news site RSS Email Alerts


[Markets] The Digital Money Revolution The Digital Money Revolution

Authored by Huw van Steenis via Project Syndicate,

The rapid pace and sheer scale of innovation in digital currencies and mobile payments indicates that a monetary revolution is forthcoming. The choice for governments and central banks is whether to stand in front of a train that is gaining steam, or get on board and reap the benefits.

How radically will digital currencies change our methods of exchange and the way that we think about money? With innovation in digital payments barreling ahead, these questions are now commanding the attention of the World Economic Forum and other international institutions.

Regardless of how Facebook’s own digital-currency moonshot, Libra, fares, it has already provided a wake-up call for firms and policymakers around the world.

“If revolution there is to be, let us rather undertake it than undergo it,” Otto von Bismarck once said.

The question for policymakers is not whether to try to shape the digital-money revolution, but how.

Digital money is already a key battleground in finance, with technology firms, payment processing companies, and banks all vying to become the gateway into the burgeoning platform-based economy. The prizes that await the winners could be huge. In China, Alipay and WeChat Pay already control more than 90% of all mobile payments. And in the last three years, the four largest listed payment firms – Visa, Mastercard, Amex, and PayPal – have increased in value by more than the FAANGs (Facebook, Apple, Amazon, Netflix, and Google). In a way, Libra is actually crashing the party late.

The opportunities offered by digital money are clear. Across Western countries, moving money is overly costly and inefficient, and those who end up paying the most are often the ones who can least afford to do so. As I argued in a report for the Bank of England (BOE) earlier this year, improving these processes could yield significant returns and social benefits.

Moreover, the needs – the potential returns – are even greater in many emerging markets, particularly when it comes to cross-border payments. According to the World Bank, the average cost of sending international peer-to-peer remittances averages around 7% of the sum. Efforts to improve the main payment channels are ongoing. TransferWise, for example, claims to have reduced the average cost of cross-border transfers for its clients to 0.74%. But less well-trodden routes remain a challenge, owing to the hurdles posed by anti-money-laundering rules and poor data quality.

Given the concerns that Libra has raised, some central banks have begun to explore the option of issuing their own digital tokens. Others are studying the thorny legal and regulatory challenges posed by digital money, so that they can safeguard monetary and financial stability. For her part, Lael Brainard, a governor on the US Federal Reserve Board, recently suggested that the risks of cryptocurrencies outweigh the benefits. By contrast, the People’s Bank of China is forging ahead – though not toward the decentralized or “permissionless” blockchain model envisioned by crypto enthusiasts. The PBOC wants to use cryptography to issue tokens to mainstream banks, which will then be passed on to customers within the existing two-tiered banking system.

Hence, if the European Central Bank (or others) wanted to be the first central bank to issue digital money, the opportunity is there for the taking. To policymakers considering the options presented by digital money, I would offer five recommendations from my BOE report.

First, monetary authorities should create the infrastructure to enable alternative payment methods to connect to one another. The private sector can flourish when central banks act as a platform for innovation, as BOE Governor Mark Carney has shown by granting non-bank payment firms access to the BOE payments system. But success will depend on how easily new providers can access the central-bank infrastructure, which will require well-designed application programming interfaces through which to receive and share information.

Second, policymakers should usher in the next generation of payments regulation. Rules need to be updated to reflect the increasing complexity and shifting risks of the current system. As the cost of payments falls, the value of data will grow. Yet existing rules pertaining to data sharing, security, and liability are mostly rudimentary. Given the flurry of new entrants, there is a case to be made for tiering regulation – as the Singaporeans have done – and stress-testing payment firms for their financial resilience and cyber-security protections.

Third, governments need to champion better digital identification, which is essential to improving financial inclusion, curbing cyber fraud, and reducing costs. Some countries have already made impressive progress on this front. India, for example, has largely cracked the identification problem with its Aadhaar program, which dramatically simplifies the process through which networks can know their customers. Countries that do not have a tradition of issuing national ID cards have more work to do, but their governments can cooperate with the private sector, or use existing high-quality national data sets such as passport and tax numbers.

Fourth, all countries need to support stronger messaging standards to improve cross-border payments, reduce costs, and prevent fraud. Just as postal codes help mail get to the right place, so too could better tagging of payment senders and recipients.

Fifth, and critically, policymakers need to create a roadmap for the decline of cash. In Sweden, cash payments have fallen by 80% over the past decade, and many other developed markets are just 5-10 years behind. Digital payments bring many benefits, but the Swedish experience shows that without a coordinated plan, the pace of change risks excluding some groups in society. As payment habits shift, each country will need a strategy to improve its payments infrastructure – including broadband and mobile-telephony networks – so that no one is left behind.

Payments innovation is moving at a dizzying pace. Some ideas may fail to get off the ground, while others may need to pivot to become commercially viable. Other issues, like market dominance or cyber-security risks, will undoubtedly become more prominent in policy debates. On balance, however, the economic and social benefits of a frictionless, fraud-free, and trusted global payments system will likely outweigh the risks.

Tyler Durden Thu, 11/14/2019 - 17:45
Published:11/14/2019 5:01:45 PM
[Markets] "What's Moral Is What's Legal... And What's Legal Is For Sale" "What's Moral Is What's Legal... And What's Legal Is For Sale"

Authored by Charles Hugh Smith via OfTwoMinds blog,

The anti-social carnage unleashed by Corporate America's "lock-in" / negative network effects has no real limits.

Here's the U.S.economy in a nutshell: Corporate America is an anti-social Black Plague, gorging on cartel-monopoly profits reaped from negative network effects running amok, enriching the few at the expense of the many and concentrating political power in the hands of the most rapacious, anti-democratic corporate sociopaths.

Let's start with network effects: the conventional definition is "When a network effect is present, the value of a product or service increases according to the number of others using it."

So for example, when telephone service was only available to a few users, its value was limited. As more people obtained telephone service, the value of the network increased to both its owners and to users, who could reach more people and conduct commerce more easily as a result of having telephone service.

In the conventional analysis, negative network effects occur from "congestion," i.e. the network is adding new users so quickly that "more users make a product less valuable."

But this superficial analysis misses the fatally anti-social consequences of corporate negative network effects, a dynamic described by analyst Simons Chase in this essay. Here is an excerpt:

Even the most imaginative and far-reaching narratives about non-obvious economic fragility and off balance sheet risks are mere rants without constructive ideas about causes and solutions.

Consider network effects, the popular economic construct applied to market concentration and increasing returns for strategies pursued by some leading tech companies. This dynamic economic agent is also known as demand side economies of scale.

W. Brian Arthur, the economist credited with first developing the theory, described the condition of increasing returns as a game of strategic positioning and building up a user base to the point where 'lock in' of dominant players occurs. Companies able to tap network effects have been rewarded with huge valuations and highly defensible businesses.

But what about negative network effects? What if the same dynamic applies to the U.S.'s pay-to-play political industry where the government promotes or approves of something through a policy, subsidy or financial guarantee due to private sector influence.

Benefits accrue only to the purchaser of the network effects, and consumers, induced by the false signal of large network size, ultimately suffer from asymmetric risk and experience what I'm calling a loss of intangible net worth for each additional member after the 'bandwagon' wares off.

If this were the case, then you would see companies experience rapid revenue growth (out of line with traditional asset leverage models), executives accumulating huge fortunes and political campaign coffers swelling.

But the most striking feature would be the anti-social outcomes, the ones not available without the instant critical mass of government-supported network effects, the ones that, at scale, monetize a society's intangible net worth.

Some products tied to these metrics include: prescriptions drugs, junk food targeting children, mortgages, diplomas, and social media. The list of industries that are likely to have gained through the purchasing of network effects in D.C. maps closely to the decay that is visible in U.S. society.

The loss of intangible capital and other manifestations of non-obvious economic fragility (to use Simons' apt phrase) is the subject of my latest book, Will You Be Richer or Poorer? Profit, Power and A.I. in a Traumatized World, in which I catalog the anti-social consequences of negative network effects and other forces eroding our nation's intangible capital.

Consider Facebook, a classic case of negative network effects running amok, creating immensely anti-social consequences while reaping billions in profits: Facebook isn't free speech, it's algorithmic amplification optimized for outrage (

The full social cost of social media's negative network effects are difficult to tally, but studies have found that loneliness and alienation are correlated to how many hours a day individuals spend on social media. (An Internet search brings up dozens of reports such as NPR’s Feeling Lonely? Too Much Time On Social Media May Be Why.)

Facebook is trying to leverage its social media "lock-in" to issue its own global currency and both Facebook and Google are trying to offer banking services without any of the pesky regulations imposed on legitimate banks. (Will $10 million in lobbying do the trick? How about $100 million? We've got billions to "invest" in corrupting and controlling public agencies and political power.)

Once Corporate America locks in cartel-monopoly power, i.e. you have to use our services and products, the corporate sociopaths use their billions in market cap and profits to buy the sociopaths in government. Pay-to-play is the real political machinery; "democracy" is the PR fig-leaf to mask the private sector "lock-in" (monopoly) and the public-sector "lock-in" (regulatory influence, anti-competitive barriers to entry, the legalization of corporate fraud, cooking the books, embezzlement, etc.)

Consider Boeing, an effective monopoly which used $12 billion in profits to buy back its own shares and "invested" millions in buying political influence so it could minimize public-sector oversight.

Rather than spend the $12 billion designing a new safe aircraft, Boeing cobbled together a fatally flawed design dependent on software, as described in The Case Against Boeing (The New Yorker) to maximize the profitability of its "lock-in".

Google is running amok on so many levels, it's difficult to keep track of its anti-social "let's be evil, it's so incredibly profitable" agenda: Google's Secret 'Project Nightingale' Gathers Personal Health Data on Millions of Americans (Wall Street Journal). The goal, of course, is to reap more billions in profits for insiders and corporate sociopaths.

The anti-social carnage unleashed by Corporate America's "lock-in" / negative network effects has no real limits. Consider the essentially limitless private and social damage caused by Big Tech: Child Abusers Run Rampant as Tech Companies Look the Other Way (New York Times).

Then there's the opioid epidemic, whose casualties run into the hundreds of thousands, an epidemic that was entirely a creature of Corporate America seeking to maximize "lock-in" profits by buying regulatory approval and pushing false claims that the corporate products were safe and non-addictive.

Note the media sources of these reports: these are the top tier of American journalism, not some easily dismissed alt-media source.

What does this tell us? It tells us the anti-social consequences are now so extreme and so apparent that the corporate media cannot ignore them. Once Corporate America locks-in market, financial and political power, it acts as a virulent Black Plague on the social order, legitimate democracy, and an entire spectrum of intangible social capital including the rule of law.

As Simons put it: 

"The ethical dimension underpinning the whole system is this: what's moral is what's legal and what's legal is for sale." Where does this Black Plague pathology take us? To a collapse of the status quo which enabled it, cheered it, and so richly rewarded it.

*  *  *

My recent books:

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

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

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

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

*  *  *

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

Tyler Durden Thu, 11/14/2019 - 14:26
Published:11/14/2019 1:36:37 PM
[Markets] Now That We've Incentivized Sociopaths... Guess What Happens Next Now That We've Incentivized Sociopaths... Guess What Happens Next

Authored by Charles Hugh Smith via OfTwoMinds blog,

As long as central banks create and distribute trillions in conscience-free credit to conscience-free financiers and corporations, the incentives for sociopathy only increase.

"Sociopath" is a word we now encounter regularly in the mainstream media, but what does it mean? Here is a list of 16 traits, many of which are visible in lionized corporate and political leaders and entrepreneurs.

One key trait is a lack of moral responsibility or conscience; the sociopath feels no remorse if he/she takes advantage of people or exploits them.

Sociopaths are masters of superficial charm, intelligence and confidence, and adept at massaging or misrepresenting reality up to and including outright lying to persuade others or get their way.

Like all psychological syndromes (manic depression, autism, bipolar disorder, etc.), there is a wide spectrum of sociopathological traits, some of which may offer some adaptive benefits (and hence their continued presence in the human genome). In other words, an individual can have a few of the traits in greater or lesser proportions.

Thus the modern BBC Sherlock Holmes (played by Benedict Cumberbatch) describes himself as a "high-functioning sociopath" (though many contest this diagnosis of the original Holmes in Arthur Conan Doyle's stories).

Anyone who has read Walter Isaacson's biography of Steve Jobs can readily see manifestations of sociopathy in Jobs: his famous "reality distortion field," his refusal to accept that he'd fathered a daughter, his lack of empathy, his wild emotional swings (from verbal abuse to weeping), his dietary extremes, his charm, so quickly turned on or off, his uneven parenting, and so on. His obsessive-compulsive behavior was also on full display. Yet Jobs is lauded and even worshiped as a genius and unparalleled entrepreneur. Was this the result of his sociopathological traits, or something that arose despite them?

The ledger of costs and benefits of Jobs' output is weighted by the global benefits of the products he shepherded to market and the hundreds of billions of dollars in sales and net worth he generated for investors while the head of Apple. Though narcissistic in many ways (with the resulting negative effects on many of his intimates), Jobs was clearly focused on creating "insanely great" products that would benefit customers and users. Despite his sociopathological traits, there is no evidence he set out to deceive anyone with the objective of exploiting their good will or belief in his vision to skim billions of dollars from unwary investors.

But the ledgers of others manifesting sociopathy are far less beneficial, as the billions of dollars they generated were in essence a form of fraud.

The rise and fall of WeWork is a recent textbook example of sociopathy reaping enormous financial gains for the sociopaths without creating any actual value. There are plenty of media accounts of the founders' excesses (including the goal of becoming the world's first trillionaire), some of which we might have expected to raise flags in venture capitalists, board members, etc., but these traits were overlooked in the rush for all involved to garner billions of dollars in fees and net worth when WeWork went public.

This example (among many) illustrates that sociopathy is incentivized in our socio-political-economic system, and sociopathic "winners" are lionized as epitomes of ambitious success. (The entire charade of the stock market rising due to Federal Reserve-enabled stock buybacks is an institutionalized example of sociopathy.)

Correspondent Tom D. recently summarized the core dynamic and consequence of this systemic incentivization of sociopathy:

I've been a successful business owner, but I'm not a sociopath--I deliver value to my customers, my investors, and I don't move forward if I see anyone being substantially hurt by my actions.

My peers and I look at organizations such as WeWorks, see the rewards reaped by the sociopathic leaders, and realize we are at a constitutional disadvantage working within such a system.

I could never conceive of taking a $700-900m payday at the expense of investors for whom I've generated no value whatsoever.

I simply could not do it.

If 'out-sociopathing' the sociopaths is what it takes to 'succeed' in todays business climate-- I'll fail.

So I don't try.

From the sociopath's standpoint, that's probably a feature not a bug--one that helps keep effective competition out of the marketplace.

I wonder how much of civilizational decline is simply due to good people accepting their lot and opting out.

If the system incentivizes conscience-free sociopaths more than it incentivizes those creating real value, the system will eventually fall into the equivalent of Gresham's law ("bad money drives out good money"): the con-men and fraudsters will drive out entrepreneurs with a conscience who create real value for customers, investors and society at large.

If we look at recent IPOs and compare them to the Apple IPO, it seems we've already reached that point. Apple went public as a highly profitable company. Uber, Lyft, Beyond Meat and WeWork (if their IPO fraud hadn't been revealed) are all unprofitable, in some cases losing billions of dollars with little prospect for eventual profits.

Venture capital folks explain this by noting that the flood of central bank credit-money-creation has generated trillions of dollars of liquid capital seeking "the next big thing" that will "disrupt" existing models and therefore generate billions in profits.

This pinpoints one key source of the incentivization of sociopaths: central banks' creation of trillions of dollars of conscience-free capital seeking a quick profit anywhere on the planet, by any means available.

Conscience-free capital is an easy mark for a conscience-free sociopath. It's a marriage made in heaven, a perfect match.

Those with a conscience are essentially squeezed out of the system. The choice is binary: either play and lose or opt out.

I've written about "opting out" since 2009, since it was one of the few options available to commoners in the final decline of the Western Roman Empire. If we feel we're at a systemic disadvantage, i.e. the system is rigged against us, opting out makes much more sense than sacrificing oneself in a fruitless battle to stay alive in a system that incentivizes amoral sociopaths.

If we consider what generates outsized success in our rapidly changing economy, we find a variety of factors supporting "winner take most" asymmetric gains. As economist Michael Spence has observed, those who develop new business models earn outsized gains because new forms of capital and labor that are scarce create the most value.

Many of these new business models disintermediate existing models, obsoleting entire layers of middlemen and management.

Netflix is a good example: the move from mailing CDs to streaming content obsoleted cable companies. Now Disney is disrupting Netflix by launching its own streaming service at $6.99 a month, offering content that cable subscribers had to pay $60+ a month to access via a "premium" cable add-on, most of which they didn't even use.

In contrast, WeWork sold itself as a "tech innovator" when in fact it was simply a commercial real estate packager, leasing large spaces and chopping them up into small spaces with common areas and a few services.

How does our system incentivize sociopathy? By focusing exclusively on short-term gains reaped from IPOs (initial public offerings) and by blindly seeking "the next disruptor that will generate billions," the system is easy prey for charming sociopaths who can tell a good (if not quite truthful) story.

The amoral sociopath with the story attracts amoral sociopaths in venture capital, banking and politics, as these fields are all focused on short-term, outsized, quickly skimmed gains, regardless of the consequences to investors or society at large.

What would change this incentivization of sociopathy? Ending the Federal Reserve's delivery of trillions of dollars in conscience-free capital to sociopaths and limiting the VC-IPO flim-flam machine would be a start, but given Wall Street's dependence on these profits and the millions the Street gives to political campaigns, this is politically unfeasible. Any such regulation that reaches Congress will be watered down or larded with loopholes.

There may be no way to excise the incentives for sociopathy, because the incentives all favor the sociopaths' most fertile ground: the Federal Reserve's money spigot of nearly free money for the most sociopathological financiers and corporations; amoral, conscience-free greed; the worship of short-term gains, regardless of consequences, and the extreme profitability of rigged games and The Big Con PR ("we're only evil when it's profitable, which is, well, all the time".)

As long as central banks create and distribute trillions in conscience-free credit to conscience-free financiers and corporations, the incentives for sociopathy only increase, and the incentives for everyone else to opt out increase proportionately.

What happens next? The dead wood of sociopathy is ignited by a random lightning strike, and the entire financial system (and the economy it feeds) burns to the ground in an uncontrollable conflagration of blowback, consequence and karma.

*  *  *

My recent books:

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

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

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

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

*  *  *

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

Tyler Durden Tue, 11/12/2019 - 08:30
Published:11/12/2019 7:46:49 AM
[Markets] Remember Why We Celebrate Veterans Day Remember Why We Celebrate Veterans Day

Authored by Michael Graham via,

101 years ago, a man who started out as a conscientious objector to World War I became that conflict’s greatest American hero when he and just a few other soldiers captured 132 German prisoners.

Sgt. Alvin York knew why he fought, and it wasn’t to make money. When Madison Avenue and Hollywood came looking for endorsements, he refused and said, “This uniform ain’t for sale.”

A generation later, when America appeared to be headed toward a second World War, many asked why we should bother, when the so-called “War to End All Wars” didn’t do any such thing. York was there to explain why America must fight once again.

“Liberty and freedom and democracy are so very precious that you do not fight to win them once and then stop,” York said.

“Liberty and freedom and democracy are prizes awarded only to those peoples who fight to win them and then keep fighting eternally to hold them.”

One man who listened and understood was James Battcock, a young Navy seaman. He left his family in 1944 aboard the USS Montpelier to face Japan near the end of the second great war.

In a diary he kept for his family, he wrote about the suicide planes that attacked his ship as they sailed past Pearl Harbor toward the Japanese coast.

“Four suicide planes dove at our ship, shot three down, one explode[d] 25 yds from port beam,” he wrote in 1944. The next year he added, “Still at Okinawa… suicide planes in area.”

And in a letter to his 5-year-old son that he wasn’t sure would ever be seen, he explained why he would leave his wife and two children to sail one third of the way around the world:

“I enlisted because to my way of thinking, when my country is in danger, I think it is my duty to help her all I can, and I want you to be proud of me, as I was of my father,” Battcock wrote.

“I want you to know that wherever I go I will try my best, and if it is God’s will that I should be taken from my little family, then I will die happy fighting for my country, as I would want my son to do if ever our country is in danger.”

Alvin York’s name is in all the history books, and in all likelihood you never heard of James Battcock. But they are just two of 41 million ordinary Americans who have worn the uniform since the first shots of the Revolution were fired at Lexington.

It is warriors like these who we honor on Veterans Day: York, Battcock and the millions just like them who came before — and after. We celebrate those men and women because they see more clearly than most that our ability to enjoy liberty and freedom is contingent upon our willingness to fight for it.

And we praise them for stepping in and preserving this nation for our families, just as Battcock did so many years ago for his little son.

At the end of the Korean War, President Eisenhower met with a few dozen wounded men and said their nation needed to see them in uniform, as a reminder of why we’re privileged to live our extraordinary lives in America.

He told them they can never put their uniforms away, and that they live to remind their fellow citizens why they sleep soundly at night.

Today, this nation sees its veterans, and honors them — and remains in awe of those who love America so much that they would risk everything to protect it.

Tyler Durden Mon, 11/11/2019 - 09:50
Published:11/11/2019 9:10:56 AM
[Markets] Who Wants To Destroy The World? Who Wants To Destroy The World?

Authored by Phil Torres via OneZero,

For most of human history, the question of who would want to destroy the world didn’t much matter. The reason, of course, was that that no individual or group of humans could demolish civilization or cause our extinction. Our ancestors just didn’t have the tools: no amount of spears, arrows, swords, or catapults would have enabled them — even the most bloodthirsty and misanthropic — to have inflicted harm in every corner of the world.

This changed with the invention of the atomic bomb. While scholars often identify 1945 as the year that human self-annihilation became possible, a more accurate date is 1948 or 1949, since this is when the United States stockpiled enough nuclear weapons (about 100) to have initiated a hemisphere-spanning “nuclear winter.” (See this work in progress for why I’m focusing on 100 nuclear weapons as a threshold.) A nuclear winter occurs when soot from burning cities significantly reduces the amount of sunlight reaching Earth’s surface for a period of months or years, thereby causing temperatures to plummet and famines to ensue. Quite unsettlingly, it wasn’t until the 1980s — decades after we had enough nukes to blot out the sun — that the nuclear winter phenomenon was first identified, although lingering questions remain even today.

The U.S. monopoly on world-ending power didn’t last long: by 1953, the Soviet Union had likewise expanded to 100 weapons. Now there were two nations on Earth that could obliterate civilization. But again, this didn’t last very long. The United Kingdom joined the club of potential world-enders around 1962, China around 1971, and France around 1973, with Israel, Pakistan, and India becoming members of this club in the 2010s. Hence, in less than a century, the world went from containing zero actors capable of unilaterally destroying the world to eight.

This is a scary situation. Unfortunately, it’s getting worse — much worse. The reason is that states are no longer the only players in the game. Thanks to new technologies, nonstate actors such as terrorist groups and lone wolves are getting in on the action, too, and they might be a lot more willing than national governments to push the proverbial doomsday button.

My own research suggests that the percentage of people who would push a doomsday button, if it were placed within finger’s reach, is fairly small, but the absolute number is unacceptably high. Even a quick Google search seems to affirm this. Consider the following answers, taken from different online sources, to the question of whether one would destroy the world if one could (quoting typos and all):

“Yes. It is obvious that we gain nothing from living and there is a huge amount of human suffering that I find quite unjustifiable. The complete annihilation of the human race would be the greatest act of compassion ever.”

“Yes, we suck as a human race.”

“Yes. Because you all are assholes. And this is not a joke I would love to push something that ends humanity. I always thought about it and now there is the question about that topic and I am happy to say I want you all dead everyone single one of you fuckers. Please give me the chance to wipe out humanity.”

“My view is that Mankind is a plague… I vote to destroy mankind and let nature start over.”

“The human animal is the only evil animal in the animal kingdom. We destroy everything… I email the president weekly and beg him to push the button and stop the madness already.”

“In the short time we’ve been on this planet, humans have already destroyed so much. We destroy ecosystems, and kill off entire species of animals… The world would be better off without humans as a whole.”

Of course, saying something definitely isn’t the same as doing it. Even so, can we be fully certain that not a single person in the world would attempt to follow through on his or her annihilatory fantasies? One way to approach this question is to look for historical examples of groups or people who both expressed a desire to kill everyone and committed some terrible act or acts of violence. The combination of these two phenomena implies that such people would be willing to act on their omnicidal (meaning killing everyone) impulses and willingly, perhaps even eagerly, push a doomsday button. So are there such examples?

Unfortunately, yes. Lots of them. And they seem to fall into a handful of basic categories.

Consider the disturbing case of Eric Harris, the psychopathic mastermind behind the 1999 Columbine High School massacre. His journal is full of all sorts of genuinely horrifying, ghoulish fantasies. On several occasions, he explicitly mentions his burning desire to extinguish humanity. At one point. he writes: “If you recall your history the Nazis came up with a ‘final solution’ to the Jewish problem. Kill them all. Well, in case you haven’t figured it out yet, I say ‘KILL MANKIND’ no one should survive.”

Elsewhere, Harris mused, “I think I would want us to go extinct,” to which he added, “I have a goal to destroy as much as possible… I want to burn the world” and “I just wish I could actually DO this instead of just DREAM about it all.”

When Harris and Dylan Klebold, his partner in crime, perpetrated their massacre in Columbine, they were equipped with garden-variety weapons. Dangerous to be sure, but hardly capable of “burning the world.” Can there be any doubt, though, that if Harris — who was relatively intelligent and liked math and science — had had access to some of the advanced technologies of tomorrow, he would have, when committing suicide, tried to go out with a much bigger bang?

