful mind that long to spot patterns in random noise and deconvolute the chorus of voices in my head. Also, nobody—and I mean nobody—in their right mind wants to rehash the events of 2020. The annual YIR is always about human folly, but how much folly is there when we’re all living in our basements (Joe)?

I tease Dave about his “Technical Analysis Wizardry,” because I want him to write a children’s book on charting. Still, I can’t deny that he often captures the market zeitgeist in one tweet.

~ Tony Greer (@TGMacro), TGMacro

Keeping it light was a Herculean task. I kept getting pulled by Lord Vader toward a revenge mindset, which I have curbed with only partial success. Epithet-rich allusions to baseball bats kept getting smuggled into the prose stemming from undiagnosed coprolalia, the acute swearing component of Tourette’s Syndrome. Some commenter after a podcast said (paraphrased), “This guy sure wants to put a hurt on a lot of people.” Indeed. The sense of frontier justice runs deep in the entire Collum clan. Horse thieves beware. I don’t need anger management; I need people to stop pissing me off. Ad hominem attacks are reserved for the total douche bags.

Writers are desperate people, and when they stop being desperate they stop being writers.

~ Charles Bukowski, American Poet

I was inadvertently ready for the pandemic in some odd ways. I love medieval history, had just finished a book on the Black Death in the fall of 2019, and was pondering immunology when Covid-19 struck. Ah, the first contention: I refuse to capitalize the whole thing because COVID-19 makes no sense linguistically—it’s not correct for an acronym or proper name—and using all caps is shouting and distracts from other attempts at emphasis. SHOULD I TYPE LIKE THIS? I don’t care what everybody else on the planet does. They are wrong. Screw ‘em. I appear to have gotten Covid-19 at birth; I have been tasteless and urged by friends and family to social distance since childhood. Obviously I should wax philosophically about the Covid-19, right? But what do you say to 350 million basement-dwelling bunker monkeys who are now expert epidemiologists and virologists with rock-solid opinions of what parts of the pandemic sucked the saltiest balls? I dedicate far less page space to the pandemic or the elections than you might expect.

It is so much better to tell the truth than to just shut up.

~ Douglas Murray (@DouglasKMurray), author of The Madness of Crowds

The YIR poses risk—possibly considerable risk—every year, but this year is special. No guff no glory I guess. There are a ton of social justice crazies (SJCs) out there. In the 65th year of my personal sitcom, the writers keep hurling absurdities to keep the series running, but I got canceled anyway. No, not by Covid-19 (unless this is The Sixth Sense) but by the diversity-industrial complex otherwise known as the Klan of the Kancel Kulture (KKK), virtuously broadcasting to the world that I am a seriously twisted bastard. It is hard to argue with that. However, if people in visible positions feel they cannot speak up right now, when will they speak up? On their deathbeds? If a 65-year-old tenured professor can’t express unpopular ideas, who can? A 9-to-5-er who could be fired in a heartbeat has no voice. I will keep spewing drivel because somebody has to do it.

Factoid: You cannot breathe with your tongue sticking out of your mouth.

Stuff your tongues back in your mouths you idiots. Of course you can. I have become increasingly aware that we are all looking through our own lens with an emerging plotline that is self-consistent with our own unique narrative. As described in The Social Dilemma, the narrative is shaped nefariously by ideologically dubious weasels in Silicon Valley running their MK-Ultra experiments on us through mass and social media. As I jam more pixelated pseudo-factoids into my noggin, doubts about their veracities are debilitating. How is it that smart blokes can peer at the same data and draw diametrically opposite conclusions? If I offered you $1000 to convince just one person—one person—that they were wrong about Russia collusion, the Biden laptop, election fraud, or the merits of sheltering, could you do it? Didn’t think so. Some of us must be, as Gerry would say, whiny morons who should simply FOAD, but we all have our truths that we will defend, Goddammit! This annual tome is, necessarily, the World According to Dave. At times it will sound narcissistic, but it’s not. [Editor’s note: yes it is.] It wanders through a range of topics in no way statistically weighted to their global importance but presented in a Michael-Lewis way sniffing out the story beneath the story. What my four regular readers would tell you is that I try to write about what others are not pondering. I don’t always find the rotting corpse, but I am attracted to foul odors.

Sturgeon’s Law: 90% of everything is crap

The Year in Review (YIR) is broken into two parts with individual sections hot-linked in the contents below. The whole beast can be downloaded as a single PDF here.


Part 1

    My Personal Year
    Conspiracy Theories
    Decade in Review
    Wealth Creation
    Broken Markets
    Link in Part 1

Part 2

    Epilogue-Climate Change
    Rise of the Cancel Culture
    The Tweet and Cancel
    The Buffalo Shove: The Real Story
    College Life
    Political Correctness—Adult Division
    Group Statements and Identity Science
    Anatomy of the Riots
    The Death of George Floyd
    Covid-19: Just Opinions
    Where to from Here?
    Links in Part 2

    My Personal Year

    How about ‘Batshit political views and how to succeed despite them?’

    ~ a colleague, when asked what topic I should present in a guest lecture

    We all suffered from suffocating acedia—a melancholy specifically resulting from monastic isolation known only to ye olde linguists.ref 1 All things considered, I personally had it as good as you could ever hope, and none of us were sleeping in the London Tube at night to avoid the Luftwaffe. We sheltered with my 30-year-old youngest son Thomas and his main squeeze, got a lot of sun enjoying casual dinners and great chats, followed by a ritualistic dragging our asses through the grass after running out of toilet paper. But by mid-year there was a notable pall over the Shire, and orcs were spotted in the woods. One prays this is not a trilogy.

    We are all biodegradable and progress through three stages of life: stud, dud, and thud. I thought getting old would take a while. I was wrong. You start life trying not to wet yourself and end life trying not to wet yourself. The middle is the fun part. The final days—pretty much gruel and drool I figure—will probably suck. While trying to avoid stage three, I put on 6 lbs sheltering but ripped off 26 lbs in the last 10 weeks (within 40 lbs of my crack weight.) You’ve gotta touch that bag before leading off again. I didn’t make it to the gym this year. That makes 15 in a row. I had a hernia fixed before the lockdown, still piss bladder stones every week or two (trying not to wet myself), came up negative on prostate cancer, make sound effects simply getting out of a chair, and learned how to cut my own hair. (The ears are easy, the back is quite a reach, and manscaping is unnerving.) We started with five dogs in the house and ended with six. The two visiting Boston Terriers inspired us to get Charlie. (Check out this video.ref 2) Charlie is great. It is nothing but Boston Terriers (and turtles) from here on.

    I intend to retire at 70; the runway lights are in view. Much of the sand in the hourglass has fallen. It’s a little weird when you realize you are no longer building a career but trying not to crash land it. As a depreciating asset, your bucket list grows short as your fuck-it list expands. I occasionally read death-bed regrets: nobody ever worries about the bloat of their in-box.

    Dave is the man who can rant better than anybody I’ve ever met.

    ~ Marty Bent (@MartyBent), Tales from the Crypt podcast

    I did a lot of podcasts—some with encore performances—since my last Year in Review. They are listed unceremoniously as follows:

    Chris Martenson (Peak Prosperity, @chrismartenson)ref 3

    Jim Kunstler (Kunstlercast; @Jhkunstler)ref 4

    Rick Sanchez (RT; @RickSanchezTV)ref 5

    Chris Irons (Quoth the Raven; @QTRResearch)ref 6

    Marty “Hodler King” Bent (Tales from the Crypt; @MartyBent)ref 7

    Sam McCullough (end of Chain; @traders_insight)ref 8

    Jason Burack (Wall St for Main St, @JasonEBurack)ref 9

    Zach Abraham (KYR Radio; @KYRRadio)ref 10

    Elijah Wood (Silver Doctors; @SilverDoctors)ref 11

    Justin O’Connell (Gold Silver Bitcoin Podcast; @GldSlvBtc)ref 12

    Anthony “Pomp” Pompliano (Morgan Creek Digital; @APompliano)ref 13

    Ryan Ortega (Jelly Donut, @JellyDonutPod)ref 14

    Thomas George (Grizzle; @thomasg_grizzle)ref 15

    Kenneth Ameduri (Crush the Street)ref 16

    Dan Ferris (Stansberry Research; @dferris1961)ref 17

    Max Keiser and Stacey Herbert (Keiser Report; @staceyherbert and @maxkeiser)ref 18

    Fergus Hodgson and Brien Lundin (Gold Newsletter Podcast; @GoldNewsletter)ref 19

    Phil Kennedy (Kennedy Financial)ref 20

    Phil Bak, CIO at Signal Advisors (@philbak1)ref 21

    A bucket-list interview with Tony Greer (@TGMacro) on RealVision that had disappeared for months was found last year and officially posted this year.ref 22 (I actually suspect it had been censored by a former employee to protect their reputation.) I had a ball serving on a panel discussion at the 2020 New Orleans Investment Conference with Adam Taggart, Chris Martenson, and Dominic Frisby.ref 23 A quick search of Zerohedge shows 61 mentions over the years. That officially makes me a Tool of the Kremlin. (I haven’t run into The Donald nor Tulsi there yet). I found a webpage that professed to help you “Find out what the best investors are reading, writing, and saying” and was shocked to find my name on it. That ten minutes of fame has now rolled off the page to the Dark Web. My Keiser Report interview got translated to Spanish and was real haga clic en cebo.ref 24 I had a tweet make it into an elite medical journal, Stats:ref 25

    A feature in Business Insider is too funny and too plot thickening to blow by here. (See “Broken Markets”.) The biggest downer in a year full of downers was being “canceled” by neo-Marxist SJCs. (See “Douche Bags”…no…sorry…“The Tweet”.) It was world-view changing and not pretty. The hinge-free left is a fountain of spew and vitriol. I usually put in a “Trigger Warning,” but if you are still reading you are either a bit of a perv or already building a case against me.

    Conspiracy Theories

    Are Conspiracy Theorists Epistemically Vicious?

    Charles R. Pigden, sophist-douche bag

    Hanlon’s razor says that you should never assume malice where incompetence will suffice. OK, but oftentimes it does not suffice. Collum’s razor says never be so narrow-minded that you refuse to believe men and women of wealth and power conspire. Those who do are probably happy not to swat those flies. Years ago I served on a PhD committee of Jim Rankin, a successful businessman from Dallas, who wrote a pretty damned interesting thesis on conspiracy theories.ref 1 There is scholarly work out there, and then there is Charles Pigden, Cass Sunstein (whose wife, Samantha Power, is a neocon), and Michael Shermer, all writing embarrassingly biased tripe that pays their mortgages. I say this every year: Stop declaring, “I am not a conspiracy theorist but…” and grow a pair. Embrace the label that horrifies you. Admit that the world is filled with sociopaths trying to screw us with complex plans. Use your fookin’ head and your gonads to stand up to the scoundrels.

    A University of Chicago study estimated in 2014 that half of the American public consistently endorses at least one conspiracy theory. When they repeated the survey last November, the proportion had risen to 61%. The startling finding was echoed by a recent study from the University of Cambridge that found 60% of Britons are wedded to a false narrative.

    A chemist at Cornell reports that a disturbing 39% of the American public are mushrooms—in the dark and fed horse manure.

    Decade in Review

    I love metaphors and similes. A particularly instructive one is Parker Brothers, Monopoly. The players all start with reasonable amounts of money. As the game proceeds, players collect $200 by simply passing Go and use this money to speculate on real estate. By the end of the game, only $500 bills are worth anything, the whole thing blows up, and most of the players end up destitute. I wonder why the originator of the game (Elizabeth Magie, not Charles Darrow) didn’t name it Inflation. In a twist of irony, an original game board sells for about $50,000.

    ~ Year in Review, 2010

    I took a little time to thumb through a decade of YIRs to find sections that I am still proud of and seem to have withstood the test of time. Few have read all ten—Hi Mom!—but I know of fintwit legends who have. In some ways, I think the earlier YIRs were better because I was working at lower levels of the intellectual strata. To minimize repetition, I bypass ideas worth talking about. For example, I was writing about a disturbing change in the mood of society by 2011. Some of these sections are wiggy topics that stayed off radars and were stuffed down memory holes, but I still stand by them and think they retain appeal to the open-minded. In chronological order:

    2002 Subprime Crisis prediction (republished in 2012): My best prediction.

    Buffett Takes a Bath (2011): Pulling the curtain back on the Orifice of Omaha.

    The Constitution and the Fourth Estate (2011): Early thoughts on the failure of media.

    Paul Krugman’s Greatest Quotes (2013): This guy is just too funny.

    Militarization of the Police and Civil Asset Forfeiture (2014): Police problems are not new.

    Problems with the Roth IRA (talk given in Las Vegas in 2014): Consult your financial advisor.

    Election (2016): My analysis of WTF Happened in 2016.

    Price Gouging (2017): Why they are neither evil nor pervasive.

    Collum versus The American Federation of Teachers (2017): Foundational smear for three sections in this the Year in Review.

    Antifa (2017): They’ve gotten worse.

    Russiagate (2017): Baloney from the outset.

    Las Vegas Shootings (2017): A seriously untold story.

    Pension Crisis (2017 and 2018): The latter was reproduced verbatim by Solari.

    Valuations (2018): Exhaustive look as a setup for this year’s writeup.

    Syria (2018): Story of fake gas attacks before the media got it.

    Kavanaugh versus Blasey-Ford (2018): The sub-surface details.

    Skripal Poisonings (2018): Not what they appeared to be.

    In Defense of Religion (2018): Through the lens of a pro-choice atheist.

    Collum-An Autobiography (2019): In case you care to know.

    Modern Monetary Theory (2019): From risk to reality in one year.

    Climate Change (2019): Where science and politics collide (briefly mentioned in Part 2).

    The Jeffrey Epstein Affair (2019): He ain’t dead (and briefly mentioned in part 2)


    I finished 2020 with my total assets distributed 23% gold, 2% silver, 54% cash-like entities, 12% in real estate (my house, no mortgage), and 9% in a smattering of equities. The large cash prevents my returns from ever moving abruptly. I hope to put it to work someday. This year gold and silver returned a respectable 20% and 32%, respectively, although the fairly standard early-season rally began looking like a dead-ingot bounce by November. My overall accrual of wealth (ex-house appreciation) came in at 10.9% following 5.7% last year. Of course, it failed to keep up with Tesla, Moderna, and Bitcoin, but my crystal ball and Ouija board remain in the shop. (Note to self: pick up laptop.)

    My best decade of the past four was from 01/01/00 through 12/31/09 with 13% annualized returns while the S&P made nothin’ (dividends included). Hold your applause. There is plenty of schadenfreude to go around. I missed the equity ramp from ’09–present. I am also not stupid; I sure wish I had caught that ramp. My reasoning behind the decision to sit it out (delineated in “Valuations”) was based on far superior reasoning to the completely vacuous reasoning in the 1990s that lavished me with wild returns including one year >100%. All you have is reasoning and luck. Those unsatisfied with decent returns are doomed to lose it all. “Easy come easy go” but Nick Carnot would disagree. I have enough to retire with inflation-adjusted zero-percent returns. I do, however, wish to leave some money to my kids, who are in a generation that will struggle to accrue wealth. I worked hard to bestow such privilege.

    Figure 3. Two decades of gold versus equities (ex-dividends, taxes, fees, and inflation).

    I’ve been a gold bug since 1999, chasing it down from 290 to 270, chasing it up from 300 to 450, and topping off the stash in 2016 in the 1200s after the swaffling by a cyclical bear market seemed to subside. It has served me well with a position that now is equivalent to six gross annual salaries. While the equity wankers thump their chests, the gold bugs quietly whooped their asses for two decades (Figure 3). JPM showed that gold beat the total returns of the S&P by 2% annualized. Gold even beat Buffett by a nose over the two decades.

    Figure 4. Gold vs S&P capital gains for 2020 (ex-dividends, taxes, fees, and inflation).

    I am waaay more comfortable holding gold than the S&P 500, which has great momentum and horrid fundamentals (see “Valuations”). I’d love to replace the gold with productive assets someday but not yet. Graphics from a useful website Macrotrendsref 1 shows gold cannot win in the long term (Figure 5) but has returned a credible 8.4% since it started trading in the open market in 1973 after a half-century hiatus. You can win in the shorter term as shown by the S&P-to-gold ratio (Figure 6). The buy-of-the-century in 1999 was terrifying at the time but crystal clear in hindsight. It was that same S&P-gold ratio that kept me white-knuckling gold from 2013 forward; it never plumbed serious lows, leaving potentially more multiples of relative gains prospectively. I’m still waiting. I own no gold equities because the CEOs don’t seem to know how to make money, but you can see in Figure 7 why serious analysts are salivating.

    Figure 5. Price of gold (yellow) relative to Dow (blue)

    Figure 6. S&P-to-gold ratio

    Figure 7. Philadelphia Gold and Silver Index (XAU) versus gold

    People act like it’s a choice. Returning to the gold standard is the answer to a problem that leaves you no choice.

    ~ Grant Williams (@ttmygh), author of Things That Make You Go Hmmm…

    There is a growing institutional bullishness for gold. Bank of America analysts noted that “as central banks and governments double their balance sheets and fiscal deficits, we up our 18-month gold target from $2000 to $3000/oz.” Goldman went bullish on gold while questioning the dollar’s reserve currency status, which is a sell signal to those who think they lie a lot. Buffett raised eyebrows when he sold his airline stocks, half of his Wells Fargo, and all of his Goldman shares (grabbed up on fire sale in ’09) while snarfing up a stake in Barrick Gold.ref 2 He has thrown more feces on the bugs over the years than a rhesus monkey.

    The energy sector which has never, in nearly 100 years of data, performed so poorly relative to the index as it has over the past 12 months. These rubber bands are all about as stretched as they have ever been…it is time to get greedy on energy.

    ~ Jesse Felder (@jessefelder), author of The Felder Report

    A bullish case can be made for various value sectors that include emerging markets, tobacco, and energy (see “Broken Markets”), but I am still thinking. Once I decide to enter one or more of these lurking opportunities, it will be quick and bold on a one-decision trade—I will marry it—and probably ride it till death do us part. I am not a trader, but stock toshingTM is risky in these crazy markets. [Note added in proof: I said, “Fuck it; let’s do it” and have started buying energy and precious metal equities.]

    One of the smartest people I follow thinks the stock market is going to drop by 50%. I like David Collum a lot but this time he’s dead wrong. Another very bright financial investor named John Hussman believes not only that the Fed is powerless, he says the stock market is going to collapse by 67%. Both predictions are interesting but basically absurd. Those guys are way too optimistic.

    ~ Bob Moriarty, Founder of 321 Gold

    I have been making and will continue to make (see below) my annual case for a vicious secular bear market in equities and, quite possibly, bonds. But Dave (says one of the voices in my head): won’t investors sell anything not locked down, selling what they can not what they want? Yes, but look at gold in previous equity bear markets:


    A tsunami of $8.5 trillion of Treasuries will be maturing by the end of 2021! Monetary stimulus will have to be astronomic to cover this. What a time to be a precious metals investor.

    ~ Otavio (Tavi) Costa (@TaviCosta), Crescat Capital

              Chaos in the Comex. There was unusual turbulence underneath the surface of the gold market this year. Debates have raged for years about whether demand for physical gold would someday overwhelm the paper gold (futures) market. Many suspect the paper gold market is used to suppress the price of and demand for physical gold. GLD was introduced in 2004 as a convenient way to buy gold, but claims in the prospectus that HSBC actually holds physical gold seemed like a rehypothecated Leprachaun story to me. HSBC’s compiled rap sheet is also disquieting.ref 1 (I think HSBC is the reconstitution of BCCI.ref 2) The Comex trading platform where you roll contracts forward stipulates that you can take possession provided not too many others try to do so as well; they are 1% fractionally reserved of the metal.ref 3 Nooo problem! On a more humorous note, former Facebook founders and current bitcoin hodlers—the Winkelvoss twins—assured us that Elon Musk would soon swamp the globe with physical metal by mining it on the moon. There are many issues with this moonbat theory, not the least of which being that you are more likely to find swiss cheese than gold on the moon.ref 4

    There is no price discovery in the market right now. If you need to borrow gold in the over-the-counter markets right now, you are going to pay a king’s ransom…There is plenty of gold in the market, but it’s not in the right places. Nobody can deliver the gold because we are forced to stay home.

    ~ Ole Hansen (@Ole_S_Hansen), Saxo Bank’s head of commodity strategy

    Welp. The Comex started breaking records for demands of physical delivery while Covid-19 created sourcing problems.ref 5 Approximately 550 tons bled from the Comex, causing the price of gold futures and the spot price of gold to part ways pronto. HSBC is said to have been gutted for $200 million in one day by the “spreads” blowing out.ref 6 One could imagine, in the limit, the futures going to zero as traders realize they are unbacked promises. Not possible? Oil futures hit –$37 per barrel albeit for different reasons,ref 7 but that sure as hell wasn’t supposed to happen either. The futures-spot spread on the London Bullion Metals Exchange (LBMA) blew out with an ensuing mad scramble to change the rules as to what form of gold (bars versus bling) the delivery could be in.ref 8 The Comex and LBMA were joining forces to supply the metals by digging into their 400-ounce bars in the Bank of England that had not seen the light of day for decades.ref 9 Some may recall that the quality of those bars was questioned several years ago when somebody noticed they were “flaking”.ref 9 (Real gold doesn’t flake.) The LBMA publically stated that it “offered its support to CME Group to facilitate physical delivery in New York”, while the big banks were stepping on Comex trading limits. Retail buyers in Germany formed lines at gold stores after authorities dropped the amount they could purchase.ref 10 Some banks like ABN Amro said screw it and exited the whole game with big losses, which also forced their customers to liquidate their gold right when the banks needed it.ref 11 That was lucky for the banks, eh? Others profited through arbitrage by buying low abroad and selling high in the US. Some drew analogies to the 1968 gold rush when the London Gold Pool lost control of their price-fixing scheme.ref 12

    The Central Banks are going to go into a new, non-conventional toolkit called debt monetization. They will lose control of the monetary base, and then we will go into a situation where, even with technology and with aging demographics in the industrialized world, we will be talking about inflation again. That might come in the next 18 to 24 months, and gold is going to skyrocket.

    ~ David “Rosie” Rosenberg (@EconguyRosie), Rosenberg Research & Assoc

    Bank of America’s Global Commodities Research team suggested that maybe paper gold is no longer as important as it used to be,ref 13 which is synonymous with “nobody wants that paper crap anymore.” Seems that taking delivery plays the same role in commodities as a $500 cap on a $2 blackjack table. It precludes unlimited doubling-down speculation. That game may be over sooner than many thought possible. Meanwhile, the Russian central bank’s gold reserves grew by >5% in one month, becoming >20% of their total reserves.

    The Fed may be forced to buy gold to maintain the appearance of responsibility for the world’s reserve currency….Global consumers are more familiar with gold than the banking system. Thus, this avenue of monetary expansion might finally lift the anchor on inflationary expectations and their associated spending habits.

    ~ Scott Minerd (@ScottMinerd), Global Chief Investment Officer, Guggenheim Partners

              Fraud. What would the gold markets be without criminal activity? The Potemkin regulators are building a racketeering case against JPM for “spoofing” the markets, hoping to pry loose some hush money. Somebody may have duped the Chinese with 83 tons of fake gold.ref 14 Bank of Nova Scotia got fined for $127 million for metal price manipulation.ref 15 Based on the Collum Three Percent Rule, that means they made upwards of $4 billion en route to this surcharge. As usual, paying a big fine with no admission of criminal wrongdoing is paradoxical. Nobody went to jail. Nobody ever does.

    Fiat money will be a passing fad in the long-term history of money…I’ve always found many commodities difficult to recommend on a buy and hold basis as most underperform inflation over the long run…Gold is definitely a fiat money hedge.

    ~ Jim Reid, Credit Strategist, Deutsche Bank

              WTF Happened in 1971? A website with this title blew into view this year.ref 16 It shows over 50 financial plots of all shapes and sizes showing marked discontinuities in 1971. Several are shown below. Wow. WTF did happen in 1971? Nixon took us off the last vestiges of the gold standard.

    Figure 1. WTF Happened in 1971?ref 16

    We have gold because we cannot trust governments.

    ~ Herbert Hoover, President of the United States, 1928–32

              Silver. A 32% gain in silver since my last YIR has more than a few sitting up and taking notice. It got entertaining when a rag-tag bunch of loons called the Robin Hodlers (see “Broken Markets”) put the silver ETF, SLV, on their buy list.ref 17 It rallied briefly but then gave that gain all back as is always the case when the amateurs get in the game. Silver dropped >15% in one day as the Robin Hodlers got chased back to the forest by the Sheriff of Price Discovery.ref 18 The Chaos at the Comex also included silver, causing some seriously upward movement. Goldman became overtly bullish silver citing solar panels as their motivation.ref 19 Beware: this is an old and possibly lame argument. Some say the enormous gold-silver ratio is bullish for silver, but this is only so if traders act on it. Others suggest the price is determined by investor preference for the stock (above ground supply) and flow (mined).ref 20 It leaves me feeling like a speculator. I have about two annual salaries committed to this hybrid precious-industrial metal but am not as convinced I understand it as I used to be. The inflation-adjusted price of silver is also not that inspiring in historical context (Figure 2).

    Figure 2. Macrotrends charts do not make silver look cheap

    A quick scan of the uncontestably retail silver market on Ebay shows what the retail crowd is doing. High (30%) premiums on silver eagles suggest froth. Recently released Apmex silver eagles were said to be a limited edition. They sold for a nearly 200% premium. Lacking mint marks, the claim is that they can be identified by the notations on the unopened box. Let me get this right: we know what’s in the boxes only if we don’t open the boxes? Sounds like the refrigerator light paradox or beanie babies retaining value with the original tag.

    Figure 3. Limited-edition silver eagles.

    Wealth Creation

    The more people who own little businesses of their own, the safer our country will be, and the better off its cities and towns; for the people who have a stake in their country and their community are its best citizens.

    ~ John Hancock, 1st and 3rd Governor of Massachusetts

    I have been Toobin’ along for several years trying to understand the distinction between wealth creation, aggregation, and transfer. The shutdown of the much-ballyhooed service economy has inspired me to stroke the keyboard. What follows is a compilation of thoughts that are loosely stitched together in an attempt to drive economists completely nuts. It wanders a bit but serves as a preface to understanding post-modern markets.

    During the Covid-19 shutdown, the Fed replaced lost wealth creation with wads of cash—an inflationary wealth redistribution. Meanwhile, the populace lived less ostentatiously akin to their ancestors of a century ago. We needed food, shelter, clothing, healthcare, and the internet (email, Zoom, and porn). Restaurant meals were replaced with the Joy of Cooking. Homemade bread was boss, resulting in a yeast and flour shortage. We cut our own hair and replaced excursions to Aruba with camping and hiking. Couples walked, jogged, and biked together. One can imagine younger couples may experience a baby boomlet in 2021. I ate meals on my deck and chatted deep into the evening with family.

    What good was the consumer economy that tanked in our absence? What the hell is a “consumer” or “service” economy anyway? You eat what you kill. You have to produce it to consume it, no matter how much money lines your pantaloons. (Come on, man. Pantaloons?) If we provide services abroad, we pocket a few IOUs for later consumption. Trade deficits mean those other guys are pocketing the IOUs. If our trading partners are producing and we are consuming, we are getting poorer by pulling consumption forward via vender financing, and they are getting richer accruing chits. We will be working for them someday. Big trade deficits steer the US toward the Trouble with Triffin—Triffin’s Dilemma —which is the ultimate and supposedly unavoidable collapse of the reserve currency as delineated by Robert Triffin.ref 1

    I was reading in the paper today that Congress wants to replace the dollar bill with a coin. They’ve already done it. It’s called a nickel.

    ~ Jay Leno

              Inflation. What happened in the past when money creation substituted for wealth? The Romans hit the goldmines hard and discovered that increasing the gold supply inflated prices. Aggressive debasement of the metal content of their coins made it even worse. Unlike dicking around with their currency, building the Appian Way and aqueducts with an army of engineers masquerading as soldiers was real wealth creation; parts still exist to this day. The rise of the Renaissance and a massive rise in the Wealth of Nations following the Black Death is often ascribed to the increasingly sought-after peasants—the new middle class shaking off serfdom—being paid more. Maybe so, but there must have been a concurrent rise in per-capita productivity, which likely arose from the emergence of more free and open markets. Hundreds of millions of peasants, when left to their own devices, will innovate and create a lot more wealth than a few Kings busily molesting wenches and attacking their neighbors. It was, however, good to be King.

    The Great Bullion Famineref 2 (whatever that is) of the 15th century was replaced by a pan-European boom when a 16th-century silver mine in Bohemia afforded oodles of silver and resulted in the introduction of the silver Thaler (from whence the term “dollar” derives).ref 3 Modern dogma suggesting the creation of money created wealth obscures the story of a temporary inflationary boom and the increasing divisibility of the currency promoting commerce. (We all know how hard it is to buy a fowl or a tankard of ale with a gold guilder.) While the discovery of the New World ultimately led to some serious wealth creation, the gold shipped to Spain by the conquistadors created nothing more than inflation, with the Spanish enjoying the perks of the Cantillon Effect—the benefit of being first in line before inflation appears in earnest. Discussions of the Cantillon Effect also underscore the aftershocks when the Spaniards failed to develop independent industry.ref 4 Modern era lottery winners are new-era Spaniards.

    Lottery winners are more likely to go bankrupt within 3–5 years than the average American.

    Robert Gordon argues a rise in real (inflation-adjusted) wages owing to fantastic gains in per-capita productivity actually caused (rather than was caused by) the great 20th-century expansion. (There’s more on Bob below.) Again, hundreds of millions of workers will revolutionize the world compared to a handful of robber barons with hot flappers in tow doing hostile takeovers of their competitors. Now we are witnessing a massive and growing wealth divide that is tearing the social fabric and undermining the statistically overwhelming contribution of 7.5 billion people who could innovate. The workers are once again filling the coffers of a few Kings (and Queens) with hot chicks in tow who are richer than Croesus in the Valley of Silicon. Mind you, I am not arguing for a wealth redistribution but instead that the Cantillon Effect is causing the distribution mechanisms to fail. Labor is battling capital for its share of the pie. Meanwhile, the capital keeps propagating like gerbils as if some asset mangling central bankers sequestered in the bowels of the system are printing the damned stuff without brrrreaks. This iatrogenic Monetary Munchhausen-by-Proxy Syndrome is also WTF Happened in 1971.ref 5

    Capital needs to cost something for a dynamic economy to work.

    ~ Sheila Bair, former FDIC Chair

    Just now, America is producing almost nothing except money, money in quantities that stupefy the imagination — trillions here, there, and everywhere.

    ~ Jim Kunstler

    Increased per-capita productivity correlates with real wealth creation. All boats rise, some more than others. Keynes predicted that technology would shorten our work weeks to 15 hours—another one of his dubious theories kaput? (Sorry for the dig, Maynard. Shake it off.) Author David Graeber argues Keynes was correct and that the void is filled with what Dave called “bullshit jobs.”ref 6 Are we paying people to dig and then fill holes? I will try to pull this all together, but not yet.

    If your lost job and income can be replaced by simply giving you government-issued checks, what were you doing that was so important?

               GDP versus NDP. I once swapped emails with a prominent economist and Great Depression expert, Professor David Kennedy of Stanford.ref 7 (I have a point coming so hold your horses.) I submitted that the Great Depression was not ended by WWII but rather continued to the end of the war. The highly constrained personal consumption (rationing) was the blowoff bottom—the last drops of excess created in the 1920s wrung out of the system—that set us up for a surreal post-war boom. He suggested I was full of shit (paraphrased) by noting a 15% growth in GDP during the war and that the war-time hardship stories are overstated. With ten years of reflection, I am not yet giving up. To understand my point, I am going to offer an alternative metric for wealth creation.

    Everybody’s favorite measure of wealth creation, of course, is GDP (or GDP per capita), which is defined as

    GDP = C + I + G + NX

    C is personal consumption,
    I is gross private domestic investment,
    G is government purchases,
    NX is net exports (exports minus imports)

    We must use real (inflation-adjusted) GDP. Most agree that the inflation correction got all garbled up (juiced) by the Boskin Commission’s fudge factors that are necessary in theory but corrupted in practice.ref 8 Those weak-minded who think inflation is too damned low and are cooking their breakfast in a teaspoon over an open flame should pull themselves out of that pool of vomit and check out the Chapwood Index. It is a highly transparent measure of inflation in the 50 largest cities.ref 9

    Figure 1. Chapwood inflation index.

    Best I can tell, the creation of debt has not been subtracted from the GDP numbers either and, certainly, the correction for inflation is not at Chapwood-levels. According to the internet, if you subtract debt from GDP, we have had negative GDP for years. (We amassed gargantuan debt during WWII, which will be a component of my argument.)

    Fun fact: My BHAG (estimate) of the global GDP at the time of Christ in 2020 dollars is $90 billion—a subsistence-level $300 per capita—compared with $80 trillion today ($10,000 per capita). Ergo, global per-capita GDP grew <0.2% per annum over two of the coolest millennia to date. Buying a global equity index fund spanning the growth of civilization would not have been that profitable.

    Let me introduce what I think is a better metric of wealth creation called the Net Domestic Product, or NDP, defined as…

    NDP = GDP – depreciation

    NDP is one of the key gauges of economic growth reported by the Bureau of Economic Analysis (BEA).ref 10 If depreciation is low, NDP is high and vice versa. Investopedia says that a large GDP is good news whereas a high NDP indicates “economic stagnation.” As the macroprudential reasoning goes, it is during good times that you witness the replacement of the old with the new—balls-to-the-wall creative destruction. Failure to upgrade production facilities eventually decreases the country’s GDP. (Just ask those who lived through the 1970s in Pittsburgh.) Maybe so, but replacement cycles are expensive and can be fast. The really frothy ones smack of Bastiat’s Broken Window Fallacy: smashing and replacing windows juices the GDP without creating any wealth.