The Columbine massacre had a huge influence on later rampage shooters, some of whom also dreamt of omnicide. For example, in 2007, an 18-year-old Finnish student named Pekka-Eric Auvinen shot several people at his school, which he also tried to burn down. Like Harris, he wrote about “a final solution” as “the death of the entire human race,” and described his massacre as “an operation against humanity with the purpose of killing as many people as possible.” Yet another rampage shooter from Finland, Matti Saari, wrote in his suicide note, “I hate the human race, I hate mankind, I hate the whole world, and I want to kill as many people as possible.”

Then, of course, there was Elliot Rodger, the incel psychopath who killed seven people and injured 14 in the 2014 Isla Vista killings. In a video shot one day before the rampage, he said in no uncertain terms: “I hate all of you. Humanity is a disgusting, wretched, depraved species. If I had it in my power, I would stop at nothing to reduce every single one of you to mountains of skulls and rivers of blood. And rightfully so. You deserve to be annihilated. And I’ll give that to you.”

School shooters and other lone wolves have idiosyncratic motives, such as a misanthropic hatred of humanity, or a desire to retaliate against women for perceived romantic and sexual slights. Together, though, they comprise a relatively cohesive category of omnicidal actors, and a relatively unpredictable one at that.

Another type of omnicidal actor comes in the form of apocalyptic terrorists who believe that to save the world, it must first be destroyed. ISIS, arguably the largest and richest terrorist group in history, is a paradigm case. While some members of ISIS probably didn’t hold apocalyptic beliefs, the leadership most certainly did — and they made strategic decisions based on these beliefs. The man who essentially founded ISIS, Abu Musab al-Zarqawi, believed that Islam’s version of Armageddon was about to unfold around the small Syrian town of Dabiq. Hence, the name of the group’s propaganda magazine, Dabiq. After the U.S. military killed al-Zarqawi in 2006, leadership of ISIS transferred to Abu Ayyub al-Masri, a fevered apocalypticist who insisted that the Islamic end-of-days messianic figure, the “Mahdi,” was about to appear in Iraq. Like al-Zarqawi, he based his strategy on his apocalyptic belief — and it backfired. He soon met his end at the hands of Western forces.

Both of these individuals really believed that the end was nigh, and that it was their duty to use violence — catastrophic violence, to be more specific — to bring about the apocalypse. ISIS members talked about acquiring nuclear weapons, releasing deadly pathogens, and building dirty bombs. I personally haven’t spoken to a single terrorism scholar who doesn’t think that ISIS would have gleefully pushed a “destroy-the-world” button, especially if Western forces were marching toward Dabiq.

But ISIS is far from the only apocalyptic group. Famously, the doomsday cult Aum Shinrikyo attempted to trigger Armageddon by releasing sarin in the Tokyo subway in 1995. Here in the U.S., more than a dozen hate groups subscribe to Christian Identity, an apocalyptic worldview that endorses the use of catastrophic violence as a means of triggering a “race war” that will initiate the end of the world. And one of the bloodiest conflicts in human history, the Taiping Rebellion, involved an apocalyptic movement called the “Taiping Heavenly Kingdom.” This was led by a man named Hong Xiuquan, who believed that he was the brother of Jesus Christ, “commissioned by the Lord of Heaven to slay the devil-demons (Manchus) whose rule had brought ruin to China.”

A final type of omnicidal actor lingers within the outermost fringe of radical environmentalist, anarcho-primitivist, and Neo-Luddite ideologies. Ted Kaczynski, better known as the Unabomber, provides an example par excellence. Beginning in 1978, Kaczynski perpetrated numerous domestic terrorist attacks, killing three people and injuring 23 others. A former UC Berkeley mathematics professor and Harvard alumnus, Kaczynski didn’t wish for humanity to go extinct. Rather, he wanted to trigger a global revolution against industrial society, with the ultimate goal of causing its collapse. Kaczynski ultimately didn’t care whether his revolution would cause people to die, since in his utilitarian calculus the ends would justify the means. As Kaczynski wrote in 1995: “This revolution may or may not make use of violence; it may be sudden or it may be a relatively gradual process spanning a few decades. Its object will be to overthrow not governments but the economic and technological basis of the present society.”

In contrast, other actors in this category have explicitly embraced pro-extinction convictions. For example, the Gaia Liberation Front (GLF), an ecoterrorist group, holds as their mission “the total liberation of the Earth, which can be accomplished only through the extinction of the Humans as a species.” In advocating this, they argue that “if any Humans survive, they may start the whole thing over again. Our policy is to take no chances.”

How might they accomplish their omnicidal aims? GLF contends that bioengineering is “the specific technology for doing the job right of annihilating humanity — and it’s something that could be done by just one person with the necessary expertise and access to the necessary equipment.” They continue: “…genetically engineered viruses… have the advantage of attacking only the target species. To complicate the search for a cure or a vaccine, and as insurance against the possibility that some Humans might be immune to a particular virus, several different viruses could be released (with provision being made for the release of a second round after the generals and the politicians had come out of their shelters).”

This parallels an anonymous article in the Earth First! Journal, published in 1989, meaning that this idea has been around for a while: “Contributions are urgently solicited for scientific research on a species specific virus that will eliminate Homo shiticus from the planet. Only an absolutely species specific virus should be set loose. Otherwise it will be just another technological fix. Remember, Equal Rights for All Other Species.”

While the most radical fringe of the environmentalist movement has avoided the limelight in recent years, some experts, such as the terrorism scholar Frances Flannery, expect a resurgence as climate and biodiversity crises worsen. This poses an obvious danger in a world replete with bullets and bombs; but it poses an existential threat in a world of cheap and easy gene editing. Technologies such as gene drives, digital-to-biological converters, and CRISPR-Cas9 are making it increasingly feasible to synthesize designer pathogens that could be far more devastating than anything found in nature.

Are there any solutions to the problems posed by virus-toting omnicidal maniacs? One hard-to-avoid — and completely terrifying — answer is mass surveillance. This could take the form of what the philosopher Jeremy Bentham called a “panopticon,” whereby the state (perhaps run by computer programs designed specifically to govern — a form of government called “algocracy”) monitors every action of its citizens. The obvious danger is that this could collapse into tyrannical totalitarianism, which itself constitutes an existential risk.

Another possibility involves what the science fiction writer, David Brin, dubs the “transparent society.” This would make surveillance egalitarian, so to speak: everyone would be able to see what everyone else is doing all the time, thereby enabling those watched to watch the watchers. Brin doesn’t argue that this is an ideal situation, only that it’s a better situation than one in which the state has all the power. Perhaps a total loss of privacy is the cost of existential security.

Alternatively, I have previously claimed that, in order to reduce the risks posed by malicious agents like those mentioned above, society should prioritize mitigating climate change and ecological destruction. Both phenomena are threat multipliers and threat intensifiers, which means that they’ll introduce new problems while making old problems even worse. Better environmental policies would lower the threat posed by ecoterrorists, whose fundamental complaint — “Humans are stupidly destroying the biosphere” — is scientifically accurate. Such policies would also decrease the number and severity of natural disasters, which could fertilize apocalyptic fervor among religious extremists. As the terrorism scholar Mark Juergensmeyer has remarked, “radical times will breed radical religion,” a hypothesis apparently supported by the rise of ISIS during the Syrian civil war.

Moving forward, people who care about human survival need to think hard not just about the various technologies that will become available, but about the types of actors who might try to use these technologies for catastrophic ill. The future of the human race could quite literally depend on it.

Tyler Durden Sun, 11/10/2019 - 22:30
Published:11/10/2019 9:39:50 PM
[Markets] Doug Casey On What Happens When Socialists Win Elections Doug Casey On What Happens When Socialists Win Elections


International Man: Earlier this year, it became apparent a socialist would win Argentina’s presidential election.

The Argentine peso lost 30% of its value in a single day. The same day, in US dollar terms, the value of the Argentine stock market was cut in half.

Doug, you spend a lot of time in Argentina and the Southern Cone. What’s your take on the situation? Is Argentina headed for another currency collapse?

Doug Casey: Cristina Fernández de Kirchner was elected vice president and Alberto Fernández was elected president in the October 27 election. They basically destroyed the incumbent Mauricio Macri.

It’s a real pity because Macri is a decent human being whose heart was is in the right place politically and economically. But he was too timid. He did too little too late. Typical of “conservatives” everywhere, he didn’t make a moral argument to the populace. He made no effort to pull the corrupt fascist welfare state out by its roots, explaining why it’s destructive and why the state is the cause, not the cure, of the country’s problems. Instead, he just made some marginal improvements around the edges, and made things more comfortable for the Peronists now that they’re back in office.

And—since he’s associated with the free market—he actually discredited the free market.

In any event, Argentina is going back into the toilet. Who knows what kind of new stupidities, in addition to the usual old stupidities, the two Fernándezes are going to impose upon the country?

On the bright side—but only for tourists—Argentina is one of the cheapest countries in the world right now. That’s because the currency has collapsed. Good news for tourists and foreign speculators but a disaster for Argentines, most of whom have all their savings and earn their salaries in the increasingly worthless peso.

If you’re a long-term believer in Argentina or if you want to enjoy a great lifestyle, now’s the time to go shopping there. Real estate is at bargain levels again. There’s really no bid for a lot of properties. In Buenos Aires an apartment costs 5–10% of its equivalent in New York or London.

Things are definitely in crisis in Argentina. But the fact is that just about every other country in the world is heading in the wrong direction—at a faster or slower rate—certainly including the United States, Canada, and countries in western Europe. The socialists, the fascists, and the jingoists are in the ascendant all over the world.

There are many reasons for this. One is that Marxist-oriented professors have been indoctrinating the younger generation in high school and college for decades. The left has totally taken over educational systems everywhere. The average person has been inculcated with perverse and destructive ideas about economics, politics, philosophy, and ethics from roughly age 6 to age 22. It’s hard to get these things out of their heads once they’ve learned them in their youth.

Also, remember that, especially since the end of the 19th century, “democracy”—really just a polite form of mob rule—has been the world’s ruling ideology. It’s resulted in the politicization of all areas of society. When every parliament or legislature in the world meets, they believe it’s not just their right but their duty to pass new laws. And that’s idiotically applauded as a good thing by the hoi polloi. Those laws tell you what you must do and what you must not do and designate penalties if you don’t obey. And all that legislation, which accrues like barnacles on a ship’s hull, has to be paid for with taxes.

Fortunately, science and technology are still advancing at the rate of Moore’s Law. Unfortunately, the world is degenerating politically at about the same rate. Argentina is not an aberration from that point of view. It’s just a generation or so “ahead” of the United States in sliding down the slippery slope.

That said, it’s more important than ever that you have a crib in a second country, no matter where you live—because anything can happen anywhere. If you can afford it and are able to do so, you should have a backup plan someplace else in the world.

International Man: As you said, Argentina isn’t the only country headed down a path toward economic hardship. Governments around the world are printing dollars, pounds, euros, pesos, and what have you by the trillions, and the trend seems to be accelerating. How do you see this playing out in the next few years?

Doug Casey: We’re going into what I’ve styled the Greater Depression. We entered the leading edge of a gigantic financial and economic hurricane in 2007 and went through it in 2008 and 2009, and now we’re in the eye of the storm.

It’s a very big hurricane, and the storm has a very big “eye,” but we’re now approaching the trailing edge. When we go into the storm’s trailing edge, it’s going to be much longer lasting, much different, and much worse than what we experienced in 2008—if anybody remembers how scary that was.

It’s going to be accompanied by social, cultural, and probably military upsets as well. Now’s the time to prepare. It’s going to be one for the record books, and not just in the United States. It’s going to happen all over the world, because all the world’s central banks and governments think the same way. They’re all bankrupt and trying to solve the problems they’ve created by printing up more currency and passing more laws. It’s bad news.

International Man: Americans are growing increasingly sympathetic to socialist ideas and politicians that promise “free stuff.” How does this trend translate into a situation like what’s happening in Argentina?

Doug Casey: The world’s governments—prominently including the US’s—are creating massive new amounts of fiat money as we speak. So far, most of this money has gone into the financial markets, creating gigantic bubbles in stocks, bonds, and real estate. A lot of people are relying on these artificially high values. They’re going to get hurt.

Over the coming decade, governments and their central banks are going to destroy their national currencies. The average guy—if he’s able to save at all—saves in dollars, euros, or yen, etc. He’s going to be wiped out.

The rich will continue to get richer, because they stand next to the fire hose of money being created. The middle and lower classes resent the politically favoured classes getting more. The middle and bottom levels of society could see real social upset, with catastrophic political ramifications.

It’s one of the reasons the odds favor Trump losing in 2020. I say that as someone who bet that he’d win in 2016. If the economy gets ugly, you’re going to get one of these absolutely crazy socialists or welfare statists that we see lined up on the Democratic debate stage. The best case is that somebody like Bloomberg—basically kind of a mellower Trump—steps in for the Democrats.

On the off chance that Trump wins in 2020, then the storm is going to definitely break during his next administration. That guarantees that the crazy Democrats—which is to say the socialists, radical welfarites, and cultural Marxists—are going to win in the next election. The conflict in basic belief systems between the Red and Blue counties is so acrid and radical—it’s the kind atmosphere you see before a civil war.

Who knows what either the Red or Blue people will do? They’re capable of absolutely anything. None of it good. I don’t see a way out.

But let’s go back to Argentina for a minute. As I said, the US is only about a generation behind the Argentines, and the Argentine electorate has been totally corrupted. The place is a blueprint for where the United States is going.

The US’s size, accumulated capital, and the productivity of its people have insulated it from a lot of the stupid things its government and the Fed have done. But if the US destroys its currency—and it’s well on the way to doing so—it will be much worse than when the Argentines destroy their currency.

Argentines have hundreds of billions of dollars stored abroad in foreign banks. When the Argentine peso collapses, that money can be brought into Argentina to pick up the bargains and bring capital into the country to get things going again.

If the US dollar is destroyed, however, it will be completely different.

First, the dollar is the major asset of most banks all around the world. It’s actually the world’s currency. If the dollar goes, it’s going to destroy their balance sheets.

Second, people all over the world who have foreign bank accounts generally save in dollars. They’re going to be devastated.

Third, Americans don’t have a lot of money abroad to bring back into the country to get things going again. In fact, the US government has made it quite hard for the average American to diversify internationally.

Fourth, the major US export for decades hasn’t been wheat or Boeings. It’s been dollars. The foreign trade deficit of $600 billion per year has given Americans an artificially high standard of living for many years. Nice foreigners give us real goods in exchange for fiat dollars. When confidence in the dollar collapses, Americans will feel it.

So, it’s going to be extremely serious when the chickens come home to roost this time. It’s a consequence of what the Federal Reserve is doing to the dollar. They’re inflating it—but they call that “Quantitative Easing.”

The Chinese symbol for the word crisis is a combination of the symbols for danger and opportunity. I’ve been pointing out the danger part, but I also want to point out the opportunity part of the equation.

The good news is that precious metals should go on a really wild run up in price. If you own a lot of gold and silver, you should not only be insulated from many of these financial and economic problems, but you should gain in relative terms.

The cheapest part of the market right now is gold and silver mining stocks. There’s going to be a panic into these stocks; they’re the only part of the stock market that offers real upside.

It’s a good-news/bad-news type of thing. The good news being that if you position yourself now, you should be able to profit from what’s going to happen. The bad news is that in a real depression everybody loses; the winners are merely the ones who lose the least.

The important thing to remember is that most of the real wealth in the world will still exist no matter how bad the Greater Depression is, and your share of it can grow if you allocate capital properly now.

International Man: The 2020 presidential election is just around the corner. Whether Donald Trump gets reelected or a Democratic candidate wins, how do you think it will affect the overall economic situation in the US?

An avalanche of money printing to finance deficit spending seems certain no matter who wins.

Doug Casey: As I said before, if Trump is reelected because the economy holds together until November 2020—which I doubt—it’s definitely going to collapse on his next term in office.

Trump is incorrectly associated with the free market and capitalism. Trump is basically a statist who thinks the government really ought to control the economy—but in the way he thinks best. Once again capitalism—what’s left of it—will be blamed in the next crisis, and in the following election the socialists will grab the economy in a stranglehold and choke it to death.

In a way, it doesn’t matter if the socialists win this time or the next time. The trend is in motion, and a real crisis seems inevitable.

I think the United States is going to be hard to recognize in five years. That’s not even counting the fact that the US government might have a serious war with the Iranians, the Chinese, or the Russians. None of this is necessary, but it’s probable.

International Man: What can people do to protect themselves and prevent the crisis from wiping them out?

Doug Casey: Buy physical gold and silver. Speculate in mining stocks. Be aware that commodities in general— and especially agricultural commodities like corn, soybeans, cattle, hogs, coffee, orange juice—are all very, very cheap.

It’s likely that we’re going to see an explosion in some or all of these things over the next few years. Last but not least, start getting into some—or all—of the second- and third-generation cryptocurrencies. My colleague Marco Wutzer, who knows about ten times more than anyone else in the field, makes an excellent case that some of them have 1,000-to-one potential from current levels.

*  *  *

Marco just released a new exclusive video on what he thinks is the most compelling crypto play right now. Click here to watch it now.

Tyler Durden Sun, 11/10/2019 - 20:30
Published:11/10/2019 7:38:23 PM
[Markets] 'Resistance'... Are Futile 'Resistance'... Are Futile

Via Monty Pelerin's World,

The status quo is always difficult to alter. Resistance is a normal reaction to change.  The current theatrics in Washington, DC are especially revealing.

Donald Trump is many things to many people. His supporters believe him to be a savior of the American system and way of life. His opponents see him as a threat, Both views are correct. From the beginning, I viewed Mr. Trump as a wrecking ball:

… there has never been an inauguration speech like this one. Contrary to Pogo, Trump defined the enemy and it was not us. This wrecking ball clearly differentiated between the average man and the parasites who inhabit Washington.

The speech was populist all the way. It was anti-establishment all the way.  Clear demarcation lines were drawn. I sense that war was declared on Washington, DC today. There will be no compromise. Either Trump will be destroyed or he will dismantle much of the Washington establishment.

This assessment has been validated by subsequent events. The winner of this existential battle is still in doubt. That itself is rather remarkable. What appeared to be a quixotic crusade now takes on heroic aspects, at least for many outside Washington. What once seemed impossible no longer does.

Don Quixote Trump still may not be favored in his battle against Goliath but the odds have shifted. The American people have been awakened to how the elites have exploited them. Whether Trump wins this battle or not, the Deep State has lost the war. They have been exposed as ruthless, lying exploiters. Don Quixote has suddenly become Goliath.

The peasants have been enlightened. The true nature of current American government has been exposed. No amount of polished rhetoric can undo this knowledge. Attempts to do so will bring out the pitchforks.

Below Jeffrey Lord reviews Kimberly Strassel’s new bestseller Resistance (At All Costs): How Trump Haters Are Breaking AmericaThis book details the resistance against Trump. The organism we know as the Deep State is doing its best to destroy this foreign body. The State knows  its vulnerability to an awakening of the masses and its exposure. As Ms. Strassel says:

For every Resistance leader who daily makes an inflated claim about Trump’s destruction of democracy, there is a more quiet, average American who is deeply alarmed by the legitimate and lasting harm this movement is causing.

What fascinating times we live in. Donald Trump, the unlikeliest of heroes, may singlehandedly have taken down the Deep State. He exposed it. Sunlight and the American people will remedy whatever he cannot.

Here is Mr. Lord’s review of Strassel’s book:

Resistance (At All Costs): Kimberley Strassel’s Home Run - A searing profile of Trump haters and the movement that drives them.

by Jeffrey Lord

“From the FBI’s unprecedented counterintelligence investigation into the Trump campaign, to state defiance of the president’s federal immigration law, to media partisanship, to the drive-by character assassination of Trump Supreme Court nominee Brett Kavanaugh, the president’s foes have thrown aside norms, due process, and the rule of law.”

So begins the cover of Kimberley Strassel’s new bestseller, Resistance (At All Costs): How Trump Haters Are Breaking America.

Strassel, a star Wall Street Journal columnist, zeroes in on the decidedly serious problem that all this insane, foaming hatred of a duly elected president has brought to the country.

There is nothing wrong, Strassel correctly notes, with being a Trump critic. Presidents have always had critics, something that comes with the job. But the spread of a virulent Trump hatred is something quite different, and is, Strassel writes, “proving far more corrosive to our institutions and rule of law than anything of which it has accused the president.”

As she notes, the very term “the Resistance” is associated throughout history with movements designed to fight “occupying powers” as, say, the French Resistance came to life to fight the forces of the occupying Nazi Germany. And once one goes down that road, as has the Trump-hating Resistance, the Resisters “view themselves as justified in taking any action necessary to get rid of the occupier.”

Set loose the Department of Justice and the FBI to spy on a presidential campaign? No problem. Ambush a Supreme Court nominee “with uncorroborated sexual assault allegations”? No problem. Use “the impeachment process for political retribution”? No big deal.

This, says Strassel, “has been the behavior of the Resistance leaders, and it has already caused harm to vital institutions.”

Yes indeed. And none more prominent than the self-inflicted massive damage the Justice Department, the FBI, and the “mainstream media” have done to their own credibility. It is in fact alarming, as Strassel notes,

that huge swaths of the country no longer trust the Justice Department or the FBI to administer equal justice. Or that, according to a 2018 Axios poll, 72% of Americans believe that “traditional major news sources report news they know to be fake, false or purposely misleading” — including 92% of Republicans and 79% of independents.

On and on go the Resistance assaults on the very fabric of the American nation, including a demand to abolish the Electoral College, an institution that lies at the very heart of the democracy that demands all American states have an equal voice in their government.

Nowhere has this assault been more evident than in the Federal Bureau of Investigation. Strassel devotes an entire chapter to the FBI as run by the Trump-hating James Comey. The absolutely perfect title of the chapter is “J. Edgar Comey.”

In that chapter, Strassel absolutely fillets Comey and his band of Trump-hating FBI bureaucrats. She begins by reeling off the list of the disgraced:

Director Jim Comey: fired for insubordination. Deputy Director Andy McCabe: terminated for lying to investigators. Senior Counterintelligence Agent Peter Strzok: dismissed for partisan bias. General Counsel James Baker: reassigned and then out on resignation — part of a federal criminal leak investigation. These were just the highlights among a dozen senior FBI leaders who were fired or faded away. They included chief of staff James Rybicki; lawyer Lisa Page; the assistant director of the Counterintelligence Division, Bill Priestap; the head of the National Security Division, Michael Steinbach; the FBI’s top congressional liaison, Greg Brower; and the assistant director for public affairs (and 33-year FBI veteran), Michael Kortan.

The list of corrupt FBI leaders is as stunning for its length as it is for its depth. The damage they have inflicted on that venerable organization is considerable.

Strassel also delves into the shenanigans behind the Mueller report episode and the Deep State. Of the latter she opens with this serious truth about the performance of various actors in the Trump-hating Resistance that is the Washington bureaucracy:

If hell hath no fury like a woman scorned, Washington has no fury like a civil servant defied. Trump has no need to travel to a Resistance rally to meet his opponents; they work for him.

Bingo. And this will be seen in crystal-clear fashion next week when Congressman Adam Schiff finally gets around to opening his impeachment hearings and using career civil servants who are deeply impressed with the ideas that they, and not the elected president of the United States, run American foreign policy.

Strassel ends with this wisdom:

For every Resistance leader who daily makes an inflated claim about Trump’s destruction of democracy, there is a more quiet, average American who is deeply alarmed by the legitimate and lasting harm this movement is causing.

Exactly right. When I hit the road for speeches I am greeted repeatedly by audiences of Americans absolutely furious at what they are seeing unfold. And make no mistake, they see the attacks on President Trump by the Resistance as thinly disguised attacks on … themselves.

Eventually, the Trump era will pass, as history rolls on. But what is immeasurably important in this era is for the star journalists of the day to write the books that will provide future leaders with an up-close and unerring documentation of the biggest political scandal in American history and the Resistance movement that was its driving force.

Kimberley Strassel’s Resistance (At All Costs): How Trump Haters Are Breaking America is indeed one of those books — a home run and a decidedly instructive one.

Tyler Durden Sun, 11/10/2019 - 13:30
Published:11/10/2019 12:35:55 PM
[Entertainment] Memoir by Mariah Carey to be published thanks to Andy Cohen A memoir by Mariah Carey is on the list of titles from Andy Cohen Books Published:11/7/2019 11:48:37 AM
[] SAD! Mark Halperin gets DRAGGED after sales figures of his 'How to Beat Trump' book released Wow, this is pretty sad given how much hype it got and the number of top Dems involved in its publication:

You mean to tell us that Anthony Scaramucci can't sell books?

Maybe Mika and Joe Scarborough bought them all:

And here endeth the "Halperin rehab tour":

More commentary:

Published:11/7/2019 9:48:07 AM

[Markets] Corporate Profits Are Worse Than You Think Corporate Profits Are Worse Than You Think

Authored by Lance Roberts via,

Corporate profits are worse than you think.

In a recent post, I discussed the deviation of the stock market from corporate profitability. To wit:

“If the economy is slowing down, revenue and corporate profit growth will decline also. However, it is this point which the ‘bulls’ should be paying attention to. Many are dismissing currently high valuations under the guise of ‘low interest rates,’ however, the one thing you should not dismiss, and cannot make an excuse for, is the massive deviation between the market and corporate profits after tax. The only other time in history the difference was this great was in 1999.”

It isn’t just the deviation of asset prices from corporate profitability which is skewed, but also reported earnings per share. As I have discussed previously, the operating and reported earnings per share are heavily manipulated by accounting gimmicks, share buybacks, and cost suppression. To wit:

“The tricks are well-known: A difficult quarter can be made easier by releasing reserves set aside for a rainy day or recognizing revenues before sales are made, while a good quarter is often the time to hide a big ‘restructuring charge’ that would otherwise stand out like a sore thumb.

What is more surprising though is CFOs’ belief that these practices leave a significant mark on companies’ reported profits and losses. When asked about the magnitude of the earnings misrepresentation, the study’s respondents said it was around 10% of earnings per share.

This is also why EBITDA has become an ineffective measure of financial strength. As I noted in “What To Watch For This Earnings Season:”

“It should come as no surprise that companies manipulate bottom line earnings to win the quarterly ‘beat the estimate’ game. By utilizing ‘cookie-jar’ reserves, heavy use of accruals, and other accounting instruments they can mold earnings to expectations.