    Let’s look at the underbelly of NDP. When those Romans constructed bridges, roads, and dwellings they created some serious wealth owing to profoundly slow depreciation. That is serious NDP because depreciation was near zero (NDP = GDP). At the micro-level, rapidly depreciating consumer goods stifle wealth accumulation (savings). Your house is full of crap with the life expectancy of a Clinton email server, none of which can be repaired. Replace your iPhone with each new model and watch what that does to your savings. Better yet, bulldoze your house every 20 years, build a better one, and tell me how that works out. In fact, the enormity of CSFs (Crap Storage Facilities) known as McMansions built with Chinese sheetrock and chincy hardware decay like scenes from Inception. I have previously called this accelerated replacement cycle—the high cost-per-use—a massive hidden inflation.ref 11

    What does the service economy look like through the lens of NDP? The GDP contribution of a family night at the movies is equivalent to several Black & Decker power tools. The latter are labor-saving devices that last at least a few years (although not like those made 50 years ago). The family movie night depreciates in <3 hours (although the popcorn slathered with WD40 stays with you longer.) Two haircuts may last you two months whereas one pair of hair clippers can shave many heads, crotches, ears, backs, eyebrows, armpits, and dogs. A bioengineering degree from MIT depreciates considerably more slowly than a degree in grievance studies at Evergreen State College. The latter is a resume-destroying educational timeshare with a negative net worth in a job interview, which you will never get.

    If you overuse one of the factors of production, such as debt capital, initially GDP will rise. You continue to overuse that factor of production, GDP flattens out; and if you continue to overuse that factor, GDP declines. More is not more — more is less.

    ~ Lacy Hunt, the legend from Hoisington Investment Management

    Back to the debate about whether WWII ended the Great Depression. Admittedly, the war machine had lasting effects as new methods of mass production—Ford’s assembly line on steroids—evolved to crank one bomber per hour in a single plant. We also constructed transcontinental oil pipelines. Nonetheless, there is an offset because the War Machine was financed with debt, which is consumption pulled forward from subsequent decades. The product of the War Machine itself—bombs, planes, ships, and bullets—contributed massively to GDP but had inordinate depreciation rates (fractions of seconds in some cases). The utility of a bomb is truly ephemeral. The NDP on most of those armaments was a rounding error from zero. Let’s drive this home using a contemporary example: the $6 trillion spent on wars in the Middle East also contributed greatly to GDP but almost nothing to NDP. It would be nice to have that cash (or should I say productive labor) back, wouldn’t it? Accounting for debt pulled forward and rapid depreciation, did the WWII really bring us out of the Great Depression? In part yes, but only in part, and only in my opinion.

    I think the technology answer has been provided to us by Dr. Robert Gordon at Northwestern. He said in our period of great growth from 1870 to 1970, we had transformative, revolutionary inventions…The technological changes today are more evolutionary, not revolutionary. The production function is one of the most fundamental relationships in all of economics, and it’s telling us we’re facing a period of difficult growth.

    ~ Lacy Hunt, the legend from Hoisington Investment Management

               Inventions Past and Present. In a fabulous book, The Rise and Fall of Growth in America (see “Books”), Robert Gordon argues that the industrial revolution from 1870–1940 was a unique and not-to-be-repeated period of wealth creation. The period from 1940–1970 was OK, whereas the modern era is a mediocre stretch that was briefly interrupted by a technological spike from 1995–2005. (That’s when the porn showed up bigly.) Before you technophiles soil your thongs, Gordon is not alone. Robert Solow, winner of the Nobel Prize for Total Factor Productivity, TFP,ref 12 quipped that you can see the influence of computers everywhere but in the productivity numbers.ref 13 Admittedly, this was a few years back, but I am not alone in my frustration with the downsides of tech innovation. The Solow Paradox is defined as the “discrepancy between measures of investment in information technology and measures of output at the national level.” Tyler Cowen, in an essay The Great Stagnation, argues we are on a plateau.ref 14 Michael Hanlon makes the case that innovation has stalled since 1970 by surveying what we still can’t do.ref 15 Hey! We finally got a Dick Tracy watch! With 1970 as the approximate cut-off, the question should be repeated: “WTF Happened in 1971?”

    We wanted flying cars; we got 140 characters.

    ~ Peter Thiel, venture capitalist

    As a preamble to a discussion of transformational versus incremental wealth creation, let me resurrect a concept first presented to you in elementary school—the non-zero intercept. The utility of this construct came to me during an organic chemistry seminar in which somebody showed a fivefold influence on a cell wall property. It clicked: “That’s jack squat.” Fivefold to an organic chemist is <1.0 kcal/mol, the energetic cost of separating two water molecules from each other, and the dude was gonna build a fancy model around that? Now imagine a plot of the unitless and obtuse concept of technological change versus time (Figure 2). It would be noisy and should curve upward due to compounding, so let’s simplify it to a fault by linearizing everything. (I feel like an economist already.) The slope is the rate of technological change, and you want that puppy steep. Oh, yeah: Tesla baby! However, no advance is built on zero foundations. The non-zero intercept is the technology you creatively destroyed. The Gutenberg press was preceded by the quill. The quill would be a minuscule non-zero intercept best represented by curve b. The overall change represents unimaginable multiples off the original technology. Now imagine replacing manual typewriters with electric typewriters. That’s an incremental change—a BIG intercept, rendering the slope a rounding error (curve a at best). You may now have surmised that the seminar about cell walls had a non-trivial basal behavior without the additive—a large intercept—that left me underwhelmed. Biochemists, which I fondly refer to as “biowankers”, screw this pooch often, but we should still follow the science.

    Figure 2. Technological change (slope) and creative destruction (y-intercept).

    OK. I’m back. Not every invention is a Gutenberg press or electricity. New appliances riding on the backs of electrification—so-called “subsidiary” inventions—can be consequential. Most boomers probably have no idea that an enormous number of labor-saving devices became regular fixtures within the household just as their parents were creating the demon seed, you (pronounced “eewe”). Yay boomers! Now this will blow your circuits: Gordon says that the greatest decade for such subsidiary inventions was the 1930s—smack dab in the middle of the Great Depression. Bob argues that part of the Depression was labor getting pistol-whipped by capex (capital expenditures). Are we seeing a déjà vu as the Fed-funded digital world replaces people? Let’s ponder a few technological changes from the near and distant past to understand wealth creation. Ponder the slopes relative to the intercepts.

               Ground transportation. We went from horse-drawn carriages to combustion-engine-powered vehicles, accruing hundreds of horse powers per vehicle in short order. Think cars, tractors, trucks, and bulldozers. In forty years, a horse had been replaced with a 1940s vintage Jaguar XK120 with a top end of 120 mph. Now I ask: 80 years later, what can you do with a Tesla that you couldn’t do with that vintage Jaguar XK120? Admittedly, a Tesla can do 250 mph on no road anywhere in the US. (Breedlove did 407 mph on the Bonneville Salt Flats in 1963.) A Tesla can go 300 miles on a single charge, but how far can it drive using the most efficient fuel source of them all, gas? I’m told Teslas are sooo cool to drive, but now I’ve gotta ask: Would you rather have sex, which is free or $20 on a bad day, or drive a Tesla? Thought so. I’m not done hammering Tesla by any means (see “Broken Markets”). How about replacing two horses with those 1912 hogs ridden by Mr. Harley and Mr. Davidson:

               Communication. When the mail was replaced with telegraphs and eventually telephones, the time required to send a message across the country or around the world dropped from months to minutes and eventually to seconds. The Rothschilds had a fabulous currier system allowing them to trade assets on news from distant lands. “Quick. Sell those Waterloo munis.” The telegraph was a black swan that blew their business model out of the water. Now we have cell phones, which were brilliantly foreshadowed in 1960 by a must-see Arthur C. Clark videoref 16 and in 1926 by Tesla—the original Tesla:

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

    ~ Nikola Tesla (@NickyT), 1926

               Food Preservation. In prehistoric times, food preservation was via tribe members; you shared the kill. Drying meat to the point of inedibility and salting and pickling in clay crocks allowed for long-term storage. (The book Salt is a comprehensive treatise on the importance of salt to civilization that lives up to its sexy title.) Refrigerators, even as subsidiary inventions, were transformational for both shipping and storage. The next hundred years witnessed automatic ice makers. We recently put to pasture a 70-year-old Philco refrigerator that still worked. NDP was high the day they cranked out that beast. In 70 years, nobody will own a 70-year-old refrigerator that still works. Depreciation rates are very high.

               Air Travel. The Wright brothers took us from commercially useless balloon-based flight (tiny intercept in Figure 2) to planes that were used militarily within a decade and crossing oceans within another. Orville Wright lived long enough to see jets in flight. Orville’s children witnessed jet-based commercial travel with the introduction of the Boeing 707 in the 1950s. Orville’s grandchildren now pay $50 bucks to get their bags looted of all valuables by TSA handlers. They do, however, get a free reach around at the security gate if their fake hip sets off the metal detector. (Hint to the old geezers with prosthetics: Identify as an old woman.) You can watch movies peering through your knees while you think about how nice a hot meal would be delivered by the stewardesses of yore.

               Visual Arts. Photographs were the visual equivalents of the Gutenberg press and tape recorders the audio analogs. Movies and TV allowed you to see movements of tornadoes, elephants, and porn. (OK. That is the last porn allusion.) Decades later, you can watch anything you want on Netflix, but you can still only watch one show at a time. We had a rabbit-eared TV (in the cabin with the fridge) that got a single channel from Montreal. We were remarkably content, and those Club Super Sex commercials appearing after midnight were quite a treat. (That one doesn’t count.) Netflix is an incremental gain. I’ll give the internet serious transformational credit. It may be the Gutenberg Press 2.0 and is the source of Robert Gordon’s spike in wealth creation from 1995–2005. Google, despite its authoritarian leanings, is still seriously cool for looking up something in seconds that required weeks or months (if even possible) in the past. The subsidiary inventions are less inspired, just ask anybody who has wrestled with a website that is not Amazon’s.

    True, social media is impressive. The internet gives us instant access to global knowledge. We are a more tolerant society, at least in theory. But Facebook is not the Hoover Dam, and Twitter is not the Panama Canal.

    ~ Victor Davis Hanson (@VDHanson), historian

               Social Media. Facebook is unique. Given their business model of selling scraped data to corporate America, it seems to be a replacement for TV commercials and billboards. They may get me to buy a Saatva rather than a Tempurpedic mattress, but I am only buying one. To the extent they scrape data for nefarious reasons (as delineated in the books Surveillance Capitalism or Deleted), it is trivial to argue the modest intercept in Figure 2 is dwarfed by a steeply negative slope. Would society lose anything if Facebook disappeared? (Please take Mark with you.) And let us not forget the Solow Paradox.

               Retail. OK, Professor Smarty Pants: what about Amazon? You can get anything from a single website in a day or two. Gordon reminds us that 100 years ago the Sears catalog let our great grandparents expand their purchasing beyond flour, beans, and nails from barrels in the general store to buying almost anything they wanted (including pre-fab houses). It took a few weeks, but, by comparison and over a century later, Amazon is incremental.

               Highways. The movies give the Romans a bad rap. The Appian Way created by Roman engineers brought civilization to Europe (admittedly at the tips of Roman swords.) Lincoln initiated the Transcontinental Railway during the Civil War. Germany created the Autobahn, which inspired Eisenhower to create our interstate highway systems. These were government programs that created huge wealth. The last half of the 20th century witnessed the Big Dig, the Bridge to Nowhere, California’s unfinished rail systems, and interstate highways in Hawaii.

               Plumbing. Running water via plumbing was developed millennia ago, but routine indoor plumbing in the early 20th century allowed homemakers to stop hauling 50–100 gallons of water a day in and out of the house. Throw in wiring and a phone, you have a modern household albeit 100 years ago.

               Government. Herbert Hoover introduced the National Bureau of Standards (NBS), which allowed huge progress through interchangeable parts and mass production. (Hoover was a great president with a bad rep.) The boomer generation, by contrast, created the National Security Agency (NSA), which ushered in 50,000 bullshit TSA jobs in the US alone. Wouldn’t you like to get some of your civil liberties back?

               Healthcare. Penicillin and its offspring introduced in the 1930s saved millions of lives. Most modern medicines are welcome additions but are more about maintenance than cure. (NB-Give a damned Nobel prize to the guy who invented Imodium in the 1960s.) Even cancer survival rates are rising slowly: you can see the non-zero intercepts.ref 17

               Food Preparation. Gas and electric ranges at the turn of the century were big improvements over wood stoves and the hearth. Microwave ovens are incremental: you can make popcorn on a stovetop. Interesting factoid: possible kitchen applications of microwaves were discovered when some guy melted the chocolate bar in his pocket while whipping up a couple of Rocky Mountain oysters in his shorts.

               Banking. The FDIC banking insurance in the 1930s represents the high-water mark for modern banking. You will have trouble convincing me that the bloated multinational banks of the present are anything but a monumental downward slide to the Gates of Hell. Banks used to be about matching lenders and borrowers—savings and loans—but are now systemically risky bucket shops with customers as prey. We’ll return to them in a bit.

               Role of Energy. Maybe the perennial optimists will be right again, but those expecting that the 21st century’s growth will match or top that of the 20th century may be disappointed. Economists have noted that the ebbs and flows of modern economies correlate with energy consumption.ref 18 It is easy to see how tapping new and better energy sources have created profound changes through the millennia. Fire brought us out of the caves. Charcoal ushered in the Bronze and Iron age. In the ancient civilized world, the west was still on the cellulose standard while the Chinese were pumping natural gas out of the ground using bamboo pipes to boil seawater to get salt. The Highlanders started burning peat laced with dead Druid priests. The industrial revolution rode the back of the whaling industry for light—coal, and eventually oil…black gold…Texas tea. (Leviathan is a great treatise on the history of whaling on the growth of New England.) Each stage was powered by a better, more efficient fuel than its predecessor.

    If stupid hippies hadn’t killed nuclear power, we’d have nuclear power plants, safer and cheaper than coal-fired plants, all over, and electric cars really would be zero emissions.

    ~ Penn Jillette, comedian

    I once had dinner with Penn Jillette. Of course, the next push forward will be based on nuclear energy. Oh, but nooooo! We can’t do that! Although deaths in the US nuclear power industry are almost undetectable,ref 19 we are told, “one life is too many.” Forget about the death toll on Friday nights in the bars near the Texas oil fields. No siree, we are doing it with solar, wind, geothermal, and biomass, all displaying energy densities that are no match for a barrel of Saudi crude let alone a single nuclear reactor. Hey: maybe you could recycle that cooking oil from McDonalds to charge your Tesla. Alternative energies are unevenly generated, and they are also destabilizing to power grids when imported beyond a critical, and rather low, threshold.ref 20 Meanwhile, I’m told that second-generation nukes are so efficient as to leave essentially no toxic waste. We should rethink our aversion to nukes and do so fast.

    The notion of wealth creation is foundational to the section on “Broken Markets.” Are the new era silicon-based industrial Goliaths really capable of creating wealth akin to their carbon-based predecessors? One last truly random and haunting thought: Civilization is, by definition, sandwiched between two ice ages. If nature ever shook the Etch-A-Sketch and zeroed out civilization, the post-apocalypse survivors would never regenerate modern society because they wouldn’t have the fossil fuels. We had one shot at building a sustainable industrial civilization. Let’s not blow it.


    [Investors] do not care about the movements in the price of the stock. Since their interest lies not in the sale of the stock but in the revenues secured through the dividends; the higher value of the shares forms only an imaginary enjoyment for them, arising from the reflection…that they could in truth obtain a high price if they were to sell their shares.

    ~ Joseph de la Vega, 17th-century businessman

    The price you pay determines your rate of return.

    ~ Warren Buffett

    Buffett noted in an iconic 1999 Fortune article that dropping interest rates are bullish.ref 1 The equity run starting in 1981 overlays perfectly with a four-decade bull market in bonds in which dropping rates were accompanied by greater profits and rising valuations. In a 60:40 portfolio, the rising price of bonds in the denominator drives the numerator and shifts enthusiastic investors to raise the percentage of equity exposure. (See Cash on the Sidelines.)ref 2 Treasuries are so overpriced now as to yield <2% nominal return per annum for thirty years. The only decision for a bond investor is how long you wish to get no yield. Jacking up the denominator of the 60:40 portfolio is nearing an end and the return from that denominator is a disastrous inflation-adjusted negative yield. The Fed, by contrast, starting with Alan Greenspan, missed that dropping part of Buffett’s thesis, often suggesting that low rates justify high equity valuations. This is called the ”Fed Model” and is tantamount to saying that the largest bond bubble in history justifies the largest equity bubble in history. Great model guys. I expect nothing less.

    To say that low interest rates justify high valuations in stocks is also to say low interest rates justify low future returns in stocks. If one wishes to protect overvalued prices, one also has to accept meager long-term returns.

    ~ John Hussman (@hussmanjp), Hussman Funds

               Historical Valuations. In 2018 I hit the valuation story as hard as I could, laying out 20 metrics all suggesting that the S&P 500 was at least twofold over historical valuations.ref 3 Figures 1–4 are just a few updates and new views. The Buffett Model—the S&P’s price-to-GDP ratio—is popular owing to its namesake. Figure 1 shows the stats of a market that is clearly muffin topping. Figure 2 is the more broadly-based Wilshire 5000 analog of the Buffett Indicator. You can see in all of them that the markets at the ’09 low were not deeply undervalued just because they had hurdled Earthward so dramatically, and the markets spent about a month below historical fair value. Pure greed kept my buying in check. There had to be more to go, but the Fed had other plans.

    Figure 1. “Are markets priced for Destruction?” —Bloomberg

    Figure 2. Wilshire 5000 versus GDP c/o Stephanie Pomboy of Market Mavens.

    Figure 3. Market valuation versus GDP measured in trillions of dollars of market cap c/o Stephanie Pomboy of Market Mavens.

    Valuation, I find, is a useless tool. If you base your investment decisions on valuation, you are never going to make money.

    ~ Mark Schmehl, Fidelity

    Traders warn not to trade off valuations as a timing vehicle. As the risk soars new-era momentum traders are confident they can dine on Fibonacos and dips and be John Elway (leave at the top). They may skedaddle out the keyhole just in time, but somebody must own those assets all the way to the next secular bottom. Do ya feel lucky? Investors, by contrast, warn that price matters: the more you pay for a given asset the lower your returns. If you buy a Toyota Camry—a good, solid car—for $100,000 you’ll get hurt at the trade-in. The best investments are good assets in which low prices have wrung out the risk.ref 4 The great risk is scooping up assets of dubious quality when the party is raging. Investors should take note that Buffett has been paring his equity exposure including airlines, half of his Wells Fargo, all of his Goldman shares, and $5 billion of Apple, apparently turning Berkshire into a social conscience fund.ref 5

    Figure 4. If we are more efficient technologically, why do we work so hard to buy the S&P?

    Figures 1–4 show the markets have been above historical valuations since the mid-90s. To reiterate: there are many more.ref 2 One group of enterprising analysts treat rising valuations as a trendline and correct for it.ref 6 How novel. This is a long time to be above any mean. Must be a new paradigm. Maybe this is the demographics of the boomers pushing the markets up the Wall of Worry propelled by a Wall of Liquidity. I see the liquidity but not the worry. Years ago, Kudlow suggested social security should be put in the markets. That would have driven valuations up even higher, but Larry seemed to miss the niggling detail that it would not in any way create wealth or even generate GDP, only slice the pie into more pieces. Sounds fair to those who have no pie, but the collective gain would be zero. Ominously as the boomers liquidate their assets there is sparse evidence that the next generation will have the resources to put a bid under anything. We could witness 25 years of downward pressure provided Covid-19 doesn’t compress that timescale the hard way.

    I understand people who bet on moral hazard. I understand people who bet on the Fed backstop. I don’t do it. I don’t think that’s a good way to invest…This notion that it doesn’t matter what happens to fundamentals…It doesn’t matter what happens to corporate earnings… It doesn’t matter what happens to economic growth… because The Fed will buy what I want to buy… that’s the mindset of the market right now….Why has the fed continuously conditioned markets to expect them to step in and repress any volatility? Isn’t it time to stop doing that because you end up not only undermining the system itself but you undermine the credibility of an institution that is critical to the well-being of this and future generations?

    ~ Mohamed El-Erian (@elerianm), former manager of Pimco

               Current Valuations. OK. I documented the lofty valuations in 2018 but what about now? Equities have risen a smart 35% in the intervening two years. Even if we took a pass on the Covid-19 disaster, which I believe has exacted serious long-term damage, Buffett’s GDP denominator would have grown 5-6% at best. Let’s look at some granular details:

    • Growth stocks are considered bottom-decile cheap when they are priced at six times sales and top-decile expensive at fifteen times sales. They were 23 times sales as of September without factoring in contributions from the Covid-19 recession.ref 7 A 75% price correction, provided it does no economic damage, will make them cheap again.
    • In 2019 over 1500 CEOs took their booty and exited to “spend more time with their families.”ref 8 In January 2020, another 219 decided to cash in their chips. Insider selling was running high. What did they know?
    • The FAANGs have ridiculous valuations. These market Sherpas—Facebook, APPL, AMZN, NFLX, GOOG, with MSFT thrown in—have a combined market cap of >$8 trillion. They are the market. The S&P 500 is now the S&P 5. We’ll bang this drum hard in “Broken Markets.” I’m partial to using just MSFT, Apple, Google, and Amazon (MAGA).
    • More companies are trading at over ten-times revenues than during the dot-com mania.ref 9
    • Forty percent of publicly traded companies have negative net worths.ref 10 The percentage of zombie companies in the S&P—companies that are at least 10 years old and unable to pay interest on their debt without taking on more debt—is 14–18% depending on who you ask.ref 11 If your cash flow can’t cover the interest payments with rates at 5,000-year lows—I am not exaggerating—you are totally screwed. (I am exaggerating on that either.) In 1990, with interest rates near 10%, only 2% of the S&P were zombies.ref 10

    • David Stockman notes the market’s “price-to-earnings ratio ranges between 52.1 times the earnings CEOs and CFOs certify on penalty of jail time ($65 per share) or 27 times the Wall Street brush-stroked and curated version ($125 per share), from which all asset write-offs, restructuring charges, and other one-timers/mistakes have been finessed out.”ref 13 (Notice how David specifies the importance of earnings that aren’t completely fabricated.)

    The stock market has returned more than 125% since the 2007 peak, which is roughly 3x the growth in corporate sales and 5x more than GDP.

    ~ Lance Roberts (@LanceRoberts), chief Strategist RIA Advisors

    From the legendary Jeremy Grantham…ref 12

    This will end badly….I have been completely amazed. It is a rally without precedent…the only one in the history books that takes place against a background of undeniable economic problems…the market and the economy have never been more disconnected…the current P/E on the U.S. market is in the top 10% of its history… the U.S. economy, in contrast, is in its worst 10%, perhaps even the worst 1%…. This is apparently one of the most impressive mismatches in history…after a 10-year economic recovery, this would have been a perfectly normal time historically for a setback….And then the virus hit…bankruptcies have already started and by year-end thousands of them will arrive into a peak of already existing corporate debt…the history books are going to be very unkind to the bulls.

               Realistic Expectations? What’s a reasonable guesstimate for investment returns over the long term? A gander at historical returns without accounting for valuation changes reveals that Wall Street hasn’t been completely truthful with us. The average nominal (non-inflation-adjusted) return for US stocks is about 5.5% annualized for 120 years and >6% in the post-war period.ref 14 Typical retirement plans assume a 7.5% nominal return. Polls show investors expect an outlandish 15% return on their equities over the next five years,ref 15 suggesting profound recency bias from the total return of 17% annualized ‘roid rage off the ’09 lows. They seem unaware that the last decade’s returns are trough-to-peak, a ridiculous one at that. Suze Orman spouts off about a Gen Z-ers putting $100 bucks a month into a Roth IRA and retiring as millionaires. Such a real return would require >11% return per annum—year after year—for 40 years.ref 16

               Lowered Expectations. Earnings for a reconstructed inflation-adjusted S&P from 1870 to the present using Shiller’s numbers show a 15-fold gain (about 2.0% annualized). Funny how that is the same as the growth in the GDP over that same period. Go figure. Let’s tease out a few gems from Buffett’s iconic 1999 analysis, shall we?

    Let’s say that GDP gets 3% real growth, which is pretty darn good…If you think the American public is going to make 12% a year in stocks, I think you have to say, for example, “Well, that’s because I expect GDP to grow at 10% a year, dividends to add two percentage points to returns, and interest rates to stay at a constant level.”…The absolute most that the owners of a business, in aggregate, can get out of it in the end—between now and Judgment Day—is what that business earns over time…[There are] frictional costs…the market maker’s spread, and commissions, and sales loads, and 12b-1 fees, and management fees, and custodial fees, and wrap fees, and even subscriptions to financial publications…investors are dissipating almost a third of everything that the FORTUNE 500 is earning for them …If I had to pick the most probable return, from appreciation and dividends combined, that investors in aggregate—repeat, aggregate—would earn in a world of constant interest rates, 2% inflation, and those ever hurtful frictional costs, it would be 6%. If you strip out the inflation component from this nominal return (which you would need to do however inflation fluctuates), that’s 4% in real terms. And if 4% is wrong, I believe that the percentage is just as likely to be less as more.

    ~ Warren Buffett, 1999 Fortune articleref 1

    Thus, the Orifice of Omaha says 4% real return is it. Rob Arnot puts it at 3.1%.ref 17 Neither analysis appears to include taxes on the dividends and on nominal capital gains. (The authorities love inflation because they get to tax it.)

    The Buffett Indicator…now yields a forecast of an average annual loss of nearly 8%, including dividends, over the coming decade.

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

              Expectations from Current Valuations. OK, Bub. We are way overvalued. I get it, but how do we get out of this metastable mess without having to put our affairs in order? It seems unavoidable that the mean regression will live up to its name. It will occur on no set timescale, but it is a gravitational pull—a force of nature. (Middle school arithmetic reminds us that you have to go through and spend time below the mean, but that is too ugly to ponder.)

    We’re in the craziest monetary and fiscal mix in history. It’s so explosive, it defies imagination.

    ~ Paul Tudor Jones (@ptj_official), January 2020

    Two years ago I created a graphic showing how long it takes markets to regain their secular highs for the last (not first) time (Figure 5). Those arrows are 40–75 years long. From the old Bill Cosby comedy skit with God talking to Noah resisting building the ark: “Noah. How long can you tread water?”

    Figure 5. I made this in 2018 and will keep posting it. (Background plot by Ron Greiss.) That longest blue arrow (1906–1981) is 75 years long. Howbowdah?

               Regression to the Mean. I’ve tried to conceptualize a model for overvaluation and the unavoidable return to normal in Figure 6. Don’t get hung up on the units; it’s a spherical cow. The 2.0% real GDP growth compounded over the 20th centuryref 18 is approximated by the noiseless blue curve (y = 1.02x where x = 0–100 years). The red curve is the market tracking the GDP Buffett style but then departing into a mania—2x overvalued—by year 45. The math is identical for any metric of valuation. The choices for regression to the mean are illustrated with green arrows.

    Figure 6. 2% growth in GDP (blue). Equity multiple expansion to 2x-overvalued occurs by year 45 (red). Regression to the mean (green) occurs by four paths: (a) crash (0 years, 50% correction); (b) secular bear (25 years, 16% correction); (c) treading water (35 years; 0% correction); (d) slow appreciation (50 years; 25% total gain).

    • A market crash approximated by the vertical red arrow is optimal for a cash-rich bear looking for an entry point. That would be me. It would also turn the highly leveraged financial system into pink mist.
    • Alternatively, curve c shows the markets treading water—moving horizontally—until they intersect with the GDP curve, which is monotonically growing at an uninterrupted 2% annualized rate. Investors will be treading water with zero real capital gains for 35 years, which is a rounding error the same as for your treasury portfolio. There are, however, dividends, but they are offset by taxes and fees.
    • More realistically, markets will serve up a price–time combo platter and slowly drift lower while the GDP slowly grinds higher. Curve b, for example, shows a net 16% loss spread over 25 years. The inflation-adjusted 66% loss in S&P from 1967–81 was spread over the 14 years (see Figure 5).
    • The Fed seems determined to follow the last path (curve d) in which the real capital gains angle upwards for eons. The boomers will have long-since gone to the light waiting 50 years for the regression to mean valuations accompanied by a 25% total gain (0.5% annualized). The Fed is charting this course by artificially and rather explicitly supporting asset prices. Unfortunately, they will fail because they actually suck at their jobs. This strategy in reality is simply generating loftier levels of overvaluation through a series of bubbles that become progressively more shock-sensitive and dangerous. It feels like the Fed is in the final stages of Tetris.

    You can replace lost capital – but you can’t replace lost time.

    ~ Lance Roberts, batting 500

    Once the markets are way overvalued, there is no escape for the collective market participants. This is not Sandra Bullock in Gravity. There is no magical way back to Earth. The John Elways might escape and the David Teppers pile drive it, but for most investors it will be a curb stomping. If you wish to assume the markets can just keep expanding valuations without bound because of some bullshit argument about liquidity or Fed support, have a ball. In turn, I will gladly crank out another chart like that in Figure 6 from 200% overvaluation that will produce even more dire projections. When you are at 35,000 feet with engine trouble, take the plane higher if you wish. The only thing guaranteed is that you will have enough fuel to get to the crash site.

    Everything is not OK, and then you look at the S&P 500—it keeps going up. The market doesn’t care about valuations. With the Fed continuing to step in, the right bet has been to bet with the Fed. The trends are your friends right now, just keep riding it higher, and it’s almost a little bit like stick your head in the sand.

    ~ Jerry Braakman, chief investment officer of First American Trust

               Stock Toshing and Value Traps. In earlier centuries, fishing through the sewers for valuables—so-called “toshing”—was a career choice. You can try to do it in equity markets too, but unlike toshers of old, stock toshers have risk capital in play. At bubble levels the bulls are in autoerotic asphyxiation while the grizzled veterans start waffling about “stock pickers market”, implying that when the market goes full-Antifa on your ass you picked the wrong stocks. Are there good buys out there? I own traces of a few close-ended Russian mutual funds (Browder-Biden-Clinton Roosky Value Fund), but cheap stocks in countries with poorly developed capitalism are a fool’s errand. Some say Japan is OK after three decades on a donut cushion but then criticize them for not being able to get their shit together. Smart guys like Jim O’Shaughnessy see value in emerging markets. Eric Cinnamond is a small-cap guru and sees opportunities in small caps.ref 19 Eric will get some money outta me at some point.

    So like around March I could feel it coming. I just – I had to play. I couldn’t help myself. And three times during the same week I pick up a – don’t do it. Don’t do it. Anyway, I pick up the phone finally. I think I missed the top by an hour. I bought $6 billion worth of tech stocks… and in six weeks I had left Soros, and I had lost $3 billion in that one play.

    ~ Stan Druckenmiller, on the deadly tractor beam of the tech mania in 2000

    Fools rush in.

    ~ Elvis

    Felder and a few others are salivating over the energy sector—Dogs of the Doha—as unpopular as hell, deeply undervalued, inflation hedging, and dividend cranking opportunities. Also, the peak oil discussion has resurfaced with the failures of fracking.ref 20 I am looking at the dividends of the big caps like Chevron (5.7%), Conoco Phillips (4.0%), BP (5.8%), and the recently Dow-Exiled Exxon (8.2%) and wondering if they are steals or dividend traps. Some are borrowing to pay dividends to appease their investors. Even if the energy dividends are at risk of some pruning because of low payout ratios, won’t they be more generous than treasuries? Over a hundred companies including GM, Ford, and various mortgage REITs took their generous dividends down to the studs (zero) to preserve cash during the crunch this spring.ref 21 There’ll be more if the post-Covid-19 world proves problematic. The world record dividend slash ‘n’ burn was in 2009, but that was sooo long ago. Once the dividend is gone, dividend-harvesting funds sell, causing organ-harvesting price drops. Nonetheless, the ridiculously low 2% energy occupancy in the S&P suggests there is more room up than down. Won’t alternative energies also put the fossil fuel companies out of business? If you believe that I have a wind farm in Nigeria to sell you.

    …enthusiasm and exuberance took hold over the summer…it hit a fever pitch that I have not seen in the five years that I’ve been managing my fund.

    ~ Justin White, a portfolio manager at T. Rowe Price

    Justin’s five years battling the markets? A fevered pitch unlike any since 2015? Wow. Raging bulls that turn into manias make smart people look bad and newly minted Wharton Whack Jobs look like geniuses. If you were a veteran, you probably missed some of the rise off the ’09 bottom you had too many shark bites. Meanwhile, the cubicle farms are stuffed full of twenty-something, dip-buying prairie dogs (occasionally poking their heads up) who think markets only go up. Veteran John Hussman’s analyses have been brilliant and useless for investors from 2009 forward. With that said, John showed that if you follow the fate of the markets for each of the ten deciles of valuation during secular bear markets, the lower valuation stocks do not protect you from the bear laying waste to your portfolio.ref 22 Everything sells. When it’s over, and the markets look like a late-afternoon yard sale (shit strewn everywhere), the bookies at Goldman will claim nobody saw it coming—they certainly did—whereas the clueless will profess to have seen the risks all along—they certainly did not.

    I have no clue where the market is gonna go in the near term. I don’t know whether it’s going to go up 10%; I don’t know whether it’s going to go down 10%. But I would say the next three-to-five years are going to be very, very challenging.

    ~ Stan Druckenmiller, legend

    Stan Druckenmiller is very smart. He is right that the market is high, but he did not catch this amazing run…The stock split bashing is unfair and keeps regular people out of the market. You can’t get in without making errors. Why not help people instead of scaring them?

    ~ Jim Cramer (@jimcramer)

    We’ve abandoned the idea that stupidity has any natural limit.

    ~ John Hussman (@hussmanjp), Hussman Funds

    Broken Markets

    A mania first carries out those that bet against it and then those that bet with it.

    ~ Jim Rogers

    Don’t Be Left Behind – This Stock Market’s Rise Is Going To Speed Up

    ~ Forbes Headline

    Excessive valuations are, by definition, broken markets, and an annual return on the S&P of 12% during the Year of the Zombie Apocalypse reinforces that claim. As usual, the devil’s in the details. Figure 1 shows the 2020 S&P with a few mile markers mentioned below.

    Figure 1. S&P 500 timeline for 2020.

    I re-read Devil Take the Hindmost this year to revisit bubbles of the past. Embedded in the narrative was Chancellor’s most poignant reminder: the big bubbles were implicitly or explicitly endorsed or supported by promoters with strong sovereign ties. We would never have state-sponsored markets, would we? Beware of magazine-cover indicators.

               Pre-Covid-19 Markets. We entered 2020 having escaped severe turbulence in the leveraged loan markets causing equities to tank in late 2019 requiring abrupt Fed intervention. Well, it didn’t actually require them, but they intervened because that is what they do. These guys would debase their sisters. The bullet had been dodged, but you could hear the sounds of locking and loading. Deloitte reported that 97% of CEOs believed we would be in a recession in 2020.ref 1 When 97% of CEOs are preparing for a recession you are in a recession. Manufacturing production was below pre-crisis levels of November 2007 and dropping. Total industrial production, having risen a whopping 4% total in 12 years, was also dropping. Railcar usage, trucking revenues, and auto and truck sales were on a luge run.ref 2 Germany, Japan, China, and the US were witnessing dropping exports and reduced consumer demand.ref 3 The large bucket shops including JPM, Barclays, HSBC, and Deutsche Bank were slashing jobs.ref 4 Andrew Lapthorne of SocGen noted the earnings for the bottom five deciles by market cap were putrid.ref 5 Legendary intellect Lacy Hunt had been warning of the fragile consumer and slowing global growth and suggested that the ineffectual Fed would remain ineffectual.ref 6 BMO Capital Markets noted that “given the backdrop of a ‘relatively’ strong domestic economic profile coming into 2020, the rapidly deteriorating outlook is remarkable.” Record consumer and corporate debt suggested a bad moon was rising.

    For sale. Hedge. Never used.

    ~ 2020 Bubble of Everything, The Shortest Story

    And then somebody ate a God-damned bat. A bat? Really? Anybody who says one man can’t make a difference never ate a bat. The pandemic that started its journey in Wuhan, China at some hotly debated date in December (or earlier) began circumnavigating the globe…but the markets kept going up. Wuhan, a major industrial region supplying goods and parts to the world, was locked down tight on January 23rd…but the markets kept going up. Employment completely collapsed across the globe…and the markets kept going up. I reached out to the likes of Roach, Einhorn, Bianco, Warburton, and Martenson to understand the damage being done to the global supply chains.

    On January 24th I did a Jelly Donut podcast (posted on February 7th)ref 7 ranting about the delusional markets. On February 18th, I did a 21-Tweet salute to the idiocracy. Here are just two:

    On February 29th Business Insider tweeted serious confirmation bias by noting that some Ivy League Professor who called the subprime crisis has now called for a 50% market dislocation.ref 8 For Christ’s sake: they were citing me (Figure 2). It was like one of those spams at the bottom of the Yahoo Finance page that I spoofed last year (Figure 3). I don’t subscribe to Business Insider but found a rough translation of the article in…wait for it…the “Latest Nigerian News”, the go-to source for all princely Nigerian money managers.ref 9 The Business Insider article obviously was pulled straight from my Jelly Donut podcast.

    Figure 2. Business insider article about impending doom.

    Figure 3. 2019 Year in Review spoof.

    Finally—finally—these crazy markets seemed about to crack. Meanwhile, I was fuming that the bad actors—the Fed, rabid speculators, and horrible corporate managers accruing globs of debt—would have the global pandemic as the perfect cover story to hide their sociopathy, and they would surely get bailed out.

    The US economy could slip into a recession if the coronavirus contagion lasts for an extended period of time.

    ~ Dave Kostin, Goldman Sachs on March 3, 2020 (bold call, eh?)

    Ever so quietly, on February 24th the markets made an all-time high en route to “the fastest 30 percent drop in history”ref 10 riding on the heels of the steepest economic downturn in US historyref 11 and the largest collapse of US employment in US history. I would be heralded as 2020’s Roger Babson, the dude who called the 1929 crash.ref 12 Of course, both Roger and I had been wandering subway stations for years proclaiming doom sounding like a perverse mix of Gail Dudek and Crazy Eddie. I was writing myself a nomination letter for the 2020 MacArthur Genius Award when the markets said “hold my beer” and pulled off a decidedly premature blow-off bottom—premature based on any metric of valuation (see above). After hitting an S&P low of 2,174.00 on both March 21 and 22—seems weird—an immaculate intervention guided equities on “the strongest 50-day rally in history”ref 13 and “the best second quarter in 22 years.”ref 14 Jeepers. It was like Independence Day; the mother ship got hit with a Covidian nuclear warhead and not a fuck was given.

    Having long regarded [the technology] sector as dominated by cyclical stocks masquerading as ‘growth’ stocks, I expected their inflated valuations would be blown apart by the recession. How wrong I was.

    ~ Albert Edwards (@albertedwards99), global strategist at Societe Generale

    U.S. Stocks Don’t Need to Fall on Economic Damage, Goldman Says

    ~ Bloomberg Headline, April 20, 2020

    I never knew that, but apparently it’s true. It must be a new paradigm. The yodlers-turned-hodlers known as the Gnomes of Zurich or the Swiss National Bank, no doubt with a few phone calls by the Fed, were busily buying FAANGs with freshly minted Swiss francs.ref 15 Meanwhile, the Fed was furiously undermining price discovery by having metaphorical sex with every beast of burden in the barnyard (snorting cocaine off their backs) using both legal and arguably illegal tools.ref 16 Recall that Bernanke warned us there was an unusual number of tools at the Fed. Now let’s focus on the sorcery wrought by the biggest bubble and craziest markets in US history.

    Markets are strongest when they are broad and weakest when they narrow to a handful of blue-chip names.

    ~ Bob Farrell’s Investing Rule #7

               The FAANGs. The heavy lifting was done by the FAANGs (Facebook, Amazon, Apple, Netflix, and Google along with the likes of Microsoft and Nvidia that totally screw up the acronym) shown in Figure 4. Apple, Amazon, and Microsoft together are now valued collectively at over $5 trillion, representing 23% of the S&P 500 ($23 trillion). They are on a scale of the economies of Germany and Japan. Half the gains in the S&P market cap since June 2014 were the FAANGs, elevating a bloated PE multiple of >20 for the group to >40. We know what Scott McNeally must be thinking. Stock splits and share rallies by Tesla (5-for-1) and Apple (4-for-1) brought back nostalgic memories of the dot-com era. Let’s look at these new-era industrial juggernauts one at a time to see where we are.

    Figure 4. FAANGM index versus S&P 500.

    AAPL keeps pumping their stock with relentless buybacks and increasing leverage to facilitate it. TSLA has been insane for so long it seems to have developed a bullet proof cult.

    ~ Mr. Skin, anonymous pundit summoned by Bill Fleckenstein on occasion

    Figure 5. The great bubbles of the last 40 years.

               Apple. After hitting the almost unimaginable $1 trillion market cap in 2018, Apple romped past the $2 trillion mark less than a year later, exceeding the market cap of the entire Russell 2000.ref 17 It was jacked by $400 billion in ten trading days.ref 18 Apple’s p/e ratio doubled since the start of 2019 (16 to 32), attaining its highest valuation in history.ref 19 Over the preceding five years earnings had increased 16% total—2.9% per annum—on revenue growth of <25% total (<4% per annum). Apple’s five-year sales growth rate was just 4.1%.ref 20 Their product line suggests that they replaced Steve Jobs with John Sculley again.

    Figure 6. Apple profits and revenues.

    Figure 7. Apple price versus profitability.

    The performance of stock markets, especially in the United States, during the coronavirus pandemic seems to defy logic. With cratering demand dragging down investment and employment, what could possibly be keeping share prices afloat?

    ~ Bob Shiller (@RobertJShiller), Yale University

               Microsoft. The stodgy old lady of tech sits at 35 times net income with a sustainable 6.5% per annum nominal earnings growth over 8 years. The rest of their 600% capital gains over that same period was valuation expansion.

    Figure 8. Microsoft’s profits and revenues.

    At particular times a great many stupid people have a great deal of stupid money.

    ~ Walter Bagehot, 19th century British Journalist

               Amazon. The Bezos dynasty has racked up a 1,000% return in 6 years. Wow. Just thinking out loud, Amazon is a great company, but at 150 times net income and >80 times free cash flow, it reminds me of that $300,000 Honda Civic. Here’s a gedanken experiment: if you completely unwind that 1,000% gain by collapsing its share price by 90%, you’d have a p/e ratio of 14.

    If you bought every company that lost money in ’19 that had a market cap over $1 billion…you’d be up 65% so far this year.

    ~ Joel Greenblatt, Capital Allocators

               Netflix. NFLX has risen 100-fold in a decade. That is hard to argue with, but it is priced at >100 times net income and 10 times revenue after having borrowed $11 billion during the last 5 years to create new content. They are losing money or, in the vernacular, there’s no ‘F’ in earnings. The creation of content is not like building a nationwide rail system. That beast needs to be fed continuously. Do they mooch another $11 billion? Are there any potential customers left who have not discovered Netflix? Now imagine unwinding this 100-bagger completely—dropping the share price by 99%. They would still be losing money and would also lose access to the credit markets. My brain hurts.

    We are either moving into a completely new paradigm, or the speculative energy in the market is incredibly out of control. I think it is the latter. I have said before that we have entered the silly season, but I stand corrected. We are in the ludicrous season.

    ~ Scott Minerd (@ScottMinerd), Guggenheim Partners

               Nvidia. Having rocketed 2,000% in five years and >100% this year alone, this FAANG designated hitter sports a p/e of >100, price-to-book of >20, and price-to-revenue (or sales) of 25-ish. These were crazy-high numbers even for the dot-com era. The appeal must be the 0.12% dividend and a strong payout ratio.

    This market is divorced from reality…there’s such a strong bid to this market—particularly in the overnight futures trading— it just doesn’t make any sense.

    ~ Christopher Ailman, CaLSTRS CIO

               Facebook. Stockman notes this >$800-billion-dollar deep-state investment is not on the surface crazy at 30 times free cash flow. But their low single-digit earnings growth facing the biggest impending plunge in advertising revenue in modern times seems ominous.ref 21 Neither online advertising nor demand for scraped data is unlimited. (See “Wealth Creation”.) I suspect—admittedly it’s only a hunch—that some of their earnings come from governments’ interest in scraped data. That many of us think the world would be a better place if Facebook completely disappeared is also a concern.

               Google. Sitting at a $1.2 trillion market cap, a price-to-earnings ratio of 35, and two years of flat earnings owing to that rumored advertising crunch, Google seems expensive. It is yet another data scraper cannibalizing each other’s revenue streams, but you should listen to the more learned individuals on this one. What I can tell you is that, as discussed in “Wealth Creation”, you can aim a digital warhead directly at my frontal lobe, but I am still only buying one mattress and only when I need it. Data scraping is cool but it seems like just smarter advertising to me.

    Right now, we’re in an absolute raging mania. We’ve got commentators encouraging companies to do stock splits. Companies then go up 50%, 30%, 40% on stock splits. That brings no value, but the stocks go up.

    ~ Stan Druckenmiller

               Zoom. Skype gave up a 35:0 lead to Zoom, which tacked on 800% as of October before dropping back to a net 500% gain. (They were pikers compared with Carver Bancorp, which tacked on 800% in one day.ref 22) Zoom, with revenues in the $1–2 billion zone, is now considered more valuable than Exxon-Mobil with revenues topping >$200 billion. When will a better conferencing software be developed by some Stanford graduate student? I also wonder what data is being scraped? What is the market price (and who would pay it) for conversations of stodgy old bastards talking about their business plans?

               Robinhodlers. Dave Portnoy, also known as Davey Daytrader and the founder of Barstool Sports, is no newcomer to marketing. He realized he could run a digital pump ‘n’ dump operation by summoning his very large army of followers. The appearance of the Robinhood trading site sporting zero trading fees was perfect for those who could not afford fees. Dave tapped into the millions of youngsters collecting their $600 checks absolutely unfettered by the slightest clue of what they were doing. Robinhood added more than three million new users by the end of April. This was what the pros call “distribution”—transfer of risk from the pros to the amateurs—at a whole new level.

    Something we really never think we’d see but we saw yesterday — buying hundreds of billions of shares of bankrupt companies, sending their shares 300%. It’s sort of this speculative behavior that we saw at the end of 1999 and the beginning of 2020.

    ~ Julian Emanuel, chief equity and derivatives strategist at BTIG

    Davey and his merry band of Robinhodlers were wreaking havoc on markets. Parents were complaining that their post-pubescent kids who’ve never made it to second base also couldn’t play online Fortnight because their friends were too busy stock trading.ref 23 The Robinhood management admitted that they were seeing deposits and trades in $600 increments. This nouveau Jim Jones was picking some of the most hopelessly insolvent companies and morphing them into ten baggers. Chapter 11 darlings like J.C. Penney, Pier 1, Whiting Petroleum, and Hertz (see below) witnessed 100–1,000% gains in one day.ref 24 Portnoy would pronounce useful Ben-Graham-esque platitudes like “stocks never go down” and then provide his daily picks. One day he made his daily picks choosing Scrabble letters randomly.ref 25 The big-league ballplayers (hedge funds) were rumored to be front running the little leaguers, driving shares of even highly liquid large-cap shares markedly higher.ref 26 Robinhodlers heard everyone is buying FAANGs and drove the price of a Chinese company with symbol FANGDD from $10 to $130 in 4 hours.ref 27 Then those Merry Men discovered 3x Levered ETFs (TQQQ).ref 28 Yeeehaw!

    Buffett is an idiot…All I do is make money, this game is fucking easy. Literally the easiest game I’ve ever played. All I do is print money….I should be up a billion dollars.

    ~ Dave Portnoy (@stoolpresidente), Barstool Sports

    Shockingly, the Robinhodlers were soon slapping Pampers on their faces to stem the blood flow. Some thought there must be a mechanism to get a Mulligan on a bad trade. A 30-year-old day trader turned a $77,000 grubstake into a $9-million-dollar loss as oil plummeted deeply negative—a uniquely 2020 story in its own right—only to find the screen read was incorrect.ref 29 Another got $730,000 in the hole with options and offed himself.ref 30 One wonders how an unemployed 20-year old got that kind of leverage. The Robinhood management took the time to say they were “deeply saddened” as they masterminded an IPO.ref 31 The Robinhood app got hacked and a few thousand accounts dragged off into the forest.ref 32 “Aaaand it’s gone.” With no emergency phone number to call,ref 33 the kids had ample time to ponder what just happened.

    I’m overleveraged, so something’s gotta be sold.

    ~ Dave Portnoy (@stoolpresidente)

    Be fearful when others are fearful and greedy when others are greedy.

    ~ UCLA Freshman

    The Robinhood IPO at a $12 billion price tag got tabled during Covid-19 and is said to have failed to get the right licenses.ref 34 Imagine, however, if they had pulled it off. It would have been epic, surpassing the previous record 600+% first-day gain of 35 (Trivia point: that little gem was created in a Cornell dorm. I’m sure liquor and pot were involved.)

    Vision without execution is just hallucination.

    ~ Henry Ford

               Tesla. The granddaddy of all bubbles is Tesla. By every metric, the investing world has lost its mind. Yes, their cars are cool as described in “Wealth Creation.” Give them points for having the first and only self-igniting car on the roadref 36 and for not needing commands from the driver to accelerate markedly.ref 37 They put up four quarters in a row of fake profits by selling gobs of government-granted carbon credits for cars not yet sold as part of a failed strategy to be put in the S&P 500 index.ref 38 Think about that for a second: the 5th largest company in the world was not allowed into the S&P 500. What do they know? Tesla controls about 0.5% of the global car market in 2019 (last full year) while sporting a market cap that is larger than the entire US and European auto sectors.ref 39

    Tesla’s metastable and metaphysical p/e ratio of 1,240 means investors are paying $100,000 to buy $82 of annual earnings. This is like buying a 10-year treasury but with a tad more risk. It is said that “TSLA is not being priced to perfection… it’s being priced to impossibility.” Its market cap popped $64 billion in one day, which corresponds to $200,000 per car sold last year. (Face in palm)

    Tesla stock is no longer tethered to anything tangible.

    ~ Bob Lutz, auto analyst

    Figure 9. Tesla imitates SpaceX (650% gain ytd).

    Figure 10. Tesla versus the legendary South Seas Company.

    Elon has done well for himself. Charlie Grant of the WSJ suggested their billion-dollar quarterly compensation expense (including options) seemed high and may have kept them out of the S&P.ref 40 Charlie adds that the “controversial long-term incentive plan” in 2018 could net Elon $50 billion from stock-option grants if the company increases its market cap to $650 billion. A 660% gain off the March lows placed the share price pennies from that bogey as I edit. Even if he misses it, Elon is still richer than Mark Zuckerberg and Warren Buffett. His compensation to date has been sufficiently generous that Musk and the Tesla board are being sued for ‘unrelenting avarice.’ref 41 Tesla may have also woken the giants.

    Most customers already have an autonomous driver. It’s called a chauffeur.

    ~ Rolls Royce spokesperson on self-driving cars

               Gamma Squeeze. All year long we heard rumors of a “gamma squeeze” and a single gamma squeezer named the “Gamma Whale” or “Nasdaq Whale” said to be the proximate cause of many of 2020’s equity wildings. The derivatives gurus are somewhat horrified that equity pricing is now following derivative pricing.ref 42 A single purchase of $300 million call options, by example, is a lot of leverage even for a whale.ref 43 Many think the Whale is SoftBank, an institution of dubious repute, and its founder, Masa Son, of Karate Kid fame (not really). Goldman said the options activity was without precedent. (This “Goldman” guy gets around.)

    Here is what I know: gamma refers to a complex hedging strategy that can force stock buyers into frenetic buying or selling strategies through gamma feedback loops, and is the third letter in the Greek alphabet. (I can recite the whole Greek alphabet and watched Animal House 27 times.) Like the other Greek hedging strategies, gamma hedging is said to reduce risk, which is a serious load of omega (hooey). Gamma hedging probably has no socially redeeming value (like Animal House) except to make its creator stinkin’ rich (like Animal House). The 2020 options market was said to be full Leeroy Jenkins, referring to a video game hero with crazed fearless. The Gamma Whale is said to be too big to fail now. Right. I believe that.

               Indexing. Mike Green was the talk of the town when he presented his case that the relentless bid from index investing would make the markets just keep going up for a very long time.ref 44 I get the logic but am unconvinced, because that has never worked. The folks at Gavekal call indexing an “in-vogue form of socialism…the bigger you are, the more capital you get” and cannot think of a “stupider way to allocate one of the key resources on which future growth relies.” Some argue that the rapid rise of indexing using environmental, social, and governance (ESG) funds to monetize virtue signaling is buying companies that don’t know how to create wealth. If you peer behind the curtain, the ESGs merely replaced Exxon and Phillip Morris with FAANGs.ref 45

    What could be more advantageous in an intellectual contest—whether it be bridge, chess, or stock selection—than to have opponents who have been taught that thinking is a waste of energy?

    ~ Warren Buffett, 1985 Berkshire Hathaway Letter to Shareholders on passive investing

      In a historic adjustment, Exxon, Pfizer, and Raytheon were booted from the Dow and replaced with Amgen, Honeywell, and 46 Wait. What? A little Googling to ascertain what the hell does for a living suggests the Dow is moving to the cloud. (Let me point out that neither Amazon nor Google is in the Dow. Let that sink in.) also trades at 200 times free cash flow (less stock-based compensation), price-to-book of 6 (below 1 is cheap), has no dividend, and has been laying off workers.ref 47,48 Although the oil market has hurt Exxon, it carries a whopping 8% dividend yield, which they have promised to keep (beware). Pfizer, the largest pharmaceutical company in the known universe, has a completely secure 4% dividend and may have just helped save the world.

               Nikola. Freshly IPO’d Nicola (pronounced Neee-kolaaah) is not an Alp yodler but rather a truck knock-off of Tesla. Nikola shares jumped 50% when GM announced it was taking a $2 billion equity stake. After doing a demonstration of a fuel-cell-powered 18-wheeler motoring down the road, Hindenburg Research and Citron Researchref 49 called them frauds, claiming that they had pulled the truck to the top of a hill and pushed it: the truck was barreling down a hill. Nikola had demoed the first gravity-powered truck!ref 50 The founder said, “My bad” and resigned.ref 51 The FBI and DOJ intercepted him at the airport preparing to flee in a petroleum-powered plane to parts unknown.ref 52 Although the company has revenue equal to the list price of one truck and no reported book value, the share-price drop left it still comfortably above the IPO price. Why? GM said it will work with Nikola to close the deal. Why? I don’t know. But then in late November GM came to its senses and gave them a gravity-powered trip off the cliff.

    Virgin Galactic Stock Soars Because Covid-19 Can’t Hurt Companies With No Sales

    ~ Barron’s Headline

               Hertz. Facing complete insolvency, Hertz was preparing to sell its fleets and facilities to pay off senior creditors (but not before paying themselves bonuses.ref 53) It was about to flood the used vehicle and rental vehicle marketsref 54 when Robinhodlers drove their worthless shares up tenfold in three trading days.ref 55 A friend sitting on a massive Hertz short at 50 cents per share with no intention of covering—selling to zero as they say—rode out that tenfold spike. Even the Vatican got burned throwing a few Hail Marys at Hertz in the distressed debt markets funded by alms for the poor.ref 56 The high command at Hertz furiously tried to exploit the blip to put together a billion-dollar equity offering until the SEC put the brakes on it to save face,ref 57 which triggered a brief short squeeze for reasons unknown to the unwashed. Thanks to the bailouts, the Fed now owns the Hertz bonds.ref 58

              A Few Other Crazies. A few others are worthy of bullets just to highlight the markets of 2020.

    • On the verge of collapse, Kodak got a special deal in which Trump offered them $765 million to prepare pharmaceutical intermediates.ref 59 This is not as crazy as some think; Kodak has serious chemistry history. Kodak scrambled to give the CEO 1.75 million options the day before the deal was announced. Kodak’s shares also drifted from $2.50 to four times that before the announcement.ref 60 They then drifted to $60 the day of the announcement, putting the CEO’s paper gains at $83 million.ref 61 Unnamed sources noted the CEO declared, “This was even better than when we announced our move into blockchain. Damn! I love this shit!” The deal was estimated to, at best, double Kodak’s revenues,ref 62 putting yet another ding in the efficient market hypothesis (EMH). Improprieties surfaced—ya think?—and the deal with the authorities collapsed.ref 63 The share price is still at $8, which is >5 times its low for 2020. That loud thud was the EMH doing a face plant.
    • Adobe reached 15 times sales at the apex of the dot-com bubble, which is nuts. After tanking 75% over several years, a 10-year 2,000% run now has it priced at 21 times sales, which is 4.5 times nuts. The long haulers will be fine; the new hodlers are likely to get hurt.
    • The strangest story emanates from the online shopping company Wayfair. Strange sales of items you would expect to find in Target were sporting bizarre prices in the $10,000 range and had odd names associated with them.ref 64 Internet sleuths sitting idle after Pizza Gate fizzled claimed that the names coincided with kids currently on milk cartons. Wayfair’s CEO runs a children’s foundation while furnishing migrant camps. (No. Really.) Despite these troubles, no evidence of profits, and a reported negative book value, Wayfair rose 1,600% off the March lows before settling back for handsome gains of 150% for the year.

    • More than a year after Bill Ackman covered his Herbalife shorts and licked his wounds inflicted by a brawl with Carl Icahn, federal prosecutors raided the health supplement maker.ref 65 Carl had already sold his 14.7 million shares and was last seen scampering out the back door.
    • Shopify (SHOP) has returned a fabulous 4,300% in five years and has 170% this year. It trades at 60 times revenue, makes no money (although they swear they will), and has a $125 billion market cap. If they gave back all 4,300% of those gains, they would still have no profits and a price-to-book ratio that would be twice that of Exxon-Mobil.ref 66
    • Penny stock Genius Brands International (ironically) was chased up 4,200% by the Robinhodlers in mid-June but gave most back closing the year up 500%. Although there is no profit, their balance sheet looks pretty good.
    • founded by the wild and crazy Patrick Byrne had a 5,000% intra-year run. One analyst sees a 50% upside from here as it benefits from “seismic forces” whatever that means. I am loathed to call it crazy because I know smart guys like Marc Cohodes who like it because of a position in the blockchain. I guess I would too.

    2020 has already set IPO records that exceed those of the tech bubble. Only 9% are estimated to be profitable.ref 67 The banks are marketing “synthetic collateralized debt obligations” again. One ETF trades under the symbol “AAA.”ref 68 Somebody has a sense of humor. Fed-sponsored capital is getting into mischief. It is easily argued that the baby harp seals are about to meet the business end of Wall Street’s Louisville Sluggers. It’ll be huffing bath salts to smelling salts in very short order. It is only through pain that we can achieve suffering.

    If orgies of unrestrained speculation are permitted to spread too far, however, the ultimate collapse is certain not only to affect the speculators but also to bring about a general depression.

    ~ Galbraith on the 1929 crash

    The Bailouts

    During peacetime the central bankers need to go back to their narrow remit. I wish that they had not treated every day of the last decade like every day was an emergency.

    ~ Kevin Warsh, former Federal Reserve governor

    Our hyper-leveraged economy was heading for trouble long before Covid-19 struck. The ensuing bailout was not your standard Fed suppository of trillions of dollars of treasuries jammed into the plumbing. We were sitting atop the largest corporate debt bubble in history,ref 1 so it should be no surprise that a vast preponderance of the bailouts targeted corporate debt that had metastasized from years of irrational Fed monetary voyeurism. It is also no surprise that the blueprints for it were rumored to be sketched out years ago.

    One message was clear: although the average Joe is told to have 6 months of savings for a rainy day, everything in corporate America is now “just in time.” Redundancy cuts into profit margins; we will worry about the future when it shows up. Admittedly, the government-mandated shutdowns added complexity to the moral hazard of this carefully orchestrated mess, but that only provides cover for the aggressive response to paper over criminal incompetence. The Feds were bailing out companies and the highly levered pension and hedge funds that held this largely toxic debt.ref 2 The demands for freebies was deafening.

    For the morons who defend buybacks, consider this: IBM bought back $140 billion of stock over the last 20 years. IBM’s market cap is now $105 billion. IBM just reported its lowest revenue since 1998. How is this winning again?

    ~ Chamath Palihapitiya (@chamath), Social Capital CEO

    I have written about stock buybacks every year since 2011. Although first popularized in Peter Lynch’s books as evidence that management thinks their shares are cheap, long ago corporate chieftains recognized them as superb vehicles for pump ‘n’ dump schemes in which the buybacks put perpetual bids under the shares and generate a buyer of last resort for their options-granted shares. Wall Street markets them as returning capital to investors: that is an intellectual air ball as discussed extensively last year.ref 3 Corporate balance sheets had been gutted by gluttony and were barren when the rainy day appeared. I touch upon buybacks below, but I am tired of beating that dead horse. I will, however, offer a few recommendations:

    • Make the board of directors totally independent of the CEO and his cronies.
    • Compensate high-ranking execs with options that cannot be liquidated for a very long time and contractually cannot be hedged. Force them to build a durable company or eat the losses personally. If they don’t like that, get another CEO.
    • Stop paying CEOs using share price as a metric.
    • Claw back every penny of the profits gained by the corporate robber barons even if it involves using RICO laws and flame throwers.
    • Mandate that corporate boards are staffed by underrepresented groups including women, minorities, and the LGBTQ community. I’m half kidding; the Nasdaq just announced that rule under threat of delisting.ref 4 It shouldn’t be hard but as a mandate? No doubt it is a good time to be a highly qualified black lesbian.

    America’s executive class in the last few decades has settled into a Ponzi-like pattern: borrow, inflate, strip assets, crash, get bailed out, start over.

    ~ Matt Taibbi (@mtaibbi), former Rolling Stone

    A quick gander at the dusty archives shows gruesome lootings of yore.ref 5 “Do it for the children” is the rallying cry of leveraged speculators. It’s an addiction. (You know what they call functional addicts? “junkies”.) After so many beatings by the husband, the abused wife has to say, “There are risks, but I need to either leave or cut the gizzard out of that bastard with a rusty butter knife.” A 1994 paper by Romer and Akerloff details how the banking system’s business model is designed to profit on the run-up to euphoria and the collapse to destitution by exploiting government handouts.ref 6 (I can attest personally that Romer remains amused by the resurgence of this work.)

    “The money powers prey upon the nation in times of peace and conspire against it in times of adversity. It is more despotic than a monarchy, more insolent than autocracy, and more selfish than bureaucracy. It denounces as public enemies, all who question its methods or throw light upon its crimes. I have two great enemies, the Southern Army in front of me and the Bankers in the rear. Of the two, the one at my rear is my greatest foe.

    ~ Abe Lincoln, killing it long before Facebook and Twitter.

    The 9/11 crisis elicited large-scale hush-money to the victims to make sure airlines would continue to run profitless enterprises and insurers and reinsurers would not have to actually insure anything.ref 7 The savings and loan crisis in the 1980s cost taxpayers serious bucks. The Great Recession witnessed bailouts of automakers (or at least their creditors). The claim that the government made money in the GFC is fraudulent bean-counting. When the World Bank, IMF, or BIS rescue countries, they are merely rescuing the bankers who loaned them money. Countries like Brazil, Greece, Mexico, and Argentina would happily tell the bankers to take a hike. Iceland actually did just that in ‘09, and then the nouveau bankers went back to fishing for cod. It is the Graft Cycle that overlays the credit and business cycles.

    Why did we do the bailouts? It was all about the bondholders. They did not want to impose losses on bondholders. They’re supposed to take losses.

    ~ Sheila Bair (@SheilaBair2013), FDIC Chair, 2006-2011

    We’ve decided that hundreds of thousands of people dying is meaningful, but the NASDAQ going down would be worse….

    ~ Scott Galloway (@profgalloway), NYU and serial entrepreneur

    Despite the somewhat different optics on the Covid-19 bailout, the pattern continued unbroken. I was livid that we were about to witness a monetary Fyre Festival on a grand scale and the debutant ball for modern monetary theory (MMT).ref 8 I launched tweets daily knowing—knowing—that we were on the cusp of another looting. Here’s a smattering:

    Within days the lines at the bailout trough looked like a Trump rally. Every imaginable financially interested party had their hands out with palms up. “It is for the employees. They will starve if you don’t give us money.” Elon Musk and Jeff Bezos asked for billions in grants, loans, and IRS credits.ref 9 A variety of industry associations asking for bucks included hotels ($150 billion), restaurants ($145 billion), manufacturers ($1.4 trillion), shopping centers ($1 trillion), beer ($5 billion), candy ($1 billion), and rails (Amtrak, $1 billion).ref 10 Importers wanted waivers on duties paid by those found guilty of dumping. The Collum Foundation wanted free internet.

    Any time there is a crisis and Washington is in the middle, it is an opportunity for guys like me.

    ~ GOP lobbyist

    The Federal Reserve is presently acting in blatant non-compliance with the Federal Reserve Act of 1913. An institution violating the rules of its own charter is de facto admitting that said institution has failed and is fundamentally broken.

    ~ Jeff Gundlach (@TruthGundlach), CEO of DoubleLine

    And so, central banks and governments blanketed the globe with an estimated $20 trillion (and still counting) of monetary napalm. They had learned their lesson, however: make sure it appears to be bailouts for the little guy. Rat studies show the subservient rats will quit cooperating if they don’t win occasionally. Human studies show they will burn the joint down. The Paycheck Protection Program (PPP) and Coronavirus Aid, Relief, and Economic Security (CARES) Act were named accordingly. Who could object with names like that? Meanwhile, special purpose vehicles (SPVs) would make loans or purchase assets of companies, corporate bonds, asset-backed securities, commercial paper, and exchange-traded funds. Secretary of the Treasury Mnuchin was handed $500 billion to use at his discretion and in secret with legal protections to block the prying eyes peeking through the Freedom of Information Act.ref 11 Nothing dubious there. The legality of the Fed actions was so sketchy that they set up a bunch of Enron-esque vehicles.ref 12 The acronyms—CPFF, PMCCF, TALF, SMCCF, MSBLP, MSLP, MLF, EIDLP, PDCF, CPDPF, FICC, CFNM, and MILF—stretched the limits of the alphabet. Section 13(3)(D) of the Federal Reserve Act lets the Fed keep the specific details of the credit confidential.ref 13

    The only persons to be helped [by printing money] are the rich.

    ~ Du Pont de Nemours, 1790

    Split the bill!!! One bill “for the people” and the other for bailouts. Otherwise, they get political cover. Trust me, I was a State Senator, this is how things work. Bundling checks for the people with trillions of $ of pork is very much on purpose.

    ~ Jim Forsythe (@JimForsythe5)

    As Jim Bianco noted, “To put it bluntly, the Fed isn’t allowed to do any of this. The central bank is only allowed to purchase or lend against securities that have government guarantees.” Jim: You’re thinking like a peasant! All this was under constant bloviations about “stimulus”, which is Fed-speak for bailing out leveraged speculators (monetary camel toe). Stimulate this, J-Po. The payroll protections were based on the honor system hoping companies would do the right thing. In their eyes they did by writing themselves handsome paychecks and bonuses. There were restrictions on executive bonuses and buybacks, but nobody is watching. And when the program ended, the companies were honor-bound to keep those employees on the payroll. I must also confess that I can’t possibly keep straight what was forgivable, forgettable, must be paid back, who can be laid off and when, and who is in charge of overseeing this $6 trillion third-trimester bailout.

    We’ll just buy whatever central banks are buying.

    ~ Rick Reider, Blackrock, the designated bond buyer for the Fed

    Who’ll run this ad hoc goliath of a bailout? Well, Blackrock had a ton of collapsed corporate bonds to dump, and they had just hired ex-Fed Head Stan Fischer.ref 14 Why not hire Blackrock to purchase all those corporate bonds? Blackrock matters. Bloomberg’s FOIA request for information about BlackRock’s dealings offered up 19 pages of completely redacted goolash.ref 15

    I believe we are on the edge of a fundamental reshaping of finance.

    ~ Larry Fink, founder and CEO of Blackrock

    There were, of course, specific and highly publicized payouts directly to the unemployed workers. By any arithmetic reasoning, however, these “relief” checks represented cosmetic percentages of the total bailout tab. I guesstimate about 5% of the total. People need to eat—there was no choice—but it was still hush-money. It also caused problems during attempts to re-staff low-wage jobs that society needed because sheltered workers had little incentive to return to work. (I imagine more than a few figured out how to be paid under the table. It also would have been a great opportunity to elevate your position from busboy to waiter.) The personal savings rate during the sheltering hit a historic 33% in April,ref 16 shattering the previous 1975 high of 17% as people holed up in their abodes bought only necessities, which apparently included shares of bankrupt companies using the Robinhood app.