‘The tricks are well-known: A difficult quarter can be made easier by releasing reserves set aside for a rainy day or recognizing revenues before sales are made, while a good quarter is often the time to hide a big ‘restructuring charge’ that would otherwise stand out like a sore thumb.

What is more surprising though is CFOs’ belief that these practices leave a significant mark on companies’ reported profits and losses. When asked about the magnitude of the earnings misrepresentation, the study’s respondents said it was around 10% of earnings per share.’

“As shown in the table, it is not surprising to see that 93% of the respondents pointed to ‘influence on stock price’ and ‘outside pressure’ as the reason for manipulating earnings figures. For fundamental investors this manipulation of earnings skews valuation analysis particularly with respect to P/E’s, EV/EBITDA, PEG, etc.”

Ramy Elitzur, via The Account Art Of War, expounded on the problems of using EBITDA.

“Being a CPA and having an MBA, in my arrogance I thought that I am well beyond such materials. I stood corrected, whatever I thought I knew about accounting was turned on its head. One of the things that I thought that I knew well was the importance of income-based metrics such as EBITDA and that cash flow information is not as important. It turned out that common garden variety metrics, such as EBITDA, could be hazardous to your health.”

The article is worth reading, and chocked full of good information; however, here are four-crucial points:

  1. EBITDA is not a good surrogate for cash flow analysis because it assumes that all revenues are collected immediately and all expenses are paid immediately, leading, as I illustrated above, to a false sense of liquidity.

  2. Superficial common garden-variety accounting ratios will fail to detect signs of liquidity problems.

  3. Direct cash flow statements provide a much deeper insight than the indirect cash flow statements as to what happened in operating cash flows. Note that the vast majority (well over 90%) of public companies use the indirect format.

  4. EBITDA just like net income is very sensitive to accounting manipulations.

The last point is the most critical. As discussed above, the tricks to manipulate earnings are well-known which inflates the results to a significant degree making an investment appear “cheaper” than it actually is.

As Charlie Munger once said:

“I think that every time you see the word EBITDA, you should substitute the word ‘bullshit’ earnings.”

What About Those Corporate Profits?

Currently, the deviation between reported earnings and corporate profits is one of the largest on record. This is an anomaly that should, in reality, not exist.

However, it is worse than it appears.

There is an interesting company included in the calculation of corporate profits which is not widely recognized in most analysis. If you are astute follower of our blog, you may recognize this particular company by the size of their balance sheet as shown below.

Yes, you guessed it (and it’s in the title). It’s the Federal Reserve.

When the Treasury Department pays interest one the debt, an expense to the U.S. Government, the Federal Reserve takes that in as “profits” which is reported on their balance sheet. Then, at the end of the year, the Fed remits a portion of the “revenue” back to the Government.

These profits,” which are generated by the Federal Reserve’s balance sheet, are included in the corporate profits discussed here. As shown below, actual corporate profitability is weaker if you extract the Fed’s profits from the analysis.

To put this into perspective, the Federal Reserve generates more profit in the last quarter than Apple, Microsoft, JP Morgan, Facebook, Google, and Intel COMBINED.

It’s quite amazing.

Nonetheless, since the Fed’s balance sheet is part of the corporate profit calculation, we must include them in our analysis. While the media is focused on record operating profits, reported corporate profits are roughly at the same level as their were in 2011. Yet, the market has been making consistent new highs during that same period.

The detachment of the stock market from underlying profitability guarantees poor future outcomes for investors. But, as has always been the case, the markets can certainly seem to “remain irrational longer than logic would predict,” but it never lasts indefinitely.

Profit margins are probably the most mean-reverting series in finance, and if profit margins do not mean-revert, then something has gone badly wrong with capitalism. If high profits do not attract competition, there is something wrong with the system, and it is not functioning properly.” – Jeremy Grantham

As shown, when we look at inflation-adjusted profit margins as a percentage of inflation-adjusted GDP we see a clear process of mean-reverting activity over time. Of course, those mean reverting events are always coupled with recessions, crisis, or bear markets.

More importantly, corporate profit margins have physical constraints. Out of each dollar of revenue created there are costs such as infrastructure, R&D, wages, etc. Currently, one of the biggest beneficiaries to expanding profit margins has been the suppression of employment, wage growth, and artificially suppressed interest rates which have significantly lowered borrowing costs. Should either of the issues change in the future, the impact to profit margins will likely be significant.

The chart below shows the ratio overlaid against the S&P 500 index.

I have highlighted peaks in the profits-to-GDP ratio with the green vertical bars. As you can see, peaks, and subsequent reversions, in the ratio have been a leading indicator of more severe corrections in the stock market over time. This should not be surprising as asset prices should eventually reflect the underlying reality of corporate profitability.

It is often suggested that, as mentioned above, low interest rates, accounting rule changes, and debt-funded buybacks have changed the game. While that statement is true, it is worth noting that each of those supports are artificial and finite in nature.

Another way to look at the issue of profits as it relates to the market is shown below. When we measure the cumulative change in the S&P 500 index as compared to the level of profits, we find again that when investors pay more than $1 for a $1 worth of profits there is an eventual mean reversion.

The correlation is clearer when looking at the market versus the ratio of corporate profits to GDP. (Again, since corporate profits are ultimately a function of economic growth, the correlation is not unexpected.) 

It seems to be a simple formula for investors that as long as the Fed remains active in supporting asset prices, the deviation between fundamentals and fantasy doesn’t matter. 

It is hard to argue that point. However, with investors paying more today than at any point in history for each $1 of profit, the next mean reversion will be a humbling event.

But, that is just history repeating itself.

Tyler Durden Thu, 11/07/2019 - 08:10
Published:11/7/2019 7:16:30 AM
[Markets] Russia, China, & The European Peninsula Russia, China, & The European Peninsula

Authored by Godfree Roberts via The Saker blog,

Eurasia has most of the world’s wealth, resources, and population — yet there is very low economic connectivity. A Sino-Russian partnership can collectively create a gravitational pull that allows them to capture the geoeconomic levers of power by creating an alternative to the Western-centric model. This entails developing new global value chains that captures the high-value activities in strategic industries and energy markets, developing new transportation corridors through Eurasia and the Arctic, and constructing new financial instruments such as development banks, trade/reserve currencies, technical standards, and trade regimes. Russia’s comparative advantage derives from its geographical expanse by developing an East-West corridor connecting Northeast Asia with Europe, and a North-South Corridor that links India, Iran and Russia. Moscow sees itself as a stabilising factor in Eurasia by bringing together the entire continent with economic connectivity to ensure that it becomes multipolar and no one state or region can dominate.

The EU stands to lose much from Russia’s Greater Eurasia ambitions. Russia’s original Greater Europe project, which they EU rejected, would have endowed the EU with a powerful ally to collectively project influence deep into the Eurasian continent. In contrast, Russia’s new Greater Eurasia initiative will marginalise the EU’s role across Eurasia as socio-economic and political decisions will be made by BRICS, the Eurasian Economic Union, the Shanghai Cooperation Organisation, and the Belt and Road Initiative. The EU is faced with a dilemma as it has strong economic incentives to cooperate with the development taking place in Greater Eurasia, yet this would contribute to the shift away from the Western-centric geoeconomic infrastructure. Glenn Diesen. The Global Resurgence of Economic Nationalism.

Halford Mackinder said we don’t think of Asia and Europe as a single continent because sailors couldn’t voyage around it. Today the Northeast Passage, NEP, along Russia’s northern coast, links the Pacific and Atlantic coasts while a network of pipelines and air, rail, road and fiber routes are knitting Mackinder’s World Island into ‘Eurasia’ despite Kissinger’s warning, “Domination by a single power of either of Eurasia’s two principal spheres–Europe or Asia–remains a good definition of strategic danger for America. For such a grouping would have the capacity to outstrip America economically and, in the end, militarily.”

As the West pursues an increasingly dystopian future, Russia and China are knitting Mackinder’s World Island into a vast, increasingly prosperous community. Their vision is so seductive, their alliance so strong, their weapons so advanced and their pockets so deep that their momentum is almost unstoppable. Russia’s leaders–Putin, Lavrov, Nabiullina, Siluanov and Shoygu–is the best in the country’s history and, as President Trump observed, China’s matches it, “People say you don’t like China. No, I love them. But their leaders are much smarter than our leaders. It’s like taking the New England Patriots and Tom Brady and having them play your high school football team.” President Xi has visited Moscow more than any other capital city  and as of August 2019, he and his Russian counterpart Vladimir Putin had met thirty times and Xi gave Putin China’s first-ever friendship medal, calling him “my best, most intimate friend.” Here are Eurasia’s  current trade, security, and cooperation blocs. After the June, 2019 Conference on Interaction and Confidence-Building Measures in Asia (CICA) in Dushanbe, Tajikistan, Putin stressed that all of them should be integrated.

*  *  *

Colonial nations lost their political and economic freedom because imperial centers of capital needed to control resources crucial for their survival, wealth, and power. This is the real meaning of the terms ‘national security’ and ‘national interest.’ Powerful nations’ ‘national security’  is the control of an economic empire of subject states and the strategies through which this is carried out are ‘national security secrets.’ They practice the antithesis of what they preach. Their trumpeting of peace, freedom, justice, rights, democracy, and majority rule disguises those strategies for controlling other people and their resources be kept secret. The most pernicious is that multi-party democracy and a free press and must precede successful development. In fact, such a combination ends all hope of development. No nation has ever developed under multiparty democracy nor, as Lee Kwan Yew observed, with a free press,

The Philippines press enjoys all the freedoms of the US system but fails the people: a wildly partisan press helped Philippines politicians flood the marketplace of ideas with junk and confuse and befuddle the people so that they could not see what their vital interests were in a developing country. And, because vital issues like economic growth and equitable distribution were seldom discussed, they were never tackled and the democratic system malfunctioned. Look at Taiwan and South Korea: their free press runs rampant and corruption runs riot. The critic itself is corrupt yet the theory is, if you have a free press, corruption disappears. Now I’m telling you, that’s not true. Freedom of the press, freedom of news critics, must be subordinated to the overriding needs of the integrity of Singapore and to the primacy of purpose of an elected government.

Russia and China offer an alternative to the imperialist model: security without coercion, aid without conditions and, instead of the WTO’s agreements that prevent sustainable development, trade and development pacts to promote it.

The blocs in play are the European Union; The Eurasian Economic Union; The Shanghai Cooperative Organization; The Association of Southeast Asian Nations; The Regional Comprehensive Economic Partnership; The Belt and Road Initiative. Note that all but one of these are Russo-Chinese. Let’s look at them in more detail.

The European Union, occupying Eurasia’s Western peninsula, is tired of the status quo. President Macron said, “We are undoubtedly experiencing the end of Western hegemony over the world…Things change, and they have been deeply shaken by the mistakes of Westerners in certain crises, by the choices that have been made by Americans for several years..And then there is the emergence of new powers whose impact we have probably underestimated for a long time. China is at the forefront, but also the Russian strategy, which has, it must be said, been pursued more successfully in recent years…They think about our planet with a true logic, a true philosophy, an imagination that we’ve lost a little bit.” [Saker’s Translation]. Mark Carney, Governor of the Bank of England added, “The world’s reliance on the US dollar won’t hold’ and needs to be replaced by a new international monetary and financial system… It is worth considering how an SHC [synthetic hegemonic currency] in the IMF could support better global outcomes.”6 Germany is completing Nord Stream II and installing Huawei despite US threats, and Hungary, Greece, and Italy are turning east. One more downturn in the US economy (where manufacturing is already in recession) and the rest of the EU will follow. Turkey’s President Erdogan, on NATO’s Eastern flank, said he bought Russia’s S-400 so Turkey could safely withdraw from NATO: his country is already a dialog partner in the world’s largest security association, the SCO.

The Shanghai Cooperative Organization, SCO.   (Russia, Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, India, China, and Pakistan; with Afghanistan, Iran, Mongolia and Belarus as observers and Armenia, Azerbaijan, Cambodia, Nepal, Sri Lanka and Turkey as dialog partners).

The SCO is the world’s largest security organization and counts four nuclear powers among its members. Its objectives are to (i) strengthen relations among member states; (ii) promote cooperation in political affairs, economics and trade, scientific-technical, cultural, and educational spheres and in energy, transportation, tourism, and environmental protection; (iv) safeguard regional peace, security, and stability; and (v) create a democratic, equitable international political and economic order. SCO members have completed an intergovernmental agreement facilitating international road transport and are finalizing one on rail transport. The Bishkek Declaration, adopted by SCO members, emphasizes the security guarantees of the Central Asian Nuclear-Weapons-Free Zone Treaty, the ‘unacceptability of attempts to ensure one country’s security at the expense of other countries’ security,’ and condemns ‘the unilateral and unlimited buildup of missile defense systems by certain countries or groups of states.’ Iranian President Hassan Rouhani, speaking to Presidents Putin, Xi, Modi and Imran Khan, blasted the US as ‘a serious risk to stability in the region and the world” and offered preferential treatment for all fellow SCO nations, companies, and entrepreneurs to invest in Iran’s market. Xi responded that Beijing will keep developing ties with Tehran ‘no matter how the situation changes.’

ASEAN. Established in 1967, the Association of Southeast Asian Nations–Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam–agreed  to accelerate their region’s economic growth, social progress and cultural development through joint endeavors in the spirit of equality and partnership in order to strengthen the foundation for a prosperous and peaceful community and to promote regional peace and stability through abiding respect for justice and the rule of law in the relationship among countries in the region and adherence to the principles of the United Nations Charter. Russia and China are strategic ASEAN partners but, though ASEAN had a much longer dialog partnerships with the Western countries like America and the EU, none of them proposed a free trade agreement for ASEAN. China did so in 1988 and then concluded the ASEAN-China FTA in record time with the result that total trade between ASEAN and China, $8 billion in 1991, grew to $600 billion in 2018 with a goal of $1 trillion by 2024.

The Regional Comprehensive Economic Partnership, (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam, China, Japan, India, South Korea, Australia and New Zealand). The world’s largest trade bloc, the RCEP accounts for half the world’s economy and, in contrast to the WTO, is biased in favor of developing nations and excludes investor-state dispute settlement (ISDS) mechanisms that advantage private corporations over states.

The Belt and Road InitiativeScheduled to launch on June 1, 2021, the BRI integrates four billion people in one-hundred thirty countries across Eurasia, Africa, Latin America and the South Pacific. BRI focuses on policy coordination, infrastructure connectivity, unimpeded trade, financial integration and people-to-people ties. It is building power plants in Pakistan, train lines in Hungary and ports from Africa to Greece, replacing Western institutions, refashioning the global economic order, forging new ties, creating new markets, deepening economic connections and strengthening diplomatic bonds. Iran is a key BRI node and Tehran sees it as the way to full integration into the Eurasian economic ecosystem. Cargo transiting from all over India via the International North-South Transport Corridor, INSTC, to the Iranian port of Bandar Abbas reduces shipping costs to Europe by forty percent. The INSTC will soon merge with BRI’s global transport network.

The BRI’s Eurasian Land Bridge exemplifies its cooperative model. Added value production–like assembling component parts from different origins–can be conducted tax free in its border Free Trade Zones, where wages are one-fifth of China’s. This allows for the addition of lower cost labor, depending upon the location, to be factored into the overall production cost rather than being exposed to one salary band in just one country. Goods entering these FTZs are considered to be outside customs borders, so attract no customs duty or VAT, and companies operating within them are exempt from all taxes. The nodes: Huoergousi Export Processing Zone (China-Kazakhstan Border); Khorgos Eastern Gate Special Economic Zone (Kazakhstan); Aktau Special Economic Zone (Kazakhstan); Alat Free Trade Zone (Azerbaijan); Poti Free Industrial Zone (Georgia); Hualing-Kutaisi Free Industrial Zone (Georgia). Turkey’s East Anatolia Free Trade Zone is the most interesting, since Turkey’s Custom Union with the EU admits Turkish origin goods free of tax. Over 6,300 trains made the journey last year, one every ninety minutes. Trans-Eurasia transit time has fallen from three weeks to two, and should be ten days by 2024. Ultimately, Russia aims to connect China’s northern provinces with Eurasia via the

The Trans-Siberian and the Chinese Eastern Railway–with Chita in China and Khabarovsk in Russia, are already totally interconnected. Across the spectrum, Moscow aims at maximizing return on the crown jewels of Russia’s Far East; agriculture, water resources, minerals, lumber, oil and gas. Construction of liquefied natural gas (LNG) plants in Yamal vastly benefits China, Japan and South Korea. The same applies to gateway Vladivostok, Eurasia’s entry point for both South Korea and Japan, as well as Russia’s entry point to Northeast Asia. Kazakhstan shows how Greater Eurasia and BRI are complementary: Astana is a member of both the BRI and the EAEU.


The Polar Silk Road sea route is five-thousand miles shorter than the Suez route that runs mostly in Russia’s coastal waters. In 2010 the first cargo ship sailed the entire route without icebreaker assistance and in 2017 the Christophe de Margerie became the first ever ice-breaking LNG carrier to transport LNG from the Yamal peninsula through the Bering Strait and south to Japan and China. Russia’s Sovcomflot and Novatek signed an agreement with China’s Cosco Shipping and the Silk Road Fund to establish a Maritime Arctic Transport joint venture to manage an ice-breaking tanker fleet in the transportation of LNG for current and planned Novatek projects including Yamal LNG, Arctic LNG 2 and others.

Pipelineistan. The IEA calculates that oil will remain the world’s dominant source of energy in 2040, accounting for one-fourth of global energy consumption. Russia accounts for fifteen percent of the world’s energy reserves and the Persian Gulf region for 65%. Russian and Chinese-built pipelines are distributing this energy wealth across the continent resurrecting the South Stream gas pipeline to supply Europe as an extension of TurkStream after the Trump administration also furiously opposed the Nord Stream 2. Russian gas will start flowing to Turkey via TurkStream this year and Russia and Bulgaria have begun work on the Balkan Stream Pipeline to carry gas to the southern EU.

The Global Electric Interconnect. Beijing launched GEIDCO in 2016, an ultra-high voltage grid that will transmit clean energy around the globe continually, following the sun. GEIDCO has seven regional offices, forty global offices, six-hundred regional and national members and has invested $1.6 trillion in eighty generation and transmission projects across Eurasia, Latin America, Africa, Europe and North America.

The Digital Silk Road. The DSR is strengthening internet infrastructure, deepening space cooperation, developing common technology standards, and improving the efficiency of policing systems among Belt and Road countries. It gathers space-based remote sensing data for multiple projects along the BRI and China is promoting BeiDou-2, its global satellite navigation system as an alternative to America’s GPS. Pakistan, Laos, Brunei, and Thailand have already adopted BeiDou. Construction has begun on the Pakistan East Africa Cable Express, connecting Pakistan to Kenya and Djibouti. In 2012, under one percent of Myanmar’s population had broadband access but the country expects to launch 5G broadband service by 2025, leapfrogging even Singapore.

Russia and China’s Electronic Funds Silk Road will Replace the US-dominated SWIFT network.

The Silk Road International Bank AIIB guarantees a trillion dollars annually in long-term, low interest loans for regional infrastructure, poverty reduction, growth and climate change mitigation and allows Eurasia’s four billion savers to mobilize local savings that previously had few safe or creative outlets. Nothing could be more sensible for the new Pipelineistan deal than to have it settled in yuan. Beijing would pay Gazprom in that currency (convertible into rubles); Gazprom would accumulate the yuan; and Russia would then buy myriad made-in-China goods and services in yuan convertible into rubles. The merger of Russia’s Mir payment system and China’s Union Pay appears inevitable because their bilateral trade is growing by an astonishing half a billion dollars a month and Beijing’s fully convertible digital yuan may debut as soon as this year, adding to the fun.

Invulnerability to attack. In the past eighteen months, Russia and China have demonstrated their ability to defend themselves against any attack and, in turn, to destroy every city in the United States inside forty-five minutes. They now operate from a position of strength, particularly in Eurasia.


According to Chinese philosopher Xunzi, there were three types of leadership: humane authority, hegemony and tyranny. Humane authority begins by creating a desirable model at home that inspires people abroad. Xunzi, proposed that, though hegemons know how to win wars, “The ruler who makes his own state act correctly will attain international primacy.” The domestic determines the international and, since humane authority based on morality rather than power, is superior to hegemony it is more important to win over people than territory. States wishing to exercise humane authority must be the first to respect the norms they advocate and leaders of high ethical reputation and great administrative ability will attract other states. “To be compassionate in great matters and overlook the small makes one fit to become lord of the covenants. Loving friends, being friendly with the great, rewarding your allies and punishing those who oppose you, the lord of the covenants has a definite duty and his moral standing should match it.” Presiding over the meetings of other states grants international recognition of humane authority. Two centuries later, Confucius summarized Xunzi thus, “Moral superiors and inferiors relate to each other like wind and grass: grass must bend when the wind blows over it”.

A warming, moral wind is blowing across Eurasia and the pieces are coming together.

Tyler Durden Thu, 11/07/2019 - 03:30
Published:11/7/2019 2:48:47 AM
[Markets] 45 Population-Control Quotes That Expose The Elites' Plan To Cut The Number Of People On The Planet 45 Population-Control Quotes That Expose The Elites' Plan To Cut The Number Of People On The Planet

Authored by Michael Snyder via,

At one time, the elite at least attempted to conceal their boundless enthusiasm for population control from the general public, but now they aren’t even trying to hide it anymore. On Tuesday, an alarming new study that advocates global population control as one of the solutions to the “climate emergency” that we are facing was published in the journal BioScience. This document has already been signed by 11,258 scientists from 153 different countries, and it openly calls for a reduction in the human population of our planet. This has always been the endgame for the climate change cult, but now a big push is being made to make the public believe that there is a “scientific consensus” that this is necessary.

You can find a summary of the report here, and I would very much encourage you to read it, because it is essentially a blueprint for where the elite intend to take humanity in the years ahead.

But in order to achieve their goals, first they are going to have to convince us that planetary disaster is imminent, and in this study the authors boldly tell us “that planet Earth is facing a climate emergency”

Scientists have a moral obligation to clearly warn humanity of any catastrophic threat and to “tell it like it is.” On the basis of this obligation and the graphical indicators presented below, we declare, with more than 11,000 scientist signatories from around the world, clearly and unequivocally that planet Earth is facing a climate emergency.

Sounds pretty scary, right?

So what solutions are they proposing?

Well, the study breaks down the necessary solutions into six basic groupings

The letter focuses on six key objectives: replacing fossil fuels; cutting pollutants like methane and soot; restoring and protecting ecosystems; eating less meat; converting the economy to one that is carbon-free and stabilising population growth.

If that sounds a lot like “the Green New Deal”, that is because it is a lot like “the Green New Deal”.

It is the sixth “objective” that concerns me the most. Because the truth is that they don’t want to just “stabilize” the global population.

According to the study, the population of the Earth really needs to be “gradually reduced”…

Still increasing by roughly 80 million people per year, or more than 200,000 per day (figure 1a–b), the world population must be stabilized—and, ideally, gradually reduced—within a framework that ensures social integrity. There are proven and effective policies that strengthen human rights while lowering fertility rates and lessening the impacts of population growth on GHG emissions and biodiversity loss. These policies make family-planning services available to all people, remove barriers to their access and achieve full gender equity, including primary and secondary education as a global norm for all, especially girls and young women (Bongaarts and O’Neill 2018).

But if humans are the primary driver of climate change, and if we only have about 12 years before we reach the point of no return as Alexandria Ocasio-Cortez has suggested, will a “gradual” reduction of the human population really be enough to satisfy the climate change zealots?

For true believers in the cause, there would be no faster way of turning this crisis around than to radically reduce the population of the planet. According to them, every one of us has “a carbon footprint”, and as the population grows the climate change crisis only gets worse. So a logical extension of this thinking would be that anyone that can find a way to significantly reduce the global population would literally be “saving the planet”. To you and I, the idea of millions or billions of people dying is absolutely horrific, but for those that have fully embraced the climate change narrative such an outcome would be extremely desirable.

And of course population control has been an obsession among the global elite for a very long time. Way before “global warming” and “climate change” were popularized, those at the top end of the social pyramid have been dreaming of dramatically culling the herd.

To demonstrate this, I would like to share with you 45 quotes that prove the elite really do want to dramatically reduce the number of people on the planet…

1. Charles Darwin (his thinking is at the foundation of so many of our scientific theories today): “At some future period, not very distant as measured by centuries, the civilised races of man will almost certainly exterminate and replace throughout the world the savage races. At the same time the anthropomorphous apes, as Professor Schaaffhausen has remarked, will no doubt be exterminated. The break will then be rendered wider, for it will intervene between man in a more civilised state as we may hope, than the Caucasian and some ape as low as a baboon, instead of as at present between the negro or Australian and the gorilla.”

2. Bill Gates: “The problem is that the population is growing the fastest where people are less able to deal with it. So it’s in the very poorest places that you’re going to have a tripling in population by 2050. (…) And we’ve got to make sure that we help out with the tools now so that they don’t have an impossible situation later.”

3. Bernie Sanders: “In poor countries around the world where women do not necessarily want to have large numbers of babies, and where they can have the opportunity through birth control to control the number of kids they have, is something I very, very strongly support.”

4. UK Prime Minister Boris Johnson: “The primary challenge facing our species is the reproduction of our species itself…It is time we had a grown-up discussion about the optimum quantity of human beings in this country and on this planet…All the evidence shows that we can help reduce population growth, and world poverty, by promoting literacy and female emancipation and access to birth control.”

5. UK Television Presenter Sir David Attenborough: “The human population can no longer be allowed to grow in the same old uncontrolled way. If we do not take charge of our population size, then nature will do it for us.”

6. Paul Ehrlich, a former science adviser to president George W. Bush and the author of “The Population Bomb”: “Solving the population problem is not going to solve the problems of racism… of sexism… of religious intolerance… of war… of gross economic inequality. But if you don’t solve the population problem, you’re not going to solve any of those problems. Whatever problem you’re interested in, you’re not going to solve it unless you also solve the population problem.”