    If the Fed buys junk bonds, what POSSIBLY ensures that the security for emergency loans is sufficient to protect taxpayers from losses? JAIL. THEM. ALL.

    ~ John Hussman, a rare example of showing an emotion

    Bailouts were run by a Treasury deputy secretary, Justin Muzinich. To avoid conflicts of interest during his impending junk-bond buying spree, he transferred his junk bond portfolio to his father’s company that specializes in junk bonds.ref 17 Shockingly, ethics experts were a little creeped out noting that Justin can simply get them back after leaving government. “This is something akin to a fake divestiture,” said a law professor and ethics specialist. As the bond market rallied Muzinich & Company recouped billions in losses as they traded with newfound clairvoyance. A Muzinich executive noted, “The Fed has been about as supportive, helpful, accommodative—whatever word you want to use—as anyone could imagine.” Indeed they were.

    Buybacks are the primary example of a growing strain of incompetence amongst CEOs and boards. And it’s where we need to start thinking about how the rules need to change.

    ~ Chamath Palihapitiya (@chamath), Social Capital CEO

               Airlines. As the world collapsed, somehow the airlines and Boeing became the poster children of the bailouts. That is true for the European airlines as well. Why? What makes them so special? They must have great lobbyists as politicians were working the backchannels hard to “go easy on them.”

    I don’t have a need for an equity stake. I want them to support the credit markets, provide liquidity. Allow us to borrow against our future. If they force it, we just look at all the other options and we’ve got plenty of them.”

    ~ Dave Calhoun (@Crash_n_Burn), Boeing CEO

    I am not so sure you do, Dave, which is why you asked for $100 billion bailout. How about you and your commercial airline customers reissue those shares, even if it sends the price down the other side of the ramp. (United did an equity sale that diluted the shareholders 15% on top of a $6 billion loan.ref 18) The airlines had blown 96% of their cash flow and cranked up a 78% increase in their debt to fund share buybacks over the last decade to goose the options of senior execs as well as the largest shareholder, Berkshire Hathaway.ref 19 (The Orifice of Omaha eventually sold near the March bottom.) Boeing was $25 billion in the hole after having bought back $100 billion in stock over the last 8 years. These companies should have been taken down to the studs long before Covid-19 hit.

    Michael O’Leary, the CEO of RyanAir, played by the rules and was furious about the bailouts.ref 20 He had built a fortress balance sheet with €4.1 billion in cash reserves only to watch his competitors get bailed out. Instead of a guy who knew how to run a company buying up remnants at a steep discount, the competitors get to cannibalize his potential business. No good deed goes unpunished. Scott Galloway underscores the immorality of the airline bailouts noting that US airlines have declared bankruptcy 66 times since 2000.ref 21 Admittedly, it’s a tough business, but if they can’t do it profitably they should hang sheetrock instead. Bailouts are likely to be money down a rat hole this time because it is very unlikely corporate clients will be returning. They’ve been Zoomed. The backstops will, once again, make their creditors whole. And there is the rat hole.

    I don’t know that 3–4 years from now people will fly as many passenger miles as they did last year….you’ve got too many planes… Our airlines position was a mistake. Berkshire is worth less today because I took that position.

    ~ Warren Buffett on liquidating all airline stocks

               Cruise Lines. The cruise lines posed a huge optical problem. They are domiciled in the Cayman Islands, pay almost no tax in the US, and are costly to the US when their ships, quite literally, have to be pulled off the rocks.ref 22 Their employees are foreign nationals working long hours bringing in an estimated $1–3 per hour wages with a health plan that involves dropping them at the nearest port if they can’t work.ref 23 They are serial debt-based share purchasers. Bailouts were politically impossible.

    OK Mofo: I will lend the money to you but at exorbitant rates.

    ~ Walter Bagehot (paraphrased but spelled right this time)

    A consortium of hedge funds was ready to bend the cruise lines over with loans at 15% collateralized by the ships. All was going swimmingly for the Pirates of the Caribbean who were teaching cruise line CEOs lessons endorsed by 19th-century scholar Walter Bagehot (lend dearly), but then the hedgies were set adrift unexpectedly. The US banks with Fed proddingref 24 and the Bank of England (BOE) bailed them out on far friendlier terms. The BOE bailed out many non-British companies.ref 25 Most Limey’s don’t even know this. Let us not forget that all central banks work for the multinational banks, not sovereign states. Don’t doubt for a minute that We the People would be ballast if the banking system willed it.

    [Parody Alert] A local man Rodney, from Indianapolis launched an airline company this week called “Bailout Flights”. The mission of Bailout Flights is to collect a portion of the $54 billion of bailout money going to the airline industry. Rodney spoke on record stating how he is confident Bailout Flights will collect at least $10 million….“I’m pretty darn sure Bailout Flights will be able to collect at least $10 million from the government,” Rodney stated. “You see, the government isn’t very smart. I highly doubt those government ‘officials’ will even check to see how long Bailout Flights has been in business…There have been 25 new airline companies started in the past week and over 50 cruise ship companies. Half of these companies are headquartered in Boca Raton, Florida, and the other half in Bermuda….“I’m in the process of launching several cruise ship companies as well,” Rodney said with a capitalist smirk on his face. “I’ve already got a name picked out: The Titanic II, III, and IV.

               Random Bailouts. The Fed and treasury slapped together bailouts estimated at $6 trillion in short order; it’s not surprising that there were a few mishaps during the 50 Shades of Bailouts.ref 26 Remember: The banks get the fees with no obligation to monitor how the money is spent.

    • MiMedx, a medical firm that recently settled civil accounting-fraud charges with indictments of top executives and is the prey of short-sellers like Marc “The Leopard” Cohodes, was approved by the government for a small-business loan.ref 27 There were loans to a half dozen other ex-cons. Two weeks after paying a $6.5 million fine to the DOJ, one company received a $10 million loan.
    • The Fed busily bought Amazon bonds, which actually trade at interest rates below US Treasuries. It is the Fed’s Leave-No-Retail-Alive (LNRA) program.

    We’ve known the vast majority of Americans have been living paycheck to paycheck. Now we find many businesses have in essence done the same. Few reserves, no ability to sustain themselves without bailouts after just a few weeks. What will all this look like on the other side?

    ~ Sven Henrich (@NorthmanTrader), Northman Trader

    • The Fed was buying bonds of Uber, Netflix, PetSmart, French telecoms, Italian banks, and Theranos.ref 25 (Just checking. Liz Holmes will be paid for a vaccine.)
    • Private equity firms were having a field day piling debt on corporate balance sheets to fund payouts. They pushed SEC Chairman to shove the Trump administration to loosen the rules that blocked them from these programs.ref 25 This is what horrific monetary policy begets. Without it, there would be no debt-laden shells of companies to be unloaded on gullible buyers reaching for stupidity. Formerly private-equity-owned firms are said to be ten times more likely to “get bankrupted.”ref 25
    • Argentina merely asked to roll some bailout money into their annual debt default and restructuring.ref 25 They do that every year.
    • The Fed allowed adjusted (fake) ebitda to give private equity guys access to bailout money.ref 25

    Unlike industrial leaders during World War II, these men speak the language of public relations and finance, not production, treatment, or logistics…

    ~ Matt Stoller (@matthewstoller), a real journalist

    • Intellinetics used an $800K loan to buy a rival a week later.ref 25
    • Dozens of publicly traded companies with plenty of capital and credit got loans because, well, why not? The bad optics caused some to give the money back. Headline: “Bank robbers get caught. Give back money.”
    • The LA Lakers received a small business loan of over $4 million,ref 25 which they returned after the referee blew the whistle for unnecessary gluttony.
    • The Catholic Church received over $1.4 billion in Covid-19 relief.ref 28 They are rumored to have plenty of assets tucked away.
    • Hotel magnate Monty Bennett’s companies got $46 million in PPP loans not realizing the first two P’s refer to “payroll protection.” He fired 95% of his staff and gave himself a $2 million dividend. It is the “Pocket Padding Program.”ref 29

    IRS Paid $1.4 Billion in Stimulus Payments to Dead People, GAO Report Says

    ~ WSJ Headline

    • David Boies, lawyer to the stars, got $5–10 million.ref 30
    • Kanye West’s clothing brand, Yeezy, snarfed up several million.ref 31
    • The politically connected receiving funds included Transportation Secretary Elaine Chao, Senate Majority Leader Mitch McConnell’s wife, Agriculture Secretary Sonny Perdue, Jared Kushner, Jay Sekulow (Trump’s Impeachment Lawyer), Grover Norquist, Roger Williams (R-Texas), Vicky Hartzler (R-Missouri), Susie Lee (D-Nevada), Debbie Mucarsel Powell (D-Florida), and Sen. Kelly Loeffler (R-Georgia) all had bacon grease dripping down their chins.ref 32 Many are republicans from 2020 swing states. Gotta wonder. This list is, beyond doubt, a smattering of the total take.
    • P.F. Chang, TGI Fridays, and other chain restaurants and hotels got some serious bucks by calling each franchise a separate financial entity.ref 33 They changed their names to P. F. Cha-Ching’s and TGI Free.
    • The fiercely libertarian Ayn Rand Institute got some freebies.ref 34 You guys never found John Gault?

    I have very limited ability to do direct loans out of the Treasury.

    ~ Steven Mnuchin (@MarriedFortheMoney), hoarding his $500 billion beer money

    • Forbes Media, Washington Times, The Washingtonian, The Daily Caller, and The American Prospect all got bucks. Most of the media is nothing but painted rust.
    • George Soros’s Media Matters, which appears to have been created to overturn the US government, got a few million from the US Government.ref 36
    • Jeff Koons, the artist who sold a giant balloon-shaped rabbit for $91 million, reflated his net worth a bit.ref 37
    • The Ohio and Florida Democratic Parties, Women’s National Republican Club of New York, and Black Republican Caucus in Florida apparently had lobbyists on payroll.ref 38
    • The Chicago Mercantile Exchange (CME Group) got a $7 billion credit facility to protect against a clearing-member default.ref 39

    This is a lie that’s been propagated by Wall Street. When a company fails, it does not fire its employees…it goes through a packaged bankruptcy…if anything, what happens is the employees end up owning more of the company. The people who get wiped out are the people who own the unsecured debt and the equity…but the employees don’t get wiped out and the pensions don’t get wiped out….And if a bunch of hedge funds get wiped out, what’s the big deal? Let them fail. So they don’t get the summer in the Hamptons: who cares?

    ~ Chamath schooling slack-jawed Scott Wapner on CNBC

    • John F. Kennedy Center for the Performing Arts defunded 100 musicians with the National Symphony Orchestra after getting $25 million to pay for “fees for artists and performers.”ref 40
    • Amtrak got over a billion to “maintain minimum service levels.”ref 41 They don’t maintain that during the best of times.
    • US fossil fuel companies have taken at least $50 million in taxpayer money they probably won’t have to pay back.ref 42 Half are said to have ties to Trump (of course).
    • The Fed bought bonds of Apple, Microsoft, Oracle, Wal-Mart, Verizon, AT&T, and more than a few multinationals not domiciled in the US. Apple was busily buying back its stock.ref 43 Was this part of the Fed-orchestrated FAANG rally off the March lows?
    • Adam Taggart documents how the Fed bailouts lined billionaire pockets to the tune of $637 billion…
    • Of 40 large companies seeking U.S. bankruptcy protection during the pandemic, a third gave executives bonuses within the prior month.ref 45 Noble Corp rushed its 2020 bonuses six months early for “employee retention” and to beat the bankruptcy clock.ref 46 The execs slept soundly knowing clawbacks were statutorily off the table.ref 47 As Ben Hunt pithily suggested:

    Burn. It. The. Fuck. Down.

    ~ Ben Hunt (@EpsilonTheory), Epsilon Theory

    • The PPP reimbursed $57 billion of bank loans as of June 10. A $5.3 billion slug going to Cross River Bank (CRB) with one branch office more than doubled its total assets.ref 48 This is a screwy operation. In 2018 they were found to be “engaged in unsafe or unsound banking.” Aren’t they all?
    • Lenders often gave PPP loans to its favorite customers—a “concierge service for the wealthy.”ref 49 Wells Fargo favored large loan amounts rather than the mandated first-come, first-served basis.ref 50
    • JPM initially balked at making PPP loans sensing a shitstorm about to ravage the nation.ref 51 This is reminiscent of their Bear Stearns negotiation tactics.
    • Hertz fired 14,000 workers while providing executives $1.5 million bonuses before its bankruptcy. They appear not to have gotten bailout money.ref 52
    • Over 80 publicly-traded companies with pre-existing large credit lines got the loans as did zombies unable to cover their debt payments with cash flow before the Covid-19.ref 53 The funds were gutted quickly. Many had more than the 500-employee cap. Oversight seemed to be lacking.

    I am decently financially savvy – had all ducks in a row, followed PPP legislation closely. CFO of two very small businesses (10 employees). Submitted info for PPP loan to my regional bank within 7 hrs of them providing exact guidance. My loan was not approved before the money ran out.

    ~ Rob Mahrt (@robmahrt)

    • The Small Business Administration running the PPP told the media that it was “too consumed by the urgent effort of helping small businesses through the economic downturn” to track the loans.ref 54
    • The Pentagon got over one billion to pay contractors.ref 55 That is a rounding error.
    • 500 JPM employees inexplicably bagged some salary relief funds, which got unwound when they got caught.ref 56 Employees at the “chronic lawbreaking recidivist” Wells Fargo pilfered from the Small Business Administration’s coffers.ref 57 Their biggest shareholder, Warren Buffett, finally realized that any bank that gets caught this often is poorly managed and dumped half his shares.ref 58 Employees of other large banks did not get caught.
    • The $2 trillion coronavirus crisis bill that passed the Senate includes a $350 million injection of cash for “Migration and Refugee Assistance.”ref 59

    There will be S&L-type frauds, absolutely ostentatious frauds. I’d be looking for tens of billions of loss to fraud….With the [Main Street] relief, you might see $50,000 frauds, $100,000, $4 million…

    ~ Neil Barofsky (@neilbarofsky), the Special Inspector General for the last bailout

    • Nigerians bilked Washington’s unemployment system for princely sums amid the chaos by siphoning off $600 unemployment checks.ref 60
    • A NY Jets wide receiver got caught snarfing up $1.2 million from the PPP Funds. He spent it on bling and gambling.ref 61 The rest of it he wasted.
    • Dozens of Austrians—not Austrian economists but real Austrians—got coronavirus stimulus checks from the US Treasury.ref 62 Although the banks hadn’t a clue how many were cashed, a spokesperson claimed ”in the grand scheme of things, it’s peanuts.” An unknown quantity of peanuts.

    America will be unrecognizable after this pandemic if big corporations walk away with trillions of dollars and no strings attached…our leaders seem to be falling prey to what can only be called a corporate frenzy of favor-seeking.

    ~ Matt Stoller (@matthewstoller), still a real journalist

    I am told the Fed has not actually bought any corporate bonds via the shell company set up to circumvent the restrictions of the Federal Reserve Act of 1913. Must be the most effective jawboning success in Fed history if that is true.

    ~ Jeffrey Gundlach (@TruthGundlach), CEO of Doubleline and the New Bond King

              Fed Bait and Switch. What the Fed said and what the Fed actually did doesn’t quite align. The corporate debt market went bonkers in a frenzy of buying ahead of the Fed’s bond binge. Corporate bond issuance soared.ref 63 There was effectively a massive short squeeze in the corporate debt markets. Sleuths like Wolf Richter, browsing the Fed balance sheet to combat insomnia, couldn’t find the junk bond purchases.ref 64 As Wolf noted, the Fed essentially said “Y’all go on and run ahead, we’ll catch up later.” Think of it as an atomic sit-up. Buying junk bonds is illegal, ethically questionable, and anathema to free-market capitalism, but was it a good idea to lie like teenagers? One of the few tools remaining at the Fed (besides the Fed governors) may be market jawboning, and now these jawboners admit to being compulsive liars. (This is a poorly kept secret.) Once the Fed is done scorching the earth and poisoning the wells, America will find itself more leveraged than before the pandemic. Ex-Fed governor Kevin Warsh suggests the conduct of the Fed could have been better, but all evidence is to the contrary.

    What were they thinking?

    ~ Scott McNealy, former CEO of Sun Microsystems (OK. That is cliche’.)

    We’re not even thinking about thinking.

    Jerome “J-Po” Powell, Chairman of the FOMC

              Relief for Jane and Joe Sixpack. As consumers were getting monetary reach-arounds by the Fed, they should ask, “What else are they doing back there?” Overall, the checks sent directly to the consumer are estimated at a quarter billion dollars, constituting 4–5% of the entire package. Rumors abound that some are being garnished by creditors.ref 65 I am not sure if that was intended, but it is serious gallows humor. What is clear is that people would starve without the money. Long soup lines suggested folks had cars and gas but no food. Attempts to provide rent relief have met the harsh reality of contract law and damage done to the counterparty (landlord). The CDC, forgetting that the ‘D’ stands for ‘disease’ not ‘debt’, announced that evictions were forbidden until the end of 2020.ref 66 Some municipalities have pushed ahead with legislation providing landlord-funded deferred rent payments.ref 67 Those landlords are probably carrying heavy debt too, which, in turn, is on pension and bank balance sheets as CMBS, foreshadowing serial defaults. In NYC, somebody got the marvelous idea of sheltering the homeless in posh hotels.ref 68 They are said to be not so posh now.

    A compassionate society has both economic reason and ethical responsibility to provide a social safety net to its most vulnerable members. It is an act of both economic insanity and ethical corruption to provide a financial safety net to its most reckless speculators.

    ~ John Hussman

    There is a calm blanketing the country right now. A calmer administration is entering the Whitehouse. I suspect the economic damage is unmeasurable and huge. Through the fog I think I can make out the tail lights of the 79th car in a pile-up.

    Loans will be interest-free for the loan term (1 year). The Interest rate will be 12% per annum on the unpaid balance thereafter” 12%. Good luck, Florida.

    ~ @SheepleAnalytic, anonymous genius, on the Florida Small Business Emergency Bridge Loans


    From personal experience as a caregiver and spouse of over 30 years, great healthcare is not something you can find by looking at some Top-100 lists in US News and World Reports.

    ~ Nowonmai (@DavidBCollum)

    The healthcare system took a shot in the shorts this year. The regular functions of hospitals got shut down to handle the influx of Covid-19 patients. A rational individual might wonder why elective surgeries didn’t proceed forward with the proviso that circumstances may require rescheduling. Instead, hospitals went to DEFCON 1, eventually furloughing an estimated 1.4 million “non-essential” healthcare workers. That is a lot of “non-essential” healthcare being bypassed. The ground-zero locations for Covid-19 such as NYC were preoccupied with the large case count briefly. They may have reached breakpoint, although those hospitals have a lot of staff and beds, and big-city hospitals always appear to be at a breaking point from the patient’s perspective. The makeshift hospitals and the hospital ship brought to port in NYC were not used. According to a recent (September) tally, 170,000 healthcare workers had Covid-19, which means we have 170,000 who are now well-positioned to return to the front lines. The CDC said over 1,700 have died,ref 1 which is an astonishingly low tally given that many were stewing in the viral plumes. Staffing shortages appeared to stem from peak case counts (of course) and early efforts to quarantine healthy, but exposed, staff.

    Serving up healthcare under battlefield conditions on a disease and a pandemic—they are not synonymous—caused a lot of forced errors. In this section I focus on the damage done to the healthcare system itself and possible long-term effects. Let’s lead off with a personal example.

    About ten years ago my wife slipped and did a header into a cabinet. The CT scan came out negative, but the astute doc noticed she was holding her head with her hands. He slapped the brace back on, took another peek, and announced she had a double break with a 40% fatality rate. This was odd because in ’99 my mother slipped, did a header into a lovely 18th century Chippendale desk, nice patina, some restoration…never mind. She snapped her neck and died. I have a point to make that has nothing to do with me being a sick puppy and possibly a one-trick pony matricidal maniac. During the sheltering, my wife fell again while gardening and did a face plant. (Really? A face plant while gardening? Shameless prose.) We picked some mulch out of her face, but at dinner she was holding her head with her hands. This time the ER was a ghost town. I begged to go in but no deal. The CT was negative but declared so by whom? Late-night scans are often interpreted overseas in places you wouldn’t necessarily wish to trust with your life. She never saw a doctor. The release papers were boilerplate. I got her to a neurosurgeon the next day, and confirmed she was OK. But that was a total failure of a higher order. My sister-in-law has been waiting 6 weeks to see a doctor for a broken shoulder.

    How many people died or were seriously maimed because we slammed the brakes on the entire healthcare system? Coronary angioplasty and stents were put off because they were not critical at that moment. ER doctors reported a disturbing 40% collapse in the number of heart attacks and 50% collapse in reported mild strokes, suggesting the victims walked them off or went house-to-morgue directly.ref 2 You can almost hear the thuds. Doctors called the shutdown of the system a “mass casualty Incident” with “exponentially growing negative health consequences” to non-Covid-19 patients. The downstream health effects…are being massively under-estimated and under-reported.”ref 3 The American Cancer Society said cancer detections dropped by 80%, mammograms by 87%, and colonoscopies by 90%.ref 4 Patients were skipping chemo treatments.ref 5

    Fun Fact: I once live Tweeted a cystoscopy: “It burns! It burns!…it looks like Nemo’s fish tank.”

    The hospitals got financial help during the bailouts including subsidies for handling Covid-19 patients, but I suspect the revenue streams weakened many systemically.ref 6 One report from months ago claimed that 42 hospitals had closed permanently and filed for bankruptcy.ref 7 Insolvency is more like cancer than a heart attack. It takes a while to kill the patient.

    Municipal bankruptcy (a most curious part of bankruptcy law) which might not make hospital purchases so wise in that the terms of trade will need to be renegotiated between those hospitals and the newly formed state Medicaid offices.

    ~ Dave Lewis, friend and former Moore Capital

    Here is where it gets very dicey. There are an estimated $5 trillion in private equity (PE) funds itching for some hospitals to buy from the discount table. Hospitals were irresistible targets before the crisis.ref 8 Over the last decade, PE firms have scooped up $340 billion worth of hospitals and related healthcare providers including nursing homes, hospices, medical practices, ambulance services, and even emergency rooms.ref 9 With vast Fed-sponsored funds sloshing around, you could imagine an army of twenty-somethings occupying cube farms scooping them up by the dozen, all done with massive leverage.

    As practices and hospitals struggle with lost revenue during the coronavirus disease 2019 pandemic, they may become more susceptible to private equity acquisition.

    ~ Joseph D. Bruch, BA, of the Harvard T.H. Chan School of Public Health

    Recall that PE-owned firms are ten times more likely to go bankrupt. Why? Because the PE guys load them with debt, pay huge bonuses, and sell them to gullible investors who are happy to buy shitty companies with stage IV balance sheets because of the grotesque excess of liquidity in the system. It’s a buy, strip, and flip model, also known as strip mining. Joel Freedman bought Hahnemann University Hospital in 2018, which was known for serving a disproportionate number of indigent patients.ref 8 When the city needed to use the now-empty hospital during the pandemic, Freedman demanded $1 million a month.

    The alternative model of private equity is to hold onto the companies (hospitals in this case) and squeeze profits out through greater efficiencies. I suspect that will not improve the quality of care.ref 10 The huge win for PE guys using this latter model will be when national healthcare provides a guaranteed payer—you.

    I blame the Fed. The PE guys are a rational free-market response to horrid monetary policy and a bloated banking system that long-ago ceased being a facilitator of capitalism. Nonetheless, if karma is real, some of these guys are gonna die of coprophagia in one of their own ERs.

    *  *  *

    Due to the length of this review of 2020, we have split it into two sections... see Part 2 here...

    •     Epilogue–Epstein

    •     Epilogue-Climate Change

    •     Rise of the Cancel Culture

    •     The Tweet and Cancel

    •     The Buffalo Shove: The Real Story

    •     College Life

    •     Political Correctness—Adult Division

    •     Group Statements and Identity Science

    •     Anatomy of the Riots

    •     The Death of George Floyd

    •     Covid-19: Just Opinions

    •     Where to from Here?

    •     Acknowledgments

    •     Books

    •     Links in Part 2

    Tyler Durden Thu, 12/24/2020 - 13:30
    Published:12/24/2020 12:59:57 PM
    [Markets] Can We All Turn Japanese? Can We All Turn Japanese?

    Submitted by Tuomas Malinen of GnS Economics

    Now that the first serious mutation of the Coronavirus has apparently emerged, many are wondering how well the global economy will cope.  “Not well” is what we consider the rather obvious answer.

    However, some hope the world economy will now manage to avoid general collapse by massive government intrusion mirroring the Japanese experience, “Japanification”, even though this will result in nothing more than permanent economic stagnation and the massive growth of sovereign debt. 

    While a questionable—if not truly disturbing—goal, could it be done?

    In this blog we explain why the whole world cannot ‘Japanificate’. Moreover, we detail why any such attempt would simply lead to a takeover of the global economy and the financial markets by central banks, leading eventually into a Global Economic Dystopia.

    The "example" of Japan

    We have already explored the 1990’s financial crisis of Japan in some detail and thus we present only a short summary here.

    When that national economic crisis intensified, the Bank of Japan (BoJ) began to act as lender of last resort, the main task of a central bank in a crisis, but it also bailed-out several financial institutions. This was highly exceptional as central banks usually provide only liquidity—not capital—to banks, much less to private financial companies.

    The government allowed, and in some cases even encouraged, banks to extend loans to ailing businesses. Government policies permitted the use of accounting gimmicks which, lacking transparency, allowed bank supervisors to implement policies that enabled banks to downplay their loan losses and overstate their capital. So, after the stock and real estate markets had collapsed, a majority of large Japanese banks remained in a state of permanent impairment—functionally bankrupt—for most of the 1990’s.

    Failed banks were propped up without either recapitalizating or clearing the bad loans off their books. When banks use their diminished loan resources to support unhealthy companies, to stave off further losses, the funding for risky new enterprises will become scarce, and also tie-up private capital which could similarly be used to support the creation of new businesses. This leads to a vicious feedback loop of depressed innovation, falling production and diminishing profits, resulting ultimately in a stagnant economy. 

    The Japanese economy has been kept growing at its substandard pace only with the help of constant monetary and fiscal stimulus. One result has been that the level of Japanese government debt has exploded (see Figure 1).

    Can We All Turn Japan?


    Firstly, the world economy was growing fast in the 1990s which in turn supported the Japanese economy through demand for its exports. Secondly, a “zombified” global corporate sector would (will) be unable to provide enough support for the economy and the financial markets as they themselves would be in constant need of further debt on easy terms.

    Thirdly, a zombified global banking sector would be unable to support the growth of new and vigorous enterprises as they would naturally concentrate on their own survival by supporting ‘zombified’ borrowers. Fourth, financial markets rely on healthy corporate profits and strong banks, which help to provide sufficient capital and liquidity to markets to keep them functioning properly. As these factors would not be extant, the world economy would be in a permanent state of vulnerability and at constant risk of collapse.

    Thus, a single rich country can manage to Japanificate because it can rely on the support of those companies and banks, and other economies globally that have not. But a critical mass of the world economy cannot—must not—reach a state of ‘Japanification’, because this implies there would be no one else left to provide both demand and capital (thus far, we have failed to establish interplanetary business relations, perhaps Mr. Musk can oblige?)

    Banking crisis and Global Dystopia awaits

    As global Japanification is not an option, what then?

    While China is likely to keep the credit-machine rolling (see Figure 2), which will support the global manufacturing sector, small and medium-sized enterprises (“SMEs”) and the global service sector is likely to feel the brunt of the second and likely third wave of the pandemic.

    As we have been warning since May, the European banking sector will not be able to cope with the negative effects of the pandemic. While the onset of the banking crisis was postponed through massive fiscal stimulus and debt-moratoria, they can keep a listing ship from capsizing only for so long.

    Governments and central bankers have no access to inter-bank markets, and when confidence among financial institutions is broken, a financial crisis emerges. Naturally, it may also start from a traditional bank run, where depositors withdraw funds from a bank en masse.

    The only option remaining to central authorities is full nationalization of the banking sector and the financial markets. This would lead to the ‘Global Dystopia’, which possibility we have been alerting our subscribers to since December 2018. It would imply the loss of economic, and eventually also political freedoms, and could lead to a modernized form of peonage—a desperate, grim and marginalized existence for hundreds of millions.  

    There’s another way

    Fortunately, there is also a way forward which leads to economic freedom and prosperity—though it will be unquestionably more difficult at the beginning.

    We need to recover the historical foundations of the western model of economic and business relations. We need free price discovery in the capital markets. We need a vigorous entrepreneurial class.  We need a multiplicity of enterprises of all sizes, engaged in fierce competition—not just winner-take all commercial behemoths.  We also need to re-establish the risk-and-reward relationship in all economic actions to resurrect ‘creative destruction’.  This means business restructuring and outright failures must be expected, and common.

    Central banks need to be reined-in or even dismantled altogether. The crushing weight of their influence and interference must be taken off the back of the global economy.  This is something many do not yet understand or accept, at least not yet, but we must be ready to do so because the alternative is so horrendous.

    We, humankind, are in a battle for the freedom of both the present and future generations. We sincerely hope that we will be brave enough to do what is necessary to win it.

    Tyler Durden Wed, 12/23/2020 - 17:40
    Published:12/23/2020 4:54:27 PM
    [Entertainment] A reading list just right for Christmas 2020: A little Dickens, a little Wilde, a little Donald Duck Critic Michael Dirda shares his favorite holiday-themed books. Published:12/23/2020 7:21:31 AM
    [Markets] Big Media: Selling The Narrative And Crushing Dissent For Fun And Profit Big Media: Selling The Narrative And Crushing Dissent For Fun And Profit

    Authored by Charles Hugh Smith via OfTwoMinds blog,

    The profit-maximizing Big Tech / Big Media Totalitarian regime hasn't just strangled free speech and civil liberties; it's also strangled democracy.

    The U.S. has entered an extremely dangerous time, and the danger has nothing to do with the Covid virus. Indeed, the danger long preceded the pandemic, which has served to highlight how far down the road to ruin we have come.

    The danger we are ill-prepared to deal with is the consolidation of the private-sector media and its unification of content into one Approved Narrative which is for sale to the highest bidders. This is the perfection of for-profit Totalitarianism in which dissent is crushed, dissenters punished and billions of dollars are reaped in managing the data and content flow of the one Approved Narrative.

    So don't post content containing the words (censored), (censored) or (censored), or you'll be banned, shadow-banned, demonetized, demonized and marginalized. Your voice will be erased from public access via the Big Media platforms and you will effectively be disappeared but without any visible mess or evidence--or recourse in the courts.

    That's the competitive advantage of for-profit Totalitarianism--no legal recourse against the suppression of free speech and dissent. And if you're shadow-banned as I was, you won't even know just how severely your free speech has been suppressed because the Big Tech platforms are black boxesno one outside the profit-maximizing corporation knows what its algorithms and filters actually do or exactly what happens to the disappeared / shadow-banned.

    Shadow-banning is an invisible toxin to free speech: if you're shadow-banned, you won't even know that the audience for your posts, tweets, etc. has plummeted to near-zero and others can no longer retweet your content. You only see your post is online as usual, because this is the whole point of shadow-banning: you assume your speech is still free even as its been strangled to death by Big Tech black box platforms.

    Since Andy Grove's dictum only the paranoid survive is my Prime Directive, I've paid a bit more to have access to server traffic data. So I can pinpoint precisely when I was shadow-banned: my overall traffic fell off a cliff and the number of readers visiting from links on Big Tech platforms fell from thousands to near-zero.

    The new consolidated Big Media Totalitarians play an interesting game of circular sources: in the traditional, now-obsolete / suppressed form of journalism, a reporter would be required to identify a minimum of three different sources for the story, and make at least a desultory effort to present two sides of the issue.

    That model is out the window in the USSA's Big Media Totalitarian regime. Now reporters only have to use a completely bogus, fabricated source in another Big Media story. Just being in another Big Media platform / publication is now "proof" that the source is legitimate.

    In other words, investigative journalism is nothing but a Potemkin Village of circular sources conjured out of thin air by Big Media. Here's an example from my own experience of being shadow-banned.

    1. A completely bogus organization pops up out of nowhere and doesn't bother identifying its owners, managers or sources.

    2. This complete travesty of a mockery of a sham fabrication then issues a list of websites which it claims, with zero evidence, are stooges / outlets of Russian propaganda.

    3. With zero investigation of this slanderous, evidence-free "source," the venerable Washington Post (owned by Jeff Bezos) publishes an evidence-free hit piece glorifying this fabrication on Page One.

    4. The other Big Media giants then amplify the bogus slander because it came from a "legitimate source," the Washington Post.

    Do you understand how circular sourcing works now? Once a flagrantly bogus bit of propaganda is embraced by one Big Media giant as part of the Approved Narrative, then every other Big Media / Big Tech corporation promotes the fabrication as "real news" even as it is obviously the acme of "fake news", a complete fabrication.

    The fake "source" was called PropOrNot, and the list included dozens of well-respected independent websites, all slandered with a completely fake accusation for one reason: each site had published some content that cast a skeptical eye on the crowning of Hillary Clinton in 2016 and the crushing of Bernie Sanders' campaign by Big Media's Approved Narrative.

    As long as you post videos of kittens and kids dancing, you're OK because your content (owned and controlled by the platform you posted it on--read the terms of Service) is free to the platforms and they use your content to "engage" users which generates billions in profits.

    But if you question the Approved Narrative, you put a big day-glo target on your back. Now if you're a multi-millionaire, you know, a top 0.1% per-center, you can afford to keep posting dissenting views even after you've been demonetized and your income falls to near-zero.

    The rest of us aren't quite so privileged. This is another of the toxic elements in Big Media / Big Tech's consolidated control of what was once known as free speech: They don't have to ban your content outright, which might cause a few ripples of tame protest; all they have to do is starve you into submission by strangling your source of income.

    Thanks to watertight terms of service, even a multi-millionaire is legally powerless against the USSA's Big Media Totalitarian regime. By posting content, you already gave away all your rights. So you can go solo and post content on some obscure corner of the web that no one knows exist, but that's the functional equivalent of being banned and demonetized.

    So go right ahead and enter a sound-proof box and scream your head off; nobody can hear you. Welcome to the totally privately owned, legally untouchable Big Tech / Big Media Totalitarian regime that will let you know what's in the Approved Narrative because that's all you're allowed to see.

    Gordon Long and I cover these topics and many more in our latest video Buying the Narrative (35:41) Since I'd like the video to actually be viewed more than 11 times, I avoided using the terms (censored), (censored) or (censored), and that's the final fatal poison delivered by our profit-maximizing Big Tech / Big Media Totalitarian regime: self censorship. You know what you can't say, so don't say it. Stick with the kitten videos and you'll be just fine.

    You'll be just fine but you no longer live in a functioning democracy. The profit-maximizing Big Tech / Big Media Totalitarian regime hasn't just strangled free speech and civil liberties; it's also strangled democracy.

    It's all fun and games until the pendulum of Totalitarian Consolidation and its Approved Narrative reaches an extreme (like, say, right now) and the pendulum swings back to an equal extreme at the other end of the spectrum. Keep in mind that hubris and money are no match for history: the more powerful you claim to be, the greater your fall. The way of the Tao is reversal.

    Welcome to the U.S.S.A.'s Banquet of Consequences (December 8, 2020)

    *  *  *

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    Tyler Durden Tue, 12/22/2020 - 16:45
    Published:12/22/2020 3:47:07 PM
    [Entertainment] Our readers recommend light classic novels to lift your holiday spirits Need a pick-me-up? You might try books by Dorothy Sayers and Nancy Mitford. Published:12/22/2020 8:16:31 AM
    [Markets] The "New Confederacy"? Yes, It's Time For Conservatives To Unite Against The Globalist Reset The "New Confederacy"? Yes, It's Time For Conservatives To Unite Against The Globalist Reset

    Authored by Brandon Smith via,

    The narrative could not be more transparent or obvious, but then again, the elites are becoming lazy in their propaganda and the leftists are not all that bright. Essentially, every time conservatives (or moderates) organize to defend themselves against communist or globalist attack we are called “Nazis”, brownshirts, populists, bullies, etc. Now, I would remind these people that if we were really going the path of the Sturmabteilung then there would be rampant intimidation and assault on leftists to the point that they would be afraid to leave their homes or even identify as leftists. Conservatives believe in self defense, not coercion and terror tactics.

    Such actions are the wheelhouse of the political left these days. They are far better than we are at imitating Brownshirt behavior. The reality is that across the board the only people engaging in widespread censorship and violence are on the political left, yet we are supposed to be the “Nazis”?

    Historically, there does seem to be a pattern here, though. In Germany in the 1920s-1930s communist groups were highly active and initiated street violence, riots and even assassinations. This lured many Germans in fear of being overtaken by a communist regime to support national socialism, the other side of the coin when it comes to tyranny. In other words, to defeat the communists the public supported the fascists, and the fascists ended up being just as bad as the communists.

    If you study the investigations of historians like Antony Sutton in books like ‘Wall Street And The Bolshevik Revolution’ or ‘Wall Street And The Rise Of Hitler’, you will discover there is incredible evidence proving that BOTH the communists and the fascists were funded and managed by the same global elites. In other words, the bankers win either way because they control both sides of the game.

    I do suspect that a similar strategy is being implemented within the US today, and that part of the agenda of globalists hellbent on getting their “great reset” is to foment civil war in America while controlling or manipulating both sides of the fight.

    It is indeed a Catch-22 for conservatives:

    • If we roll over and do nothing, then the extreme left and their corporate and political partners take control of the country and we will never see freedom again as they assert their “social justice” mandates along with their lockdown mandates.

    • If we fight back using the same tactics as the leftists or support martial law, then we ultimately erase the civil liberties protected within the Bill of Rights. Those rights will NEVER return (don’t believe the promises for a second) and we become history’s biggest hypocrites and a cautionary tale of the “dangers of nationalism” told to children generations from now, much like the Nazis.

    There is, however, another option, and it’s not diplomacy.

    The establishment likes to make people think there are only ever two choices during any crisis, and both choices involve giving up more freedom or giving government more power. What they don’t want you to consider is the third option – The people taking power for themselves and removing power from those that would abuse it.

    Why should we rely on a middleman to enact such measures? Why are we always being told that we need to wait for a president or a government to do the job we can do ourselves? The liberty movement doesn’t revolve around Trump or the election, and it should NEVER rely on martial law as a means to secure our safety. We can do this on our own without asking permission or waiting to be led by a mascot.

    It is true that the political left and conservatives are no longer capable of finding common ground (except, interestingly, among some moderate liberals that also stand against forced vaccinations and medical mandates). In terms of the hard left, their cult is so far beyond reality now that it would be impossible to reconcile. They live on another planet and their frothing zealotry is too entrenched for them to ever see reason.

    In their delusional fantasies we are the ultimate villains, and they are the “noble freedom fighters”. Of course, every single establishment power platform in the corporate world, in Big Tech and in the mainstream media is at their disposal, not to mention millions in funding from globalist organizations like the Open Society Foundation and the Ford Foundation, so this tale of the leftist “underdog” makes us double over with laughter at times.

    The majority of conservatives just want to be left alone to live our lives the way we see fit. You know, like real Americans are supposed to do. But this notion is not acceptable to collectivists. They argue that we are “all part of a society”…THEIR society, and we must abide by their ideologies and rules “for the greater good” or suffer the consequences. In other words, you can check out anytime you like, but you can never leave.

    The fact is, groups in general are abstractions of the mind. Just because someone declares that you are a part of their society does not make it so. Walking away is every individual’s right as a human being. Groups that survive and thrive tend to be built on shared values and principles. They don’t all need to agree on every detail, but they can’t be diametrically opposed in every way either.

    Usually those with principles that match with an inherent sense of conscience are the groups that most appeal to people.

    That said, there are people in this world (around 1% to 5% of any given population) that do NOT have inherent conscience, or they suffer from an ingrained affliction called narcissism. These people are attracted to movements that seek to dominate others, and they maintain membership through force rather than appealing to principle. There is no possible way that this group can ever coexist with people that value freedom and empathy. At least, not without incredible conflict…

    There is a large and growing opposition to pandemic lockdown measures, social justice policies that amount to cultural Marxism, as well as the prospect of a Biden presidency which would encourage both of these travesties exponentially. It’s not all about Biden or the leftists, obviously. The Reset goes far beyond them, but many conservatives are looking at the problem more according to what is directly in front of them and less according to the people behind the curtain.

    In light of this the mainstream media is doing exactly what is it designed to do – Create propaganda to “shame” anyone that dares to oppose the prevailing establishment narrative. Their most recent strategy is to label the conservative rebellion against the Reset as “the new Confederacy”, and to bring up the specter of the Civil War.

    This narrative is riding on the back of discussion among conservatives and state politicians that the possibility of secession should be explored in the wake of the growing impasse between leftists, the globalist agenda, and freedom loving Americans.

    The establishment and the useful idiots on the left will have none of it. Despite the fact that all they talked about during the first two years of Trump’s presidency was secession, now that the shoe is on the other foot (if Biden enters the White House and maybe even if he doesn’t) the SJWs and their media counterparts are FURIOUS at the idea that conservatives might actually succeed where they failed.

    Collectivists are good at destroying things, not creating things. Their calls for secession were a joke because we all know they are incapable of self sufficiency, and also they have no means of defense. One look at short lived autonomous zones like “The CHAZ” will give you insight to what would happen if leftists tried to separate within a states. It would be a disaster for them.

    When conservatives talk about separation, though, the leftists and globalists listen. They might not ever admit it, but they know we are actually capable of it.

    To be clear, what I believe is happening is that conservatives are being prodded and provoked, not to separate and organize but to centralize. I think they want us to support actions like martial law which would be considered totalitarian. Conservatives, the only stalwart defenders of civil liberties, using military suppression and abandoning the Bill of Rights to maintain political power? That is a dream come true for the globalists in the long term. And despite people’s faith in Trump, there are far too many banking elites and globalists within his cabinet to ensure that such power will not be abused or used against us later.

    I think the concept of the “new confederacy” label being used by leftists and the media reveals what they truly fear, though:

    • If they can get us to roll over for the lockdowns and medical tyranny and a Biden dictatorship, they’re happy.

    • If they can get us to support martial law under a Trump “coup”, they’re happy.

    • But what they don’t want is for conservatives and moderates to form their own organizational resistance not beholden to any singular political figure or top down pyramid structure.

    Such organization is happening right now. Millions of liberty minded Americans are leaving leftist counties and states, taking their wealth and businesses with them, and going to more conservative regions where they feel they will be safer. There has not been an ideological immigration like this in the US for well over a century. The reality is that conservatives are congregating (FINALLY) and they are starting to work together for their own security.

    In my own area in Montana I have been running local open meetings on preparedness and current events in the hopes of getting people on the same page and networked in the event that the current crisis spills over and rule of law breaks down. Or, in the event that there is an attempt by the state or federal government to enforce medical lockdown mandates where we live. These meetings have been expanding in the past couple of months and needless to say, people in my town are not going to submit to restrictions and do not plan to hide quietly in their homes while their community and businesses are destroyed.

    These groups are forming across the country, and thank God, because without community organization there is ZERO chance of survival or freedom for liberty minded Americans. As I’ve noted in some of my latest articles, the rebellion against lockdowns and vaccination mandates is visible even in hard-left states like California and New York. There is much to be optimistic about. However, the fight is going to be difficult and there will be ample vitriol leveled against us as we successfully unify.

    Organization requires a tit-for-tat philosophy to do well. Meaning, everyone must take some risk in order to encourage others to join the fight.

    For example, conservatives want business owners to refuse to enforce lockdown rules. But, if a business owner makes this courageous choice and faces off with government health officials, then patriots need to be there to back them up. This might even mean standing in the way of law enforcement that is violating the constitutional rights of that business.

    I call this “creating a wall of worry”; many police and sheriffs are not onboard with the enforcement of illegal mandates, but those that are need to understand that there are potential consequences for doing so. The wall of worry is a deterrent, and the larger the group of people involved the better. Police are not going to risk escalation of a fight over lockdown mandates if they realize that fight could go badly for them. And, if people in their own departments are against the lockdowns, the consequences double if they seek to enforce them. They should be the ones worried, not us.

    Health Department officials are even less likely to push the issue in the face of opposition.

    By extension, if your local sheriff’s department or police department is standing against the unconstitutional mandates and the state or federal government threatens them with repercussions, YOU must be there to offer help and support. They are taking a risk for you, so you must be willing to take a risk for them.

    I am also hearing considerable chatter that many medical professionals including doctors and nurses are going to REFUSE to take the poorly tested and questionable Covid vaccine for fear of damaging side effects. And why should they? Why take a vaccine for a virus that only threatens less than 0.3% of the public outside of nursing homes?

    Medical professionals are under immense pressure to take the vaccine or lose their license to practice. Conservatives MUST defend them if they rebel against mandatory vaccination.

    This means helping them to set up their own clinics outside of the controlled system where they can continue to aid people and still make a living. This means networking liberty minded patients that need treatments for various ailments to doctors and nurses that will not demand they show a medical passport and will not report them to the government. This means protecting doctors and nurses from retribution should government officials try to punish or arrest them.

    Communities will need to build their own localized economies, using barter and trade and maybe even creating a local currency scrip (hopefully backed by some kind of commodity). They are going to have to insulate themselves from the lockdowns economically in order to defy the lockdowns in a practical way. Otherwise, anyone that does not conform to medical passports and contact tracing will be denied access to the establishment controlled economy and die of poverty. We have to create alternatives. We have to offer people a choice outside of tyranny, otherwise many will go along with the tyranny.

    Finally, conservative communities are going to have to provide for their own security. Regardless of how the election situation actually ends, and even if Trump stays in the White House and refuses to concede, martial law is an unacceptable scenario. Conservatives don’t need it anyway. We should be establishing localized security (otherwise known as militias) composed of any able bodied person in the community that wants to join. These militias would have to form as unofficial organizations, as it is unlikely that state politicians will sanction them.

    That’s okay. We don’t need them to sanction our own security and defense. Like I said, we can handle it ourselves.

    In the meantime, the leftists will label us “brownshirts”, but as mentioned they are the people that have proven over and over again to be violent and totalitarian, so their accusations ring hollow. The media will call us the “new confederacy”, which is funny because the majority of the original confederates and slave owners during the Civil War were Democrats.

    We’ll set aside that irony and point out that people have an inherent right to self defense and to freedom from oppression, and none of us are slave owners. Anyone that calls for the globalist Reset is an enemy of individual rights, and anyone that tries to enforce medical tyranny is on the wrong side of history and of morality.

    They can call us whatever they want and make erroneous historical comparisons until they are blue in the face; it won’t change the fact that we are seeking to be free and they are seeking to take that freedom away. This is all that matters.

    *  *  *

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    Tyler Durden Mon, 12/21/2020 - 23:40
    Published:12/21/2020 10:47:05 PM
    [Markets] Social Security Is A Mess: There Are 6 Million Active Accounts Of People Aged 112+ Social Security Is A Mess: There Are 6 Million Active Accounts Of People Aged 112+

    Our friends at Open The Books continue to expose government waste - and fraud - and in their latest investigation, they have shone the spotlight on one of the largest wastes in the US government: the Social Security Administration.

    What they have uncovered is that last year alone, Social Security admitted to $8 billion in improper and mistaken payments.

    The punchline: when they dug deeper, they found that there are six million active social security numbers of people aged 112 and older... even though only 40 or less or those people exist in the world.

    The root cause of this collosal abuse: failure to verify death. And yet while you won't read about it in the papers, the four-year total sum to US taxpayers is roughly $2.8 billion, which in today's numbers when trillions are thrown around may not sound like much, but add up all the other areas of government waste, and soon you end up with far greater numbers.

    Watch the clip below for more.

    Tyler Durden Mon, 12/21/2020 - 22:40
    Published:12/21/2020 9:42:02 PM
    [Entertainment] The 20 Buzziest Books of 2020 E-Comm: Best books of the yearWe 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! From...
    Published:12/21/2020 5:37:01 AM
    [Markets] Record 41% Of European IG Bonds Have Negative Yields As ECB Buys Quarter Of All Eligible Corporate Bonds Record 41% Of European IG Bonds Have Negative Yields As ECB Buys Quarter Of All Eligible Corporate Bonds Tyler Durden Sun, 12/20/2020 - 10:15

    This is the kind of stuff that will one day fill history books chronicling the great crash of 2021.

    Published:12/20/2020 9:31:04 AM
    [Markets] Governing By Rage And Ridicule Governing By Rage And Ridicule Tyler Durden Fri, 12/18/2020 - 14:20

    Authored by Simon Black via,

    Back in July, Yale University began a critical study on COVID vaccines.

    But there was an interesting twist to Yale’s study: scientists weren’t looking at the actual vaccine candidates; instead they were studying how to most effectively convince people to take a vaccine.

    One of the things they tested, in fact, was how guilt, embarrassment, and negative social stigma could pressure people into taking a vaccine, even if they have doubts or concerns about it.

    In other words, the study examined if shaming people would be an effective way to compel everyone to take a COVID vaccine.

    The results of that study have not yet been reported. But the mainstream media and Twitter mob have already decided that shaming people is the best approach to vaccine compliance.

    As I wrote earlier this week, comprehensive trial results from a handful of vaccine candidates have only been published within the last week or so. But Twitter and the media have been essentially pre-shaming people for months.

    CNN ran a story in early AUGUST, for example, entitled, “Covid-19 conspiracy theories: 6 tips on how to engage anti-vaxxers”.

    This is the perfect illustration of pre-shaming.

    There was practically zero data on any vaccine candidate back in August. Yet the luminaries at CNN had already decided that anyone who expressed concern was a conspiracy theorist.

    And now that some vaccines have received emergency authorization, tactics have moved from pre-shaming to full blown rage and intimidation.

    Fines and jail time are now being openly discussed in the United States, Europe, Australia, etc. And many prominent companies in the private sector have piled on, proposing rules that could forbid unvaccinated customers from airplanes or hotels.

    I recently read an editorial in a British paper that went so far as to suggest that unvaccinated people should potentially be brought up on murder charges.

    But as we can see, this approach is nothing new. There are countless other examples of their ‘rule by rage and ridicule’.

    Just look at tax policy–

    The Bolsheviks want to raise trillions of dollars in tax revenue; and they want to raise a good chunk of that money from large corporations and the richest citizens.

    Now… one possible method might be to approach billionaires and CEOs as respected partners.

    Explain to them that the country is in a deep fiscal hole, and ask if they’d be willing to make a financial sacrifice. Treat them with dignity and kindness, and vocally praise their generosity if they go along with it.

    But that’s not how these people operate.

    Instead, they threaten to nationalize entire industries, propose outright asset confiscation, and publicly ridicule wealthy people simply for being successful; they think Jeff Bezos is the worst scum of the earth.

    Most strikingly they’ve managed to cast a dark cloud of suspicion on the entire idea of being rich.

    When I was growing up in the 80s, every kid I knew wanted to be a millionaire. Becoming rich was a common aspiration in the West. And wealthy people used to be admired.

    Now they’re despised.

    These Bolsheviks have succeeded in shifting public opinion so much that wealth is now something you have to apologize for.

    AOC sums it up the best when she says, “You don’t MAKE a billion dollars. You TAKE a billion dollars.” People actually believe this nonsense.

    (This, coming from a person who sells ‘Tax the Rich’ sweatshirts for nearly $60 and books the revenue as tax-free campaign contributions.)

    It’s a perfect example of rage and ridicule in action.

    We’ve also seen this approach with social justice (heavens forbid someone commit the heresy of saying that all lives matter…)

    We’ve clearly seen rage and ridicule over the past 9+ months of Covid lockdowns, because you now have the right to be pepper-sprayed by your fellow citizens if you’re not as terrified as they are.

    We’ve seen a whole lot of rage and ridicule over the election, with Twitter mob and Bolsheviks creating their ‘enemies list’ of people who espouse different ideological views.

    (Some prominent Bolsheviks have even called for a “Truth and Reconciliation Commission” in the new Biden administration.)

    And now we’re seeing this same rage and ridicule approach to vaccines.

    These tactics have been extremely effective; they keep sane, normal people quiet for fear of being publicly maligned and ostracized.

    • You’re not allowed to talk about the vaccine.

    • You’re not allowed to talk about the election.

    • You’re not allowed to have an opinion about social justice (unless you’re groveling for forgiveness).

    • You’re not allowed to ask intelligent, informed questions.

    • Your assertions will always be baseless.

    • You will always be an evil conspiracy theorist.

    • Their assertions will always be true.

    • They will always be righteous.

    And anyone who believes their talk of openness, compromise, healing, and unity is in for a rude awakening.

    *  *  *

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    Published:12/18/2020 1:21:49 PM
    [Markets] Stimulus Stalls On GOP Push To Limit Fed Powers As $1,200 Checks Blocked By Johnson Stimulus Stalls On GOP Push To Limit Fed Powers As $1,200 Checks Blocked By Johnson Tyler Durden Fri, 12/18/2020 - 12:40

    Update (1240ET): Sen. Ron Johnson (R-WI) says he's blocking $1,200 direct stimulus checks to Americans, citing the national debt, according to Bloomberg's Steven Dennis.

    Sens. Bernie Sanders (I-VT) and Josh Howley (R-MO) were pushing for the $1,200 amount.

    While Sanders and other Democrats are pushing for more checks, bipartisan leaders are trying to keep the plan under $900 billion through the use of much smaller checks. Democratic leaders, however, want the direct checks to be on top of the $900 billion.

    According to Hawley, Sanders will attempt to pitch the direct checks which will be capped so that wealthier Americans don't get them.

    *  *  *

    As pandemic relief negotiations continue to stall in Congress, the latest major obstacle has emerged; a battle over the Fed's ability to channel tens of billions of dollars to state and local governments - a largely-unused provision in the Cares Act which expires on Dec. 31.

    Democrats want to preserve this option for what the Wall Street Journal editorial board describes as a plan "to use the Fed to go around Congress if they don't control the Senate next year," while Republicans - led by Sen. Pat Toomey (R-PA) - want to repurpose approximately $429 billion in Cares Act funding to finance roughly half of the new spending.

    According to the report, the Fed only made $25 billion in loans and other commitments because the majority of businesses and municipalities were able to borrow more cheaply in the private market.

    That Democrats are opposing the Toomey language gives away that their plan is to use the Fed to go around Congress if they don’t control the Senate next year. They’re afraid a GOP Senate won’t agree to another spending blowout to rescue profligate states like Illinois and New Jersey. They want to use the Fed’s municipal and state lending facility, which was stood up this year at the height of the pandemic and market disruption, as the bailout vehicle. -Wall Street Journal

    At present, Fed Chairman Jerome Powell has agreed to return the unused portion of the funding to the Treasury, following the request of Secretary Steven Mnuchin. If the Cares Act is allowed to lapse on Dec. 31, a Biden Treasury would require a new appropriation from Congress to restore the programs.

    The Journal also notes that after the $429 billion is repurposed for Covid relief, the Fed will still control some $35 to $40 billion as a cushion for various pandemic facilities - which could then be leveraged as much as 10x to lend to cities and states on terms set by the Biden Treasury and the Fed.

    Democrats, meanwhile, say the fight is over the Fed's ability to prevent an economic collapse.

    Back in March, the Federal Reserve moved quickly to slash interest rates, flood the financial markets and boost bond purchases. While Congress has struggled for months to extend federal aid programs, the Fed has stuck with its slate of emergency lending programs, and had no intention of winding them down before the recovery was complete. -Washington Post

    The Post omits the fact that just $25 billion was used, yet Democrats arguing to extend the funding insist that Republicans want to slash the Fed's broader, stabilizing authority, just weeks before Biden is set to take office.

    "This proposal isn’t just, ‘let’s go back to the world as it existed the day before the Cares Act.’ It’s actually a significant reduction of the authorities that the Treasury and Fed had before the Cares Act," said Bharat Ramamurti, a Democratic member of the Congressional Oversight Commission.

    The coronavirus pandemic spurred the Fed into one of its most active years ever. In the pandemic’s early days, the Fed reached far beyond its playbook from the Great Recession in ways that economists say prevented an even deeper recession. As the coronavirus spread beyond China and U.S. stocks plunged into the red, the Fed quickly slashed interest rates to zero in March. A sprawling set of programs to flood the markets and boost bond purchases further helped reinvigorate the financial system. Plus, the Fed also rolled out loan programs to struggling businesses and local governments. -Washington Post

    On Wednesday, however, Federal Reserve Chair Jerome Powell reiterate that the array of emergency lending facilities from the spring were never intended to be permanent, saying at a press conference that "When the time comes, after the crisis has passed, we will put these emergency tools back in the box."

    Republicans argue that the Fed has gone beyond its mandate of maximum unemployment and stable prices - with Toomey telling reporters on Thursday that the Fed shouldn't be engaged in "fiscal policy, social policy or allocating credit," which are the domain of Capitol Hill.

    Democrats, on the other hand, want to expand the Fed lending programs in order to help more businesses and local governments dying on the vine during the pandemic. They also want the Fed to focus on racial inequality and climate issues, which they argue pose risks to economic growth.

    Toomey insists that the Fed's emergency lending capabilities "remain on the books," and that Congress could simply approve new programs "if in the future, some dire emergency occurs."

    "We’re not changing the role of the Fed at all," Toomey added. "We’re saying these programs were meant to be temporary, and they’re going to be temporary."

    Override Early Access
    Published:12/18/2020 11:51:31 AM
    [Entertainment] The perfect science fiction, fantasy and genre-bending tales for the chilly days ahead Winter takes center stage in books by George R.R. Martin, Peter Hoeg, Tove Jannson, Tanya Tagaq and more Published:12/18/2020 8:18:06 AM
    [Entertainment] The Masked Singer Reveals the Season 4 Winner Sun, Crocodile, Mushroom, The Masked Singer, Season 4Another season of The Masked Singer in the books, and it went out with a bang. Tonight's finale gave the three finalists a couple of chances to sing one last time before finally...
    Published:12/16/2020 9:37:30 PM
    [Markets] Can 20 Years Of Deflation Be Compressed Into Two Years? We're About To Find Out Can 20 Years Of Deflation Be Compressed Into Two Years? We're About To Find Out Tyler Durden Wed, 12/16/2020 - 17:50

    Authored by Charles Hugh Smith via OfTwoMinds blog,

    Extremes become more extreme right up until they reverse, a reversal no one believes possible here in the waning days of 2020.

    The absolutely last thing anyone expects is a collapse of all the asset bubbles, i.e. a deflation of assets that reverses the full 20 years of bubble-utopia since 2000. The consensus is universal: assets will continue to loft ever higher, forever and ever, because the Fed has our back, i.e. central banks will create trillions out of thin air without any consequence other than assets lofting ever higher.

    This research paper from the San Francisco Federal Reserve begs to differ. Here is an excerpt from Longer-Run Economic Consequences of Pandemics (San Francisco Federal Reserve)

    "Measured by deviations in a benchmark economic statistic, the real natural rate of interest, these responses indicate that pandemics are followed by sustained periods--over multiple decades--with depressed investment opportunities, possibly due to excess capital per unit of surviving labor, and/or heightened desires to save, possibly due to an increase in precautionary saving or a rebuilding of depleted wealth. Either way, if the trends play out similarly in the wake of COVID-19 then the global economic trajectory will be very different than was expected only a few months ago."

    Allow me to translate: wars launch 20-year booms of rebuilding, pandemics launch 20 years of deflation. Oops! Not only do wars destroy physical assets that must be rebuilt, they also tend to kill off a consequential percentage of the labor force, generating a labor shortage that pushes up wages.

    So capital wins funding the rebuilding and labor wins because workers are scarce and in demand: win-win baby! Pandemics are considerably less warm and fuzzy, especially Covid-19. Pandemics are like neutron bombs, they leave the built environment intact so there's no impetus to invest.

    Unlike the Black Death that decimated the human workforce from China to Europe in the 1350s, Covid disproportionately takes the lives of the elderly, most of whom have already left the workforce. So the Covid pandemic's reduction of the workforce is too modest in scale to create labor scarcities consequential enough to push wages higher.

    In other words, lose-lose: capital earns low returns in a low-demand environment and labors' wages stagnate in this low-demand economy.

    Cue 20 years of asset deflation. Bu-bu-but the Fed is omnipotent, godlike in its powers! The Fed can push stocks to moon, never mind history, fundamentals or reality!

    Yes, well, um, fantasies are nice, and delusions are fun, but reality inevitably intrudes and diminishing returns on the Fed's neofeudalist feast for the super-wealthy are about to grab markets by the throat, regardless of what the Fed bleats.

    There are a couple of funny little things called reversion to the meanbubble-symmetry and non-linear dynamics that the Fed doesn't actually control (gasp!) because they are not fully controllable by human policies. Statistical outliers / extremes have a preternatural propensity to reverse, regardless of human manipulation (recall that the way of the Tao is reversal.)

    And these reversals are not "buy the dip" wiggles; they completely reverse the entire bubblicious move to the stars via bubble-symmetry: so markets that go from 1,000 to 30,000 retrace all the way back down to 1,000, no matter how many humans shout, scream, plead and whine "that's not possible!"

    Oh yes it is. Hubris weighs heavily on our faith in the "right" human policies to work magic forever and ever. So as long as the Fed follows the "right policy" and continues printing trillions of dolars out of thin air and buying bonds (and whatever else needs to be bought up to loft markets higher) then Dow 100,000 is in the bag.

    Or not. The idea that human don't control everything is anathema to a technocrat elite, and so when the inevitable reversal crashes assets, everyone will rush around looking for the human-action cause of the disaster and the human-action fix, so we can get back on track to Dow 100,000.

    But the search for causes will be in vain, for extremes pendulum swings reach a limit and then swing back, eventually reaching the opposite extreme minus a bit of friction, which is minimal in a frictionless financial sector of printing trillions with keystrokes.

    If you want evidence that the pendulum has swung as far as it can go, ponder this chart of billionaire wealth jacked higher by the Fed and its central bank cronies:

    Can 20 years of asset deflation be compressed into a mere two years? Absolutely. The global financial system has been running a 20-year experiment in extremes that's close to producing interesting results.

    Extremes become more extreme right up until they reverse, a reversal no one believes possible here in the waning days of 2020. If we could measure hubris, it would be near-infinite. and the reversal of that near-infinite extreme will be one for the ages.

    *  *  *

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    Published:12/16/2020 5:06:18 PM
    [Markets] Why Michael Morell Cannot Be CIA Director Why Michael Morell Cannot Be CIA Director Tyler Durden Sun, 12/13/2020 - 22:30

    Authored by Ray McGovern via,

    As President-elect Joe Biden names his cabinet and other chief advisers, what has escaped wide attention is the fact that none of his hawkish national security advisers — except for his nominee for defense secretary, Gen. Lloyd Austin — has served in the military.

    Former CIA Deputy Director Michael Morell, who is reportedly on Biden’s short list for CIA director, shares that non-veteran status, one of the reasons along with other skeletons from Morell’s past that make him singularly unfit to lead the CIA.

    During my 27 years at the CIA, I worked under nine CIA directors — three of them (Stan Turner, Bill Colby, and George H.W. Bush) at close remove — and served in all four of the agency’s main directorates.

    Having closely followed the past-two-decade corruption of my profession — in particular, what the chair of the Senate Intelligence Committee called the “uncorroborated, contradicted, or even non-existent” intelligence manufactured to “justify” the attack on Iraq, I have on occasion offered suggestions for remediation, particularly during transition periods like this one. (Links to five such efforts in the past appear below.)

    Whiz Kids

    Decades of unfortunate experience show that over-dependence on bright, but inexperienced “best and brightest” can spell disaster. War gaming and theorizing at Princeton and Johns Hopkins have yielded knights with benightedly naive, politics-drenched decisions that get U.S. troops killed for no good reason.

    Michael Morell, acting director of the CIA, Feb. 14, 2013. (DoD Photo By Glenn Fawcett)

    Even if Gen. Lloyd Austin is confirmed as secretary of defense, the whippersnappers already appointed by Joe Biden will probably be able to outmaneuver the general and promote half-baked policies and operations bereft of needed military input — not to mention common sense from the likes of Gen. Austin who knows something of war.

    The current generation of “whiz kids” — the well-heeled, politically astute chickenhawks Biden has appointed — will always “know better” and — if past is precedent — are likely to pooh pooh what Gen. Austin may advise, assuming he is able to get a word in edgewise.

    Moreover, ambitious former generals like David Petraeus — many of them now on the outside of the proverbial revolving door making big bucks in the MICIMATT (Military-Industrial-Congressional-Intelligence-Media-Academia-Think-Tank) complex — will not hesitate to weigh in with their own self-interested support to the chickenhawks, fostering the notion that military threats from notional enemies warrant still more funding for the defense contractors on whose boards so many alumni generals sit.

    Who does not remember the braggadocio accompanying the criminal attack on Iraq, the full-throated support of journalists like David Sanger of The New York Times, and the chest-thumping of Bush/Cheney neocons saying “Real men go to Tehran?” (Sanger is still at it, sitting on the “Judith Miller Chair for Journalism”.)

    Clearly, one does not have to go as far back as Vietnam for noxious examples of the harm that can be done by these “best and brightest,” albeit inexperienced advisers — whether out of the myth of American exceptionalism, ignorance of post-WWII military history, or pure arrogance.

    It may be helpful to recall that Vice President Dick Cheney, the archdeacon of the chickenhawks, acquired five draft deferments during Vietnam. (So did his successor as vice president, the president-elect.)

    Cheney, Tenet and Bush (White House photo)

    Cheney, of course, was the driving force behind the attack on Iraq. He had appointed himself Bush’s principal intelligence officer (usurping the role of CIA Director George Tenet who made not a murmur of protest) and went first and biggest with the Big Lie on (ephemeral) weapons of mass destruction in Iraq. Here’s Cheney in his kick-off speech to the Veterans of Foreign Wars on Aug. 26, 2002: “Simply stated, there is no doubt that Saddam Hussein now has weapons of mass destruction.”

    Simply stated, Tenet dutifully followed White House orders to “fix” the intelligence to support Cheney’s accusations against Iraq. Tenet did so formally in the deceitful National Intelligence Estimate of Oct. 1, 2002 — which earned the sobriquet “The Whore of Babylon.”

    It was successfully used to get Congress to enable Bush/Cheney to make war on Iraq, and eventually create havoc in the whole region. In his memoir Tenet gave the laurels to Morell for “coordinating the CIA review” of Secretary of State Colin Powell’s UN speech that let slip the dogs of war. (Details on that below)

    Cakewalks and Cubbyholes

    Cheney, the quintessential chickenhawk, surrounded himself with advisers of the same bent. One pitiable example was armchair warrior Kenneth Adelman, who had been director of the U.S. Arms Control and Disarmament Agency under President Reagan. In a Washington Post op-ed of Feb. 13, 2002, Adelman wrote: “I believe demolishing Hussein’s military power and liberating Iraq would be a cakewalk.”

    Two years later, Adelman wrote an equally pathetic op-ed, insisting that he and his neoconservative friends had been right on everything except Iraq possessing WMD, Iraqi factions cooperating after Saddam Hussein was deposed, and “probably” on close ties between Saddam and al-Qaeda.

    As for Cheney himself, he did memorize some weapons nomenclature vocabulary, but could not avoid an occasional faux pas betraying his lack of familiarity with things on the ground. Nine months after the attack on Iraq, when WMD were still nowhere to be found, NPR asked Cheney whether he had given up on finding them.

    “No, we haven’t,” he said. “It’s going to take some additional, considerable period of time in order to look in all the cubbyholes and ammo dumps and all the places in Iraq where you’d expect to find something like that.” (The continued, quixotic search cost not only a billion dollars but the lives of U.S. troops.).

    The amateur but opinionated Cheney was the largest fly in the intelligence ointment. Four months into the war it got so blatantly bad that we Veteran Intelligence Professionals for Sanity (VIPS) sent a Memorandum to President Bush entitled “Intelligence Unglued”, recommending that he “ask for Cheney’s immediate resignation.”