7. Dave Foreman, the co-founder of Earth First: “We humans have become a disease, the Humanpox.”

8. CNN Founder Ted Turner: “A total population of 250-300 million people, a 95% decline from present levels, would be ideal.”

9. Japan’s Deputy Prime Minister Taro Aso: about medical patients with serious illnesses: “You cannot sleep well when you think it’s all paid by the government. This won’t be solved unless you let them hurry up and die.”

10. David Rockefeller: “The negative impact of population growth on all of our planetary ecosystems is becoming appallingly evident.”

11. Richard Branson: “The truth is this: the Earth cannot provide enough food and fresh water for 10 billion people, never mind homes, never mind roads, hospitals and schools.”

12. Environmental activist Roger Martin: “On a finite planet, the optimum population providing the best quality of life for all, is clearly much smaller than the maximum, permitting bare survival. The more we are, the less for each; fewer people mean better lives.”

13. HBO personality Bill Maher: “I’m pro-choice, I’m for assisted suicide, I’m for regular suicide, I’m for whatever gets the freeway moving – that’s what I’m for. It’s too crowded, the planet is too crowded and we need to promote death.”

14. Al Gore: “One of the things we could do about it is to change the technologies, to put out less of this pollution, to stabilize the population, and one of the principal ways of doing that is to empower and educate girls and women. You have to have ubiquitous availability of fertility management so women can choose how many children to have, the spacing of the children… You have to educate girls and empower women. And that’s the most powerful leveraging factor, and when that happens, then the population begins to stabilize and societies begin to make better choices and more balanced choices.”

15. MIT professor Penny Chisholm: “The real trick is, in terms of trying to level off at someplace lower than that 9 billion, is to get the birthrates in the developing countries to drop as fast as we can. And that will determine the level at which humans will level off on earth.”

16. Julia Whitty, a columnist for Mother Jones: “The only known solution to ecological overshoot is to decelerate our population growth faster than it’s decelerating now and eventually reverse it—at the same time we slow and eventually reverse the rate at which we consume the planet’s resources. Success in these twin endeavors will crack our most pressing global issues: climate change, food scarcity, water supplies, immigration, health care, biodiversity loss, even war. On one front, we’ve already made unprecedented strides, reducing global fertility from an average 4.92 children per woman in 1950 to 2.56 today—an accomplishment of trial and sometimes brutally coercive error, but also a result of one woman at a time making her individual choices. The speed of this childbearing revolution, swimming hard against biological programming, rates as perhaps our greatest collective feat to date.”

17. Colorado State University Professor Philip Cafaro in a paper entitled “Climate Ethics and Population Policy”: “Ending human population growth is almost certainly a necessary (but not sufficient) condition for preventing catastrophic global climate change. Indeed, significantly reducing current human numbers may be necessary in order to do so.

18. Professor of Biology at the University of Texas at Austin Eric R. Pianka: “I have two grandchildren and I want them to inherit a stable Earth. But I fear for them. Humans have overpopulated the Earth and in the process have created an ideal nutritional substrate on which bacteria and viruses (microbes) will grow and prosper. We are behaving like bacteria growing on an agar plate, flourishing until natural limits are reached or until another microbe colonizes and takes over, using them as their resource. In addition to our extremely high population density, we are social and mobile, exactly the conditions that favor growth and spread of pathogenic (disease-causing) microbes. I believe it is only a matter of time until microbes once again assert control over our population, since we are unwilling to control it ourselves. This idea has been espoused by ecologists for at least four decades and is nothing new. People just don’t want to hear it.”

19. Kofi Annan, UN Secretary-General from 1997-2006: “The idea that population growth guarantees a better life — financially or otherwise — is a myth that only those who sell nappies, prams and the like have any right to believe.”

20. Thoraya Ahmed Obaid, UN Under-Secretary-General from 2000-2010: “We cannot confront the massive challenges of poverty, hunger, disease and environmental destruction unless we address issues of population and reproductive health.”

21. Bill Nye: “In 1750, there were about a billion humans in the world. Now, there are well over seven billion people in the world. It more than doubled in my lifetime. So all these people trying to live the way we live in the developed world is filling the atmosphere with a great deal more carbon dioxide and other greenhouse gases than existed a couple of centuries ago. It’s the speed at which it is changing that is going to be troublesome for so many large populations of humans around the world.”

22. Actress Cameron Diaz: “I think women are afraid to say that they don’t want children because they’re going to get shunned. But I think that’s changing too now. I have more girlfriends who don’t have kids than those that do. And, honestly? We don’t need any more kids. We have plenty of people on this planet.”

23. Democrat strategist Steven Rattner: “WE need death panels. Well, maybe not death panels, exactly, but unless we start allocating health care resources more prudently — rationing, by its proper name — the exploding cost of Medicare will swamp the federal budget.”

24. Matthew Yglesias, a business and economics correspondent for Slate, in an article entitled “The Case for Death Panels, in One Chart”: “But not only is this health care spending on the elderly the key issue in the federal budget, our disproportionate allocation of health care dollars to old people surely accounts for the remarkable lack of apparent cost effectiveness of the American health care system. When the patient is already over 80, the simple fact of the matter is that no amount of treatment is going to work miracles in terms of life expectancy or quality of life.”

25. Planned Parenthood Founder Margaret Sanger: “All of our problems are the result of overbreeding among the working class”

26. Gloria Steinem: “Everybody with a womb doesn’t have to have a child any more than everybody with vocal chords has to be an opera singer.”

27. Jane Goodall: “It’s our population growth that underlies just about every single one of the problems that we’ve inflicted on the planet. If there were just a few of us, then the nasty things we do wouldn’t really matter and Mother Nature would take care of it — but there are so many of us.”

28. U.S. Supreme Court Justice Ruth Bader Ginsburg: “Frankly I had thought that at the time Roe was decided, there was concern about population growth and particularly growth in populations that we don’t want to have too many of.”

29. Planned Parenthood Founder Margaret Sanger: “The most merciful thing that the large family does to one of its infant members is to kill it.”

30. Salon columnist Mary Elizabeth Williams in an article entitled “So What If Abortion Ends Life?”: “All life is not equal. That’s a difficult thing for liberals like me to talk about, lest we wind up looking like death-panel-loving, kill-your-grandma-and-your-precious-baby storm troopers. Yet a fetus can be a human life without having the same rights as the woman in whose body it resides.”

31. Paul Ehrlich: “Basically, then, there are only two kinds of solutions to the population problem. One is a ‘birth rate solution,’ in which we find ways to lower the birth rate. The other is a ‘death rate solution,’ in which ways to raise the death rate — war, famine, pestilence — find us.”

32. Alberto Giubilini of Monash University in Melbourne, Australia and Francesca Minerva of the University of Melbourne in a paper published in the Journal of Medical Ethics: “[W]hen circumstances occur after birth such that they would have justified abortion, what we call after-birth abortion should be permissible. … [W]e propose to call this practice ‘after-birth abortion’, rather than ‘infanticide,’ to emphasize that the moral status of the individual killed is comparable with that of a fetus … rather than to that of a child. Therefore, we claim that killing a newborn could be ethically permissible in all the circumstances where abortion would be. Such circumstances include cases where the newborn has the potential to have an (at least) acceptable life, but the well-being of the family is at risk.”

33. Nina Fedoroff, a key adviser to Hillary Clinton: “We need to continue to decrease the growth rate of the global population; the planet can’t support many more people.”

34. Barack Obama’s primary science adviser, John Holdren: “A program of sterilizing women after their second or third child, despite the relatively greater difficulty of the operation than vasectomy, might be easier to implement than trying to sterilize men.”

35. Another quote from John Holdren: “If population control measures are not initiated immediately and effectively, all the technology man can bring to bear will not fend off the misery to come.”

36. David Brower, the first Executive Director of the Sierra Club: “Childbearing [should be] a punishable crime against society, unless the parents hold a government license … All potential parents [should be] required to use contraceptive chemicals, the government issuing antidotes to citizens chosen for childbearing.”

37. Maurice Strong: “Either we reduce the world’s population voluntarily or nature will do this for us, but brutally.”

38. Thomas Ferguson, former official in the U.S. State Department Office of Population Affairs: “There is a single theme behind all our work–we must reduce population levels. Either governments do it our way, through nice clean methods, or they will get the kinds of mess that we have in El Salvador, or in Iran or in Beirut. Population is a political problem. Once population is out of control, it requires authoritarian government, even fascism, to reduce it…”

39. Mikhail Gorbachev: “We must speak more clearly about sexuality, contraception, about abortion, about values that control population, because the ecological crisis, in short, is the population crisis. Cut the population by 90% and there aren’t enough people left to do a great deal of ecological damage.”

40. Jacques Costeau: “In order to stabilize world population, we must eliminate 350,000 people per day. It is a horrible thing to say, but it is just as bad not to say it.”

41. Finnish environmentalist Pentti Linkola: “If there were a button I could press, I would sacrifice myself without hesitating if it meant millions of people would die”

42. Author Dan Brown: “Overpopulation is an issue so profound that all of us need to ask what should be done.”

43. Prince Phillip, husband of Queen Elizabeth II and co-founder of the World Wildlife Fund: “In the event that I am reincarnated, I would like to return as a deadly virus, in order to contribute something to solve overpopulation.”

44. Ashley Judd: “It’s unconscionable to breed, with the number of children who are starving to death in impoverished countries.”

45. Charles Darwin: “With savages, the weak in body or mind are soon eliminated; and those that survive commonly exhibit a vigorous state of health. We civilised men, on the other hand, do our utmost to check the process of elimination; we build asylums for the imbecile, the maimed, and the sick; we institute poor-laws; and our medical men exert their utmost skill to save the life of every one to the last moment. There is reason to believe that vaccination has preserved thousands, who from a weak constitution would formerly have succumbed to small-pox. Thus the weak members of civilised societies propagate their kind. No one who has attended to the breeding of domestic animals will doubt that this must be highly injurious to the race of man. It is surprising how soon a want of care, or care wrongly directed, leads to the degeneration of a domestic race; but excepting in the case of man himself, hardly any one is so ignorant as to allow his worst animals to breed.”

As you can see, this kind of thinking goes all the way back to Charles Darwin.

The elite really do look down on all the rest of us with great disdain, and let us hope that their goal of dramatically reducing the size of the human population is not realized any time soon.

Tyler Durden Wed, 11/06/2019 - 16:40
Published:11/6/2019 3:43:46 PM
[Books] Close encounter of the Glenn kind (Scott Johnson) Encounter Books commissioned Ben Weingarten to interview Glenn Reynolds in connection with Glenn’s Encounter Books pamphlet The Social Media Upheaval (video below). Episode 5 in the Close Encounters series, the interview takes up Glenn’s belief in the need to use antitrust laws to break up collusive big tech companies and his response to libertarian critiques of such a plan as well as the corrosive impact of social media on its Published:11/6/2019 6:40:19 AM
[Markets] 'Omniviolence' Is Coming And The World Isn't Ready 'Omniviolence' Is Coming And The World Isn't Ready

Authored by Phil Torres via,

In The Future of Violence, Benjamin Wittes and Gabriella Blum discuss a disturbing hypothetical scenario. A lone actor in Nigeria, “home to a great deal of spamming and online fraud activity,” tricks women and teenage girls into downloading malware that enables him to monitor and record their activity, for the purposes of blackmail. The real story involved a California man who the FBI eventually caught and sent to prison for six years, but if he had been elsewhere in the world he might have gotten away with it. Many countries, as Wittes and Blum note, “have neither the will nor the means to monitor cybercrime, prosecute offenders, or extradite suspects to the United States.”

Technology is, in other words, enabling criminals to target anyone anywhere and, due to democratization, increasingly at scale.

Emerging bio-, nano-, and cyber-technologies are becoming more and more accessible. The political scientist Daniel Deudney has a word for what can result: “omniviolence.” The ratio of killers to killed, or “K/K ratio,” is falling.

For example, computer scientist Stuart Russell has vividly described how a small group of malicious agents might engage in omniviolence:

“A very, very small quadcopter, one inch in diameter can carry a one-or two-gram shaped charge,” he says.

“You can order them from a drone manufacturer in China. You can program the code to say: ‘Here are thousands of photographs of the kinds of things I want to target.’ A one-gram shaped charge can punch a hole in nine millimeters of steel, so presumably you can also punch a hole in someone’s head. You can fit about three million of those in a semi-tractor-trailer. You can drive up I-95 with three trucks and have 10 million weapons attacking New York City. They don’t have to be very effective, only 5 or 10% of them have to find the target.”

Manufacturers will be producing millions of these drones, available for purchase just as with guns now, Russell points out, “except millions of guns don’t matter unless you have a million soldiers. You need only three guys to write the program and launch.”

In this scenario, the K/K ratio could be perhaps 3/1,000,000, assuming a 10-percent accuracy and only a single one-gram shaped charge per drone.

That’s completely—and horrifyingly—unprecedented. The terrorist or psychopath of the future, however, will have not just the Internet or drones—called “slaughterbots” in this video from the Future of Life Institute—but also synthetic biology, nanotechnology, and advanced AI systems at their disposal. These tools make wreaking havoc across international borders trivial, which raises the question: Will emerging technologies make the state system obsolete? It’s hard to see why not.

What justifies the existence of the state, English philosopher Thomas Hobbes argued, is a “social contract.”

People give up certain freedoms in exchange for state-provided security, whereby the state acts as a neutral “referee” that can intervene when people get into disputes, punish people who steal and murder, and enforce contracts signed by parties with competing interests. 

The trouble is that if anyone anywhere can attack anyone anywhere else, then states will become - and are becoming - unable to satisfy their primary duty as referee. It’s a trend toward anarchy, “the war of all against all,” as Hobbes put it - in other words a condition of everyone living in constant fear of being harmed by their neighbors.

Indeed, in a recent paper, “The Vulnerable World Hypothesis,” published in Global Policy, the Oxford philosopher Nick Bostrom argues that the only way to defend against a global catastrophe is to employ a universal and invasive surveillance system, what he calls a “High-tech Panopticon.” Sound dystopian? It sure does to me.

“Creating and operating the High-tech Panopticon would require substantial investment,” Bostrom writes, “but thanks to the falling price of cameras, data transmission, storage, and computing, and the rapid advances in AI-enabled content analysis, it may soon become both technologically feasible and affordable.”

Bostrom is well-aware of the downsides—corrupt actors in a state could exploit this surveillance for totalitarian ends, or hackers could blackmail unsuspecting victims. Yet the fact is that it may still be a better option than suffering one global catastrophe after another. 

How can societies counterattack omniviolence? One strategy could be a superintelligent machine—essentially, an extremely powerful algorithm—that’s specifically designed to govern fairly. We could then put the algorithm in political charge and, insofar as it governs as something like a “Philosopher King,” not worry constantly about the data collected being misused or abused. Of course, this is a fantastical proposal. Even the real-world use of AI in the justice system is fraught with problems. But at this point, do we have a better idea for preventing the collapse of the state system under the weight of widespread technological empowerment?

Perhaps a completely new idea will emerge that can preserve the current system—if we even want it preserved. Or perhaps emerging technologies won’t empower people as much as I and others anticipate. It could be that offensive technologies will actually lag behind defensive technologies, making it very difficult to execute a successful attack. It could also be that before omniviolence and democratization undercut the state, civilization collapses because of climate change-linked stressors like lethal heatwaves, megadroughts, coastal flooding, rising sea-levels, melting glaciers and polar ice caps, desertification, food supply disruptions, disease outbreaks, biodiversity loss, species extinctions, and mass migrations. If we ended up living as hunter-gatherers again, the main worry would be sticks and stones, not designer pathogens and artificial intelligence.

Civilization is an experiment. We may not get the results we’re expecting. So humanity would do well to hope for the best but prepare for the worst.

*  *  *

Phil Torres is a scholar of global catastrophic risks, and author of several books. His essay, “Superintelligence and the Future of Governance: On Prioritizing the Control Problem at the End of History,” appears in the 2018 anthology, Artificial Intelligence Safety and Security

Tyler Durden Tue, 11/05/2019 - 23:25
Published:11/5/2019 10:42:58 PM
[Markets] Schlichter: Trump Is Derailing The Elite's Gravy Train Schlichter: Trump Is Derailing The Elite's Gravy Train

Authored by Kurt Schlichter, op-ed via,

Like the garbage French elite of long ago, our American garbage elite of today has learned nothing and forgotten nothing.

For four years, it has been focused entirely on deep-sixing Donald Trump for his unforgivable crime of demanding that our ruling caste be held accountable for its legacy of failure. Instead of focusing on not being terrible at their job of running America’s institutions, our elitists have decided that the real problem is us Normals being angry about how they are terrible at their job of running America’s institutions.

So, let’s imagine that they finally vanquish Trump, though every time they come up against him they end up dragging themselves home like Ned Beatty after a particularly tough canoe trip.

What happens then?

What happens then is that it’s back to business as usual, and for decades, business as usual for our garbage elite has not merely been running our institutions badly but pillaging and looting our country for power, prestige and cash.

The difference is that in the future they will be much more careful to ensure that no one who is not in on the scam will ever again come anywhere near the levers of power. You can already see it – the demands that we defer to the bureaucrats they own, the attacks on the idea of free expression, and the campaign to disarm us. Their objective is no more Trumps, just an endless line of progressive would-be Maduros with the march toward despair occasionally put on pause for a term by some Fredocon Republican who hates us Normals just as much as the Dems, but won’t admit it until after he’s out of office.

Our garbage elite talks a good game about its service and moral superiority, but if our betters were actually better than us, we would not be having this national conversation about how awful they are.

The fact is that what they want to do is go back to the way it was before Trump, back to 2015, aka the year 1 BT – Before Trump. Back then, progressive Democrats got their bizarre social pathologies normalized. Moderate Democrats got money, power and an open season on the local talent. Corporate types represented largely by squishy Republicans got globalism and the ability to ship our jobs out and import Third World serfs in. And the fake conservatives of Conservative, Inc., got to cash in without the necessity of actually conserving anything.

The only people that the old system didn’t work for were the American people.

It’s important to remember and to always remind yourself, that everything our elite says about its motives and morals is a lie and a scam. Take the whole #MeToo thing. This was supposed to be some sort of revolutionary rebellion against the sexual exploitation of the powerless by the powerful. It’s not, and never was. Rather, it’s simply an internal power struggle among and within the elites to reallocate power among snooty people who don’t give a damn about you or me.

The fall of Harvey Weinstein or Matt Lauer or any of the other bigwigs means nothing to the conservative single mom being exploited by the Democrat donors who own Walmart. It was actually striving female members of the elite – actresses, models, media figures, executives – leveraging the monstrosity of the creeps at the top to increase their own power within the elite. Do you see any of these #MeToo heroines, now that they have taken their scalps, helping their non-elite sisters out in Gun-Jesusland? Yeah, right. They are lining up with the rest of their elite pals to shaft us.

What you do see is excuses. They excuse Bill Clinton and his enabler Felonia Milhous von Pantsuit. They excuse Gropey Joe. They are in the process of excusing Katie Hill, whose naked hairbrush photo has ensured that none of us will ever sit on a hotel room chair again. Why no outrage? Why no concern? Because taking out Stumbles McMyturn or Hoover’s Dad or Congresswoman Every Man’s Lesbian Fantasy Destroyer does not help the faction of the elite that benefited from #MeToo. That would help us, but not the elite. Throuple Gal was exposed by Townhall’s peppery sister site Redstate, not the mainstream media, and the mainstream media is horrified – not by her furniture defilement but that word of it got through the gate they yearn to keep.

The simple fact is that they desperately want Trump out so they can return to the good old days of winks, nods, and payoffs.

Look at the Biden Family Crime Syndicate and the antics of the junior capo of the Cosa Nose Candy. In what universe is it A-OK that the crack-fueled Johnny Appleseed of paternity suits that is Joe’s snortunate son was cashing in on $50K a month in sweet, sweet Ukrainian gas gold just weeks after Ensign Biden got booted because he tooted? And then there’s riding on Air Force Two to the NBA’s favorite dictatorship for some commie ducats. Now there are even some Romanian shenanigans too – is there a single country on earth that Totally-Not-Senile Joe didn’t shake down for the benefit of his daughter-in-law’s second hubby?

But our garbage elite’s garbage media seems amazingly uninterested in all this – it’s fascinated by the timing of a situation room snap after Trump unleashed the Army’s Delta Force on al-Baghdadi and by dog medal memes, but the Veep’s boy’s bag-mannery is not merely of no interest but is something they close their fussy phalanx ranks around to protect. Keep in mind, the premise underlying the whole star chamber impeachment festival of onanism is that Donald Trump, America’s chief law enforcement officer, was somehow wrong and bad and double-plus ungood because he allegedly asked the Ukrainians, “Hey, what’s the dealio with the Columbia Kid’s pay-offs?”

In a non-bizarro political universe, the proper reaction to the Prezzy demanding, “You best fork over the evidence on these manifestly corrupt antics involving the Vice-President of the United States or we’re cutting you off from the American taxpayers’ feeding trough,” would be, “Hell to the yeah, four more years! Four more years!’

But it’s not, because the elite likes its sexual abuse and its foreign cash and its total lack of accountability to us, the Normals, the people who are supposed to be the ones that our elite is working for. The elite has not learned its lesson. It has not admitted that it sucks and resolved to stop sucking.

Instead, it has doubled down. And if it gets power again, it will act to solve what it sees as the most urgent problem facing America – the fact that we the people have the ability to reject the elite’s utter incompetence and surpassing greed and elect someone with a mandate to burn down the whole rotten edifice.

If the elitists get power again, they are never letting go of it, not without a fight. And now, doesn’t the elite’s obsessive fixation on shutting down conservative dissent, eliminating competing institutions (like religious entities), and disarming law-abiding Americans make a lot more sense?

*  *  *

Our garbage elite is outraged over the success of my action-packed yet hilarious novels of America torn apart by liberal malice, People’s RepublicIndian Country and Wildfire. In a few weeks, Number IV, Collapse, will drop. They call these books “appalling.” They don’t want you to read them. That’s better than any blurb!

Tyler Durden Tue, 11/05/2019 - 20:05
Published:11/5/2019 7:07:53 PM
[Opinion] Can Democrats Legally Benefit from Criminal Dishonesty?

By Amanda Alverez -

Ever wonder the number of people believing they could commit the perfect crime? There are many books and movies exposing such attempts and even hilarious ‘really dumb failed criminal plots.’ Could it be possible to accept Democrats have succeeded for many years? At least until Donald J. Trump arrived in ...

Can Democrats Legally Benefit from Criminal Dishonesty? is original content from Conservative Daily News - Where Americans go for news, current events and commentary they can trust - Conservative News Website for U.S. News, Political Cartoons and more.

Published:11/5/2019 5:14:05 PM
[Markets] Rabo: Markets Scream Risk On Today... Until Trump Or Navarro Make Clear They Oppose Cutting Tariffs Rabo: Markets Scream Risk On Today... Until Trump Or Navarro Make Clear They Oppose Cutting Tariffs

Submitted by Michael Every of Rabobank

So it’s another day where we are thrown a mass of trade-related news to try to scythe through towards common sense.

First, there is the ASEAN summit, wrapping up just round the corner (and a million miles) from me here in Bangkok. Some trade deals were done: New Zealand, for example, will get even easier access to Chinese markets…in the same week that two Chinese nationals studying at a NZ private school decided to parade up and down Auckland in PLA dress uniforms, including swords, while waving the Chinese flag. However, the Regional Comprehensive Economic Partnership (RCEP) fell through after India once again walked away on concerns over its relative power differential with China – just as it did from the Belt and Road Initiative.

What’s the pattern to trade there? Short India, long everyone else in the region? Or a recognition that the larger players, who are less reliant on trade, are seeing a very different picture to the smaller players, who have no choice but to look to free trade, even though they see the larger issues just as clearly. If so, Risk On or Risk Off?

More importantly, China then threw a spanner into the works of the much-hyped “phase one” US-China trade ‘deal’ via a surprise insistence on the removal of 15% tariffs on USD112bn worth of goods imposed on 1 September – otherwise they won’t sign. What a tactical surprise that must be to someone who wrote in The Art of the Deal: “I've read hundreds of books about China over the decades. I know the Chinese. I've made a lot of money with the Chinese. I understand the Chinese mind.” Risk Off!

More surprising is the FT is reporting the US is considering doing exactly that. Risk On! But really? Only if by “the US” the story writers mean “some doves within the White House”, because the story makes clear US hawks oppose the concession and Trump himself is regarded as an obstacle rather than a proponent. Perhaps not a surprise given it would open him up to charges of looking weak on China, having been wrong on tariffs, and being a poor negotiator – he also wrote "The worst thing you can possibly do in a deal is seem desperate to make it. That makes the other guy smell blood, and then you're dead," in The Art of the Deal. Of course, that won’t stop markets screaming Risk On today – until Trump or Navarro make clear they are opposed. CNY is already testing back towards 7, bond yields are higher, and US stock futures are suggesting another all-time high. After all, we have an election in just under a year, so anything goes, right?

Plus, it’s been so long since the markets were given any gifts. I mean, it’s been literally days since an extra 25bp Fed rate-cut was tossed their way. And weeks since the Fed ramped up its Repo operations to a QE scale (even if we aren’t allowed to call it QE). It was certainly time for another goodie to be thrown our way, right?

Perhaps underlining why we seem reliant on increasingly desperate measures, and statements, to keep asset markets happy, consider this peach of piece of advice from new ECB President Lagarde: “We should be happier to have a job than to have our savings protected.” Quite the humdinger, the more you play it over in your mind. Equally, so was Hong Kong’s TVB reporting that the ear of a LegCo candidate “dropped off” over the weekend. On the trade news, on the idea that having a job is all that matters, and that human anatomy can ‘plop’ to the floor by itself, I must again share this classic Blackadder moment:

Nursie: Another good idea. You’re so clever today, you’d better make sure your foot doesn’t fall off.