    Naiveté on War

    In a recent, disturbingly graphic article entitled “Biden’s young Hawk: The Case Against Jake Sullivan,” retired Army Maj. Danny Sjursen broadly hinted that President Biden’s national security adviser should at least look at the photos. (An editor’s note in the piece explained that such photos are almost totally absent from Establishment media: “Graphic images of war and suffering are included with this text. We believe it is important for the world to witness what their taxes, votes and apathy may be supporting.” )

    Jake Sullivan, seated farthest back, as national security advisor to vice president, in a meeting with President Barack Obama and advisers, Aug. 29, 2013. (White House, Pete Souza)

    In his article Sjursen finds himself wondering “whether Sullivan’s ever seen a dead child, gazed upon the detritus of American empire, waded through the sights and smells of our indecency. And, worse still, I wondered whether it’d matter much if he had. …”

    The national security adviser is gatekeeper to the president, with the gate strong or weak depending — at least in concept — on what the president wants. In the normal course of business, the CIA director and the director of national intelligence would go through the security adviser to get to the president. Cabinet secretaries in the national security arena and, when appropriate, FBI directors often use the same channel.

    What seems important here, though widely overlooked, is that no Biden national security appointee/nominee except Gen. Austin has apparently served a day in the military. Not Sullivan, not DNI nominee Avril Haines, not secretary of state nominee Antony Blinken, and not FBI Director Christopher Wray.

    This is just one factor that should disqualify Morell for director of Central Intelligence (DCI). There are already far too many fledgling warhawks-without war experience. In Morell’s case, though, there are many other factors — some even more important — that disqualify him. His playing fast and loose regarding the legality and effectiveness of torture has been in the headlines recently, thanks to Senate Intelligence Committee member Ron Wyden (D-OR), who called Morell a “torture apologist.”

    It has been a challenge to record Morell’s many artful dodges, but Consortium News did publish “On Iraq/Torture, Still in Denial”, as Morell began to peddle his memoir in May 2015.

    Two of Morell’s tours de force with Charlie Rose in 2016, in which Morell advocates killing Russians and Iranians in Syria, were covered by CN.

    More revealing still — and damning of his chances for another try at CIA — is an article, “Rise of Another CIA Yes Man.” That piece was written when Morell was picked to be Gen. David Petraeus’s deputy at CIA; it ends with personal comments by intelligence professionals who knew Morell well.

    The article also includes citations from Tenet’s own memoir, including encomia he threw in Morell’s direction, one of which should actually be enough to bar Morell from any future role in intelligence.

    Tenet to the left of Powell at the United Nations on Feb. 5. 2003. (Wikimedia Commons)

    In Tenet’s book, At the Center of the Storm, he writes that Morell “coordinated the CIA review” of the intelligence used by Secretary of State Colin Powell in his infamous Feb. 5, 2003 speech to the UN Security Council on the threat from (non-existent) WMD in Iraq.

    Tenet, who sat directly behind Powell on that day, pointed out that Morell had served as regular briefer to President George W. Bush. It has been reported that, of the CIA’s finished intelligence product on Iraq, it was The President’s Daily Brief delivered by Morell that most exaggerated the danger from Iraq.

    Morell fluttered quickly up CIA ranks as the yes-sir protege of two CIA directors who were, arguably, the worst of them all — “Slam-Dunk” Tenet and the-Russians-hacked-so-Trump-won John Brennan. During the presidential campaign of 2016, as Brennan and his accomplices in the National Security State worked behind the scenes to sabotage candidate Donald Trump, Morell dropped any pretense of nonpartisanship — which used to be the hallmark of an intelligence professional.

    From retirement (but with eyes on the big prize he coveted in a new Democratic administration), Morell openly backed the Democratic candidate in a highly unusual op-ed in The New York Times on August 5, 2016: “I Ran the C.I.A. Now I’m Endorsing Hillary Clinton.”

    Iraq: the Crucible

    In my view, the key gauge in weighing qualifications for a national security position like CIA director is whether a candidate showed good judgment before the misbegotten, calamitous attack on Iraq.

    Morell flunks that test outright. Accordingly, he can hardly be expected to be one of the calmer voices in a room of still less experienced fledgling hawks who, to quote Maj. Sjursen, have never “waded through the sights and smells of our indecency” in killing and maiming abroad. With Morell in the room, there would be greater risk of the U.S. getting sucked into still more misadventures overseas.

    What did Morell tell Bush about Iraq? In Tenet’s memoir, he describes Morell as “the perfect guy” to brief President Bush, noting that Morell and Bush hit it off “almost immediately”. Morell added later: “I was President Bush’s first intelligence briefer, so I briefed him kind of the entire year of 2001.”

    ‘The Entire Year 2001’

    So, was Iraqi President Saddam Hussein trying to acquire “weapons of mass destruction” during 2001? The first (and honest) answer was ”No” — if Powell and National Security Adviser Condoleezza Rice are to be believed. Here’s what they said at the time — Powell publicly during a speech in Cairo and Rice to CNN five months later.

    Powell on Feb. 24, 2001:

    “He [Saddam Hussein] has not developed any significant capability with respect to weapons of mass destruction. He is unable to project conventional power against his neighbors.”

    Rice told CNN’s John King on July 29, 2001:

    “We are able to keep arms from him [Saddam Hussein]. His military forces have not been rebuilt.”

    Is this what Morell told Bush just six weeks before 9/11? Did Morell ever explain how Iraq could have developed, purchased, or stolen copious WMD in one year’s time?

    Rice. (Wikipedia)

    And when Morell briefed Bush right after 9/11, was the president fixated on Saddam Hussein, as counterterrorism chief Richard Clarke describes him in his book Against All Enemies? According to Clarke, on 9/12 Bush told him “to go back over everything, everything. See if Saddam did this. See if he’s linked in any way.”

    Clarke says he was incredulous, replying, “But, Mr. President, al-Qaeda did this.” In later interviews Clarke added that he felt he was being intimidated to find a link between the attacks and Iraq.

    Did Morell play it straight and tell Bush (as Clarke did) that Iraq had nothing to do with al-Qaeda or the attacks of 9/11? Did Clarke share that vignette at the time with Tenet and Morell?

    And what about those notional Weapons of Mass Destruction in Iraq? After 9/11, did Morell take his cue from Cheney, Defense Secretary Donald Rumsfeld, and Tenet and give President Bush the impression that Iraq already had all manner of WMD and was on the threshold of acquiring a nuclear weapon?

    Sham Dunk

    Later, in December 2002 when Morell’s boss Tenet assured Bush and Cheney that CIA could prove, slam-dunkedly, the existence of WMD in Iraq, did Morell ever ask himself how both Powell and Rice could have been so far off base the year before?

    Far more likely, Morell knew what the game was, as he watched Rice do a fancy pirouette, telling CNN’s Wolf Blitzer on Sept. 8, 2002 that “Saddam Hussein is actively pursuing a nuclear weapon. We do know that there have been shipments into Iraq of aluminum tubes that really are only suited to nuclear weapons programs.”

    The most accomplished engineers and technical intelligence analysts in the intelligence community knew that the aluminum tubes story was BS. In the finest tradition of intelligence analysis, they remained impervious to the political winds. They insisted that associating those aluminum tubes with nuclear weapons development was wrong and they could not be persuaded to go along. And yet that bogus information got into Powell’s February 2003 speech at the UN.

    In Morell’s memoir he wrote that he wanted to apologize to Powell. Morell says, “We said he [Saddam Hussein] has chemical weapons, he has a biological weapons production capability, and he’s restarting his nuclear weapons program. We were wrong on all three of those.”

    But not my fault, wrote Morell, who tried to shift the blame by claiming he was not a senior official at the time.

    How does that square with Tenet writing that Morell “coordinated the CIA review” of Powell’s speech? Whom to believe? However begrudging must be any trust given “slam-dunk” and “we-do-not-torture”Tenet, he presumably would have less reason to dissimulate than Morell in this particular case.

    Assuming Morell did “coordinate the CIA review” of Powell’s speech, did Morell know about the strong dissent on the infamous aluminum tubes?

    More important, did he know that CIA operators had recruited and “turned” Naji Sabri, the Iraqi foreign minister (who Saddam Hussein continued to believe was still working for him) and, with the help of British intelligence, had “turned” the chief of Iraqi intelligence, Habbush, as well.

    After the reporting from these two sources on other issues and after their access to secret information was evaluated and judged to be genuine, President Bush was told that Sabri and Habbush both said there were no weapons of mass destruction in Iraq. Sabri’s information was given to the president by Tenet on Sept. 18, 2002; Habbush’s in late Jan. 2003. 

    Did Tenet not share that with Morell before he coordinated CIA input into Powell’s speech?

    Clearly, this first-hand intelligence from proven sources with excellent access did not suit the Cheney/Bush narrative for war on Iraq. The president’s staff told CIA operatives not to forward additional reporting on this issue from these sources, explaining that Bush did not want more information about weapons of mass destruction; rather, it was now about “regime change.”

    McGovern questions Clapper at Carnegie Endowment in Washington. (Alli McCracken)

    Did Morell know about this when he was “coordinating” input into Powell’s disastrous speech? It is a safe bet that Morell was fully aware of the con job he was “coordinating” — as did other senior intelligence officials.

    In his own memoir, former Director of National Intelligence (and, during Iraq, director of imagery analysis), James Clapper takes a share of the blame for the Iraq WMD fiasco. Clapper puts the blame for “the failure” to find the (non-existent) WMD “squarely on the shoulders of the administration members who were pushing a narrative of a rogue WMD program in Iraq and on the intelligence officers, including me, who were so eager to help that we found what wasn’t really there.” (emphasis added) .

    Regarding Morell’s “I-confess-they-did-it” apology to Powell, the still-youngish Morell has not stopped lusting for an eventual seat at the table, so he apparently thought it a smart move politically. Typically, Powell did not react — as far as is known. Nor has the conflict-averse Powell summoned the cohones to say clearly what he thinks of how Tenet, Morell, et al. sold him a bill of goods on Iraq.

    In the “where-are-they-now?” department, Tenet quit in July 2004 and fled to Wall Street to be joined the following year by Jami Miscik, who was deputy director for intelligence during the Iraq fiasco. She “lucked into” a nice job at Lehman Brothers before it went bust.

    Note to readers: If you know someone advising the Biden team on selecting a director for CIA, please pass this along.

    Finally, those interested in suggestions from the experience of previous transition teams, please click on one or two of the links below. The key issues tend to remain the same. Above all, integrity counts.

    *  *  *

    Additional Readings

    1 — A Compromised Central Intelligence Agency: What Can Be Done?

    By Ray McGovern, 2004

    Chapter 4 in “Patriotism, Democracy, and Common Sense: Restoring America’s Promise at Home and Abroad”, Rowman & Littlefield, 2004

    Ray’s chapter follows chapters by Alan Curtis (editor), Gary Hart, and Jessica Mathews.

    Link to Chapter 4 text:

    2 — Sham Dunk: Cooking Intelligence for the President?

    By Ray McGovern, 2005

    Chapter 19 in “Neo-CONNED! Again: Hypocrisy, Lawlessness, and the Rape of Iraq”, Light in the Darkness Publications, 2005?

    3 — Try These on Your CIA Briefer, Mr. President-Elect

    By Ray McGovern, November 8, 2008

    4 — What Needs to Be Done in Intelligence (a memo for the Bush-to-Obama transition team)

    By Ray McGovern. December 4, 2008

    5 — US Intelligence Vets Oppose Brennan’s CIA Plan

    By Veteran Intelligence Professionals for Sanity (VIPS), March 9, 2015

    *  *  *

    Please Contribute to Consortium News During  its 2020 Winter Fund Drive

    Override Early Access
    Published:12/13/2020 9:46:23 PM
    [2020 Presidential Election] How Much Voter Fraud Was There? (John Hinderaker) Over the next few years, books will be written about the 2020 presidential election. Some will argue that the Democrats stole the election through widespread voter fraud. Others will argue that while safeguards were lax and there was a good bit of fraud, Joe Biden would have won the election anyway. I doubt that anyone will argue that Biden, the sad shell of a man who at his best was Published:12/12/2020 12:38:06 PM
    [Markets] No Privacy, No Property: The World In 2030 According To The WEF No Privacy, No Property: The World In 2030 According To The WEF Tyler Durden Sat, 12/12/2020 - 07:00

    Authored by Anthony Mueller via The Mises Institute,

    The World Economic Forum (WEF) was founded fifty years ago. It has gained more and more prominence over the decades and has become one of the leading platforms of futuristic thinking and planning. As a meeting place of the global elite, the WEF brings together the leaders in business and politics along with a few selected intellectuals. The main thrust of the forum is global control. Free markets and individual choice do not stand as the top values, but state interventionism and collectivism.

    Individual liberty and private property are to disappear from this planet by 2030 according to the projections and scenarios coming from the World Economic Forum.

    Eight Predictions

    Individual liberty is at risk again. What may lie ahead was projected in November 2016 when the WEF published “8 Predictions for the World in 2030.” According to the WEF’s scenario, the world will become quite a different place from now because how people work and live will undergo a profound change. The scenario for the world in 2030 is more than just a forecast. It is a plan whose implementation has accelerated drastically since with the announcement of a pandemic and the consequent lockdowns. 

    According to the projections of the WEF’s “Global Future Councils,” private property and privacy will be abolished during the next decade. The coming expropriation would go further than even the communist demand to abolish the property of production goods but leave space for private possessions. The WEF projection says that consumer goods, too, would be no longer private property.

    If the WEF projection should come true, people would have to rent and borrow their necessities from the state, which would be the sole proprietor of all goods. The supply of goods would be rationed in line with a social credit points system. Shopping in the traditional sense would disappear along with the private purchases of goods. Every personal move would be tracked electronically, and all production would be subject to the requirements of clean energy and a sustainable environment. 

    In order to attain “sustainable agriculture,” the food supply will be mainly vegetarian. In the new totalitarian service economy, the government will provide basic accommodation, food, and transport, while the rest must be lent from the state. The use of natural resources will be brought down to its minimum. In cooperation with the few key countries, a global agency would set the price of CO2 emissions at an extremely high level to disincentivize its use.

    In a promotional video, the World Economic Forum summarizes the eight predictions in the following statements:

    1. People will own nothing. Goods are either free of charge or must be lent from the state.

    2. The United States will no longer be the leading superpower, but a handful of countries will dominate.

    3. Organs will not be transplanted but printed.

    4. Meat consumption will be minimized.

    5. Massive displacement of people will take place with billions of refugees.

    6. To limit the emission of carbon dioxide, a global price will be set at an exorbitant level.

    7. People can prepare to go to Mars and start a journey to find alien life.

    8. Western values will be tested to the breaking point..

    Beyond Privacy and Property

    In a publication for the World Economic Forum, the Danish ecoactivist Ida Auken, who had served as her country’s minister of the environment from 2011 to 2014 and still is a member of the Danish Parliament (the Folketing), has elaborated a scenario of a world without privacy or property. In “Welcome to 2030,” she envisions a world where “I own nothing, have no privacy, and life has never been better.” By 2030, so says her scenario, shopping and owning have become obsolete, because everything that once was a product is now a service.

    In this idyllic new world of hers, people have free access to transportation, accommodation, food, “and all the things we need in our daily lives.” As these things will become free of charge, “it ended up not making sense for us to own much.” There would be no private ownership in houses nor would anyone pay rent, “because someone else is using our free space whenever we do not need it.” A person’s living room, for example, will be used for business meetings when one is absent. Concerns like “lifestyle diseases, climate change, the refugee crisis, environmental degradation, completely congested cities, water pollution, air pollution, social unrest and unemployment” are things of the past. The author predicts that people will be happy to enjoy such a good life that is so much better “than the path we were on, where it became so clear that we could not continue with the same model of growth.”

    Ecological Paradise

    In her 2019 contribution to the Annual Meeting of the Global Future Councils of the World Economic Forum, Ida Auken foretells how the world may look in the future “if we win the war on climate change.” By 2030, when CO2 emissions will be greatly reduced, people will live in a world where meat on the dinner plate “will be a rare sight” while water and the air will be much cleaner than today. Because of the shift from buying goods to using services, the need to have money will vanish, because people will spend less and less on goods. Work time will shrink and leisure time will grow.

    For the future, Auken envisions a city where electric cars have substituted conventional combustion vehicles. Most of the roads and parking spaces will have become green parks and walking zones for pedestrians. By 2030, agriculture will offer mainly plant-based alternatives to the food supply instead of meat and dairy products. The use of land to produce animal feed will greatly diminish and nature will be spreading across the globe again.

    Fabricating Social Consent

    How can people be brought to accept such a system? The bait to entice the masses is the assurances of comprehensive healthcare and a guaranteed basic income. The promoters of the Great Reset promise a world without diseases. Due to biotechnologically produced organs and individualized genetics-based medical treatments, a drastically increased life expectancy and even immortality are said to be possible. Artificial intelligence will eradicate death and eliminate disease and mortality. The race is on among biotechnological companies to find the key to eternal life.

    Along with the promise of turning any ordinary person into a godlike superman, the promise of a “universal basic income” is highly attractive, particularly to those who will no longer find a job in the new digital economy. Obtaining a basic income without having to go through the treadmill and disgrace of applying for social assistance is used as a bait to get the support of the poor.

    To make it economically viable, the guarantee of a basic income would require the leveling of wage differences. The technical procedures of the money transfer from the state will be used to promote the cashless society. With the digitization of all monetary transactions, each individual purchase will be registered. As a consequence, the governmental authorities would have unrestricted access to supervise in detail how individual persons spend their money. A universal basic income in a cashless society would provide the conditions to impose a social credit system and deliver the mechanism to sanction undesirable behavior and identify the superfluous and unwanted.

    Who Will Be the Rulers?

    The World Economic Forum is silent about the question of who will rule in this new world.

    There is no reason to expect that the new power holders would be benevolent. Yet even if the top decision-makers of the new world government were not mean but just technocrats, what reason would an administrative technocracy have to go on with the undesirables? What sense does it make for a technocratic elite to turn the common man into a superman? Why share the benefits of artificial intelligence with the masses and not keep the wealth for the chosen few?

    Not being swayed away by the utopian promises, a sober assessment of the plans must come to the conclusion that in this new world, there would be no place for the average person and that they would be put away along with the “unemployable,” “feeble minded,” and “ill bred.” Behind the preaching of the progressive gospel of social justice by the promoters of the Great Reset and the establishment of a new world order lurks the sinister project of eugenics, which as a technique is now called “genetic engineering” and as a movement is named “transhumanism,” a term  coined by Julian Huxley, the first director of the UNESCO.

    The promoters of the project keep silent about who will be the rulers in this new world. The dystopian and collectivist nature of these projections and plans is the result of the rejection of free capitalism. Establishing a better world through a dictatorship is a contradiction in terms. Not less but more economic prosperity is the answer to the current problems. Therefore, we need more free markets and less state planning. The world is getting greener and a fall in the growth rate of the world population is already underway. These trends are the natural consequence of wealth creation through free markets.


    The World Economic Forum and its related institutions in combination with a handful of governments and a few high-tech companies want to lead the world into a new era without property or privacy. Values like individualism, liberty, and the pursuit of happiness are at stake, to be repudiated in favor of collectivism and the imposition of a “common good” that is defined by the self-proclaimed elite of technocrats. What is sold to the public as the promise of equality and ecological sustainability is in fact a brutal assault on human dignity and liberty. Instead of using the new technologies as an instrument of betterment, the Great Reset seeks to use the technological possibilities as a tool of enslavement. In this new world order, the state is the single owner of everything. It is left to our imagination to figure out who will program the algorithms that manage the distribution of the goods and services.

    Override Early Access
    Published:12/12/2020 6:04:50 AM
    [Satire] Donald Trump’s Greatest Legacy: Winning the War on Christmas

    President Donald J. Trump didn't need a second term to make history as one of the most successful U.S. presidents since George Washington. He spent the last four years Making America Great Again while refusing to take a salary and achieved more than enough to secure his place in the history books, if not atop Mount Rushmore.

    The post Donald Trump’s Greatest Legacy: Winning the War on Christmas appeared first on Washington Free Beacon.

    Published:12/12/2020 4:34:25 AM
    [Markets] Cycles, Systems, & Seats In The Coliseum Cycles, Systems, & Seats In The Coliseum Tyler Durden Fri, 12/11/2020 - 16:20

    Authored by Charles Hugh Smith via OfTwoMinds blog,

    The idea that debt, leverage, speculation, greed, exploitation and parasitic elites can expand exponentially forever is magical thinking.

    Contrary to first impressions, I am not a doom-and-gloomer; I'm a systems-cycles-er, meaning I'm interested in where systems and cycles are heading.

    Cycles work because we're still running Wetware 1.0 which entered beta testing around 200,000 years ago and was released, bugs and all, around 50,000 years ago. Since the processes and inputs haven't changed, neither do the outputs.

    Nature is a mix of dynamic, semi-chaotic systems (fractals, etc.) and cyclical patterns which tend to operate within predictable parameters. Why should human nature and human constructs (societies, economies and political realms) be any different?

    So longterm success breeds complacency, hubris, economic and intellectual sclerosis, draining political infighting and the overproduction of parasitic elites, to use Peter Turchin's apt description. Consumption of resources expands to soak up every last bit of what's available and then the supply of goodies plummets for a multitude of completely natural and predictable reasons (sunspot/solar activity, El Nino, etc.) and a host of unpredictable but equally natural semi-chaotic extremes (100-year droughts, floods, etc.).

    Wetware 1.0's go-to solutions to all such difficulties are rather limited:

    1. Ramp up magical thinking. If a couple of human sacrifices ensured good harvests in the good old days, let's slaughter a couple hundred now--and if that doesn't work, then...

    2. Do more of what's failed spectacularly and slaughter a couple thousand fellow humans, because darn it, maybe everything will turn around if we just kill another couple dozen.

    This requires ignoring the novelty of the current challenges and clinging to what worked so well in the past even as whatever worked in the past can't possibly work now because circumstances are fundamentally different.

    3. Seek scapegoats. It's those darn witches. Burn a bunch of them and our troubles will magically disappear.

    4. Go take what we need from some other tribe. What's our oil doing under their sand?

    5. Consolidate power and wealth in the hands of elites whose failures exacerbated the crisis. Because the obvious solution (to the elites with cushy offices around the palaces and temples) to repeated failures of a leadership that only excels in one thing, squandering rapidly depleting resources on infighting and self-aggrandizement, is to give us all the remaining wealth and power. Hey, this makes perfect sense once you understand #2 above.

    6. Demand sacrifices of the many to protect the privileges of the few. The Empire needs some warm bodies to fend off the Barbarians, because it would be a real shame if the Barbarians reached our palatial estates and disrupted the flow of wine and festivities. No worries when you come back on your shield; the bureaucracy will give you a decent burial and your spouse and kids can join the multitude of half-starved beggars waiting for the dwindling distributions of bread and circuses. But never mind that, did you hear about the upcoming games in the Coliseum? Good seats are going fast.

    7. Eat your seed corn to keep the party going awhile longer. Not every human group had the luxury of borrowing "money" to keep the fast-unraveling party going awhile longer, so they consumed their seed corn and drained the last of their reserves--which is the same thing as borrowing "money" from a future with diminishing resources and productivity.

    8. Maintain supreme confidence that "it will all work out fine because it's always worked out fine" without any sacrifice required of "those who count." What's forgotten is that the luxe greatness that is now teetering on the precipice of ruin was won by the sacrifices of the elites far exceeding the sacrifices of the many.

    Back in the day, joining the elite and maintaining one's position required constant sacrifices on behalf of the common good, and strict adherence to public virtue. Now that's all forgotten, and all that remains are elites possessed by the demons of shameless greed and self-interest.

    The idea that debt, leverage, speculation, greed, exploitation and parasitic elites can expand exponentially forever is magical thinking. Yet that is precisely what America and the rest of the global economic order insists is true and will always be true, forever and ever.

    By all means, reject those horrid, awful doom-and-gloomers who look at systems and cycles. Everything will be fine as long as you secure seats for the next games at the Coliseum--they should be spectacular--but not in the way you expect.

    *  *  *

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

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    My recent books:

    A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

    Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
    (Kindle $5, print $10, audiobook) Read the first section for free (PDF).

    Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($5 (Kindle), $10 (print), ( 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).

    Override Early Access
    Published:12/11/2020 3:29:28 PM
    [Culture] Hillbilly Elegy, the movie (Paul Mirengoff) Hillbilly Elegy by J.D. Vance is one the most worthwhile books I’ve read in recent years. It’s a riveting account of Vance’s family as it moved from the hills of Kentucky to an Ohio steel town — Middletown — where it struggled to fulfill some semblance of the American Dream. Hillbilly Elegy is also a sociological study of Middletown and its “hill” population. The story had special resonance for me Published:12/9/2020 1:53:32 PM
    [TC] Gift Guide: The best books for 2020 as recommended by VCs and TechCrunch writers (Part 2) We published the TechCrunch list of the best books of 2020 last week, which included such titles as Barton Gellman’s Dark Mirror as recommended by our cybersecurity editor Zack Whittaker and Shoe Dog by Phil Knight, recommended by Lightspeed’s Nicole Quinn. In all, we selected nine books from our writers and VCs in the community that helped us get through 2020. Published:12/9/2020 1:53:32 PM
    [Fake News] Today’s Free Comic Relief from the Left (Steven Hayward) In the Annal of Ridiculous Headlines and Fake News, this one may be the all time winner: Dan Rather Creates Graphic Novel To Unite Us In March 2019, First Second Books launched a new line of political graphic novels, World Citizen Comics, to bring in names such as Dan Rather, Seth Abramson, Jennifer L. Pozner, and more. Legendary news anchor Dan Rather provides a voice of reason and explores what it means Published:12/8/2020 5:45:13 PM
    [Entertainment] December 2020 Celeb Book Club Picks From Reese Witherspoon, Jenna Bush Hager & More E-comm: Celeb Book Club December 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!. If...
    Published:12/8/2020 3:41:02 PM
    [World] The Feminist’s Gambit: A Skeptical Take on Netflix’s 'The Queen Gambit' Published:12/7/2020 9:05:09 PM
    [Markets] COVID Is Toppling America's "Points Of Failure" Dominoes COVID Is Toppling America's "Points Of Failure" Dominoes Tyler Durden Mon, 12/07/2020 - 16:23

    Authored by Charles Hugh Smith via OfTwoMinds blog,

    Sorry Fed, it's too late. The dominoes are already toppling, and every point of failure is being exploited by the catalyzing effects of Covid.

    America's many points of failure--leverage points where a break brings down the entire system--are falling like dominoes, a process catalyzed by Covid. These systemic points of failure have been masked for the past 20 years by the widespread distribution of trillions of dollars, either printed or borrowed.

    There's no point of failure that can't be glued together or covered up a bit longer with fountains of cash. That's the American way of solving problems: just throw more money at it.

    Unfortunately for America, substituting borrowed trillions for real problem-solving generates its own set of problems, problems that increase the system's vulnerability to collapse. Healthcare / sickcare is a leading example of this: as the corruption, pay-to-play and profiteering deepened, the federal government's endless borrowed trillions boosted healthcare / sickcare from 5% of the nation's economy to roughly 20% today.

    Covid Is Revealing the Cancerous Underbelly of U.S. Healthcare.

    As I've noted for a decade, this has created an enormous fragility: healthcare is now so immense that it will bankrupt the nation all by itself. (see charts below) Once the corrupt, pay-to-play, profiteering sectors such as healthcare and banking become "too big to fail," then the Federal Reserve and Treasury are obliged to bail them out or continue funding their spiraling-out-of-control demands.

    Speaking of "too big to fail," look at the voracious monster the Fed's endless monetary goosing has incentivized--a financial system addicted to Fed "free money," soaring debt, accelerating leverage and near-infinite speculation.

    Given that the Fed has effectively promised to backstop all of Wall Street's bets, bail out every major player and never let the stock market falter for longer than three weeks, the Fed has created this incentive structure: there is no risk at all in borrowing billions, leveraging it into tens of billions and then dumping these multiplying billions into the most speculative bets available.

    And so that's what every fund manager, hedge funder, punter, gambler and guru has done, and been richly rewarded for doing so.

    There's just one tiny little second-order consequence of the Fed's incentivizing debt, leverage and speculation: wealth and income inequality have reached such extremes that they've unraveled the social order. Social cohesion: gone. The social contract: shredded. Social disorder: in the first inning of a very long game.

    Now the Fed is backtracking while it laughingly claims its policies didn't have anything to do with America's skyrocketing wealth/income inequality. That the Fed is well aware of the destructive consequences of its endless quantitative easing is evidenced by their recent proposals (FedNow) to start sending "free money" directly to households via a new system of household accounts at the Fed. (Look for an initial rollout by 2022.)

    Sorry Fed, it's too late. The dominoes are already toppling, and every point of failure is being exploited by the catalyzing effects of Covid, either first-order or second-order effects. Every weak point--corruption, incompetence, bureaucratic sclerosis, self-serving insiders, counterproductive complexity, regulatory thickets, clinging to the past, and most especially doing more of what's failed spectacularly--will give way, bringing down existing systems with a momentum that will surprise all those who thought every system in America was rock-solid and forever.

    Two words will define 2021: acceleration and amplitude. The catalyzing effects will accelerate throughout all the interconnected systems like wildfire and the consequences will move rapidly from linear (predictable) to non-linear (geometric, unpredictable) as each weakness is amplified by the self-reinforcing dynamics unleashed as every point of failure triggers another failure in a connected system.

    If you still believe that America's systemic points of failure are endlessly sustainable, please study these four charts and extend the trendlines.

    *  *  *

    My recent books:

    A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook coming soon) Read the first section for free (PDF).

    Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
    (Kindle $5, print $10, audiobook) Read the first section for free (PDF).

    Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($5 (Kindle), $10 (print), ( audiobook): Read the first section for free (PDF).

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

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

    *  *  *

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    Published:12/7/2020 3:32:54 PM
    [Entertainment] For the science fiction, fantasy and horror book fans in your life: A gift guide Anthologies like “The Big Book of Modern Fantasy” cover a lot of ground. Illustrated books like “Flyway” offer something special. Published:12/7/2020 8:03:37 AM
    [Markets] From A Hamilton Moment To Perpetual Debt Slaves: This Is The True Face Of The EU From A Hamilton Moment To Perpetual Debt Slaves: This Is The True Face Of The EU Tyler Durden Mon, 12/07/2020 - 03:30

    Authored by Tom Luongo via Gold, Goats, 'n Guns blog,

    Over the summer while the U.S. was mired in the worst kind of color revolution with race riots, economic shutdowns and the worst kind of divisive politics, the European Union was celebrating its great achievement.

    A seven-year budget and COVID-19 bailout package that was heralded as German Chancellor Angela Merkel’s “Alexander Hamilton Moment.” Because that legislation, meant to be the cornerstone of Germany six-month stint as the president of the European Council finally granted the European Commission the ability to issue debt, collect taxes and disburse funds.

    That would be the way the COVID-19 relief funds would be raised and distributed. It was the first moment of fiscal integration under a central EU body that would bypass the individual member states as the means by which to raise capital.

    It would be the first step in the process of consolidating debt issuance and euro creation under the control of Brussels, rather than continuing to carry out the fiction of individual sovereign debt.

    The euro is a fatally flawed currency because of this and if it is to survive deeper into the 21st century having only one central issuer of it, the EU itself via the European Commission and the European Central Bank, with one aggregated risk profile (interest rate) is necessary.

    The current leadership of the EU was put in place to make this happen on powerful Germany’s watch. And in July is looked like it was done. The markets loved it. The media hailed Merkel as the great leader of Europe. Some countries balked, the so-called Frugal Five, but eventually they signed off on the draft legislation once they were no longer directly on the hook for any more wealth transfers from them to perpetual problem children like Italy, Greece and Spain.

    But lurking in the background were the cultural sovereigntists, the Visegrads, most notably Poland and Hungary.

    Forgotten in all the media hoopla but known to keen observers of the situation, Hungary and Poland only signed off on the deal if there were to be no tying of funds to what the EU calls “rule of law” violations.

    Merkel assured Hungarian Prime Minister Viktor Orban that the final legislation would be free of this requirement and provisionally he signed off on it as well as Polish Prime Minister Mateusz Morawiecki.

    Now, anyone who is a regular observer of Merkel knows that her promises are about as reliable as a mail-in ballot from Pennsylvania. When the final legislation came before the European Council for ratification there was an explicit tie of funds to member states being in compliance with the EU’s vaguely-worded standards on internal law.

    This meant that the EU could withhold funds if it felt that Hungary or Poland or any other country had a national law on its books that was ‘anti-EU behavior’ they could be sanctioned. Merkel calculated like she always does that pressure would win her the day in the final moment.

    After all, everyone always caves to the EU’s power.

    Except this time it didn’t work and Orban and Morawiecki very publicly vetoed this because if they didn’t it would mean the end of their countries. Now Merkel’s Hamiltonian Moment is gone.

    Hungary and Poland, like the Brits voting for Brexit a second time last year, finally said, that’s it. Further negotiation with you is tantamount to surrender. I talked about this in a recent article in more detail.

    The lesson of 2020 to this point has been that negotiation is no longer an option. There can be no settlement on fishing for the Brits, the rule-of-law for EU member states.

    For Americans all negotiating has achieved is a terminally corrupt central government running sham elections with a compliant and hostile media telling them they are deplorable scum.

    We are now expected to accept the results because they said so. Um, yeah, no.

    The only way to accept the current reality is to believe the very people who you wouldn’t buy a used couch from no less lead your government are telling you the unvarnished truth.

    Accepting any version of the narrative that this was a close election in the U.S. is the most pathetic form of negotiating your own surrender I’ve seen in quite a long time.

    This is the unbridgeable gap of modern politics. It is the infinite gulf between surrender and negotiating with terrorists.

    What’s funny is the stunned silence from the EU and its cheerleaders since this happened. Orban and Morawieki did something extraordinary and all the EU could do is beg them back to the table. But they know there is no coming back to the table on this point.

    Both of these countries have already suffered the wrath of Merkel on points of internal politics where she even invoked Article 7 against them to try and remove their voices from the wholly irrelevant European Parliament.

    There comes a point where threats are meaningless. Neither Hungary nor Poland want to leave the EU but at the same time neither of them signed up for a new form of Soviet Union either.