Queenie: Is that what happens when you have a good idea? Your foot falls off?

Nursie: Certainly is. My brother had the idea of cutting his toenails with a scythe, and his foot fell off!

Tyler Durden Tue, 11/05/2019 - 08:52
Published:11/5/2019 8:04:57 AM
[Markets] The Middle Class Is Now The 'Muddle Class' The Middle Class Is Now The 'Muddle Class'

Authored by Charles Hugh Smith via OfTwoMinds blog,

The net result is the muddle class has the signifiers but not the wealth, power, capital or agency that once defined the middle class.

The first use of the phrase The Muddle Class appears to be The rise of the muddle classes (Becky Pugh, in January 2007. The "muddle" described the complex nature of defining "the middle class," which includes education, class origins, accents, and many other financial, social and cultural signifiers.

Comedian Jason Manford claimed to have coined the term in June 2013"I've invented a new term; 'Muddle Class'. When you find yourself being working class AND middle class at the same time."

I'm using the term to describe the economic class that has the social signifiers of middle class status but little to no ownership of meaningful capital or control of their own financial security. In other words, this class "muddles through" the erosion of their purchasing power and economic security, claiming the social status of "middle class" while their financial status is impoverished when compared to the security of previous generations of "middle class."

Social status signifiers include: college diplomas, advanced degrees, overseas travel, aspirational dining and consumer goods, home ownership, etc. But where previous generations were building meaningful capital and assets that could be passed down to their offspring, the assets of the "muddle class" are either negligible or highly contingent on the speculative bubble du jour (stocks, bonds, housing).

The more meaningful economic metrics for middle class status are:

1. Household indebtedness, i.e. how much of the income is devoted to debt service, and

2. How much of the household spending is funded by debt.

  • If debt overwhelms assets, this financial fragility is not "middle class."

3. The ability of the household to set aside substantial savings / capital investment.

  • If the household is unable to save enough to weather financial crises, this financial fragility is not "middle class."

4. The security of the households' employment.

5. The dependence of the household wealth on speculative asset bubbles inflated by central bank policies.

  • If owner's net equity in a house is 10% to 20% of the value (the rest being mortgage debt), a modest deflation of the housing bubble will wipe out all their equity and leave them underwater, i.e. owing more than the house is worth. This financial fragility is not "middle class."

6. The percentage of the household income that is unearned, i.e. derived not from labor but from productive assets.

If all the household income is earned and there is no accumulation of income from capital (assets), then this is the definition of the working class.

7. The exposure of the households' employment to automation, AI or offshoring.

8. How much of the household income is government transfers: benefits, subsidies, etc.

  • Households that depend on government transfers to get by are not "middle class."

The muddle class is losing ground not just in financial security and agency (control of capital), but in intangible capital, a topic I explore in my new book Will You Be Richer or Poorer? Profit, Power and A.I. in a Traumatized World: the intangible capital of social mobility, positive social roles, employment stability, political power and a host of other forms of capital that define "middle class" as much as a college diploma or home ownership.

The middle class has been transformed into the muddle class by a number of forces:

1. Neoliberal globalization and ideology has eroded employment security by offloading risk onto workers while fragmenting the family structure via turning everything into a global market.

2. The 4th Industrial Revolution (software, robotics, digital technologies) is disrupting previously stable employment, making earned income contingent and prone to disruption.

3. The destruction of interest earned on savings and the rise of central-bank fueled speculation has forced households to either lose ground by holding cash or gamble in the rigged casino of global markets--a gamble most will lose by design.

4. The ceaseless rise of non-discretionary costs has eroded the purchasing power of wages, while the winner take most speculative economy has reduced labor's share of the economy (see chart below).

The net result is the muddle class has the signifiers but not the wealth, power, capital or agency that once defined the middle class. Signifiers may have social value, but not the sort of financial value that can be handed down or converted into tangible capital.

*  *  *

My recent books:

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

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

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

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

*  *  *

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

Tyler Durden Tue, 11/05/2019 - 08:07
Published:11/5/2019 7:13:53 AM
[Markets] SoftBank's 'Conglomerate Discount' Balloons To $130 Billion As Investors Bet Worst Is Yet To Come SoftBank's 'Conglomerate Discount' Balloons To $130 Billion As Investors Bet Worst Is Yet To Come

After a suite of marquee investments blew up in the company's face over the summer, SoftBank, the Japanese telecoms giant with a massive VC arm attached, is preparing to face its first real 'day of reckoning' this week when it reports Q2 earnings, according to the FT and Nikkei Asian Review. The results will be released after the close of Japanese markets on Wednesday.

Masayoshi Son

Most analysts expect a grim showing: In the span of a few months, SoftBank Chairman Masayoshi Son's reputation as one of the world's most successful momentum investors has been totally eviscerated. The company's stake in ride-share darling Uber has generated an on-paper loss of 30%. What's worse, Son has insisted on throwing even more money at WeWork parent 'The We Company' in a desperate attempt to stave off an imminent bankruptcy, which would have stuck SB with losses in the billions of dollars.

In the latest indication of just how little faith investors' have in the company, Nikkei points out that SoftBank's 'valuation discount', the gap between its valuation in public markets and its net asset value, has swollen to $130 billion.

Take the group's net debt figure of $45 billion (which excludes 10 trillion yen of debt held in subsidiaries and is the figure that Son prefers to use), add that to SoftBank's market capitalization of $81 billion, and its enterprise value is $126 billion. This is essentially the all-in cost of buying the company.

Against that, however, SoftBank has around $191 billion of quoted assets on its balance sheet, the largest of which is a 26% stake in Alibaba Group Holding, the Chinese e-commerce giant. It also owns U.K. chip designer Arm, which SoftBank has on its books at $25 billion, and another $8 billion of assorted assets it classifies as "others." Add it all up, and SoftBank owns around $224 billion of assets.

In addition, however, there are over 80 tech companies in the Vision Fund - such as ride-hailing giants Didi Chuxing and Grab, Indian hotel startup Oyo, and Chinese social media company ByteDance. SoftBank estimates its one-third share of these are worth $32 billion.

Add all these assets together and the total comes to $256 billion - or $130 billion more than the company is worth on the market. This is the "conglomerate discount," and it appears to have widened since Son railed about it in the past.

SoftBank and Son are still desperately trying to court Saudi Arabia and convince Crown Prince MbS to commit to backing a planned second iteration of its Vision Fund (which Saudi Arabia backed to the tune of $45 billion from its sovereign wealth fund). However, even before WeWork's valuation imploded, leading to the scrapping of its planned IPO and an embarrassingly public rescue that involved the ouster of co-founder and CEO Adam Neumann, there was talk that the Saudi's would sit this one out.

Courtesy of the FT

As SoftBank sees it, the Saudis owe it another chance: In the aftermath of Jamal Khashoggi's murder inside a Saudi consulate in Istanbul, SoftBank stood by the kingdom, even as Wall Street executives and other business leaders in the West cancelled plans to attend last year's Future Investment Initiative (better known as MbS's "Davos in the Desert") while publicly contemplating whether to sever all business ties to the kingdom, according to the FT.

One year later, those grievances appear to have been forgotten. But sparse attendance at Son's speech at this year's FII was seen as emblematic of the reputational hit that Son had taken in the aftermath of the WeWork blowup.

Analysts quoted by Nikkei said that unless SoftBank can pull off the turnaround at WeWork, reviving its valuation will be difficult.

"It cannot be helped that SoftBank's [WeWork] investment is seen as a failure," said Mitsunobu Tsuruo, analyst at Citigroup Global Markets Japan. "Investors are worried whether [it] will be the last negative material to affect SoftBank and its shares."

"We believe that unless the WeWork episode is resolved, SoftBank improves disclosure and clarifies its strategy, there is no solid anchor" to its net asset value, said Atul Goyal, analyst at Jefferies Securities.

On the other hand, another analyst argued that the double-digit slump in SoftBank's share price this year has completely priced in the WeWork fiasco, and that the SoftBank shares have nowhere to go but up from here.

"We think the impact of this [WeWork] event is now priced in and expect the shares to rebound," SMBC Nikko Securities wrote in an Oct. 25 report.

A successful IPO from one of the Vision Fund's 80 other portfolio companies could provide exactly the catalyst that the company needs. A listing for TikTok owner ByteDance in Hong Kong could accomplish this. Whatever happens, a successful offering will almost certainly need to happen outside of the US, since American markets have repeatedly shown this year that they have little appetite left for richly valued unicorns following a nearly uninterrupted string of IPO flops, from Uber & Lyft, to Slack, Peloton and others.

A successful IPO would certainly help, after WeWork's failed share float. ByteDance, the owner of social media app TikTok, which was valued at $75 billion in an October 2018 fundraising led by SoftBank, is reportedly considering a listing in Hong Kong.

Then again, one IPO might not be enough; many professional asset managers now see Vision Fund backing as an obvious counter-indicator, as one hedge fund manager told the FT. After all, when it comes to valuing its portfolio companies, SoftBank has been so wrong, so many times, that rebuilding trust and faith in its abilities could prove to be an impossible task.

"If SoftBank says this is the value, how much of that should you believe?" says Kirk Boodry, a tech analyst at Redex Holdings who publishes on research platform Smartkarma. One hedge fund investor says backing from the Vision Fund is "an immediate cue to sell."

And though SoftBank has scored several huge wins in recent years (it still owns a massive stake in Alibaba), investors in the Vision Fund largely missed out on those wins.

According to the FT, Vision Fund executives are counting on a $30 billion investment from Saudi Arabia for V2. But MbS has reportedly told advisors and other insiders that, while he would like to reward Son's loyalty, his advisors are vehemently against it.

Tyler Durden Mon, 11/04/2019 - 21:50
Published:11/4/2019 9:04:34 PM
[Markets] US Issues $20M Reward For Return Of US Agent, "Longest Held" Hostage In Iran US Issues $20M Reward For Return Of US Agent, "Longest Held" Hostage In Iran

A flurry of US-Iran related activity on the 40th anniversary of the American hostage crisis and the Islamic revolution that sparked it: after Iran earlier on Monday announced it took steps to double its uranium enrichment capacity via new advanced centrifuges, Washington has answered by slapping new sanctions on Mojtaba Khamenei, the second son of Iran’s Supreme Leader Ali Khamenei, as well as eight advisers of Iran's top cleric, including the head of judiciary Ebrahim Raisi, and Iran’s Armed Forces General Staff and its chief, General Mohammad Bagheri.

Crucially, the United States Treasury also announced a $20 million reward for info on the return of Bob Levinson, who is believed to have been held hostage by the Iranian government since his disappearance from Iran's Kish Island in 2007.

Levinson is the longest held American hostage inside the Islamic Republic, and multiple efforts to free him or gain knowledge of his whereabouts have come up empty over the years. It's believed he came under suspicion of Iran's intelligence agencies due to his being a former Drug Enforcement Administration and FBI agent.

Indeed years ago it was revealed that he was likely working as a contractor for the CIA. According to a recent Newsweek profile of Levinson:

Levinson, an ex–FBI agent well into a second career as a private detective, had disappeared over a decade earlier from a hotel on Iran's Kish Island. He had been seen only twice since then, first in a hostage video his family received from unknown intermediaries in 2010, then in photos three years later, showing the then-63-year-old increasingly haggard and begging for help.

At first, the U.S. government claimed it had no knowledge of why Levinson, an expert on Russian organized crime, had gone to Iran. The Iranian regime denied it was holding him. But in 2013, the Associated Press and other news outlets revealed that the ex-agent had gone to Kish on an off-the-books CIA mission to probe high-level Iranian money laundering.

The United States has reportedly long been engaged in secretive efforts to secure his release, but little is as yet known of his status. 

Concerning the new sanctions announced Monday, the US Treasury stated in its press release that it is targeting "Iran’s inner circle responsible for advancing regime’s domestic and foreign oppression," or what it also describes as “Khamenei’s network”.

This follows broader economic sanctions on Iran's energy, auto, banking, and other major sectors after the May 2018 Trump administration pullout of the 2015 nuclear deal. 

Office of the Iranian Supreme Leader via AP.

US Secretary of State Mike Pompeo said of the new sanctions: "The designation seeks to block funds from flowing to a shadow network of Khamenei’s military and foreign affairs advisers who have for decades oppressed the Iranian people, supported terrorism, and advanced destabilizing policies around the world."

"While the Iranian regime’s decision to jail our diplomats has cast a 40-year shadow over our relations, the United States knows that the longest-suffering victims of the Iranian regime are the Iranian people," he added, referencing the 40th anniversary of the 1979 crisis, which went for 444 days. 

Tyler Durden Mon, 11/04/2019 - 20:30
Published:11/4/2019 7:33:43 PM
[Markets] The Metamorphosis Of The Deep State The Metamorphosis Of The Deep State

Authored by Edward Curtin via,

It gets funny, this shallow analysis of the deep state that is currently big news. There’s something ghoulish about it, perfectly timed for Halloween and masked jokers. What was once ridiculed by the CIA and its attendant lackeys in the media as the paranoia of “conspiracy theorists” is now openly admitted in reverent tones of patriotic fervor. But with a twisted twist.

The “Deep State” has been redefined as career bureaucrats doing their patriotic duty

It was two years ago, early in the Trump administration, when The New Yorker and Salon, among many others, were asserting in no uncertain terms that there was no deep state in the United States, and so Trump had nothing to fear from that quarter since it was a figment of his paranoia.

Kit Knightly, writing in the Off-Guardian, brilliantly demolished this spurious propaganda at the time in a must read reminder of how tricksters play their games.

The corporate mass-media has recently discovered a “deep state” that they claim to be not some evil group of assassins who work for the super-rich owners of the country and murder their own president (JFK) and other unpatriotic dissidents (Malcom X, MLK, RK, among others) and undermine democracy home and abroad, but are now said to be just fine upstanding American citizens who work within the government bureaucracies and are patriotic believers in democracy intent on doing the right thing.

This redefinition has been in the works for a few years, and it shouldn’t be a surprise that this tricky treat was being prepared for our consumption a few years ago by The Council on Foreign Relations.

In its September/October 2017 edition of its journal Foreign Affairs, Jon D. Michaels, in “Trump and the Deep State: The Government Strikes Back,” writes:

Furious at what they consider treachery by internal saboteurs, the president and his surrogates have responded by borrowing a bit of political science jargon, claiming to be victims of the “deep state,” a conspiracy of powerful, unelected bureaucrats secretly pursuing their own agenda.

The concept of a deep state is valuable in its original context, the study of developing countries such as Egypt, Pakistan, and Turkey, where shadowy elites in the military and government ministries have been known to countermand or simply defy democratic directives. Yet it has little relevance to the United States, where governmental power structures are almost entirely transparent, egalitarian, and rule-bound.

The White House is correct to perceive widespread resistance inside the government to many of its endeavors. But the same way the administration’s media problems come not from “fake news” but simply from news, so its bureaucratic problems come not from an insidious, undemocratic “deep state” but simply from the state—the large, complex hive of people and procedures that constitute the U.S. federal government.

Notice how in these comical passages about U.S. government transparency and egalitarianism, Michaels slyly and falsely attributes to Trump the very definition – “unelected bureaucrats” – that in the next paragraph he claims to be the real deep state, which is just the state power structures.

Pseudo-innocence conquers all here as there is no mention of the Democratic party, Russiagate, etc., and all the machinations led by the intelligence services and Democratic forces to oust Trump from the day he was elected.

State power structures just move so quickly, as anyone knows who has studied the speed with which bureaucracies operate. Ask Max Weber.

Drip by drip over the past few years, this “state bureaucracy” meme has been introduced by the mainstream media propagandists as they have gradually revealed that the government deep-staters are just doing their patriotic duty in trying openly to oust an elected president.

Many writers have commented on the recent New York Times article, “Trump’s War on the ‘Deep State’ Turns Against Him” asserting that the Times has finally admitted to the existence of the deep state, which is true as far as it goes, which is not too far. But in this game of deceptive revelations – going shallower to go deeper – what is missing is a focus on the linguistic mind control involved in the changed definition.

Well, I don’t know about you guys, but I’m convinced.

In a recent article by Robert W. Merry, whose intentions I am not questioning – “New York Times Confirms: It’s Trump Versus the Deep State” – originally published at The American Conservative and widely reprinted, the lead-in to the article proper reads:

Even the Gray Lady admits the president is up against a powerful bureaucracy that wants him sunk.”

So the “powerful bureaucracy” redefinition, this immovable force of government bureaucrats, is slipped into public consciousness as what the deep state supposedly is. Gone are CIA conspirators and evil doers. In their place we find career civil servants doing their patriotic duty.

Then there is The New York Times’ columnist James Stewart who, appearing on the Today Show recently, where he was promoting his new book, told Savannah Guthrie that:

Well, you meet these characters in my book, and the fact is, in a sense, he’s [Trump] right. There is a deep state…there is a bureaucracy in our country who has pledged to respect the Constitution, respect the rule of law. They do not work for the President. They work for the American people.

And, as Comey told me in my book, ‘thank goodness for that,’ because they are protecting the Constitution and the people when individuals – we don’t have a monarch, we don’t have a dictator – they restrain them from crossing the boundaries of law.

What Trump calls the deep state in the United States is protecting the American people and protecting the Constitution. It’s a positive thing in this sense.

So again we are told that the deep-state bureaucracy is defending the Constitution and protecting the American people, as James Comey told Stewart, “in my book, ‘thank goodness for that,’” as he put it so eloquently.

These guys talk in books, of course, not person to person, but that is the level not just of English grammar and general stupidity, but of the brazen bullshit these guys are capable of.

This new and shallow deep state definition has buried the old meaning of the deep state as evil conspirators carrying out coup d’états, assassinations, and massive media propaganda campaigns at home and abroad, and who, by implication and direct declaration, never existed in the good old U.S.A. but only in countries such as Egypt, Turkey, and Pakistan where shadowy elites killed and deposed leaders and opponents in an endless series of coup d’états.

No mention in Foreign Affairs, of course, of the American support for the ruthless leaders of these countries who have always been our dear allies when they obey our every order and serve as our servile proxies in murder and mayhem.

Even Edward Snowden, the courageous whistleblower in exile in Russia, in a recent interview with Joe Rogan, repeats this nonsense when he says the deep state is just “career government officials” who want to keep their jobs and who outlast presidents. From his own experience, he should know better. Much better.

Interestingly, he suggests that he does when he tells Rogan that “every president since Kennedy” has been successfully “feared up” by the intelligence agencies so they will do their bidding.

He doesn’t need to add that JFK, for fearlessly refusing the bait, was shot in the head in broad daylight to send a message to those who would follow.

Linguistic mind-control is insidious like the slow drip of a water faucet. After a while you don’t hear it and just go about your business, even as your mind, like a rotting rubber washer, keeps disintegrating under propaganda’s endless reiterations.

To think that the deep state is government employees just doing their patriotic duty is plain idiocy and plainer propaganda.

It is a trick, not the treat it is made to seem.

Tyler Durden Sun, 11/03/2019 - 21:20
Published:11/3/2019 8:25:50 PM
[Markets] Six Charts Showing Just How Much The Government Has Grown Six Charts Showing Just How Much The Government Has Grown

Authored by Ryan McMaken via The Mises Institute,

Federal spending and federal taxation in the United States set new records in 2019. And the federal budget deficit swelled to more than a trillion dollars. Europe is in the middle of an enormous spending binge. But apparently hard-core laissez-faire libertarian purists have taken over the world's governments.

At least, that's the case in the minds of many leftists and conservatives who have convinced themselves that "market fundamentalists" have conquered the world's institutions, and have enacted a global regime of near-zero taxation, free trade, and almost totally unregulated markets.

We hear this over an over again when everyone from The Pope to Bernie Sanders claims "neoliberalism" — a term used to "denote... a radical, far-reaching application of free-market economics unprecedented in speed, scope, or ambition" — has forged the world into a paradise for radical libertarians.

As one writer at The Guardian assures us, the UK must end the nation's "generation-long experiment in market fundamentalism." Meanwhile, Tucker Carlson insists that American policymakers "worship" markets and have a near-religious devotion to capitalism.

The neoliberal takeover is so complete, in fact, that we're told neoliberals are the ones really running the Labour Party. Meanwhile, sociologist Lawrence Busch informs us of a "neoliberal takeover" of higher education. "Free-market fundamentalists," Busch contends, have transformed America's colleges and universities into swamps of capitalist obeisance.

By What Metric?

But whenever I hear about how government intervention in the marketplace is withering away — to be replaced by untrammeled markets — I am forced to wonder what metric these people are using.

By what measure are governments getting smaller, weaker, and less involved in the daily lives of human beings?

In this country, at least, this case certainly can't be made by consulting the data on government taxation and spending.

From 1960 to 2018, federal tax receipts per capita increased from $3,523 to $5,973, an increase of 70 percent.

Combining state and local taxation with federal taxes, the increase is even larger. Taxation per capita at all levels combined grew 118 percent from $5,247 in 1960 to $11,461 in 2018.

The size and scope of government isn't just growing to reflect population changes. After all, the US population only grew 81 percent from 1960 to 2018. And the federal government, embroiled in a global cold war amidst a rising tide of social programs, wasn't exactly vanishingly small in 1960.

In all these per capita graphs, I've factored in population growth because many defenders of government growth claim that governments must get larger as populations increase. Even if that were true, we can see that total spending and taxation is outpacing population growth considerably.1 But it should not simply be accepted that population growth ought to bring increases in government spending and taxation. Military defense of the United States doesn't become more expensive simply because the population grew. Moreover, innovation and productivity gains make products and services less expensive in a functioning private economy. This is often masked by relentless money supply inflation in the name of price "stability." But the natural progression of an economy is toward falling prices. Only with government procurements have we come to expect everything getting more expensive every year.

Fueled by huge deficits, federal spending has outpaced tax collections. Per capita federal spending increased by 191 percent from 1960 to 2018, climbing from $4,300 to $12,545.

The deficit topped a trillion dollars during the 2019 fiscal year, a new high for a so-called "boom period" during which deficits are supposed to shrink.

Ultimately, of course, huge deficits will put an additional burden on the taxpayers beyond the hundreds of billions of dollars per year necessary to simply pay interest on the debt. The huge debt levels put upward pressure on interest rates, and require more central-bank interventions designed to prop up demand for government debt. These interventions both crowd out demand for private debt, and have led to asset-price inflation as a result of money-supply inflation. This benefits the wealthy, but harms first time home buyers and ordinary savers.

The government spending itself is a problem as well. Governments try to play off government spending as if it were all a free gift to the taxpayers as some sort of "return" on the "investment" of taxes paid.

As Murray Rothbard has noted, however, government spending is just as damaging as the taxation that came before it. Government procurements bid up the prices of goods and services that could have been available at lower prices in the private sector were it not for the government spending. Steel and other materials would be less expensive for entrepreneurs. High tech workers could be employed innovating and making things for ordinary taxpayers instead of for government agencies and bureaucrats. Small business owners and ordinary consumers all are worse off as a result.

So, given that spending and taxation are at or are near all-time highs right now, where exactly is this takeover by laissez-faire libertarians we keep hearing about?

It's certainly not in the regulatory side of the government.

The number of pages published in the Code of Federal Regulations increased 710 percent from 1960 to 2018, and 37 percent over the past twenty years. Every additional page represents new regulations, new rules, new punishments, and new fees. These are costs employers must contend with, and consumers must ultimately pay for. Protectionists who think that manufacturers would flock to the United States were it not not low tariffs might consider the regulatory burden placed on employers by our own domestic policies.

Both staffing and budgets for federal regulatory agencies continue to balloon. The combined budgets for federal regulatory agencies have more than tripled over the past 40 years, rising from under 20 billion in 1978 to 65 billion today.

Part of this has been to pay salaries for the ever growing army of federal employees. Employees at regulatory agencies doubled over the past forty years, rising from 140,000 full-time equivalent positions in 1978 to 280,000 today.

The US population increased by 47 percent during that time.

When the federal government isn't spending more, it's taking on more risk, committing the taxpayers to more bailouts, and flooding the market with government insured debt. As The Washington Post reported earlier this month, "In 2019, there is more government-backed housing debt than at any other point in U.S. history." And these government guarantees are up considerably since the 2009 housing crash. The Post continues: "Now, Fannie Mae, Freddie Mac and the Federal Housing Administration guarantee almost $7 trillion in mortgage-related debt, 33% more than before the housing crisis ... Because these entities are run or backstopped by the U.S. government, a large increase in loan defaults could cost taxpayers hundreds of billions of dollars."

Yet, in spite of all this, we'll no doubt continue to be told that government is withering away, government institutions are "underfunded," and extreme anti-government libertarians have taken over. Of course, it's entirely possible that the success of certain free-market ideas — however limited that success may be — has helped to restrain the growth of government taxation and spending. Without this so-called "victory" of the libertarians, we might be looking at a per capita tax burden that grew 200 or 300 percent in recent decades, rather than a "mere" 118 percent. 

But given the ongoing growth of government taxation, spending, and regulation, it should be abundantly clear that we are hardly living in an age of "market fundamentalism," laissez-faire libertarianism, or policymakers who "worship" the market. If anything, trends appear to be moving in exactly the opposite direction. 

Tyler Durden Sun, 11/03/2019 - 12:30
Published:11/3/2019 11:52:58 AM
[Markets] Is China Playing Trump & His Trade Team For Chumps? Is China Playing Trump & His Trade Team For Chumps?

Authored by Charles Hugh Smith via OfTwoMinds blog,

If we put ourselves in the shoes of the Chinese negotiators, we realize there's no need to sign a deal at all.

The world's worst negotiating strategy is to give the other side everything they want in exchange for worthless empty promises, yet this is exactly what Trump and his trade team are doing. All the Chinese trade team has to do to get rid of tariffs and other U.S. bargaining chips is mutter some empty phrase about "agreeing in principle" and the U.S. surrenders all its bargaining chips.

If the other side are such naive chumps that they give you everything you want without actually committing to anything remotely consequential, why bother with a formal agreement? Just play the other side for the chumps they are: if they threaten to reinstate tariffs, just issue another worthless press release about "progress has been made."