    Orban makes no bones about this in his speeches and especially in his reasoning for this veto, likening ‘anti-EU’ standards to ‘anti-Soviet’ ones.

    What’s clear is that if pressure could have worked on Orban and Morawiecki they would never have vetoed the bill in the first place. So, what comes next?

    Pulling an end run around them, of course. Enter George Soros dusting off not only his constant call for perpetual bonds to pay for rebuilding Europe on someone else’s dime but now encouraging individual groups of EU states to band together to issue them and exclude Hungary and Poland from the mix.

    It turns out that there is an easy way to overcome the veto: employ the so-called enhanced cooperation procedure. It was formalized in the Lisbon Treaty with the express purpose of creating a legal basis for further eurozone integration, but it was never used for that purpose. Its great merit is that it can be used for fiscal purposes. A sub-group of member states can set a budget and agree on a way to fund it – say, through a joint bond.

    At this point, perpetual bonds could come in very useful. They would be issued by member states whose continued existence would be readily accepted by long-term investors such as life-insurance companies.

    But doesn’t that signal exactly the wrong thing to the markets? Doesn’t that undermine the whole fiscal and financial integration argument? Isn’t this just more of the same balkanization of the EU into regional tribes and not a more perfect union?

    What Soros is proposing is, of course, a massive perpetual wealth transfer from the working class who pay the lion’s share of the taxes to the ‘long-term’ investor like his Davos Crowd oligarch friends who need a constant stream of income for doing nothing

    The worst part about this proposal, of course, is that with a perpetual bond there is no repayment of principal. You simply pay the interest in perpetuity. Do you really think it’ll be the middle-class shop owner in Frankfurt or Milan buying these perpetual bonds?

    Or will it be people like him who made billions scamming off the rigged game of the hyper-financialized casino? It’s not like any of this wealth was earned through building anything. So giving it up for a 3-5% perpetual income stream off the labor of the serfs is all gravy.

    Of course Soros wants this to happen. It’s the path to perpetual debt slavery.

    So, given all of that what incentive would Hungary and Poland (joined most likely by Slovenia, the Czech Republic, Slovakia and the Baltics) have in even remaining in the EU at all?

    And with the tumult in the U.S. and the likelihood that Joe Biden Kamala Harris will be the next president no help will be coming their way either as the restoration of the globalist oligarchy in the U.S. will see U.S./EU relations restored.

    Orban and Morawiecki opened up a big can of worms with this veto. They have to see the bigger picture here. I know Orban understands where his potential allies are – Russia. Unfortunately, the Poles haven’t shown one iota of clue on this front. Once Biden is inaugurated (yes gods I hope not!) we may finally see them come to their senses.

    They’ve started this process. 2021 will see a lot of elections – Italy, Germany in particular – that could support them if they continue to hold out and the EU doesn’t negotiate.

    But for now the next choice on the European continent is a false one – a USSR reborn with a German and French flavor or perpetual debt slavery. Both choices lead to the other happening. I guess the real choice is only in the order of operations.

    *  *  *

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    Published:12/7/2020 3:00:57 AM
    [Markets] ???????"2021 Will Be Catastrophic" - UN Warns Of Humanitarian Crisis As 270 Million People May Starve ???????"2021 Will Be Catastrophic" - UN Warns Of Humanitarian Crisis As 270 Million People May Starve Tyler Durden Sun, 12/06/2020 - 07:35

    While 2020 could be one for the record books, the UN is out with a new warning that a humanitarian catastrophe could be setting up for 2021. 

    World Food Programme (WFP) chief David Beasley sounded the alarm at a United Nations General Assembly meeting Friday about the reemergence of the virus pandemic and resulting humanitarian crisis, reported RT News.

    Beasley said a humanitarian catastrophe is developing with some 270 million people on the pathway towards "starvation." 

    "2021 is literally going to be catastrophic, based on what we're seeing at this stage in the game ... because we've spent $19 trillion, that money may not, and will not most likely be available for 2021," he said. 

    He added, "We're now looking literally at 2021 being the worst humanitarian crisis year since the beginning of the United Nations, and we're going to have to step up."

    Beasley said the virus pandemic and resulting government lockdowns are disrupting supply chains and the global economy - stating the "cure could be worse than the disease because of the economic ripple effect."  He also said "man-made conflicts" were adding to the ongoing humanitarian challenges in the world, specifically mentioning Syria, Yemen, and South Sudan.

    "We've got to end some of these wars. We've got to bring these wars to an end, so we can achieve the sustainable development goals that we so desire," he said, dubbing the conflicts, health crisis and looming famine as "icebergs in front of the Titanic."

    Beasley was out with a similar warning in August. Back then, he requested billions of dollars in humanitarian aid to avert a "famine of biblical proportions" that would threaten most of the world.  

    The dramatic rise in the number of people who don't have the means to feed themselves because of depressionary unemployment, supply chain breakdowns, and crop failures have been some of the catalysts this year that could spark a global hunger crisis as early as next year.

    Even in the US, a developed world economy, food insecurity is soaring as tens of millions are unemployed, broke, and now lining up at food banks during the holiday season. 

    In a separate food insecurity report from June, the UN secretary-general, Antonio Guterres, warned the world is on the brink of the worst food crisis ever witnessed in the post-World War II era. 

    Making matters worse, world food prices are rapidly rising, with the Food and Agriculture Organization index hitting the highest level since early 2015.

    FAO said in a release that the "pandemic exacerbating and intensifying already fragile conditions caused by conflicts, pests, and weather shocks, including recent hurricanes in Central America and floods in Africa." 

    Besides soaring food prices, the global economy is slumping once more. 

    And if that wasn't enough, a natural weather phenomenon called La Nina, which we described in September, is disrupting the global agriculture industry, causing dry weather in some regions and heavy rainfall in others, lowering crop yields and driving up spot prices of food. 

    While central banks have printed trillions of dollars in bailing out financial markets - the one thing they cannot do is print food - the world is likely on the verge of a massive humanitarian crisis. 

    Published:12/6/2020 6:56:27 AM
    [Markets] Oliver Stone: Here's Why Trump Should Pardon Snowden, Assange Oliver Stone: Here's Why Trump Should Pardon Snowden, Assange Tyler Durden Sat, 12/05/2020 - 21:40

    Filmmaker Oliver Stone has joined the growing chorus of activists calling for President Trump to pardon Julian Assange and Edward Snowden - without whom we wouldn't know about intrusive government surveillance programs, the United States' aggressive drone strike program, or that Hillary Clinton's 2016 campaign manager and his brother are apparently into 'spirit cooking' with a satanic performance artist.

    According to Stone, pardoning the pair of whistleblowers "will take the edge off his pardons for his family & loyalists by being unselfish and not self-serving. And at the least, confound his many critics -- as well as future historians."

    Second, "It will drive his enemies in #DeepState and #Media absolutely nuts!"

    "A pardon of @Snowden and #Assange would be a great shock to this world, and reflect well on @realDonaldTrump," wrote Stone in a Thursday tweet. "Despite all the negatives he’s created, it will be seen as a purely merciful action. It will not be forgotten."

    On Thursday, Edward Snowden asked President Trump to pardon Assange.

    Snowden — who released classified documents on surveillance programs — fled to Hong Kong, and later to Moscow, to seek asylum. He tweeted last month that he and his wife were applying for Russian citizenship. 

    Meanwhile, Assange faces a sentence of up to 175 years in prison if convicted of charges of conspiring to hack government computers and for violating the 1917 Espionage Act for “unlawfully obtaining and disclosing classified documents related to the national defence.” -The Hill

    Meanwhile for more on Oliver Stone, read: Oliver Stone, America Firster authored by Bill Kauffman via The American Conservative

    At root, Oliver Stone is a patriot who despises the American Empire for corrupting his country, and a far cry from your run-of-the-mill Hollywood liberal.

    I first became aware of Oliver Stone when in 1986 I was watching his film Salvador with an audience of left-wing Santa Barbarians. They were enjoying this madcap cinematic indictment of Uncle Sam’s imperialist crimes in Central America—until a scene in which the rebel forces, riding to town like a Marxist cavalry in the righteous cause of The People, began executing the unenlightened. Then the boos rang down.

    Who is this guy, I wondered. My curiosity was whetted further when the P.C. reviewer in the Los Angeles Herald denounced Stone’s screenplays for earlier films: “Movies like Midnight Express, Scarface, and Year of the Dragon are such grand-scale xenophobic fever-dreams that they almost demand to be remade into operas, complete with belching smoke and lurid lighting and crimson-suited devils scurrying out of the wings to pitchfork lily-white Mother America.”

    Ah, a left-wing America Firster! 

    Not quite, as his subsequent work and his entertaining new memoir, Chasing the Light, illumine, but Oliver Stone, our most political major filmmaker, evinces a rowdily heterodox vision shaped by the unusual quartet of Jim Morrison, Sam Peckinpah, Frank Capra, and Jean-Luc Godard.

    What do you call a man who joins the Merchant Marine on a whim, runs up big pro football gambling debts, and takes the Old Right view of FDR’s foreknowledge of the Japanese attack on Pearl Harbor?

    I’d call him an American.

    Stone was a rich kid, the son of an FDR-hating Jewish Republican who had served on Eisenhower’s Supreme Headquarters Allied Expeditionary Force staff and a French Catholic party girl. He attended the Hill School, played on the tennis team, was devastated by his parents’ divorce, and then went seriously off script.

    Avid for experiences, Stone dropped out of Yale, taught in a Catholic school in Taiwan, and volunteered to fight in Vietnam. He came home with a Bronze Star, shrapnel in his ass, and a taste for “powerful Vietnamese weed.”

    Stone’s politics hadn’t changed all that much, though. He had supported Barry Goldwater in 1964 and would vote for Ronald Reagan in 1980. In later years he became more explicitly libertarian, expressing support for Ron Paul and making a film about Edward Snowden. 

    At root, Oliver Stone is a patriot who despises the American Empire for corrupting his country. JFK, his fantasia on the Deep State, echoes Dwight Eisenhower’s warning that “we must guard against the acquisition of unwarranted influence” by “the military-industrial complex.” Platoon and Salvador bespeak an old-fangled American anti-interventionism in an age when that tendency, once the default position of ordinary Americans, is a virtual thoughtcrime. 

    Lost innocence is as common in Stone’s films as splattered blood. In Midnight Express, the Turkish prison movie to end all Turkish prison movies, protagonist Billy Hayes is a Long Island college kid just trying to make a few bucks by smuggling two kilos of hashish to sell to his friends. Heck, it’s no different than being the guy who runs out to pick up the pizza and beer at halftime! (The real Hayes, as Stone later learned, was on his fourth smuggling run and was about as innocent as Brad Davis, the deeply troubled actor who played him.)

    When his sentence is stretched from four to 30 years, Billy explodes in a Stone-penned courtroom rant that belongs in the xenophobe’s hall of fame: “For a nation of pigs it sure is funny you don’t eat ’em … I hate you, I hate your nation, and I hate your people.”

    Yikes! As the husband of an Armenian I’m not overly sensitive to slights against the Turkish nation, but this was a tad intemperate. But so was the left-wing French newspaper Liberation, which reviled Stone as “a madman of the Right.”

    A pithier America First line from Stone’s pen came in Year of the Dragon (1985), when a New York City cop (Mickey Rourke) responds to a Chinese gangster who is describing his culture’s ancient tolerance of gambling and extortion: “This is America you’re living in and it’s 200 years old, so you’d better get your clocks fixed.”

    Stone’s co-writer on Year of the Dragon was Michael Cimino, whose Oscar-winning epic The Deer Hunter was unusual for its sympathetic treatment of small-town working-class men whose church is central to their lives. Critic Pauline Kael sneered at The Deer Hunter’s “traditional isolationist message: Asia should be left to the Asians, and we should stay where we belong, but if we have to be over there we’ll show how tough we are.” A Trumpian message, on Trump’s better days. Cimino blew up his career with the sprawling Heaven’s Gate, a commercial disaster that snuffed his long-dreamt-of goal of filming Ayn Rand’s novels The Fountainhead and Atlas Shrugged.

    Liberal Hollywood, eh? 

    Bill Kauffman is the author of 11 books, among them Dispatches from the Muckdog Gazette and Ain’t My America.

    Published:12/5/2020 8:50:29 PM
    [Markets] Feds Admit $2.3 Trillion In Improper Payments Feds Admit $2.3 Trillion In Improper Payments Tyler Durden Sat, 12/05/2020 - 21:15

    Submitted by Adam Andrzejewski,

    Since 2004, twenty large federal agencies have admitted to disbursing an astonishing $2.25 trillion in improper payments. Last year, these improper payments totaled $175 billion – that’s about $15 billion per month, $500 million per day, and $1 million a minute.

    But what exactly is an improper payment?

    Federal law defines the term as “payments made by the government to the wrong person, in the wrong amount, or for the wrong reason."

    When people or companies receive incorrect payments, it erodes trust and hinders the government’s ability to finance everything from defense to health care.

    Recently, auditors at published a 24-page oversight report analyzing why, how, and where federal agencies wasted our tax dollars last year.

    Here are the top 10 takeaways regarding improper and mistaken payments by the 20 largest federal agencies in 2019:

    1. Total Mistakes: $175 billion in estimated improper payments reported by the 20 largest federal agencies, averaging $14.6 billion per month – Total (FY2004-FY2019): $2.25 trillion.

    2. Worst Programs - $121 billion (approximately 69 percent) in improper payments occurred within three program areas – Medicaid, Medicare, and Earned Income Tax Credit.

    3. Claw Back – only $21.1 billion of the $175 billion improper payments during 2019 was recaptured — that’s only 14 cents on every dollar misspent. Five-year total: $103.6 billion recaptured/ $747.7 billion improperly spent

    4. Biggest Offenders:

    5. Dead people: $871.9 million in mistaken payments were made to dead people. Medicaid, social security payments, federal retirement annuity payouts (pensions), and even farm subsidies were sent to dead recipients. Root cause: failure to verify death. Four-year total: $2.8 billion

    6. Ancient Americans: Six million Social Security numbers are active for people aged 112+; however, only 40 people in the world are known to be older than 112 years of age.

    7. Worst Upward Trend: Medicaid and Medicare improper payments soared from $64 billion (2012) to $88.6 billion (2017), and, in 2019, to $103.6 billion. Five-year total: $456 billion

    8. Best Turnaround: In 2018, the Education Department overpaid $6 billion to college students receiving PELL grants and student loans. In 2019, improper payments were reduced to $1.1 billion – an 85-percent reduction.

    9. Improper Income Redistribution: $17.4 billion in improper payments by the Internal Revenue Service (IRS) within the Earned Income Tax Credit program. 25-percent of all payments were improper. Five-year total: $84.35 billion

    10. Purchasing Power: What can $175 billion buy? Last year, the federal government wasted the equivalent of a full year of all federal salaries, perks, and pension benefits for every employee of the federal executive agencies. A stunning example of institutionalized incompetence.

    Justifications for their improper payments vary by agency.

    For example, Veterans Affairs (VA) says they are working on the problem and, yet, have a long way to go:

    “During FY19 testing for improper payments, VA found that many root causes of improper payments still have not been remediated. While the VA is actively working corrective actions to remediate these complex problems, VA completes its statically valid testing for Improper Payments Elimination & Recovery Act) one year in arrears…”

    The Internal Revenue Service (IRS) flat out admits that their improper payments ($17.4 billion FY2019) will continue:

    “… the IRS does not have the resources to audit every return claiming return tax credits… Without legislative change to greatly improve effective tools to administer these credits, the improper payment rate will not drastically change.”

    Over the years, improper payments is an issue that has attracted reform efforts on both sides of the aisle.

    In 2009, President Barack Obama issued an executive order to stop improper payments in the core programs of the federal government. Core programs provide services such as Medicare and Medicaid.

    In 2020, President Donald Trump emphasized the importance of eliminating improper payments in the President’s Budget to Congress FY2021.

    But with billions of dollars misspent every year, it’s obvious that both administrations failed to successfully address the issue of improper payments and much more needs to be done.

    Published:12/5/2020 8:20:30 PM
    [Markets] "It Was No Longer Safe For Me To Live In China": Former Chinese Communist Party Insider Breaks With Beijing "It Was No Longer Safe For Me To Live In China": Former Chinese Communist Party Insider Breaks With Beijing Tyler Durden Fri, 12/04/2020 - 19:00

    By Cai Xia, a Professor at the Central Party School of the Chinese Communist Party from 1998 to 2012. This essay was translated from the Chinese by Stacy Mosher (Read in Chinese here).

    When Xi Jinping came to power in 2012, I was full of hope for China. As a professor at the prestigious school that educates top leaders in the Chinese Communist Party, I knew enough about history to conclude that it was past time for China to open up its political system. After a decade of stagnation, the CCP needed reform more than ever, and Xi, who had hinted at his proclivity for change, seemed like the man to lead it.

    By then, I was midway through a decades-long process of grappling with China’s official ideology, even as I was responsible for indoctrinating officials in it. Once a fervent Marxist, I had parted ways with Marxism and increasingly looked to Western thought for answers to China’s problems. Once a proud defender of official policy, I had begun to make the case for liberalization. Once a loyal member of the CCP, I was secretly harboring doubts about the sincerity of its beliefs and its concern for the Chinese people.

    So I should not have been surprised when it turned out that Xi was no reformer. Over the course of his tenure, the regime has degenerated further into a political oligarchy bent on holding on to power through brutality and ruthlessness. It has grown even more repressive and dictatorial. A personality cult now surrounds Xi, who has tightened the party’s grip on ideology and eliminated what little space there was for political speech and civil society. People who haven’t lived in mainland China for the past eight years can hardly understand how brutal the regime has become, how many quiet tragedies it has authored. After speaking out against the system, I learned it was no longer safe for me to live in China.


    I was born into a Communist military family. In 1928, at the beginning of the Chinese Civil War, my maternal grandfather joined a peasant uprising led by Mao Zedong. When the Communists and the Nationalists put hostilities on hold during World War II, my parents and much of my mother’s family fought against the Japanese invaders in armies led by the CCP.

    After the Communists’ victory, in 1949, life was good for a revolutionary family such as ours. My father commanded a People’s Liberation Army unit near Nanjing, and my mother ran an office in that city’s government. My parents forbade my two sisters and me from taking advantage of the privileges of their offices, lest we become “spoiled bourgeois ladies.” We could not ride in our father’s official car, and his security guards never ran family errands. Still, I benefited from my parents’ status and never suffered the privations that so many Chinese did in the Mao years. I knew nothing of the tens of millions of people who starved to death during the Great Leap Forward.

    All I could see was socialism’s bright future. My family’s bookshelves were stocked with Marxist titles such as The Selected Works of Stalin and Required Reading for Cadres. As a teenager, I turned to these books for extracurricular reading. Whenever I opened them, I was filled with reverence. Even though I could not grasp the complexity of their arguments, my mission was clear: I must love the motherland, inherit my parents’ revolutionary legacy, and build a communist society free of exploitation. I was a true believer.

    I gained a more sophisticated understanding of communist thought after joining the People’s Liberation Army in 1969, at age 17. With the Cultural Revolution in full swing, Mao required everyone to read six works by Karl Marx and Friedrich Engels, including The Communist Manifesto. One utopian passage from that book left a lasting impression on me: “In place of the old bourgeois society, with its classes and class antagonisms, we shall have an association, in which the free development of each is the condition for the free development of all.” Although I didn’t really understand the concept of freedom at that point, those words stuck in my head.

    The People’s Liberation Army assigned me to a military medical school. My job was to manage its library, which happened to carry Chinese translations of “reactionary” works, mostly Western literature and political philosophy. Distinguished by their gray covers, these books were restricted to regime insiders for the purpose of familiarizing themselves with China’s ideological opponents, but in secret, I read them, too. I was most impressed by The Rise and Fall of the Third Reich, by the American journalist William Shirer, and a collection of Soviet fiction. There was a world of ideas outside of the Marxist classics, I realized. But I still believed that Marxism was the only truth.

    I left the military in 1978 and got a job in the party-run trade union of a state-owned fertilizer factory on the outskirts of the city of Suzhou. By then, Mao was dead and the Cultural Revolution was over. His successor, Deng Xiaoping, was ushering in a period of reform and opening, and as part of this effort, he was recruiting a new generation of reform-minded cadres who could run the party in the future. Each local party organization had to choose a few members to serve in this group, and the Suzhou party organization picked me. I was sent to a two-year program at the Suzhou Municipal Party School, where my fellow students and I studied Marxist theory and the history of the CCP. We also received some training in the Chinese classics, a subject we had missed on account of the disruption of education during the Cultural Revolution.

    I plowed through Das Kapital twice and learned the ins and outs of Marxist theory. What appealed to me most were Marx’s ideas about labor and value—namely, that capitalists accrue wealth by taking advantage of workers. I was also impressed by Marx’s philosophical approach, dialectical materialism, which allowed him to see capitalism’s political, legal, cultural, and moral systems as built on a foundation of economic exploitation.

    When I graduated, in 1986, I was invited to stay on as a faculty member at the school, which was short-staffed at the time. I accepted, which disappointed some of the city’s leaders, who thought I had a promising future as a party apparatchik. Instead, my new job launched my career as an academic in the CCP’s system of ideological indoctrination.


    At the top of that system sits the Central Party School in Beijing. Since 1933, it has trained generations of top-ranking CCP cadres, who run the Chinese bureaucracy at the municipal level and above. The school has close ties to the party elite and is always headed by a member of the Politburo. (Its president from 2007 to 2012 was none other than Xi.)

    In June 1989, the government cracked down on pro-democracy protesters in Tiananmen Square, killing hundreds. Privately, I was appalled that the People’s Liberation Army had fired on college students, which ran contrary to the indoctrination I had received since my childhood that the army protected the people; only Japanese “devils” and Nationalist reactionaries killed them. Alarmed by the protests, plus the fall of communism in Eastern Europe, the CCP’s top leadership decided it had to counteract ideological laxity. It ordered local party schools to send some of their teachers to the Central Party School to brush up on the party’s thinking. My school in Suzhou chose me. My brief stay at the Central Party School made me want to study there for much longer. After spending a year preparing for the entrance examinations, I was admitted to the master’s program in the school’s theory department. So devoted was I to the CCP’s line that behind my back, my classmates called me “Old Mrs. Marx.” In 1998, I received my Ph.D. and joined the school’s faculty.

    Some of my students were regular graduate students, who were taught a conventional curriculum in Marxist political theory and CCP history. But others were mid- and high-level party officials, including leading provincial and municipal administrators and cabinet-level ministers. Some of my students were members of the CCP’s Central Committee, the body of a few hundred delegates that sits atop the party hierarchy and ratifies major decisions.

    Teaching at the Central Party School was not easy. Video cameras in the classrooms recorded our lectures, which were then reviewed by our supervisors. We had to make the subject come alive for the high-level and experienced students in the class, without interpreting the doctrine too flexibly or drawing attention to its weak spots. Often, we had to come up with smart answers to tough questions asked by the officials in our classes.

    Most of their questions revolved around puzzling contradictions within the official ideology, which had been crafted to justify the real-world policies implemented by the CCP. Amendments added in 2004 to China’s constitution said that the government protects human rights and private property. But what about Marx’s view that a communist system should abolish private property? Deng wanted to “let a part of the population get rich first” to motivate people and stimulate productivity. How did that square with Marx’s promise that communism would provide to each according to his needs?

    I remained loyal to the CCP, yet I was constantly questioning my own beliefs. In the 1980s, Chinese academic circles had engaged in a lively discussion of “Marxist humanism,” a strain of Marxist thinking that emphasized the full development of the human personality. A few academics continued that discussion into the 1990s, even as the scope of acceptable discourse narrowed. I studied Marx’s Economic and Philosophic Manuscripts of 1844, which said that the purpose of socialism was to liberate the individual. I identified with the Marxist philosophers who stressed freedom—above all, Antonio Gramsci and Herbert Marcuse.

    Already in my master’s thesis, I had criticized the idea that people should always sacrifice their individual interests in order to serve the party. In my Ph.D. dissertation, I had challenged the ancient Chinese slogan “rich country, strong army” by contending that China would be strong only if the party allowed its citizens to prosper. Now, I took this argument a step further. In papers and talks, I suggested that state enterprises were still too dominant in the Chinese economy and that further reform was needed to allow private companies to compete. Corruption, I stressed, should be seen not as a moral failing of individual cadres but as a systemic problem resulting from the government’s grip on the economy.


    My thinking happened to align in part with that of Deng’s successor, Jiang Zemin. Determined to develop China’s economy, Jiang sought to stimulate private enterprise and bring China into the World Trade Organization. But these policies contradicted the CCP’s long-held theories prizing the planned economy and national self-sufficiency. Since the ideology of neither Marx nor Mao nor Deng could resolve these contradictions, Jiang felt compelled to come up with something new. He called it “the Three Represents.”

    I first heard of this new theory when everyone else did. On the evening of February 25, 2000, I watched as China Central Television (CCTV) broadcast a report on the Three Represents. The party, Jiang said, had to represent three aspects of China: “the development requirements of advanced productive forces,” cultural progress, and the interests of the majority. As a professor at the Central Party School, I immediately understood that this theory presaged a significant shift in CCP ideology. In particular, the first of the Three Represents implied that Jiang was abandoning the core Marxist belief that capitalists were an exploitative social group. Instead, Jiang was opening the party to their ranks—a decision I welcomed.

    The Central Propaganda Department, the body in charge of the CCP’s ideological work, was responsible for promoting Jiang’s new theory, but they had a problem: the Three Represents had come under attack from the extreme left, which thought Jiang was going too far in wooing entrepreneurs. Hoping to skirt this dispute, the Propaganda Department chose to water down the theory. The People’s Daily published a full-page article demonstrating the correctness of the Three Represents with cross-references to texts by Marx, Engels, Lenin, Stalin, Mao, and Deng.

    I found this unconvincing. What was the purpose of the Three Represents if it merely restated existing ideology? I was disgusted by the superficial methods of the party’s publicity apparatus. I grew determined to reveal the true meaning of the Three Represents, a theory that in fact marked a bold departure for China. This, it turned out, would bring me into conflict with the entrenched bureaucracy of the CCP.


    My opportunity to promote a proper understanding of the Three Represents arrived in early 2001, when CCTV, hearing from a colleague that I was especially interested in Jiang’s new theory, invited me to write a television program on it. I spent six months researching and writing the documentary and discussing it at length with producers at the network. My script emphasized the need for innovative new policies to meet the challenges of a new era. I stressed the same things Jiang did: that the government was now going to reduce its intervention in the economy and that the role of the party was no longer to make violent revolution against the exploitative capitalists—instead, it was to encourage the creation of wealth and balance the interests of different groups in society.

    On the afternoon of June 16, four CCTV senior vice presidents gathered in a studio in the network’s headquarters to review the three 30-minute episodes. As they watched it, their faces darkened. “Let’s stop here,” one of them said when the first episode ended.

    “Professor Cai, do you know why you were invited to produce a program on the Three Represents?” he asked.

    “The party has put forward a new ideological theory,” I replied, “and we need to publicize it.”

    The official was unmoved. “Your research and innovation can be presented at the Central Party School, but only the safest things can be shown on TV,” he said. At that point, nobody was quite sure what the Three Represents would ultimately be interpreted to mean, and he worried that my script might be out of step with the Propaganda Department’s views. “If there’s any discrepancy, the impact would be too great.”

    Another station administrator chimed in. “This year is the 80th anniversary of the Chinese Communist Party!” he exclaimed. Such an anniversary demanded not a discussion of challenges facing the party but a heroic celebration of its triumphs. At that moment, I understood. The CCTV people weren’t interested in the real implications of ideology. They just wanted to make the party look good and flatter their superiors.

    The Central Party School in Beijing, June 2019; Ben Blanchard / Reuters

    Over the next ten days, we scrambled to remake the documentary. We edited out potentially offensive words and phrases, working day and night as my script went through several political reviews by teams from across the party bureaucracy. Finally, a dozen officials arrived for one last review, during which I learned even more about the party’s hypocrisy. At one point, a high-level member of the vetting committee spoke up. In the program’s second episode, I had quoted two of Deng’s famous sayings, which are often strung together: “Poverty is not socialism; development is the hard truth.”

    “Poverty isn’t socialism?” the official asked dubiously. “So what is socialism?” His critique went on, growing louder. “And development is the hard truth? How are those two sentences related? Tell me!”

    I was dumbfounded. These were Deng’s exact words, and this senior official—the head of the State Administration of Radio, Film, and Television, the powerful agency overseeing all broadcast media—didn’t know it? I thought immediately of Mao’s criticism of bureaucrats during the Cultural Revolution: “They don’t read books, and they don’t read newspapers.”


    Over the course of 2001, as part of its efforts to promote Jiang’s signature theory, the Propaganda Department began work on a study outline for the Three Represents, a summary that would be issued as a Central Committee document for the entire party to read and implement. Perhaps because I had worked on the CCTV program and had given a speech on the Three Represents at an academic conference, I was asked to help.

    Along with another scholar and 18 propaganda officials, I was sent to the Propaganda Department’s training center near the foothills west of Beijing. The department had settled on a general framework for the outline, and now it was asking us to fill the framework with content. My task was to write the section on building the party.

    Drafting documents for the Central Committee is a highly confidential process. My colleagues and I were forbidden from leaving the premises or receiving guests. When the Propaganda Department convened a meeting, those who weren’t invited weren’t allowed to ask about it. We writers could eat and take walks together, but we were prohibited from discussing our work. I was the only woman in the group. At dinner, the men gossiped and cracked jokes. I found the off-color, alcohol-fueled conversation vulgar and would always slink out after a few bites of food. Finally, another participant took me aside. Talk of official business would only get us in trouble, he explained; it was safer and more enjoyable to confine the conversation to sex.

    Helping with the study outline was the most important writing assignment of my life, but it was also the most ridiculous. My job was to read through a stack of documents cataloging Jiang’s thoughts, including confidential speeches and articles intended for the party’s internal consumption. I would then extract relevant quotations and place them under various topic subheadings, annotating the source. I couldn’t add or subtract text, but I could change a period to a comma and connect one quote to another. I was amazed that the formal explanation of one of the party’s most important ideological campaigns in the post-Mao era would be little more than a cut-and-paste job.

    Because the task was so easy, I spent a lot of time waiting in boredom for my work to be vetted. One day, I sounded out another participant, a professor from Renmin University of China. “Aren’t we just creating another version of Quotations From Chairman Mao?” I asked, referring to the Little Red Book, a pocket volume of out-of-context aphorisms that circulated during the Cultural Revolution. He looked around and smiled wryly. “Don’t worry about it,” he told me. “We’re in a lovely scenic location with good food and pleasant walks. Where else could we convalesce so comfortably? Just go fetch a book to read. All that matters is that you’re here when they call you for a meeting.”

    In June 2003, a high-profile press conference was held at the Great Hall of the People, in Beijing, to unveil the study outline, and all of us who had helped write it were told to attend. Liu Yunshan, a Politburo member and the head of the Propaganda Department, presented the report. As he and other officials took to the stage, I felt a sinking feeling. My understanding of the Three Represents as an important pivot in the ruling party’s ideology had been completely squeezed out of the document and replaced with pablum. Remembering the lewd chatter around the dinner table every night, I felt for the first time that the system I had long considered sacred was in fact unbearably absurd.


    My experience with the study outline taught me that the ideas the party sanctimoniously promoted were in fact self-serving tools used to deceive the Chinese people. I soon learned that they were also a way of making money. An official I came to know at the General Administration of Press and Publication, which controls the right to publish books and magazines, told me of a disturbing episode involving a turf war over publishing revenues within the CCP.

    For many years, Red Flag Press had been one of three organizations responsible for publishing the party’s educational books. In 2005, the press was in the process of publishing a routine book of readings when an official from the Central Organization Department, the powerful agency in charge of the CCP’s personnel decisions, stepped in to insist that only his department had the authority to publish such a book. He tried to get the General Administration of Press and Publication to prevent the book from being published. But Red Flag Press’s main job was precisely to publish works on ideology. To get out of this fix, the agency vetted the book in the hopes of finding problems that would justify banning it—but awkwardly, it came up empty.

    Why was the Organization Department so territorial about publishing? It all came down to money. Many departments have slush funds, which are used for the lavish enjoyment of senior officials and divided among personnel as “welfare subsidies.” The easiest way to replenish those funds is to publish books. At that time, the CCP had more than 3.6 million grassroots organizations, each of which was expected to buy a copy of a new publication. If the book was priced at ten yuan per copy, that meant a minimum of 36 million yuan in sales revenue—equivalent to more than $5 million today. Since that money was coming from the budgets of the party branches, the scheme was essentially an exercise in forcing one public entity to transfer money to another. No wonder the Organization Department promoted a new political education topic every year. And no wonder almost every institution within the CCP had a publishing arm. With nearly every unit inventing new ways to make money, venality has permeated the regime.

    Despite my growing disillusionment, I didn’t completely reject the party. Along with many other scholars inside it, I still hoped that the CCP could embrace reform and move in the direction of some form of democracy. In the later years of the Jiang era, the party started tolerating a relatively relaxed discussion of sensitive issues within the party, as long as the discussions never went public. At the Central Party School, my fellow professors and I felt free to raise deep-seated problems with China’s political system among ourselves. We talked about reducing the role of party officials in deciding administrative issues that were best handled by government officials. We discussed the idea of judicial independence, which had been written into the constitution but never really practiced.

    To our delight, the party was in fact experimenting with democracy, both within its own operations and in society at the grassroots level. I saw all of this as hopeful signs of progress. But subsequent events would only cement my disillusionment.


    A key turning point came in 2008, when I took a brief but fateful trip to Spain. Visiting the country as part of an academic exchange, I learned how Spain had transitioned from autocracy to democracy after the death of its dictator, Francisco Franco, in 1975. I could not help but compare Spain’s experience to China’s. Mao died just ten months after Franco, and both countries underwent tremendous changes in the ensuing three decades. But whereas Spain quickly and peacefully made the leap to democracy and achieved social stability and economic prosperity, China accomplished only a partial transition, moving from a planned economy to a mixed economy without liberalizing its politics. What could Spain teach China?