The other guaranteed losing strategy in negotiation is advertise your own fatal weakness, which in Trump's case is his obsession with pushing the U.S. stock market to new highs. There is no greater gift he could hand the Chinese trade team than this monumental weakness, for all they have to do is talk tough and the U.S. stock market promptly tanks, sending the Trump Team into a panic of appeasement and empty claims of "progress."

The Chinese team has gotten their way for a year by playing Trump's team as chumps and patsies, so why stop now? The Chinese know they can get way without giving anything away by continuing to play the American patsies and using the president's obsession with keeping U.S. stocks lofting higher to their advantage: declare the talks stalled, U.S. stocks crater, the American team panics and rushes to remove anything that might have enforcement teeth, reducing any "trade deal" to nothing but empty promises.

Given their success at playing America's team, why do a deal at all? Just play the chumps for another year, and maybe Trump will be gone and a new set of even more naive patsies enter the White House.

If we put ourselves in the shoes of the Chinese negotiators, we realize there's no need to sign a deal at all: the Trump team has gone out of its way to make it needless for China to agree to anything remotely enforceable. All the Chinese have to do is issue some stern talk that crushes U.S. stocks and the Trump Team scurries back, desperate to appease so another rumor of a "trade deal" can be issued to send U.S. stocks higher.

It would be pathetic if it wasn't so foolish and consequential.

*  *  *

My recent books:

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

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

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

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

*  *  *

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

Tyler Durden Sun, 11/03/2019 - 11:30
Published:11/3/2019 10:55:30 AM
[Markets] Foreign Aid Makes Corrupt Countries More Corrupt Foreign Aid Makes Corrupt Countries More Corrupt

Authored by James Bovard at,

Any time a government hands out money, not just foreign aid, it breeds corruption... And there are few better examples than Ukraine - just don’t tell the House impeachment hearings.

Barricade with the protesters at Hrushevskogo street on January 26, 2014 in Kiev, Ukraine.Sasha Maksymenko / cc

Counting on foreign aid to reduce corruption is like expecting whiskey to cure alcoholism. After closed House of Representatives impeachment hearings heard testimony on President Trump’s role in delaying U.S. aid to Ukraine, Senate Majority Leader Chuck Schumer declared:

Numbers don’t lie. It’s even more clear now that President Trump is not the anti-corruption crusader he claims to be.”

Most of the press coverage has tacitly assumed that American assistance is vital to fighting corruption in Ukraine. But that ignores foreign aid’s toxic record and Ukraine’s post-Soviet history.

2002 American Economic Review analysis concluded that “increases in [foreign] aid are associated with contemporaneous increases in corruption,” and that “corruption is positively correlated with aid received from the United States.”

That was the year President George W. Bush launched a new foreign aid program, the Millennium Challenge Account (MCA). Bush declared, “I think it makes no sense to give aid, money, to countries that are corrupt.” But the Bush administration continued delivering billions of dollars in handouts to many of the world’s most corrupt regimes. By 2004, the State Department had codified what amounted to backtracking: “The MCA is an incentive-based supplement to other U.S. aid programs.” The Bush team found excuses to give MCA aid to some of the world’s most corrupt governments as well, including Georgia.

In 2010, President Barack Obama proclaimed at the United Nations that America was “leading a global effort to combat corruption.” Obama’s “aides said the United States in the past has often seemed to just throw money at problems,” the Los Angeles Times reported. But the reform charade was exposed the following year when the Obama administration fiercely resisted congressional efforts to curb wasteful aid. Secretary of State Hillary Clinton warned that restricting handouts to nations that fail anti-corruption tests “has the potential to affect a staggering number of needy aid recipients.”

The Obama administration continued pouring tens of billions of American tax dollars into sinkholes such as Afghanistan, which even its president, Ashraf Ghani, admitted in 2016 was “one of the most corrupt countries on earth.” And the deluge of aid the Afghan government received only worsened the corruption. As John Sopko, the heroic Special Inspector General for Afghan Reconstruction (SIGAR), observed, “We need to understand how US policies and practices unintentionally aided and abetted corruption. We must recognize the danger of dealing with characters or networks of unsavory repute, tolerating contracting abuses, accepting shoddy performance and delivering unsustainable projects.”

The closed House impeachment hearings last week heard from acting U.S. ambassador to the Ukraine William B. Taylor Jr., who testified that he “had authority over the bulk of the U.S. effort to support Ukraine against the Russian invasion and to help it defeat corruption.” The Washington Post lauded Taylor as someone who “spent much of the 1990s telling Ukrainian politicians that nothing was more critical to their long-term prosperity than rooting out corruption and bolstering the rule of law, in his role as the head of U.S. development assistance for post-Soviet countries.”

Transparency International, which publishes an annual Corruption Perceptions Index, shows that corruption surged in Ukraine during the late 1990s and remains at obscene levels (though recent years have shown slight improvements). Taylor was ambassador to Ukraine from 2006 to 2009, when corruption sharply worsened despite hundreds of millions of dollars in U.S. aid. Ukraine is now ranked as the 120th least corrupt nation in the world—lower than Egypt and Pakistan, two other major U.S. aid recipients. What Washington Redskins owner Dan Snyder is to the NFL, Taylor appears to be to the anti-corruption cause.

Bribing foreign politicians to encourage honest government makes as much sense as distributing free condoms to encourage abstinence. Rather than encouraging good governance practices, foreign aid is more likely to produce kleptocracies, or governments of thieves. As a Brookings Institution analysis observed, “The history of U.S. assistance is littered with tales of corrupt foreign officials using aid to line their own pockets, support military buildups, and pursue vanity projects.” And both American politicians and bureaucrats are want to continue the aid gravy train, regardless of how foreign regimes waste the money or use it to repress their own citizens.

If U.S. aid was effective, Ukraine would have become a rule of law paradise long ago. The country’s new president, Volodymyr Zelensky, may be sincere in his efforts to root out corruption. But it is an insult to both him and his nation to pretend that Ukraine cannot clean up its act without help from Donald Trump. The surest way to reduce foreign corruption is to end foreign aid.

Tyler Durden Sun, 11/03/2019 - 07:00
Published:11/3/2019 6:22:05 AM
[Education] Sexually Explicit Books Were Put in These Virginia Classrooms. Parents Want Answers.

Parents in Loudoun County, Virginia, are outraged after discovering that thousands of books were placed in classrooms across the school district this year as part... Read More

The post Sexually Explicit Books Were Put in These Virginia Classrooms. Parents Want Answers. appeared first on The Daily Signal.

Published:11/2/2019 2:18:12 PM
[Markets] Peter Schiff: When Is The Market Going To Wake Up To This Con? Peter Schiff: When Is The Market Going To Wake Up To This Con?


As expected, the Federal Reserve cut interest rates another 25 basis points on Wednesday.

The mainstream read the post FOMC meeting comments to be relatively hawkish, saying Powell and Company seemed to indicate that future rate cutting is on pause.

Peter Schiff opened up his podcast reminding us that just one year ago, the Fed was raising rates and telling us it would continue to do so through 2019. It also claimed that quantitative tightening was on “autopilot.”

And they said this with a straight face. And everybody believed them.”

At the time, Peter was saying it wasn’t going to happen. He said the central bank would start cutting rates and relaunch QE. And here we are.

The central bank removed the phrase saying it was committed to “act as appropriate to sustain the expansion” from its forward guidance. This was widely viewed as a more hawkish stance. The Fed replaced that language, instead saying, “The Committee will continue to monitor the implications of incoming information for the economic outlook as it assesses the appropriate path of the target range for the federal funds rate.” Powell was more emphatic during his press conference, saying bank officials “see the current stance of monetary policy as likely to remain appropriate.”

Of course, Powell again claimed that the Fed is not engaged in quantitative easing despite the repo operations and bond-buying program. He tried to draw a distinction between QE and today’s operations by pointing out that the central bank is buying short-term bonds today while it bought longer-term debt during QE.

This is really a distinction without a difference. I mean, who cares what the maturity of the bonds are?”

If the Fed was going to simply let the bonds fall off the books once they matured, the length of the term might be relevant. But Peter said that’s not what’s going to happen.

They’re just going to keep rolling these bonds over … This is another source of financing, of the Fed financing government debt. That’s quantitative easing. I mean, why did the Federal Reserve do QE in the first place? To keep interest rates lower than they would have been had they not done quantitative easing. And, by extension, to prop up asset prices.”

And why is the Fed doing what it’s doing today?

For the exact same reason. To keep interest rates artificially low, to suppress the cost of borrowing, to help out all debtors so they can make payments on their debt and to keep the stock market elevated, to keep real estate prices elevated.”

We also got the GDP numbers on Wednesday. Growth came in at 1.9%. That was better than expected. But a big chunk of that growth was consumer spending and a revived housing market. This was a function of Fed policy.

The Federal Reserve is basically doing now what it was doing then, for the same reason it was doing it then, except it doesn’t want to admit. Powell doesn’t want to say that the Fed is doing quantitative easing. The main reason is he doesn’t want to admit the economy needs it.

In fact, Powell keeps saying the economy is good.

Well, if everything is good, why do we need the emergency monetary policy when everything wasn’t good? When we were trying to get the economy out of a bad place, we did QE. And if it’s now in a good place, why are we doing it again? So, that’s why he wants to deny he’s doing it.”

When asked, Powell did admit that the current monetary policy is “accommodative.” Peter said it may even be more accommodative than it was when rates were at zero because inflation is higher. In fact. Powell admitted core CPI is finally above 2%. So, if inflation, even as the government measure it is above 2% and the Fed just dropped rates to 1.5%, we’re talking about negative real interest rates.

That is highly accommodative. I mean, why would the Fed be accommodating the strongest economy in the history of our country? Clearly, the reason Powell thinks we need so much support from the Fed is because he knows the economy is weak, that without the Fed’s help, it would implode. A strong economy doesn’t need the help of the Fed.”

Peter also talked about the fact that the Fed basically admitted that inflation is going to go a whole lot higher. Powell said the Fed would need to see a “really significant” and persistent move up in inflation before considering rate hikes. Basically, Powell conceded that the Fed wasn’t going to be vigilant about inflation. It is willing to let the genie out of the bottle. The question then becomes, how will it ever get the inflation genie back in the bottle? In short, it won’t. Think about what it took for Paul Volker to put the inflation genie back in the bottle in the 1980s. We saw 20% interest rates. Can you imagine that in this debt-riddled, overleveraged economy?

The only key is when is the market going to wake up to this game, this con. When are they going to realize the box the Fed has put itself in? That it is completely impotent when it comes to inflation-fighting? That it is all bark and no bite, and it basically, it’s not even barking yet? It’s only talking about the prospect of barking in the future, but it will never bite. And when the markets figure this out, the bottom is going to drop out of the dollar. Gold is going to absolutely go through the roof.”

Tyler Durden Fri, 11/01/2019 - 16:25
Published:11/1/2019 3:42:19 PM
[Entertainment] There’s now an e-reader just for kids, and it misses what children love about books Kids don’t feel burdened by carrying physical books; they feel girded with the tools of their own entertainment. Published:11/1/2019 6:10:50 AM
[Markets] Has California Lost 'The Mandate Of Heaven'? Has California Lost 'The Mandate Of Heaven'?

Authored by Charles Hugh Smith via OfTwoMinds blog,

At that point, it's too late: there's no bid for overpriced decaying bungalows, overpriced tech stocks, etc.

In Chinese history, natural disasters were viewed as portents that the The Mandate of Heaven (tianming or "Heaven's will") had been withdrawn from the ruling dynasty. Broadening this concept a bit to regional dominance and power, we might ask: has California lost the Mandate of Heaven?

How many conflagrations does it take for it to sink in that the Golden State has lost its lustre in some profoundly karmic fashion?

How many messes of human excrement on our doorstep does it take to realize the situation will never get better, it can only get worse--much worse?

How many power blackouts, traffic gridlocks and mandatory evacuations does it take for those in denial to accept that the Mandate of Heaven has been withdrawn?

Young residents of the state have never experienced the velocity and depth of California's famous busts. The last real spot of bother in California's economy occurred almost 30 years ago in the early 1990s. Since then, it's been one boom after another.

California's cycles of enormous booms followed by equally gargantuan busts date back to the first Gold Rush. The eventual collapse of mining shares and overpriced real estate in San Francisco was epic, and Mark Twain's account of his chest full of mining shares going from a tidy fortune to zip-zero-nada is a rueful reminder of how quickly fortunes can turn in the land of boom and bust.

It's deceptively easy to take a pencil and ruler and extend a boom into infinity: the number of iPhones sold (always up), Apple's quarterly earnings (always up), property tax revenues (always up) stocks' multiple expansion ((always up) and so on.

California's vast chattering class has ridden the IPO/VC/tech-monopoly/ stock buyback bubble for so long that it can't believe the bubble could ever burst. This class lives in enclaves protected from human excrement, the addicted and the deranged, and in an information enclave of me-too tech/entertainment boosterism.

But as Benoit Mandelbrot showed in his book The (Mis)behavior of Markets, markets and human behavior are inherently fractal, i.e. chaotic, which means there are limits on the predictability of markets and economic trends.

Thus the chattering class has no inkling that the masses can cancel their Netflix, Disney and Apple subscriptions as easily as they signed on. Once jobs, tips, bonuses and gigs dry up, the tech-entertainment giants will find expenses are still rising while revenues are cratering. Once revenues and profits crater, it's harder for management to justify borrowing billions more to fund more stock buybacks.

Extending booms into infinity doesn't track reality. The last real recession circa 1990-1991 blew a $20 billion hole in the California state budget, and accounting for inflation and growth since then, we can expect a $35 - $40 billion hole being blown in the budget once the IPO / tech bubble collapses, as the state is heavily dependent on capital gains taxes for much of its income tax revenues. (There is no long-term capital gains rate in California; all capital gains are taxed as ordinary income, a rate that quickly hits 13.3%.)

Once capital gains dry up, the state is in a fiscal crisis with no solution.

And if the state can't solve the homeless crisis with current spending in the hundreds of millions, then what will happen when the revenues dry up? What will happen if the homeless population doubles or triples? Look at the social havoc generated by the homeless population in San Francisco, which is roughly 1% of the total populace (around 9,000 homeless and a total population of 860,000.)

Phase transitions are intrinsic to systems displaying self-organized criticality such as markets and human behavior. Everything seems fine on the surface, and there's no pressing need to sell the house and move away; there seems to be plenty of time until the phase transition kicks in and suddenly everything has changed for the worse, and so much faster than anyone expected.

At that point, it's too late: there's no bid for overpriced decaying bungalows, overpriced tech stocks, etc. Just like Mark Twain's chest of mining stocks, the transition from being worth a fortune to no-bid near-worthlessness can be sudden indeed once California loses the Mandate of Heaven.

Beneath the surface, pressures are building and resilience is eroding, and when the tipping point is reached the transition will not be gradual and controllable, it will be non-linear and uncontrollable.

*  *  *

My recent books:

Will You Be Richer or Poorer? Profit, Power and A.I. in a Traumatized World (15% discount in October, Kindle $5.95, print $10.95) Read the first section for free (PDF).

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

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

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

*  *  *

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

Tyler Durden Tue, 10/29/2019 - 18:05
Published:10/29/2019 5:24:40 PM
[Politics] Daily Presidential Tracking Poll

The Rasmussen Reports daily Presidential Tracking Poll brought to you by Bill O'Reilly's: The United States of Trump for Tuesday shows that 46% of Likely U.S. Voters approve of President Trump’s job performance. Fifty-three percent (53%) disapprove.

The latest figures include 31% who Strongly Approve of the job Trump is doing and 42% who Strongly Disapprove. This gives him a Presidential Approval Index rating of -11. (see trends).

Regular updates are posted Monday through Friday at 9:30 a.m. Eastern (sign up for free daily email update).

Now that Gallup has quit the field, Rasmussen Reports is the only nationally recognized public opinion firm that still tracks President Trump's job approval ratings on a daily basis. If your organization is interested in a weekly or longer sponsorship of Rasmussen Reports' Daily Presidential Tracking Poll, please send e-mail to

Published:10/29/2019 8:52:36 AM
[Markets] 4 Risks To The Bullish View 4 Risks To The Bullish View

Authored by Lance Roberts via,

When I was growing up, my father, probably much like yours, had pearls of wisdom that he would drop along the way. It wasn’t until much later in life that I learned that such knowledge did not come from books but through experience. One of my favorite pieces of “wisdom” was:

“A sure-fire ‘no lose’ proposition is doing exactly the opposite of whatever ‘no lose’ proposition is being proposed.”

Of course, back then, he was mostly giving me “life advice” about not following along with my stupid-ass friends who were always up elbows deep in mischief.

However, that advice also holds true with the financial markets currently. As I have noted over the last couple of weeks (read this and this) the “bulls” certainly seem to regained control of the markets as new highs were reached on Monday. As I stated, between the Fed cutting rates, reigniting “not-QE,” and the President following our script of putting the “trade war” to rest, “what is there NOT to love if you are a bull.”

While we have begun to opportunistically increase our the equity exposures in our portfolios, we are cognizant there are currently several warning signs investors should consider before buying into the “bullish view.”

Here are four to consider.

Warning 1: Conflicting Confidence

There are several different surveys of confidence, which all currently show the same thing. Individuals are extremely optimistic on just about everything. Recently, I discussed our composite confidence indicator:

“The latest release of the University of Michigan’s consumer sentiment survey rose to a three-month high of 96, beat consensus expectations, and remains near record levels. The chart below shows our composite confidence index, which combines both the University of Michigan and Conference Board measures. The chart compares the composite index to the S&P 500 index with the shaded areas representing when the composite index was above a reading of 100.”

“On the surface, this is bullish for investors. High levels of consumer confidence (above 100) have correlated with positive returns from the S&P 500.”

As I have discussed many times previously, the stock market rise has NOT lifted all boats equallyMore importantly, the surge in confidence is a coincident indicator and more suggestive, historically, of market peaks as opposed to further advances.

As David Rosenberg, the chief economist at Gluskin Sheff previously wrote:

‘For an investment community that typically lives in the moment and extrapolates the most recent experience into the future, it would only fall on deaf ears to suggest that peak confidence like this and peak market pricing tend to coincide with each other.”

However, that confidence may be short-lived as “CEO Confidence” is near historic lows. As we covered in our previous analysis, this divergence should not be dismissed. A quick look at history shows this historical relationship between these two measures of confidence. The divergence is seen every time prior to the onset of a recession.

Notice that CEO confidence leads consumer confidence by a wide margin. This lures bullish investors, and the media, into believing that CEO’s really don’t know what they are doing. Unfortunately, consumer confidence tends to crash as it catches up with what CEO’s were already telling them.

What were CEO’s telling consumers that crushed their confidence?

“I’m sorry, we think you are really great, but I have to let you go.”

Warning 2 – All Hat, No Cattle

For those of you unfamiliar with Texas sayings, “all hat, no cattle” means that someone is acting the part without having the “stuff” to back it up. Just wearing a “cowboy hat,” doesn’t make you a “cowboy.”

One of the problems for the “bulls” currently  is that while asset prices are hitting record highs, profit margins aren’t.

In other words, investors, in their rush to “be long the market,” are paying ever-higher prices for each dollar of profit being produced. The problem, of course, is falling profit margins, not surprisingly, have preceded recessions and bear markets.

We will discuss valuations more in a moment, but the important point here is that investors are increasingly taking on “risk,” without consideration for the consequences. As shown, below speculators are now extremely “short volatility” which suggests there is no fear of a correction. Unfortunately, for the bulls, this has typically been a pretty reliable contrarian indicator.

Much of the existing “complacency” stems from the belief the Fed will continue to lower interest rates and provide ongoing support for asset prices. After all, this is what happened as the Federal Reserve kept interest rates suppressed after the financial crisis. However, the difference between now and then is that individuals are currently fully invested in the financial markets.

“Cash is low, meaning households are fairly fully invested.” – Ned Davis

In other words, the “pent up” demand for equities is no longer available to the magnitude that existed following the financial crisis which supported the 300% rise in asset prices.

While investors may want to believe asset prices can only go higher, this is the very basis of the “Greater Fool Theory.” At some point, someone, is going to be left holding the bag.

Warning 3 – Valuations

With the global levels of over-valuation of stocks and bonds, combined with excessive optimism, and leverage as noted above, such has set the stage for exceedingly low returns over the next decade, or longer. As our friends over at Crescat Capital recently noted, valuations are anything but “cheap.”

What happens next should be obvious: unless one assumes that the laws of economics and finance are irreparably broken; a deep recession and a market crash are inevitable, especially after the longest central bank-sponsored bull market in history.

However, in the short-term, valuations, as discussed previously, are a poor market timing device for investors. However, from a long-term investment perspective, valuations mean a great deal as it relates to expected returns.

With earnings estimates being revised lower, economic growth remaining weak, and high levels of complacency, the importance of valuations should not be readily dismissed.

Warning 4 – Share Buy Backs

We have discussed the issue of “share buybacks” numerous times and the distortion caused by the use of corporate cash to lower shares outstanding to increase earnings per share.

“The reason companies spend billions on buybacks is to increase bottom-line earnings per share which provides the ‘illusion’ of increasing profitability to support higher share prices. Since revenue growth has remained extremely weak since the financial crisis, companies have become dependent on inflating earnings on a ‘per share’ basis by reducing the denominator. As the chart below shows, while earnings per share have risen by over 360% since the beginning of 2009; revenue growth has barely eclipsed 50%.”

The problem with this, of course, is that stock buybacks create an illusion of profitability. However, for investors, the real issue is that almost 100% of the net purchases of equities has come from corporations.

The problem is that corporate spending binge may be coming to an end. Via Goldman Sachs:

“Corporate buybacks are ‘plummeting’ as companies tighten their purse strings, and it could have a big impact on the market, Goldman Sachs warned in a note to clients.

In the second quarter, S&P 500 share buybacks totaled $161 billion, about 18% less than the first quarter, the firm found. The amount spent on buybacks this year is down 17% from a year earlier.

For 2019, total buybacks will drop 15% to $710 billion, and in 2020 they see a 5% decline to $675 billion.”

While this may not sound like much, it suggests that a primary support for higher asset prices is being removed. Of course, if a recession sets in, share repurchases could easily cease altogether. 

If They Don’t “Buy & Hold” – Why Should You?

Of course, these are just “warning signs.” None them suggest that the markets, or the economy, are immediately plunging into the next recession-driven market reversion.

But they are warning signs nonetheless. Past experience suggests that future returns are likely to be far less than historical averages suggest. Furthermore, there is a dramatic difference between investing for 30 years, and whatever time you personally have left to your financial goals.

While much of the mainstream analysis suggests you should “invest for the long-term,” and “buy and hold” regardless of what the market brings, that is not what professional investors are doing.

The point here is simple. No professional, or successful investor, every bought and held for the long-term without regard, or respect, for the risks that are undertaken. If the professionals are looking at “risk,” and planning on how to protect their capital from losses when things go wrong, then why aren’t you?

Tyler Durden Tue, 10/29/2019 - 08:30
Published:10/29/2019 7:52:15 AM
[Markets] Russia-Africa "Shared Vision 2030": Alternative To Neo-Colonial Pillage Russia-Africa "Shared Vision 2030": Alternative To Neo-Colonial Pillage

Authored by Matthew Ehret via The Strategic Culture Foundation,

A long night of suffering has kept one of the richest continents on the globe in a state of virtual dark age for over a century. Although the age of science has given humanity the means to access the highest standards of living in world history, 2019 has seen 15 000 children die of preventable deaths every day (illness, starvation and murder) with half occurring in Sub Saharan Africa. In a world of advanced energy technology, only five of 54 African countries have access to 100% electrification and all are North African.

Africa’s dark situation was never due to simplistic terms like “corruption” or “incompetence”, nor was Africa ever “culturally incompatible” with western technology as some racists have taught in social science classes. The truth is that Africa was never given true independence as is popularly believed. Sure there was nominal independence, but the economic independence needed to become a sovereign country was never granted by the empire.

This is why the growing presence of nations such as China and Russia on the continent are increasingly seen as beacons of hope for a new generation of Africans who recognise in this Eurasian alliance an opportunity to capture the future they were robbed of over half a century ago.

The Russian African Summit in Sochi

A watershed moment in this systemic change has occurred with the first Russia-Africa Economic and Security Summit in Sochi (Oct. 23-24) co-chaired by President Putin and Egypt’s President el-Sisi, featuring 50 African heads of State alongside 3000 representatives of business, government, and finance. This summit was the first of its kind, and followed hot off the heels of China’s first China-Africa Economic and Security Summit which was held in July 2019. In the past two years, 40 African states have signed onto China’s Belt and Road Initiative which has scared many imperially minded technocrats in the west.

In an interview leading up to the Summit, President Putin beautifully echoed the Chinese philosophy of win-win development for Africa:

We are not going to participate in a new ‘repartition’ of the continent’s wealth; rather, we are ready to engage in competition for cooperation with Africa, provided that this competition is civilized and develops in compliance with the law. We have a lot to offer to our African friends.”

While it does not have the same level of investments as China (which leads the world with $200 billion/year), Russia’s investments have quadrupled since 2009 now clocking it at $20 billion/year and growing with a focus on rail, energy diplomacy, education, culture sharing and military assistance. Russia is currently building Egypt’s first nuclear reactor in El Dabaa, and is negotiating with several other nations such as Ethiopia, Nigeria and Kenya to go nuclear which will end the policy of technological apartheid imposed onto Africa for decades. Russia has announced the construction of an Africa Center of Excellence and Nuclear Power in Ethiopia and the Russian Academy of Sciences announced branches opening up across Africa. A vital driver for development, Russian Railways is working to construct trans-border and intra-border rail in Ghana, Burkina Faso, Nigeria, Libya, Egypt and East Africa (just to name a few). During the summit, Russia announced a cancellation of a $20 billion African debt as an act of goodwill.

President Putin pointed out the elephant in the room when he said:

 “We see a number of Western states resorting to pressure, intimidation, and blackmail against governments of sovereign African countries. They hope it will help them win back their lost influence and dominant positions in former colonies and seek—this time in a ‘new wrapper’—to reap excess profits and exploit the continent’s resources without any regard for its population, environmental or other risks. They are also hampering the establishment of closer relations between Russia and Africa—apparently, so that nobody would interfere with their plans

Unlike the west, Russia has the advantage of having encouraged African development during the dark days of the Cold War and is thus infinitely more trusted than the west, whose positive attempts to genuinely help Africa develop (as seen under the leadership of John F. Kennedy, Italian Industrialist Enrico Mattei or President de Gaulle) ended with either assassinations or coups.

Some may call Putin’s words anti-west hyperbole, but a comparison of the quality of investments Russian vs American into Africa demonstrates the two opposing intentions referenced by Putin.

The Trap of Conditionalities

Where US Aid, the World Bank and IMF have poured billions of dollars into Africa over decades, standards of living, and stability of those recipient nations have only plummeted. This is the opposite result one would expect from such “generous” behaviour. Why?

The answer can be partly be found in the shift towards IMF/World Bank conditionalities which grew out of a monstrous paradigm shift that occurred in the 1950s-1970s. Where leaders such as Franklin Roosevelt and his ally Henry Wallace envisioned an industrialized Africa liberated from colonialism, the Bretton Woods instruments they created to provide long term low interest loans internationally were cleansed of anti-colonial leaders and replaced with deep state tools early in the Cold War ensuring that any credit issued would be tied to deadly conditionalities as exposed by John Perkins in his book Confessions of an Economic Hitman.

Under this neo-colonial formula, Africa was allowed to get money. But those dollars would no longer be “permitted” to be invested into genuine nation building or advanced technological progress as Patrice Lumumba, Kwame Nkrumah or Thomas Sankara intended. Only “appropriate technologies” such as windmills or solar panels were permitted. Small wells were ok, but major water/energy projects like hydroelectric dams or Great Manmade Rivers were not allowed. Certainly no nuclear power was permitted (unless you happened to be an apartheid state run by white racists of course). Oil drilling and mining investments were ok, but only if foreign companies like Barak Gold or Standard Oil did the work and none of the revenue or electricity benefited the people. Without the means of producing real wealth (defined as combination of material, intellectual and spiritual growth), Africa’s productive powers of labor collapsed with their sovereignty and the debts only grew.

Hysterical Neocons Lash out

It is no secret that just as China began outpacing the Americans in African investment in 2007. Rather than acting intelligently to increase genuine infrastructure funding as the Chinese had done, the US Deep State not only continued its outdated debt-slavery practices, but created AFRICOM as a military arm across the continent. Ironically AFRICOM’s presence coincided with a doubling of militant Islamist activities since 2010 with 24 groups now identified (up from only 5 in 2010) and a 960% increase in violent attacks from 2009-2018. Just as western lending has caused a pandemic of slavery, so too has western security forces only spread mass insecurity.

The fact is that the neo cons infesting the Military Industrial Complex have openly identified both countries as co-equal enemies to the USA and understand that this alliance represents an existential threat to their hegemony. Speaking at the Heritage Foundation last year, former National Security Advisor John Bolton said (without blushing): 

“The predatory practices pursued by China and Russia stunt economic growth in Africa; threaten the financial independence of African Nations; inhibit opportunities for US investment… and pose a threat to US national security interests.”

His words were bolstered by acting head of AFRICOM Thomas Waldauser in Feb. 2019 “To thwart Russian exploitative efforts, USA AFRICOM continues to work with a host of partners to be the military partner of choice in Africa.”

Luckily for the world, Bolton and Waldauser were both flushed from their posts by an American President who has chosen to ally with Russia and China rather than risk World War III. However, the dangerous ideology and deep state power structure they represent is not yet defeated, and with Trump’s intention to pull troops out of Syria, these psychotic forces are as dangerous as ever.

Tyler Durden Tue, 10/29/2019 - 03:30
Published:10/29/2019 2:52:06 AM
[Markets] "I See Bubbles Everywhere" - Fearful Bob Shiller Warns "There's No Place To Hide" "I See Bubbles Everywhere" - Fearful Bob Shiller Warns "There's No Place To Hide"

Authored by Mike Shedlock via MishTalk,

Economist Robert Shiller says there is no alternative to riding out bubbles.

Please consider Stock Market Crash Near? Nobel Laureate Sees 'Bubbles Everywhere'

When Nobel Laureate and "Irrational Exuberance" author Robert Shiller says he sees bubbles in the financial markets — you'd better listen up. He literally wrote the book on stock market crashes and bubbles after all.

"I see bubbles everywhere," Shiller, economics professor at Yale University and author of just-published "Narrative Economics" told investors gathered in Los Angeles Wednesday. "There's no place to go. You just have to ride it out. You invest even though you expect the price to decline." Shiller famously predicted the 2000 stock market crash and the 2007 crash of the housing market.

Shiller says the housing market is in a bubble phase, not unlike 2005. That was the point the housing bubble was inflated, but yet to go parabolic. "It's like 2005 again," Shiller said. "San Francisco and L.A. are already slowing down." That's a "bad indicator," he said, as those markets have been going up for years.

No Place to Go?!

I do not care about books or past predictions.

I care about logic of the moment.

For starters, if housing was like "2005 again", San Francisco and LA would not be "already slowing down." But that is nitpicking.

Here's the important issue: On an individual basis, It is absurd to say there is "no place to go".

Places to Hide

  1. Gold

  2. US Dollar

  3. Foreign Currencies

  4. US treasuries 5-year or less

It is impossible for all of those to decline at the same time. Heck it is impossible for 2 and 3 to decline at the same time except compared to gold or some other asset, which of course implies somewhere else to hide.

Bubbles B. Goode: Musical Tribute to the Fed

It's true that someone must hold every stock and every bond. However, Shiller's statement "You just have to ride it out" is nonsense at the individual "you" level.

Choose wisely where to hide.

Tyler Durden Mon, 10/28/2019 - 16:40
Published:10/28/2019 3:48:06 PM
[Politics] Daily Presidential Tracking Poll

The Rasmussen Reports daily Presidential Tracking Poll brought to you by Bill O'Reilly's: The United States of Trump for Monday shows that 45% of Likely U.S. Voters approve of President Trump’s job performance. Fifty-four percent (54%) disapprove.

The latest figures include 31% who Strongly Approve of the job Trump is doing and 43% who Strongly Disapprove. This gives him a Presidential Approval Index rating of -12. (see trends).

Regular updates are posted Monday through Friday at 9:30 a.m. Eastern (sign up for free daily email update).

Now that Gallup has quit the field, Rasmussen Reports is the only nationally recognized public opinion firm that still tracks President Trump's job approval ratings on a daily basis. If your organization is interested in a weekly or longer sponsorship of Rasmussen Reports' Daily Presidential Tracking Poll, please send e-mail to

Published:10/28/2019 8:48:59 AM
[Markets] The EU Is Rewriting WWII History to Demonize Russia The EU Is Rewriting WWII History to Demonize Russia

Authored by Max Parry via,

Last month, on the 80th anniversary of the start of World War II, the European Parliament voted on a resolution entitled “On the Importance of European Remembrance for the Future of Europe.” The adopted document:

2. Stresses that the Second World War, the most devastating war in Europe’s history, was started as an immediate result of the notorious Nazi-Soviet Treaty on Non-Aggression of 23 August 1939, also known as the Molotov-Ribbentrop Pact, and its secret protocols, whereby two totalitarian regimes that shared the goal of world conquest divided Europe into two zones of influence;

3. Recalls that the Nazi and communist regimes carried out mass murders, genocide and deportations and caused a loss of life and freedom in the 20th century on a scale unseen in human history, and recalls the horrific crime of the Holocaust perpetrated by the Nazi regime; condemns in the strongest terms the acts of aggression, crimes against humanity and mass human rights violations perpetrated by the Nazi, communist and other totalitarian regimes.

For 75 years, we have been told that the war started on September 1st, 1939 when Germany invaded Poland, even though the Pacific Theater between Japan and China began two years earlier. Now we are to understand that it actually began eight days prior when the German foreign minister visited Moscow. Take no notice of the inherent doublespeak in the premise that a war could be the consequence of a peace agreement, which without any evidence provided is said to have contained “secret protocols”, not provisions. You see, unlike the other pacts signed between European countries and Nazi Germany?—?such as the Munich Betrayal of 1938 with France and Great Britain to which the Soviets were uninvited while Austria and Czechoslovakia were gifted to Hitler for the courtesy of attacking Moscow - ?Molotov-Ribbentrop was really a confidential agreement between Hitler and Stalin to conquer Europe and divide it between them.

This is pure mythology. The fact of the matter is that neither the Soviets or even Germany drew the dividing line in Poland in 1939, because it was a reinstatement of the border acknowledged by the League of Nations and Poland itself as put forward by the British following WWI. Even Winston Churchill during his first wartime radio broadcast later that year admitted:

Russia has pursued a cold policy of self-interest. We could have wished that the Russian Armies should be standing on their present line as the friends and allies of Poland, instead of as invaders. But that the Russian Armies should stand on this line was clearly necessary for the safety of Russia against the Nazi menace.

Yet according to the EU, even though Moscow was the last country to agree to a peace deal with Hitler, it was all part of a hidden plot between them. In that case, why then did Germany choose to invade the USSR in 1941? The EU leaves this question unanswered. Forget about its racial policies of enslaving slavs or that Hitler openly declared in Mein Kampf that Germany needed to conquer the East to secure the LebensraumNevermind that in the Spring of 1941, less than two months before Operation Barbarossa, Stalin gave a speech to the Kremlin at a state banquet for recent graduates of the Frunze Military Academy to give warning of an imminent attack:

War with Germany is inevitable. If comrade Molotov can manage to postpone the war for two or three months through the Ministry of Foreign Affairs, that will be our good fortune, but you yourselves must go off and take measures to raise the combat readiness of our forces.

The EU has redacted that the entire reason for the signing of the Nazi-Soviet pact in August 1939 had been to buy time for the Red Army’s attrition warfare strategy to adequately prepare its armaments against a future invasion by the Wehrmacht. The Soviet leadership well understood that Germany would eventually renege on the agreement, considering that in 1936 it had signed the Anti-Comintern Pact with Japan and Italy directed at the Communist International. For six years, the USSR was thwarted in its attempts to forge an equivalent anti-fascist coalition and to collectively defend Czechoslovakia by the British and the French, whose ruling classes were too busy courting and doing business with Germany. It had been the Soviets alone who defended the Spanish Republic from Franco in the final rehearsal before the worldwide conflict and only when all other recourses had run out did they finally agree to a deal with the Hitlerites.

Just a week prior to the signing of the neutrality treaty, Stalin gave a secret speech to the Politburo where he explained:

The question of war or peace has entered a critical phase for us. If we conclude a mutual assistance treaty with France and Great Britain, Germany will back off of Poland and seek a modus vivendi with the Western Powers. War would thus be prevented but future events could take a serious turn for the USSR. If we accept Germany’s proposal to conclude with it a non-aggression pact, Germany will then attack Poland and Europe will be thrown into serious acts of unrest and disorder. Under these circumstances we will have many chances of remaining out of the conflict while being able to hope for our own timely entrance into war.

This latest resolution is part of a long pattern of misrepresentation of WWII by the Anglo-Saxon empire, but is perhaps its most egregious falsification that truly desecrates the graves of the 27 million Soviet citizens who were 80% of the total Allied death toll. Earlier this year, for the commemoration on the 75th anniversary of the Normandy landings, Russia and its head of state were excluded from the events in Portsmouth, England. As if the ongoing absence of Western European leaders from the May 9th Victory Day ceremonies held annually in Russia weren’t insulting enough, while it’s true that the Eastern Front was not involved in Operation Overlord, Russian President Vladimir Putin had previously been in attendance at the 70th anniversary D-Day events in 2014. No doubt the increase in geopolitical tensions between the West and Moscow in the years since has given the EU license to write out Russia’s role in the Allied victory entirely with little public disapproval, though many of the families of those who volunteered in the International Brigades were rightly insulted by this tampering of history and voiced their objection.

The EU motion‘s real purpose is to fabricate the war’s history by giving credit to the United States for the liberation of Europe while absolving the Western democracies that opened the door for the rise of fascism and tried to use Germany to annihilate the USSR. History itself should always be open to debate and subject to study and revision, but the Atlanticists have made this formal change without any evidence to support it and entirely for political purposes. Like the founding of the EU project itself, the declared aim of the proposal is supposedly to prevent future atrocities from taking place, even though the superstate was designed by former Nazis like Walter Hallstein, the first President of the European Commission, who was a German lawyer in several Nazi Party law organizations and fought for the Wehrmacht in France until his capture as a POW after the invasion of Normandy.

Rather than preventing future crimes, the EU has committed one itself by deceptively modifying the historical record of communism to be parallel with that of the Third Reich. Even further, that they were two sides of the same coin of ‘totalitarianism’ and that for all the barbarity committed during the war, the Soviets were equally culpable — or judging by the amount of times the text cites the USSR versus Germany, even more so. It remains unclear whether we are now to completely disregard the previous conclusions reached by the military tribunals held by the Allies under international law at Nuremberg of which all 12 war criminals sentenced to death in 1946 were German, not Soviet. The document doesn’t even attempt to hide its politicized direction at the current government in Moscow, stating that:

Russia remains the greatest victim of communist totalitarianism and that its development into a democratic state will be impeded as long as the government, the political elite and political propaganda continue to whitewash communist crimes and glorify the Soviet totalitarian regime.

This accusation does not stand up to critical observation, as Russia has since erected official memorials to those executed and politically persecuted during the so-called ‘Great Terror.’ However, the stark difference between the EU resolution and the Wall of Grief in Moscow is that the latter is based on evidence from the Soviet archives. It has become a widespread and ridiculous belief in the West that Stalin somehow killed as much as five times as many people as Hitler, an absurdity not reflected in the now disclosed and once highly secretive Soviet archives, which after two decades of examination show that over a period of three decades from the early 1920s to his death in 1953, the total recorded number of Soviet citizens executed by the state was slightly less than 800,000. While that is certainly a horrid number, how does it even begin to compare to an industrial scale extermination based on the race theory?

How can anyone believe Stalin killed tens of millions of people when even the most simple analysis of a population demographics chart shows that the Soviet population rate consistently increased each decade with the only reduction taking place during WWII as a result of their casualties? Socialists, who perhaps more than any other political tendency seem to suffer from autophobia, should defend their own history from such falsification. It is only when flaws occur under communist states that the entire political and economic system is to be denounced outright, but never capitalism which for five centuries has colonized half the world while enslaving and killing entire nations.

Most of the wildly exaggerated death figures stem from falsities written in The Black Book of Communism by a group of right-wing French academics in 1997,who did not conceal their apologism for the Nazi collaborationist self-proclaimed Russian Liberation Army (ROA) commanded by Gen. Andrey Vlasov who defected to Germany during the war:

A singular fate was reserved for the Vlasovtsy, the Soviet soldiers who had fought under the Soviet general Andrei Vlasov. Vlasov was the commander of the Second Army who had been taken prisoner by the Germans in July 1942. On the basis of his anti-Stalinist convictions, General Vlasov agreed to collaborate with the Nazis to free his country from the tyranny of the Bolsheviks.

The other highly cited work by the West for its overestimated portrayal of Soviet repression is the equally unreliable The Gulag Archipelago volumes by Alexander Solzhenitsyn, who as historian Ludo Martens noted also attempted to provide justification for Vlasov’s treason in his best-selling 1973 work:

And so it was that Vlasov’s Second Shock Army perished, literally recapitulating the fate of Samsonov’s Russian Second Army in World War I, having been just as insanely thrown into encirclement. Now this, of course, was treason to the Motherland! This, of course, was vicious, self-obsessed betrayal! But it was Stalin’s. Treason does not necessarily involve selling out for money. It can include ignorance and carelessness in the preparations for war, confusion and cowardice at its very start, the meaningless sacrifice of armies and corps solely for the sake of saving one’s own marshal’s uniform. Indeed, what more bitter treason is there on the part of a Supreme Commander in Chief?

The truth is located in the Soviet archives which indicate that Stalin’s successor, the Ukrainian-born Nikita Khrushchev, was as intent on absolving the entirety of the Soviet leadership as himself from any culpability in the purges of the 1930s so that blame for its excesses were placed squarely on his predecessor. In succession, Western historians like the British Foreign Office propagandist Robert Conquest followed his example and this account quickly became official doctrine. In hindsight, Khrushchev’s infamous 1956 secret speech, “On the Cult of Personality and Its Consequences”, was what planted the seeds of self-doubt in the Soviet system that would eventually lead to its undoing decades later. To the contrary, what the historical records show is most of those who were purged in that period were not necessarily perceived as political threats to Stalin himself, but were targeted because of an overall systemic paranoia held by the entire Soviet government regarding internal sabotage and counter-revolutionary activity by a real fifth column getting inspiration from a certain traitorous former Bolshevik in exile and a potential invasion originating from outside the country.

Many forget that during the Russian Civil War, exactly such a scenario had occurred when the Allies of World War I, including the United States, collectively intervened on the side of the Whites only to be driven out by the Red Army, making such fearful instincts not entirely unreasonable. Not to mention, the rapid industrialization of the entire nation in a single decade while in preparation for the growing threat of war with Germany. When Hitler began his Masterplan for the East, their worst fears came to fruition when tens of thousands of Banderite turncoats enlisted in the 14th Waffen Grenadier Division of the SS (1st Galician) in Ukraine to collaborate with the German occupiers in the slaughter of their fellow countrymen and after the war ended, continued their treasonous struggle during the 1950s with assistance from the CIA. So the saying goes, just because you’re paranoid doesn’t mean they aren’t out to get you…

As for the accusation of “whitewashing”, it is true that recent polls indicate that 70% of Russians today hold a favorable view of Stalin — but just as many are nostalgic for communism itself and regret the breakup of the USSR on the basis that the socialist system ‘took care of ordinary people.’ Putin did once remark that despite Stalin’s legacy of repression, he doubted that the native Georgian statesman would have been willing to drop two atomic bombs on Japan like the United States, an atrocity that killed 225,000 innocent civilians (most of them instantly) which is more than a quarter of those capitally punished during the entire Stalin era. Was he wrong to say so? A significant amount of deaths also occurred in the Soviet-wide famines of the 1930s, but there is significantly more evidence to suggest that the British deliberately starved 3 million Bengalis to death then there is to support the Holodomor fraud concocted by the Ukrainian nationalist diaspora. If the West wants to talk about deliberate starvation, it should take a look at what the U.S. did with its economic sanctions in the 1990s killing half a million Iraqi children which former U.S. Secretary of State Madeleine Albright famously described as “worth it.”

This isn’t the first time the Anglosphere has historically omitted the Soviet role in the Allied victory or conflated the USSR with the Third Reich. On previous occasions the European Parliament has issued resolutions declaring August 23rd “a European day of remembrance of the victims of the Nazi-Soviet alliance.” This is all an attempt by the Atlanticists to depict communism as somehow worse than fascism while disconnecting the Nazis from the lineage of European settler colonialism whose racism was its source of inspiration. Why is that which befell the Jews not considered an extension of what was already done to the Herero-Nama tribes for which Namibia is now suing Germany a century later?

The neoliberal political establishment in Europe and its anti-EU populist opponents are fond of appearing dead-set against one another, but it seems they share the same fairytale beliefs about WWII that the Nazis and Soviets were equivalent evils as inscribed in this latest decree. It has always been ironic that the liberal billionaire “philanthropist” and currency manipulator George Soros is so derided by right-wing populists when it was his Open Society Institute NGOs which engineered the collapse of communism in Eastern Europe. Soros may be averse to the anti-immigrant brand of right-wing nationalism currently on the rise in Western Europe, but as a fanatical Russophobe he is willing to make strange bedfellows with ultra-nationalists in Kiev to undermine Moscow’s sphere of influence and that includes revising WWII history to a version favored by the Banderites which took power during the pro-EU 2014 coup d’etat in Ukraine.

The Nazi junta regime in Kiev has since instituted Russophobic ‘de-communization’ laws erasing the remaining traces of Ukraine’s Soviet past while replacing them with memorials to their wartime foes. A recent example was the city of Vinnitsa renaming a street that paid tribute to the Soviet spy and war hero Richard Sorge to that after Omelyan Hrabetsk, a commander of the Ukrainian Insurgent Army which cooperated with Germany during the war and killed thousands of Poles and Jews. Sorge posed as a German journalist in Tokyo and famously provided timely intelligence to Moscow that Japan did not plan to attack the USSR, allowing Stalin to transfer essential reinforcements to the Battle of Moscow which proved to be a major turning point in the war. He was executed by the Japanese in 1944 and posthumously awarded the Hero of the Soviet Union.

Now the EU is ‘decommunizing’ history in its own legislation. Meanwhile, Soros’s influence over the EU cannot be overstated as his lobbying power has enabled him to provide direct council to its executive branch more than any official head of state in the political and economic union. The hedge fund tycoon made a fortune as an investor during Russia’s mass privatization in the 1990s after enlisting Jeffrey Sachs and the IMF to apply ‘shock therapy’ to its economy as it did in Poland and his native Hungary. Under Putin, however, Soros’s NGOs have since been barred from Russia. Perhaps the reason he can so cynically provide support to fascist elements in Ukraine to undercut Moscow is that he did so personally in his upbringing in Hungary.

Born Gyorgy Schwartz, during WWII he was a teenager from an affluent Jewish family which survived the Axis occupation by using their wealth to bribe a government official from the collaborationist Arrow Cross government who provided the Soros’s forged documents identifying them as Christians, while the adolescent by his own admission delivered deportation notices to other Jews. A short time later, the young Soros impersonated the adopted gentile son of an official who inventoried the stolen valuables and property from Jewish estates and even accompanied him during his work. One would assume as a Jew he would have been haunted by these experiences, but Soros has repeatedly stated he has no regrets and even disturbingly compared it to his future work as an investor.

Like Soros, the EU has no ideology except an unquenchable thirst for greed and is fond of Nazis when they are the kind that hate Russia. For its own political interests, it is willing to dangerously foster a version of history invented by a rebranded far right where the quislings who collaborated with the Axis powers elude guilt and the Soviets who courageously defeated them are maliciously slandered. Fascism was never fully eradicated only because the West continued to nurture it during the Cold War and even now that capitalism has been reinstated in Eurasia, it continues to do so to undermine a resurgent Moscow on the world stage.

As the world appears increasingly on the brink of WWIII, one is reminded of the expression by Karl Marx who famously stated that “history repeats itself…first as tragedy, then as farce” in The Eighteenth Brumaire of Louis Napoleon, when comparing Napoleon Bonaparte’s seizure of power in the French Revolution with the coup by his nephew half a century later which brought an end to the French Revolution. Equally fitting is the humorous line by the legendary writer and noted anti-imperialist Mark Twain who reputedly said, “history doesn’t repeat itself, but it does rhyme.”

Both are applicable to the unquestionable tragedy of WWII and the farcical mockery of its history by the EU whose policies continue to make another global conflict that much more likely.

Tyler Durden Mon, 10/28/2019 - 02:00
Published:10/28/2019 1:15:32 AM
[Markets] The Forgotten Media Purges Of The Great Depression The Forgotten Media Purges Of The Great Depression

Authored by Steve Penfield via The Unz Review,

Republican Hoover built the federal broadcasting shield in 1927. Roosevelt fashioned it into a weapon in 1934 and Democrats have never put it down since. One might consider the elaborate FCC speech barriers: A Poll Tax on Public Debate

One of the more enduring myths accepted as reality in our modern society is that America has a relatively free press. The ruling authorities and their entrenched accomplices promote that lie as diligently as they work to ensure that it never again becomes true.

America did have a mostly free and independent press until the rise of broadcasting in the 1920s. Within a few years, a small group of Republicans, progressives and corporate interests successfully nationalized the airwaves with restrictive licensing that blocked competition, rewarded insiders and squelched dissent.

Over the next few decades, the increasingly powerful medium of radio and then television drowned out the previously broad spectrum of information and ideas—with often three or more diverse choices of daily newspapers in many U.S. cities—and turned free speech into carefully rationed federal broadcasting privileges, their anointed urban newspaper monopolies and a few approved magazines.

One of the more ironic parts of this forgotten history is that a Republican, Herbert Hoover, led the initial charge to politicize the press. When the more authoritarian FDR took the reins in 1933—holding onto power until his death in 1945—he would ultimately purge the airwaves as well as the newspaper and magazine stands of the nation’s greatest commentators, publishers, editors and writers. In their absence, only pro-war / pro-welfare state neo-liberals and neo-conservatives would survive in mainstream media for generations to come.

March 1919 post-WWI military parade. New York Gov. Al Smith (far left), Bill Hearst (center), Franklin Roosevelt (far right).

During Roosevelt’s tenure in office, administration officials and prominent associates would wage a scorched-earth campaign against any independent voice of dissent while generously rewarding supporters. Popular radio talk-show hosts Father Charles Coughlin and Boake Carter were dramatically forced off the air. New Republiccolumnist and author John Flynn was successfully targeted for censorship by FDR himself. Independent newspaper publisher William Randolph Hearst, a lifelong Democrat who initially supported FDR but later soured to New Deal abuses, was vilified and marginalized. Robert “Colonel” McCormick of the Chicago Tribunegot roughed up by Roosevelt’s cronies in a similar fashion.

(Anti-New Deal publishers Hearst and McCormick were so popular with the general public that their newspaper “holdings comprised over 50 percent of the country’s Sunday circulation” according to pro-FDR media historian Betty Houchin Winfield. Once those independent newsmen’s reputations were destroyed, establishment papers in New York and Washington D.C. would come into prominence.)

The Hollywood studios of Walt Disney were occupied by federal troops one day after Pearl Harbor. The editor and lead columnist for the Saturday Evening Post—middle-America’s most admired weekly read—were run off the magazine. Libertarian writer, Albert Jay Nock, was blacklisted. Editor for the liberal Nation magazine, Oswald Garrison Villard, met the same fate. Famous aviator and anti-war spokesman, Charles Lindbergh, found himself viscously condemned by pro-war media for quietly speaking the truth. Popular syndicated columnist at the Baltimore SunH.L. Mencken, may have “voluntarily” went into oblivion under hostile conditions that still don’t make sense.