    I came to the pessimistic conclusion that the CCP was unlikely to reform politically. For one thing, Spain’s transition was initiated by reformist forces within the post-Franco regime, such as King Juan Carlos I, who placed national interests above their personal interests. The CCP, having come to power in 1949 through violence, was deeply wedded to the idea that it had earned a permanent monopoly on political power. The party’s record, particularly its crackdown on the Tiananmen Square protests, demonstrated that it would not give up that monopoly peacefully. And none of the post-Deng leaders had the courage to push for political reform; they simply wanted to pass the buck to future leaders.

    China's Politburo Standing Committee members in Beijing, November 2012; Carlos Barria / Reuters

    I also learned that after Franco’s death, Spain quickly created a favorable environment for reform, consolidating judicial independence and expanding freedom of the press. It even incorporated opposition forces into the transition process. The CCP, by contrast, has treated demands for social and economic justice as threats to its power, suppressing civil society and restricting people’s liberties. The regime and the people have been locked in confrontation for decades, making reconciliation unthinkable.

    My newly acquired understanding of the democratic transition in Spain, along with what I already knew about those in the former Soviet bloc, led me to fundamentally reject the Marxist ideology in which I once had unshakable faith. I came to realize that the theories Marx advanced in the nineteenth century were limited by his own intellect and the historical circumstances of his time. Moreover, I saw that the highly centralized, oppressive version of Marxism promoted by the CCP owed more to Stalin than to Marx himself. I increasingly recognized it as an ideology formed to serve a self-interested dictatorship. Marxism, I began to hint in publications and lectures, should not be worshiped as an absolute truth, and China had to start the journey to democracy. In 2010, when some liberal scholars published an edited volume called Toward Constitutionalism, I contributed an article that discussed the Spanish experience.

    My vision—shared with other liberal scholars—was that China would start by implementing democracy within the party, which, over the long run, would lead to a constitutional democracy. China would have a parliament, even a real opposition party. In my heart, I worried that the CCP might violently resist such a transition, but I kept that thought to myself. Instead, when speaking with colleagues and students, I argued that such a transition would be good for China and even for the party itself, which could consolidate its legitimacy by making itself more accountable to the people. Many of the officials I taught acknowledged that the party faced problems, but they could not say so themselves. Instead, they cautiously urged me to persuade their superiors.


    The problem was that at that very time, Jiang’s successor, Hu Jintao, was moving in the opposite direction. In 2003, while in the process of taking over the reins of power, Hu had put forward “the Scientific Outlook on Development,” his substitute for Jiang’s Three Represents. The concept was another attempt to justify China’s mixed development model with a thin cover of Marxist-sounding ideology, and it avoided the big questions facing China. China’s breakneck development was producing social conflict as farmers’ land was seized for development and factories squeezed workers for more profits. The number of petitioners seeking redress from the government increased dramatically, and nationwide, demonstrations eventually exceeded 100,000 per year. To me, the discontent showed that it was becoming harder for China to develop its economy without liberalizing its politics.

    Hu thought otherwise. “Don’t muck up things,” he said in 2008, at a ceremony marking the 30th anniversary of the policy of reform and opening. I understood this to mean that the economic, political, and ideological reforms the party had made so far should be maintained but not pushed forward. Hu was defending himself against accusations from both sides: from conservatives who thought that reform had gone too far and from liberals who thought it hadn’t gone far enough. So China, under his watch, entered a period of political stagnation, a decline similar to what the Soviet Union experienced under Leonid Brezhnev.

    Thus it was with optimism that I looked to Xi when it became clear that he was going to take power. The easy reforms had all been made 30 years ago; now it was time for the hard ones. Given the reputation of Xi’s father, a former CCP leader with liberal inclinations, and the flexible style that Xi himself had displayed in previous posts, I and other advocates of reform hoped that our new leader would have the courage to enact bold changes to China’s political system. But not everyone had such confidence in Xi. The skeptics I knew fell into two categories. Both proved prescient.

    The first group consisted of princelings—descendants of the party’s founders. Xi was a princeling, as was Bo Xilai, the dynamic party chief of Chongqing. Xi and Bo rose to senior provincial and ministerial positions at almost the same time, and both were expected to join the highest body in the CCP, the Politburo Standing Committee, and were considered top contenders to lead China. But Bo fell out of the leadership competition early in 2012, when he was implicated in his wife’s murder of a British businessman, and the party’s senior statesmen backed the safe and steady Xi. The princelings I knew, familiar with Xi’s ruthlessness, predicted that the rivalry would not end there. Indeed, after Xi took power, Bo was convicted of corruption, stripped of all his assets, and sentenced to life in prison.

    The other group of skeptics consisted of establishment scholars. More than a month before the 18th Party Congress of November 2012, when Xi would be formally unveiled as the CCP’s new general secretary, I was chatting with a veteran reporter from a major Chinese magazine and a leading professor at my school who had observed Xi’s career for a long time. The two had just wrapped up an interview, and before leaving, the reporter tossed out a question: “I hear that Xi Jinping lived in the Central Party School compound for a period of time. Now he’s about to become the party’s general secretary. What do you think of him?” The professor’s lip twitched, and he said with disdain that Xi suffered from “inadequate knowledge.” The reporter and I were stunned at this blunt pronouncement.

    In spite of these negative views, I willingly suspended disbelief and put my hopes in Xi. But shortly after Xi’s ascension, I started to have my doubts. A December 2012 speech he gave suggested a reformist and progressive mentality, but other statements hinted at a throwback to the pre-reform era. Was Xi headed left or right? I had just retired from the Central Party School, but I still kept in touch with my former colleagues. Once when I was talking to some of them about Xi’s plans, one of them said, “It’s not a question of whether Xi is going left or right but rather that he lacks basic judgment and speaks illogically.” Everyone fell silent. A chill ran down my spine. With deficiencies like these, how could we expect him to lead a struggle for political reform?

    I soon concluded that we probably could not. After Xi released his comprehensive reform plan in late 2013, business and academic circles excitedly predicted that he would push ahead with major reforms. My feeling was just the opposite. The plan avoided all the key issues of political reform. China’s long-standing problems of corruption, excessive debt, and unprofitable state enterprises are rooted in party officials’ power to meddle in economic decisions without public supervision. Trying to liberalize the economy while tightening political control was a contradiction. Yet Xi was launching the biggest ideological campaign since Mao’s death to revive Maoist rule. His plan called for intensified societal surveillance and a clampdown on free expression. A ban on any discussion of constitutional democracy and universal values was shamelessly promoted under the banner of “governance, management, service, and law.”

    This trend continued with a package of legal reforms passed in 2014, which further exposed the party’s intent to use the law as a tool for maintaining totalitarian rule. At this point, Xi’s perverse tendencies and the CCP’s political regression were clear. If I once had a vague hope for Xi and the party, my illusions were now shattered. Subsequent events would only confirm that when it came to reform, Xi was taking China from stagnation to regression. In 2015, the party rounded up hundreds of defense lawyers. The next year, it launched a Cultural Revolution–style campaign against an outspoken real estate tycoon. It was my reaction to that episode that landed me in hot water.


    The tycoon, Ren Zhiqiang, had increasingly come into conflict with Xi, whom he criticized for censoring Chinese media. In February 2016, a CCP website labeled Ren as “anti-party.” I didn’t know Ren personally, but his case struck me as especially disturbing because I had long relied on the principle that within the CCP, we were allowed—even encouraged—to speak freely in order to help the party correct its own mistakes. Here was a longtime party member who had been demonized for doing just that. Having lived through the Cultural Revolution, I knew that people branded with the label “anti-party” were deprived of their rights and subjected to harsh persecution. Since a defense of Ren could never be published in censored media outlets, I wrote one up and sent it to a WeChat group, hoping my friends would share it with their contacts. My article went viral.

    Although most of my article simply quoted the party’s constitution and code of conduct, the Central Party School’s disciplinary committee accused me of serious errors. I faced a series of intimidating interviews in which my interrogators applied psychological pressure and laid word traps in an effort to induce a false confession of wrongdoing. It was uncomfortable, but I recognized the process as a psychological contest. If I didn’t show fear, I realized, they would lose half the battle. And so a stalemate ensued: I kept publishing, and the authorities kept calling me in for questioning. Soon, I concluded that security agencies were tapping my phone, reading my digital correspondence, and following me to see where I went and with whom I met. Retired professors from the Central Party School usually need permission only from the school to travel to Hong Kong or abroad, but now the school hinted that I had to clear such trips with the Ministry of State Security in the future.

    In April 2016, the text of a speech I had given a few months earlier at Tsinghua University—in which I argued that if ideology violates common sense, it deteriorates into lies—was published on an influential website in Hong Kong. The timing was bad: Xi had just announced that some of the free inquiry taking place at the Central Party School had gone too far and urged greater supervision of its professors. As a result, in early May, I was called in again by the school’s disciplinary committee and accused of opposing Xi. From then on, the CCP blocked me from all media in China—print, online, television. Even my name could not be published. Then, one night in July, I was summoned again to a meeting at the Central Party School, where a member of the disciplinary committee placed a foot-tall pile of documents on the table in front of me. “There’s already this much material on you,” he said. “Think it over.” It was clear that I was being warned to keep silent and that if I so much as tweeted a word, I would be subjected to disciplinary action, including reduced retirement benefits. I was indignant at my treatment, even though I understood that others had been dealt with even more harshly.

    In all my years as a member of the CCP, I had never violated a single rule, nor had I ever been called in for a reprimand. But now, I was regularly interrogated by party officials. The school’s disciplinary committee repeatedly threatened the humiliating prospect of holding a large public meeting and announcing a formal punishment. At the end of each conversation, my interrogators demanded I keep it a secret. It was all part of an underworld that couldn’t be exposed to the light of day.

    Then came a cover-up of police brutality that triggered my final break with Xi and the party. Earlier, in May 2016, Lei Yang, an environmental scientist, was on his way to the airport to pick up his mother-in-law when, in circumstances that remain murky, he died in the custody of the Beijing police. In order to evade responsibility for the crime, the police framed Lei, alleging that he had been soliciting a prostitute. His classmates from his university days, outraged at this attempt at defamation, banded together to help his family seek justice, starting a campaign that reverberated throughout China. To quell the fury, the CCP’s top leaders ordered an investigation. The prosecution agreed to an independent autopsy, and a trial was scheduled to argue the matter.

    A strange thing happened next: Lei’s parents, wife, and children were put under house arrest, and the local government offered them massive compensation, about $1 million, to give up their pursuit of the truth. When Lei’s family refused, the payment was increased to $3 million. Even after a $3 million house was thrown in, Lei’s wife insisted on clearing her late husband’s name. The government then pressured Lei’s parents, who knelt before their daughter-in-law and begged her to abandon the case. In December, prosecutors announced that they would not charge anyone for Lei’s death, and his family’s lawyer revealed that he had been forced to stand down.

    When I learned of this outcome, I sat at my desk all night, overcome with grief and anger. Lei’s death was a clear-cut case of wrongdoing, and instead of punishing the police officers responsible, their superiors had tried to use the people’s hard-earned tax money to settle the matter out of court. Officials were closing ranks rather than serving the people. I asked myself, If the CCP’s officials are capable of such despicable actions, how can the party be trusted? Most of all, I wondered how I could remain part of this system.

    After 20 years of hesitation, confusion, and misery, I made the decision to emerge from the darkness and make a complete break with the party. Xi’s great leap backward soon left me with no other choice. In 2018, Xi abolished presidential term limits, raising the prospect that I would have to live indefinitely under neo-Stalinist rule. The next summer, I was able to travel to the United States on a tourist visa. While there, I received a message from a friend telling me that the Chinese authorities, accusing me of “anti-China” activities, would arrest me if I returned. I decided to prolong my visit until things calmed down. Then the COVID-19 pandemic broke out, and flights to China were canceled, so I had to wait a little longer. At the same time, I was disgusted by Xi’s mishandling of the outbreak and signed a petition supporting Li Wenliang, the Wuhan ophthalmologist who had been harassed by police for warning his friends about the new disease and eventually died of it. I received urgent phone calls from the authorities at the Central Party School demanding that I come home.

    But the atmosphere in China was growing darker. Ren, the dissident real estate tycoon, disappeared in March and was soon expelled from the party and sentenced to 18 years in prison. Meanwhile, my problems with the authorities were compounded by the unauthorized release of a private talk I had given online to a small circle of friends in which I had called the CCP “a political zombie” and said that Xi should step down. When I sent friends a short article I had written denouncing Xi’s repressive new national security law in Hong Kong, someone leaked that, too.

    I knew I was in trouble. Soon, I was expelled from the party. The school stripped me of my retirement benefits. My bank account was frozen. I asked the authorities at the Central Party School for a guarantee of my personal safety if I returned. Officials there avoided answering the question and instead made vague threats against my daughter in China and her young son. It was at this point that I accepted the truth: there was no going back.

    Published:12/4/2020 6:13:47 PM
    [Entertainment] Alison Lurie, Pulitzer-winning novelist of mordant wit and boundless empathy, dies at 94 Her books, including “Foreign Affairs” and “The War Between the Tates,” chronicled the lives of women searching for self-knowledge and self-fulfillment. Published:12/3/2020 7:06:56 PM
    [Entertainment] Katherine Heigl & Sarah Chalke Are Friendship Goals in First Trailer For Netflix's Firefly Lane Firefly LaneSome of 2020's buzziest TV shows--Little Fires Everywhere, Normal People, The Undoing--are based on books. And 2021 will continue the trend of wonderfully written stories getting adapted for...
    Published:12/3/2020 12:04:40 PM
    [Markets] Do You Really Think The Empire Will Sacrifice The Dollar To Further Enrich Billionaires? Do You Really Think The Empire Will Sacrifice The Dollar To Further Enrich Billionaires? Tyler Durden Thu, 12/03/2020 - 12:25

    Authored by Charles Hugh Smith via OfTwoMinds blog,

    As for stock markets... the devil take the hindmost.

    Let's keep it simple: US dollar up, stocks down. US dollar down, stocks up. Stocks up, billionaires get richer. Since that spot of bother in March 2020 when the US dollar (USD) soared and stocks cratered, the USD has been in a free-fall, boosting the wealth of America's Robber Barons and various other skimmers, scammers and other undeserving scoundrels.

    Chief among the undeserving scoundrels feasting on the decline of the USD are global stock markets which have soared not because revenues and profits are soaring but because the USD has plummeted.

    The Federal Reserve is widely worshiped as the Ultimate Power in the Universe, a kind of financial Death Star. The Fed has seen fit to crush the USD to further boost the wealth of billionaires and save global stock markets from their well-deserved ruin. Saving the world, ho-hum, just another day for the god-like Fed.

    But something doesn't quite add up here, for as the all-powerful Fed devalues the US dollar, it destroys the exorbitant privilege of America's reserve currency. What's the exorbitant privilege? Simply this: the owner of a reserve currency can create "money" (USD) out of thin air and trade it for autos, oil, semiconductors--real-world goods that were not created out of thin air. Rather, all these real-world goods required tremendous investment and significant costs to be produced and transported.

    The exorbitant privilege is something for nothing--a remarkably good deal. And yet the universal expectation is the Fed is going to throw that privilege in the dumpster by pushing the USD into the ground, first by devaluing it relative other currencies and then by letting hyper-inflation destroy what's left of its purchasing power.

    It is not an exaggeration to say that the ability to create "money" out of thin air and trade it for real-world goods is the foundation of America's global power, what I call the Imperial Project. The same can be said for the other reserve currencies, the euro and the yen. (Since China's currency is pegged to the US dollar, it is not a true reserve currency; it is only a derivative of the USD.)

    So let me get this straight: the Fed is consciously choosing to undermine and then lay waste to the foundation of American power--just to boost Robber Barons and zombie global stock markets? I don't think so. That the Fed would pursue a suicidal destruction of the purchasing power of the dollar just to boost stock markets and billionaires--that beggars belief.

    The Fed is not the Empire, it is the handmaiden of the Empire. The Fed's dual mandate-- for PR purposes, stable employment and prices--is actually balancing the conflicting demands of a global and domestic currency--Triffin's Paradox writ large.

    The inherent problem with a reserve currency is that it must meet global economic needs and domestic needs, and these are intrinsically in conflict. America's billionaires and pension funds want the US stock market to loft higher on the back of a declining USD, but that diminishes the global purchasing power of the USD--a trend heading for economic ruin.

    The Fed has had numerous reasons to weaken the dollar since March: a desperate need to "save" global stock markets from well-deserved collapse, and an equally desperate need to keep the dollar weak so global debtors with loans denominated in dollars can manage to service their trillions in USD-denominated debts.

    But drawing a line extending this short-term necessity all the way to hyper-inflationary oblivion is a grave misreading of the Empire's need for the exorbitant privilege of a strong dollar.

    The Fed is about done with its "rescue" of billionaires and global markets and debtors. Against virtually all expectations of seers, pundits, gurus, etc. the USD is about to start serving the Empire in its foundational role. As for stock markets--the devil take the hindmost.

    *  *  *

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    Published:12/3/2020 11:34:14 AM
    [Book Review] Gift Guide: The best books for 2020 recommended by VCs and TechCrunch writers (Part 1) 2020 was a tough year for all of us, but a strong one for books (how often do you get to say that?). Sales are up, driven by lockdowns, boredom, and the need for escape. Yet, 2020 also felt like a watershed year for media in general, a time when we started to deeply question the value of real-time communications driven by fear. Published:12/2/2020 2:29:24 PM
    [Markets] Online Spending Hits Record On Cyber Monday Online Spending Hits Record On Cyber Monday Tyler Durden Wed, 12/02/2020 - 11:25

    Submitted by Market Crumbs,

    Earlier this week we wrote about online shopping being the big winner of this year's Black Friday.

    Online spending on Black Friday jumped by 21.6% to a record $9 billion, according to data from Adobe Analytics, which analyzed transactions from 80 of the top 100 U.S. online retailers. The total makes this year's Black Friday the second-largest single day for online shopping in U.S. history behind last year's Cyber Monday, when shoppers spent $9.4 billion.

    With this year's Cyber Monday now in the books, it officially broke last year's $9.4 billion as consumers spent a record $10.8 billion, according to Adobe Analytics. Despite jumping more than 15% from last year and setting a new record, the total fell short of Adobe's original estimate of $12.7 billion.

    Adobe recently cut its estimate for online spending this holiday season to $184 billion from its original estimate of $189 billion. The lowered estimate still marks a 30% increase from last year's total.

    "Throughout the remainder of the holiday season, we expect to see record sales continue and curbside pickup to gain even more momentum as shoppers avoid crowds and potential shipping delays," Adobe Digital Insights director Taylor Schreiner said.

    Similar to their findings on Black Friday, Adobe found that consumers increasingly shopped on their smartphones as 37% of Cyber Monday's sales came from mobile devices. Adobe also found that 25% of the day's total sales came in the last few hours as consumers on the west coast spent $2.7 billion from 7 PM to 11 PM.

    Meanwhile, Amazon said yesterday that the 2020 holiday season is their "biggest yet" as independent businesses tallied $4.8 billion in sales between Black Friday and Cyber Monday, marking a 60% increase from last year. Amazon also disclosed an astonishing 71,000 small- and medium-sized businesses across the world have already surpassed $100,000 in sales so far this holiday season. However, Amazon did not share any specific sales figures for either Black Friday or Cyber Monday for the company as a whole.

    "To give customers more time to save and more flexibility during an unusual time, Amazon kicked off the holiday season earlier than ever, just after Prime Day, with deep discounts and deals starting in October," Amazon said. "And through Cyber Monday, 2020 has been the largest holiday shopping season so far in our company's history thanks to customers around the world."

    With record online spending on this year's Black Friday and Cyber Monday, retailers will now watch closely to see if consumers can keep it up or are tapped out.

    Published:12/2/2020 10:31:51 AM
    [Markets] Students At UK University Demand The Word "Black" Be Banned From Lectures & Textbooks Students At UK University Demand The Word "Black" Be Banned From Lectures & Textbooks Tyler Durden Wed, 12/02/2020 - 05:00

    Authored by Paul Joseph Watson via Summit News,

    Students at Manchester University have demanded that the word “black” when used as a negative expression such as the word “blackmail” should be banned because it is “divisive.”

    Yes, really.

    The complaint was prompted by a university study surround issues affecting Black, Asian and Minority Ethnic (BAME) staff and faculty.

    Citing concerns of black people, the report noted that there were “linguistic concerns about Black being associated with negative expressions” such as “blackmail” and “black sheep.”

    After the report labeled the use of words which included “black” as “divisive and not inclusive,” the university’s student union demanded that “any other use of the word ‘black’ as an adjective to express negative connotations” should be banned in research papers, lecture slides, and books published by professors.

    Students claimed that such words were based on a “colonial history” and should be abolished in light of the Black Lives Matter movement.

    However, Lexicographer Jonathon Green pointed out that such claims were completely erroneous given that the background environment of “identity politics” “simply wasn’t there at the moment of coinage.”

    As in America, many students have been indoctrinated to believe that one of the primary purposes for going to university is to lobby for speech and words to be banned.

    Back in September, Bristol University announced that it would crack down on “diet culture and fatphobia” language so as not to offend obese people and those with eating disorder.

    *  *  *

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    Published:12/2/2020 4:25:37 AM
    [Markets] German Regulator Reportedly Has Evidence Ernst & Young Helped Conceal Wirecard Fraud German Regulator Reportedly Has Evidence Ernst & Young Helped Conceal Wirecard Fraud Tyler Durden Wed, 12/02/2020 - 04:15

    German authorities have defended domestic regulators and politicians - including BaFin, the Germany equivalent of the SEC, along with Chancellor Angela Merkel's finance minister Olaf Sccholz - past the point of public believability. It's clear, as former CEO Markus Braun's lawyers are arguing, that the German officials who were tasked with holding companies accountable instead protected Wirecard - until Ernst & Young refused to sign off on the company's financial statements earlier this year after failing to track down more than $2 billion that the company claimed was stashed in the Philippines.

    Wirecard's sudden slide into insolvency, which made several short-seller's rich, led to the arrest of Braun (whose formerly sterling reputation as an evangelist for the transformative power of data and technology has likely been forever blemished) while former COO Jans Marsalek managed to successfully evade authorities (it's believed he is hiding out in Russia, possibly with the protection of Russian intelligence services). Public fury was directed initially at Braun, who was released on €5 million bail, a massive sum for somebody who had the vast bulk of their wealth tied up in shares of a now-worthless company, but has since migrated to German regulators who ignored numerous reports from shortsellers over the years, even going on the offensive and targeting an investigative reporter from the FT, alleging some fantastical scheme about the reporter cooperating with short sellers.

    In recent weeks, the perception that EY's business in Germany would simply weather this storm without any lasting repercussions has faded as German lawmakers and regulators have called for a criminal investigation into EY.

    They claimed that top managers at EY's German unit were likely aware of Wirecard's fraud (at least, on some level), and likely enabled the company for years.

    And on Tuesday, the FT - the paper that masterminded the investigation that brought Wirecard down - reported that German regulators purportedly have evidence that EY signed off on some of the company's results, even though auditors new some of the statements were "factually inaccurate". Apas, Germany's regulator that oversees auditing firms, has obtained the evidence, and is turning it over to prosecutors to help further a criminal probe.

    Some of the wrongdoing dates to 2017, when EY reportedly gave Wirecard a pass despite the fact that the "issues" highlighted in EY's complaints to the company couldn't be easily resolved. In reality, the stonewalling of the audit team by executives at Wirecard was clearly suspect.

    However, in 2017 EY was just days away from denying Wirecard the crucial all-clear, according to documents reviewed by Apas. On March 29 of that year EY warned Wirecard that a qualified audit was imminent and shared a draft version of a qualified opinion with its client, people familiar with the documents told the FT. One of the sticking points raised by EY were protracted delays to a forensic audit by EY’s anti-fraud team into alleged accounting manipulations at a Wirecard subsidiary in India, which was being stonewalled by Wirecard executives. Just days later, the auditors changed their minds. On April 5, they signed an audit opinion that stated: “Our audit has not led to any reservations.” Apas found that it was unreasonable to believe that the issues could have been resolved within a few days, according to people familiar with the matter. The watchdog told prosecutors that therefore EY’s unqualified audit was “factually inaccurate”.

    In terms of personnel, it looks like the two key players on the EY side are Andreas Loetscher and Martin Dahmen, who were the lead partners of the EY unit charged with auditing Wirecard. Dahmen eventually left EY in 2018 to become the head of accounting at Deutsche Bank.

    Last week the EY auditing partners, Andreas Loetscher and Martin Dahmen told MPs that they were being probed by Apas over their work for Wirecard and declined to give testimony to the parliamentary inquiry commission into Wirecard. EY told the Financial Times on Monday that because of “the ongoing confidentiality obligation” the firm and Mr Dahmen were unable to discuss details of the audit procedures at Wirecard. Based on its current understanding of the facts, "our colleagues conducted their audit procedures professionally, to the best of their knowledge and in good faith”, the firm said. The auditing firm stressed that it was "actively working towards a legally effective release from the confidentiality obligation after which we will be able to provide details." Mr Loetscher, who in 2018 left EY to become Deutsche Bank’s head of accounting, declined to comment. Apas previously said that it categorically does not comment about its work, pointing to strict legal confidentiality requirements. Munich prosecutors are evaluating the evidence sent by Apas and have not decided whether to open a criminal investigation of EY partners. Under German law, auditors found guilty of such misconduct can be punished with up to three years in jail.

    Around the time Dahmen left, Wirecard infamously tried to cover up the massive fraud by engineering a buyout of Deutsche Bank. Though that deal apparently died on the vine.

    Of course, DB had access to all the short-seller reports warning about potential fraud at Wirecard. But Dahmen's previous "experience" working on Wirecard's books could have of course been very relevant. And now Deutsche Bank is buying up some of the remnants of Wirecard's loan book.

    Published:12/2/2020 3:35:37 AM
    [Entertainment] 10 books to read in December If you still have holiday shopping to do, perhaps one of these books will fit the bill. Published:12/1/2020 7:20:29 AM
    [Entertainment] 17 Books to Read This December E-Comm: December Books, 2020We 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!. The...
    Published:12/1/2020 5:49:13 AM
    [World] A Holiday Gift Idea: New books by Joshua Mitchell, Michael Walsh and Brandon Weichert Published:11/28/2020 8:35:26 PM
    [Markets] Glenn Greenwald Opines On Ilhan Omar's Misguided Defense Of John Brennan Glenn Greenwald Opines On Ilhan Omar's Misguided Defense Of John Brennan Tyler Durden Sat, 11/28/2020 - 19:00

    Authored by Glenn Greenwald via

    The right to dissent from, and to work against, the official foreign policy of the U.S. Government is vital: foundational to Constitutional liberties. There is very little such dissent in the U.S. Congress, where many of the core tenets of the Foreign Policy Community (from CIA drone warfare and clandestine coups to steadfast support for Gulf State and Middle East tyrannies as well as Israel) enjoy overwhelming, at times virtually unanimous, bipartisan support.

    That is one of the reasons that — as I’ve said repeatedly — I am glad that there are now members of Congress such as Congresswomen Ilhan Omar of Minnesota and Rashida Tlaib of Michigan who so vocally and unflinchingly dissent from this general foreign policy orientation and especially from those policies which most members of Congress either cannot or do not want to denounce.

    Whether or not one agrees with these two lawmakers on every issue, having members of Congress questioning and objecting to highly consequential foreign policies is inherently healthier than full-scale agreement or fear-driven acquiescence. Dissent strengthens all democracies. That is why I have relentlessly defended Congresswoman Omar, even in the face of less-than-ideally-phrased proclamations, from what I regard as bad faith accusations of bigotry and a lack of patriotism (just as I denounced moronic claims that Trump was a “traitor”): bad faith accusations of bigotry or treason are often designed to demonize attempts to question pieties and ostracize those who do it.

    For that very reason, I was quite surprised to see that late Friday night, Congresswoman Omar, in response to something I wrote, defended not only former CIA Director John Brennan — who as Obama’s CIA Director presided over the bombing of numerous countries including Somalia — but also The Logan Act. The Logan Act is nothing more than an unconstitutional attempt to criminalize foreign policy dissidents, like her, and is so dangerous in the hands of the CIA, FBI and federal prosecutors precisely because it lacks any clear definition or meaning.

    Despite this, Congresswoman Omar depicted that ancient statute not as what it is — an impossibly vague and overly broad attempt to criminalize the core Constitutional right to dissent — but instead as some kind of specific, precisely defined, and well-established precedent, the contours of which are clearly established and easily applied. None of that is true.

    This 219-year-old statute is one of the most unconstitutional and dangerous laws in the U.S. Code. Because it has never been used to prosecute anyone, and was only used to obtain an indictment one time in its entire history — back in 1803, against someone who wrote an op-ed criticizing U.S. foreign policy toward France — nobody knows what it actually prescribes or allows because there is no binding judicial precedent interpreting what it means. It is precisely because it has never been used to prosecute anyone that there is no judicial clarity about what it means, and that’s how the U.S. Government wants it (for the same exact reason, the DOJ has never made good on its threats to prosecute any journalist who publishes classified information under the Espionage Act of 1917: they prefer to weaponize the fear of uncertainty regarding the law’s scope and application rather than prosecute journalists under it and thus risk a judicial ruling declaring it unconstitutional or inapplicable to journalists).

    The wildly broad vagueness and lack of clarity is what makes it so dangerous to leave the Logan Act on the books. These are exactly the kinds of ambiguous laws that can serve as an abusive pretext in the hands of the FBI, empowering it to investigate anyone it wants under the rubric of this archaic, ambiguous law. A law can be so vague that it can be unconstitutional for that reason alone: a failure to clearly advise citizens of what is and is not legal violates the right of due process.

    But while all such vague laws are dangerous, the Logan Act is particularly menacing to those who dissent from core U.S. foreign policy and are thus often accused of disloyalty, such as Congresswoman Omar. All members of Congress, but particularly foreign policy dissidents, should be working to repeal this ancient and repressive law, not wielding it as a weapon against adversaries and pretending that it is some highly specific, clear and valid criminal constraint on the conduct and speech of U.S. citizens.

    *  *  *

    The context of the exchange with Congresswoman Omar, and the key role played in it by former Obama CIA Director John Brennan, is necessary to understand Rep. Omar’s point. Far more importantly, this context illustrates the severe, ongoing dangers of allowing this dangerous law to fester on the books.

    On Friday, reports emerged that, just days after Israeli Prime Minister Benjamin Netanyahu met with Saudi Crown Prince Mohammed bin Salman, a key Iranian nuclear scientist was ambushed and murdered by gunmen. U.S. officials told The New York Times that Israel was behind the assassination — which should be unsurprising given that Israel assassinated several senior Iranian nuclear scientists during the Obama years.

    This news provoked indignation from MSNBC’s John Brennan, formerly Obama’s Director of the CIA, an agency heralded worldwide for its righteous opposition to assassinations. Along with condemning the assassination of this Iranian scientist as “a criminal act and highly reckless,” Brennan also used his tweet to send an explicit message to Iranian officials: urging them not to retaliate but instead to wait for the Biden administration to take over, promising the new U.S. administration would “respond against perceived culprits.”

    In other words, Brennan, like many people (including myself), is concerned that the Trump administration and Israel are seeking to escalate tensions with Iran during the transition — either because they seek war with Tehran or, more likely, because they want to provoke a cycle of retaliation that would prevent the incoming Biden administration from re-implementing the Iran Deal which Trump nullified and which Israel vehemently opposes.

    Thus, Brennan sought to subvert what he perceives as the current foreign policy of the U.S. Government — to provoke and punish Iran — by encouraging Iranian officials to ignore the provocation and therefore not derail efforts by the incoming U.S. administration to establish better relations once Biden is inaugurated:

    There are so many amazing ironies to this Brennan statement. To begin with, it’s just stunning to watch Obama’s Chief Assassin — who presided over a global, years-long, due-process-free campaign of targeted assassinations, under which the official “kill list” of who was to live and who was to die was decreed by Judge, Jury and Executioner Brennan in a secret White House meeting that bore the creepy designation “Terror Tuesdays” — now suddenly posture as some kind of moral crusader against assassinations. I have denounced these Israeli assassinations as terrorism — both in the past and yesterday — but I have also denounced with equal vigor the Obama/Brennan global assassination program.

    The audacity of Brennan’s moral posturing became even more evident as he tried to explain why his and Obama’s assassination program was noble and legal, while the one that resulted in Friday’s killing in Iran was immoral and criminal. After all, this is the same John Brennan who got caught red-handed lying about how many innocent civilians were killed by Obama’s global assassination program, and who even claimed the right to target American citizens for execution by drone without any transparency let alone due process: a right they not only claimed but exercised.

    When you’re reduced to sitting on Twitter trying to distinguish your own global assassination program from the one you’re condemning, that is rather potent evidence that you are among the absolute last persons on earth with the moral credibility to denounce anything. That’s particularly true when you directed your unilateral assassination powers onto your own citizens, ending several of their lives.

    But that’s the Trump era in a nutshell: the most bloodthirsty monsters and murderers successfully whitewash their own history of atrocities by deceiving people into believing that none of this was done prior to Trump, and that their flamboyant opposition to Trump — based far more in stylistic distaste for him and loss of their own access than substantive policy objections — absolves them of their own prior, often-worse monstrosities. Call it the David Frum Syndrome.

    But to me the most glaring irony — as I pointed out — is how similar is the transition message sent by Brennan on Friday to the Iranians when compared to the one sent by Gen. Michael Flynn to the Russians during the 2016 transition after the Obama administration sanctioned Moscow. The message of both Flynn and Brennan was virtually identical: don’t over-react or excessively retaliate: a new administration will soon take power and wants to work with you, so don’t do anything rash now that could prevent that from happening.

    But the difference is that while Brennan was predictably celebrated for his message to the Iranians, with viral likes and re-tweets, Flynn was criminally investigated by Jim Comey’s FBI for his. After Comey, then the FBI Director, ordered the investigation into Flynn’s ties to Moscow closed at the start of 2017 due to lack of evidence, FBI agents deeply hostile to Trump seized on Flynn’s December, 2016, intercepted phone call with Russian Ambassador Sergey Kislyak — when Flynn was a national security transition official just weeks away from taking over — to continue the criminal investigation on the ground that he may have violated the Logan Act by attempting to subvert current U.S. foreign policy with his message to Moscow not to overreact and instead to wait for the new administration.

    Read the rest of the report here.

    Published:11/28/2020 6:05:23 PM
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