These are just some of the big names that went down with a fight. (All of the boldednames above will receive some overdue exoneration a bit later.) No one will ever know how many other smaller fish were scared off from honest reporting as a result of political pressure.

Today, this would be like President Trump having his underlings run coordinated smear campaigns and putting the Washington Post, Time magazine, and both MSNBC and CNN out of business or replacing their editorial staff with reliable pro-Trump lackies. To complete the parallel, a Trump campaign spokesman in Hollywood would have to direct a movie portraying a major publisher (say, Arthur Sulzberger of the NYT) as a hideous demagogue… all in good sport, of course.

(Mainstream media goes berserk when Trump merely defends himself from personal attacks during hostile press conferences or from wild conspiracy theories. Back in the 1930s, reporters were far more dignified in their principled disagreement with New Deal policies. And President Roosevelt was much more underhanded in dealing with the press than Trump’s frequent social-media salvos—many of which are so obvious as to be written in ALL CAPS.)

Hoover’s Enduring Legacy: A Poll Tax on Public Debate

Republican Herbert Hoover—who served as President from March 1929 to March 1933—is most known for being the unlucky occupant of the Oval Office during the New York City stock market crash of October 1929. (The Governor of New York at this time—Franklin Delano Roosevelt—usually gets left out of that narrative.)

“Wonder Boy” Hoover—as nicknamed by Republican predecessor Calvin Coolidge over his penchant for meddling—took major strides to increase spending, bailout failed banks, micro-manage the economy and “take action” during his single term in office. Unfortunately, his political mischief was not limited to economics.

Hoover’s most enduring and damaging legacy to overall freedom in America—rarely acknowledged in mainstream press—was his nationalizing of all formerly private and well-established common law broadcasting property rights, as documented by economist Thomas Hazlett and others. Hoover himself would later reminisce in his 1952 memoirs:

“One of our troubles in getting legislation [to nationalize the airwaves] was the very success of the voluntary system we had created. Members of the Congressional committees kept saying, ‘it is working well, so why bother?’” (as quoted by B.K. Marcus)

As Secretary of Commerce under Presidents Harding and then Coolidge, Hoover used his position to reward large corporations (that eventually became propaganda monoliths NBC and CBS and subsequent replicas) by severely restricting access to the airwaves, while empowering government to arbitrarily harass any independent voices, which gradually disappeared from mass-media over the next generation. The resulting Radio Act of 1927 created sweeping federal powers to award or deny initial membership privileges (with periodic renewals) to an exclusive broadcasting fraternity based on subjective standards of operating in the “public interest, convenience, and necessity.”

One of the few books available on the topic of federal broadcast rationing is Rebels on the Air: An Alternative History of Radio in America, by Jesse Walker of Reason magazine. Delving into the political atmosphere of the time, Walker notes:

Every year from 1922 to 1925, Hoover hosted a national conference for the radio industry. The legal scholar Jonathan Emord, drawing on the conference records, has sketched a convincing theory of competition-fearing broadcasters [such as RCA-NBC and its parent companies General Electric and Westinghouse] and power-seeking government officials reaching a quid pro quo: “in exchange for regulatory controls on industry structure and programming content, industry leaders would be granted the restrictions on market entry that they wanted.”

Another good read on New Deal media history is Justin Raimondo’s Reclaiming the American Right: The Lost Legacy of the Conservative Movement. This book, written in 1993 and updated in 2008, has entire chapters on Garet Garrett of the Saturday Evening Post, columnist and author John Flynn, and publisher Robert McCormick of the Chicago Tribune. These chapters cover about 100 pages and provide excellent insights to the time period. Strangely, the author couldn’t afford a single kind word for popular independent publisher Bill Hearst (barely mentioned) or any acknowledgement at all for radio sensation Charles Coughlin—both targets of FDR suppression.

Robert Murphy’s Politically Incorrect Guide to the Great Depression and the New Deal provides a refreshing history of 1920s to 1940s economic affairs, with lengthy excerpts from other good books on the subject. Unfortunately, the P.I. Guide falls for the myth of a “liberal” media and omits any reference to the landmark Radio Act of 1927 or the Communications Act of 1934.

2004 essay by B.K. Marcus published by the Mises Institute gives a concise account of federal broadcasting controls. This work excels on legal theory and general history, but is silent on Roosevelt. A 2017 article in Reason magazine titled “FDR’s War Against the Press” finally sheds some light on this dark chapter of American culture, but leaves most of the victims buried and forgotten. I hope to expand upon all of the above.

Outside of these few offerings (and some obscure books and articles footnoted therein) mainstream media shows virtually no interest in Roosevelt’s harsh treatment of the press, which was calculated and brutal. Wikipedia goes to great contortions to justify Roosevelt’s censoring, as we shall soon see. PBS’s 13-hour infomercial “The Roosevelts – An Intimate History” (available on Netflix) manages to be even worse. When it comes to New Deal narratives, Hollywood and major media offer only glib platitudes on FDR’s efforts for “saving” the nation and providing “relief” for the common man—both of which are highly debatable. (Mr. Murphy’s P.I. Guide and economist Robert Higgs give ample evidence to suggest that Hoover and especially FDR made the Depression worse.)

To date, nothing I can find in mainstream or alternative media does justice to the enormous harm to public welfare caused by FDR’s war on the press, or Hoover’s enduring legacy of federal broadcasting controls. These arbitrary restrictions on the most powerful medium of news publishing amount to a crushing poll tax on public debate—far more debilitating than the despised poll tax on voting had ever been.

The contrast in restricted speech rights and nearly unlimited voting privileges is dramatic. The traditional poll tax required prior to voting in some southern states—banned in federal elections by the 24th Amendment in 1964 and outlawed in allelections by the Supreme Court in 1966—had only cost a few dollars. Yet poll taxes supposedly created insurmountable obstacles to poor people expressing their inalienable right to vote, which often means voting themselves more welfare. Federal speech restrictions effectively disenfranchise over 99.9% of Americans, rich or poor, from the powerful platforms of radio and TV broadcasting.Nonetheless, modern politicians and approved pundits unanimously support FCC speech rationing to keep out independent voices.

With a second (ostensibly “green”) New Deal in the works and internet freedom under constant threat, a more thorough history of the original New Deal in relation to independent reporting is long overdue.

I can lead a nation with a microphone” (from Flobots’ song “Handlebars”)

When it comes to Franklin D. Roosevelt and the media, most mainstream accounts show a charming FDR comforting American families gathered round their home radios, in some cases, next to a fireplace. And that’s about as deep as the story goes.

During his three-plus terms in office, Roosevelt staged 30 such “fireside chats.” Some of them, like during the 1933 banking collapse and his 1941-42 maneuvering the U.S. into war, engaged over half the nation listening in to his well-rehearsed speeches.

Conventional accounts—in Wikipedia, the PBS-Roosevelt docudrama, multiple books and dozens of articles I’ve reviewed—never mention that these “chats” were advertising for partisan Democrat purposes. As such, the unilateral Roosevelt speeches were multi-billion-dollar political gifts in today’s currency. There was apparently no opportunity for a GOP response. And the radio press was largely neutered in its ability to put any of Roosevelt’s wild proposals into context.

What precipitated the climate of fear in broadcasting is another topic of embarrassment rarely mentioned in mainstream circles. Thanks to the efforts of Herbert Hoover and some liberal sponsors of corporate media control, the Radio Act of 1927 created the Federal Radio Commission (FRC) and gave it enormous latitude for enforcement. Giant corporations got the broadcasting cartel they longed for. Liberals got a tool for censorship they desired.

FDR’s handywork in the Communications Act of 1934 replaced the FRC with the Federal Communications Commission and gave government regulators even more arbitrary power. And Franklin Roosevelt frequently used these broad powers to his advantage. In the New Dealers’ opinions, criticizing FDR’s frenetic policies was never in the “public interest.”

University of Alabama history professor David Beito’s 2017 article “FDR’s War Against the Press” recounts some of the early fears of U.S. radio broadcasters. While Roosevelt complained bitterly about the “poisonous propaganda” of newspaper columnists:

Roosevelt’s relationship with radio was warmer. The key distinction was that broadcasters operated in an entirely different political context: Thanks to federal rules and administrators, they had to tread much more lightly than newspapers did. At its inception in 1934, the Federal Communications Commission (FCC) reduced the license renewal period for stations from three years to only six months.

Mr. Beito explains how federal rules impacted radio broadcasters during the New Deal, at a time before television was commercially available:

It did not take long for broadcasters to get the message. NBC, for example, announced that it was limiting broadcasts “contrary to the policies of the United States government.” CBS Vice President Henry A. Bellows said that “no broadcast would be permitted over the Columbia Broadcasting System that in any way was critical of any policy of the Administration.” He elaborated “that the Columbia system was at the disposal of President Roosevelt and his administration and they would permit no broadcast that did not have his approval.” Local station owners and network executives alike took it for granted, as Editor and Publisher observed, that each station had “to dance to Government tunes because it is under Government license.” Some dissident radio commentators, such as Father Charles Coughlin and Boake Carter, gained wide audiences. But radio as a whole was firmly pro-Roosevelt—and both Coughlin and Carter were eventuallyforced off the air for pushing the envelope too far.

For this essay, I’ll only touch briefly on radio personality Boake Carter before moving on to more household names. Though long forgotten, he was once high on Roosevelt’s hit list.

Boake (pronounced “boke”) Carter was born in England, moved to America in 1921 and began radio commentary in 1930. Wikipedia states:

In 1936, he had more listeners than any other radio commentator. … But by 1937, the Roosevelt White House already had three federal agencies investigating him. In 1938, under pressure from Roosevelt’s allies, he lost his WCAU [Philadelphia] job, was barred from CBS, and lost his General Foods sponsorship that had replaced Philco [Radios]. With his removal, there was no longer any popular radio commentator who opposed Roosevelt’s foreign policy.

The last sentence in bold seems to forget another prominent radio opponent of FDR’s foreign policy—Father Charles Coughlin, who was banished in 1940—but we get the drift. Based on Wikipedia’s hostile description of Boake Carter, one academic article online (that engages in overt victim shaming) and a surviving radio broadcast I could find, Mr. Carter was confident and eloquent, a World War I vet who understood the foolishness of unnecessary conflict, a critic of the New Deal and opponent of union violence. Naturally, radical leftists hated him. Modern historians have no use for him either.

Of all the Roosevelt purge victims, Wikipedia’s treatment of Boake Carter is arguably the least biased. For those on Roosevelt’s enemies list, contemporary historiography gets considerably worse. Yet others in the news media during the New Deal managed to stay in FDR’s favor.

Rewards for Loyal Press Servants

A separate essay could be justified to cover the corresponding rewards that the Roosevelt administration made available to the increasingly dominant throngs of pliant pressmen. Media historian Betty Houchin Winfield’s 1990 book FDR and the News Media scratches the surface on this important topic, but leaves more questions than answers.

Exclusive broadcast licensing rewarded primarily NBC and CBS with a near stranglehold on the airwaves throughout the Great Depression. Roosevelt also managed White House print media correspondents with strict access privileges that meant life or death to a journalist’s career.

While Ms. Winfield—a Missouri state professor and federal grant recipient—allows glimpses of pro-Roosevelt press gullibility, she remains harsh about all critics of the New Deal. For instance, Charles Coughlin was guilty of “demagoguery.” H.L. Mencken was “hostile” and “furious.” The “antagonistic” publishers Robert McCormick and William Randolph Hearst were waging a “frontal attack on those New Deal social and economic changes” out of their own “vested interests.” Professor Winfield provides almost no journalistic evidence in these men’s own words to corroborate her orthodox conclusions. Disagreeing with the New Deal simply means you are a bad person, according to this government scholar and many others in mass media.

Ms. Winfield—would could pass for a “moderate” by MSNBC standards—cites a few powerful but isolated anecdotes on gushing press adoration of Roosevelt’s antics, usually couched in the author’s own admiration for her subject. Franklin Roosevelt was so brash in his manipulation of the press:

Roosevelt would tell the correspondents exactly how to write stories. … “I suppose if I were writing your stories for you, I would say it is the most brutally frank Budget Message ever sent in.” … “In other words, if I were writing the story today I think it would be perfectly all right to say this, without putting in on me…” [about the “obligation” of his federal housing programs] The reporters became so used to his demands that by 1934 they began asking him for his news interpretations. (Winfield page 40, with more quotes like that)

One of many reporters who struggled to maintain his objectivity was Arthur Krock, Washington bureau chief of the New York Times. In Mr. Krock’s own memoirs, he described being questioned by FDR for not attending the jovial White House press performances. In response to Roosevelt’s query, Krock expressed his own difficulty in keeping his “objectivity when I’m close to you and watching you in action. You charm me so much that when I go back to write comment on the proceedings, I can’t keep it in balance.” (Winfield page 65)

Roosevelt would later reward Krock with an exclusive interview where FDR rationalized his failed court-packing plan of 1937. Historian Winfield “outs” Krock for violating press guidelines and allowing Roosevelt’s press secretary to review and edit his sensational “scoop” article published in the New York Times. Mr. Krock would be rewarded with a Pulitzer Prize for this adulterated reporting the following year.

The New Dealers’ arsenal also contained hundreds of federal employees in media relations who produced thousands of one-sided marketing handouts to frame a story to Roosevelt’s advantage, apparently a first in non-wartime American politics. Democrat publicity bureaus’ use of “press releases” to spin stories in Roosevelt’s favor was so great that:

In less than one year, the NRA [industrial cooperation agency] issued 5,200 handouts and the AAA [agricultural office] almost 5,000. … In the 1939 study Government Publicity, James L. McCamy found that during a seven-week period in 1937 the New York Timesprinted 1,281 items which appeared to have been released or influenced by administration publicity offices. (Winfield pages 90-91)

By 1940, newspaper publishers were so eager to gain favor with the powerful New Deal office of communications that 135 papers carried the musings of FDR’s wife, Eleanor, in her daily column. No president before or after Roosevelt has attempted such an overt spousal accommodation via the press.

The potentially larger problem of broadcast jingoism—simplicity and repetition of the New Deal’s favorite buzzwords—can only be assumed at this point based on a few surviving anecdotes and knowing the pattern of modern State media (fond of terms like “family farmers,” “climate change,” “social security” and other expensively misleading slogans). Until comprehensive transcripts of radio and television broadcast news become available, this segment of media history remains largely untold.

Roosevelt’s War on ‘The Colonel’

For our “feature length” members of FDR’s enemies list, a good place to start is in the American heartland. Pretty much from day one of the Roosevelt revolution, New Dealers set their targets on Robert “Colonel” McCormick and his Chicago Tribune.And they never took a break.

From the moment the Prince of Hyde Park, New York declared his candidacy for the highest office in 1932, Chicago’s leading paper had never bought into the Roosevelt charm. Actually, McCormick was familiar with Roosevelt from their time shared at the elite Groton prep school at the turn of the century, according to historian Ralph Raico. And he wasn’t impressed.

Now as an adult, McCormick—a trained lawyer and distinguished World War I veteran—diligently exposed the legal usurpations, agricultural ruin, union excesses and other economic chicanery throughout Roosevelt’s dreadful tenure. And he did it on a daily basis in America’s second biggest city, with the largest circulation among broadsheet newspapers. To get some idea of how seriously Roosevelt took criticism from his old schoolmate, Justin Raimondo’s chapter (page 151) on Colonel McCormick gives insight:

The Tribune featured a cartoon on the front page, and the New Dealers lived in terror of the deft pen strokes of [the paper’s two leading cartoonists]. Frank C. Waldrop, in The Colonel of Chicago, relates the fact that “[i]t was no idle rumor that men who knew their business took care to stay out of harm’s way, if possible, on days that Mr. Roosevelt… and other dignitaries of quick-firing temperament, had been depicted.”

When FDR tried to use his ill-conceived National Recovery Administration (NRA) to seize effective control of the newspaper business during his first term, McCormick spoke out for press freedom during the annual meeting of the American Newspaper Publishers Association held in Manhattan. Based on popular mythology of a “liberal” Roosevelt fighting for American freedoms, one might think that New Dealers would welcome such an event. But that was not the case.

As McCormick lashed out at FDR inside the hall, 250,000 true believers in the [NRA] Blue Eagle paraded down Fifth Avenue, banners flying and in an ugly mood. This was the first indication that Roosevelt and his NRA mobs were getting ready to move against their opponents in the press… That summer in Washington, the NRA staged a propaganda campaign of unprecedented proportions, with marches, rallies, threats of boycott—and worse—for those who failed to cooperate. (Raimondo page 153)

Roosevelt hated the Chicago Tribune to such an extent that he worked with a wealthy supporter, silver-spoon retail heir Marshall Field III, to open a competing newspaper—the Chicago Sun in 1941 to siphon off the Tribune’s readers. But the public paid little attention to this obvious stunt.

Once the insipid “Franklin Son” was up and running, Roosevelt used his Attorney General to interfere with the Tribune’s exclusive franchise with the Associated Press, launching a three-year court battle that ended in 1945 with a victory for the meddling president. (To get some feel for the disposition of Mr. Field, he would later finance and sit on the board of directors for Chicago’s professional community agitator Saul Alinsky.)

From the mid-1930s until the end of the war, the Chicago Tribune endured public burning of its newspapers, angry protests, boycotts, shrill pamphlets, vicious personal smears in the pro-FDR press, IRS harassment and even treats of prosecution for “treason.” The Tribune survived the affair, but was financially and politically damaged.

This was Franklin D. Roosevelt in action. And he had a few more scores to settle.

Citizen Roosevelt Goes after ‘The Chief’

Next up for the Roosevelt treatment was publisher William Randolph Hearst. Mr. Hearst—known as “the Chief” to his many staff writers—was a lifelong Democrat who initially supported FDR in 1932 but increasingly soured to the New Deal around the middle of Roosevelt’s first term.

With any mention of Big Bad Bill Hearst, some overdue words of correction are needed to address the festering myths circulated by his contemporary adversaries as well as their surviving heirs in corporate media. Both groups hold congenital disgust for independent publishing that cannot be squared with reality.

A good read for anyone interested in this great American icon is the 2000 biography The Chief: The Life of William Randolph Hearst by David Nasaw. The book’s author generally favors a state-run economy and supports U.S. involvement in Europe’s War of the 1940s. Other than those standard features to be expected in big league publishing, the 600-page book is exhaustively researched, well written, and provides a fairly balanced treatment of the tensions between Hearst, Roosevelt and the many factions within their orbits.

Throughout his life, Hearst and his impressive chain of newspapers in at least 18 major cities and other media outlets took on powerful businesses and politicians with what often seemed like reckless abandon. His estimated 20 million readersduring his mid-1930s peak loved him for it. The corporate oligarchs and their political serfs despised him. So did rabid New Dealers, as did the many partisan publishers that were either attached to one political party (like Joseph Pulitzer had been) or devoted to power (like the New York Times and Washington Post). And war enthusiasts of both Global Bloodbaths wanted Hearst to be hog-tied and thrown into a barbecue pit.

One example of Hearst’s fearless nature involves his papers’ reporting before and during World War I. The Republican pro-war New York Tribune ran hit pieces in six successive Sunday editions from April to June 1918 denouncing Hearst for his alleged disloyalty, relying on a tally of unpatriotic articles promoted by state and federal officials. According to The Chief’s author, Mr. Nasaw, each of the six anti-Hearst articles in the New York Tribune was preceded by a boxed scorecard:

Since the United States entered the war [in April 1917] the Hearst papers have printed:

74 – attacks on our allies
17 – instances of defense or praise of Germany
63 – pieces of antiwar propaganda
– deletion of a Presidential proclamation
Total 155

Hearst was among the few publishers resisting English and French propaganda stories of German atrocities in Belgium before U.S. entry to the war. During America’s intervention, his conservative press opponents went to Washington to work with the U.S. Attorney General in 1918 to put Hearst out of business on charges of “treason.” The bogus claims were eventually dropped for lack of evidence. (The Chief pages 243, 268-270)

Probably the best summation of Hearst’s character comes early in the book based on a private letter from Winston Churchill to his wife after a 1929 meeting with the Chief in Los Angeles. Mr. Churchill viewed Hearst as “simple” but remarked on his “complete indifference to public opinion, a strong liberal and democratic outlook, a 15 million daily circulation [at the time], oriental hospitalities, extreme personal courtesy” and other mostly amenable qualities. What’s surprising is that Churchill—a career war hawk—had every reason to dislike Hearst for his vigorous opposition towards U.S. coming to England’s rescue in WW I.

So what were Hearst’s politics? He was very much for international economic cooperation (including with Soviet Russia and Socialist Germany), but opposed open warfare with either. He was pro-labor when business had all the power and pro-business when federalized unions turned violent in the mid-1930s. Hearst believed strongly in law and order, initially favoring alcohol prohibition (as did FDR) then switching to the “wet” side when organized crime flourished in the late 1920s. He strongly opposed Roosevelt’s National Recovery Act industrial cartels but supported job-killing government make-work “relief” programs until at least 1935 when patronage abuses became rampant. Overall, Hearst was intense in his opinions but usually more practical than ideological.

If you happened to be a Marxist college professor radicalizing your students, a corrupt business tycoon seeking political favor, or a lying government official reneging on campaign promises—and Hearst’s reporters found out, as they often did—your life was going to be unpleasant for quite a while. Which is to say, Hearst made some powerful enemies.

In the case of Hearst’s wisely abandoning the disastrous New Deal, Roosevelt’s ranks of minions and collaborators would never forgive him. A common claim holds that after his endorsed candidate, FDR, took office in 1933 the Hearst newspapers suddenly “moved far to the right.” In this case, that oft-repeated “far right” comment was dropped into Wikipedia’s History of New York City (1898–1945), haphazardly footnoted to the book above. The possibility that Hearst (like many other proponents of individual liberty) was the steady hand and it was actually Roosevelt who had shifted the country far to the left escapes consideration in mainstream circles.

Perhaps the biggest ongoing farce regarding the villainous portrait of William Randolph Hearst is how his aggressive criticism of America’s entry into both World Wars gets brushed aside—totally ignored—with trite exaggerations about the publisher’s youthful exuberance during America’s brief 1898 war against Spain in Cuba. What’s most absurd about that whole affair—usually embellished with the legend of Hearst supposedly saying “I’ll furnish the war”—is the raw chutzpah of those leveling the charges. In most cases, the Latter-Day Peaceniks now wringing their hands over some century-old reporting before a brief war in Cuba are also the zombie-like death merchants who lied us into much bigger and permanently debilitating wars. And the Hearst critics are still proud of their own war-mongering!

Which brings us back to That Man in the White House. Roosevelt had been watching Hearst closely from around 1934 when his National Recovery Administration was broiling the country. In the Fall of 1934, FDR instructed his Secretary of the Treasury, Henry Morgenthau, to have the IRS dig through the tax returns of Hearst and his vast publishing enterprise as a weapon to hold in his back pocket. The author of The Chiefsays Roosevelt never used this sledge hammer, so I take that to be correct. But Roosevelt didn’t stop with attempted tax extortion.

Throughout 1935, Hearst had been exercising his First Amendment right to criticize the New Deal’s bureaucratic excesses and persistently high unemployment, which infuriated the sensitive aristocrat in the White House. By March 1936:

the president had signaled that it was “open season” on Hearst by ridiculing him, by name, during a press conference. Asked if he had clamped a censorship on his administration, the president, Newsweek reported, “snapped back his answer: Preposterous! The correspondent must have read that in a Hearst paper!” (The Chief page 520)

This crude effort to stir his base to action did not go unnoticed. Democrat Senator Hugo Black, “a zealous and effective New Deal loyalist” was already chairing a commission to go on a hunting expedition through private telegrams of Hearst and anyone else who might impede Roosevelt’s progress. The 2017 Reason articleprovides a good accounting of the Black Committee tactics:

Over a nearly three-month period at the end of 1935, FCC and Black Committee staffers searched great stacks of telegrams in Western Union’s D.C. office. Operating with virtually no restriction, they read the communications of sundry lobbyists, newspaper publishers, and conservative political activists as well as every member of Congress. Writing to Black, one investigator stated that they had gone through “35,000 to 50,000 per day.” Various newspapers and members of Congress later estimated that staffers had examined some five million telegrams over the course of the investigation.

Of course, this was an unethical and probably illegal invasion of privacy, not to mention an assault on the Constitution. The results of the dragnet were used by New Dealers to openly attack Bill Hearst and other anti-New Deal newspapers. Facing the threat of lawsuit from Hearst and criticism from ACLU and finally some pro-Roosevelt press, the Black Committee disbanded in mid-1936. Team Roosevelt got away with a public relations hand slap. Senator Black would be rewarded by FDR the next year with a Supreme Court appointment. The lengthy Wikipedia page for Hugo Blackdoes not contain a single word of this disgraceful affair or mention Bill Hearst once. Ms. Winfield’s FDR media book entirely omits the Black Committee episode.

For the remainder of Roosevelt’s reign, William Randolph Hearst would be tarred as evil incarnate. And few dared to challenge that assessment. New Deal supporters would organize protests, write pamphlets and books, and even produce the 1941 smear film Citizen Kane to drive home their point. The sole intent of that “classic” movie was to demonize the most prominent surviving publisher who dared to criticize their Leader for Life and his ridiculous economic, social and military schemes.

Scores of partisans in media and academics still pretend that libelous movie—produced by a socialist and prominent FDR campaigner, Orson Welles—was innocent entertainment. The enormous Wikipedia page on Citizen Kane praises the work as “Considered by many… to be the greatest film ever made.” The Wiki writers make no mention of any political affiliation of the producer Welles or any possible motive for him disliking Hearst. At the time of its release, Kane was a cinematic flop despite ample free buzz from media admirers. Everyone knew Welles was a left-wing activist in contempt of Hearst and in support of Roosevelt. One of many books to confirm Welles’s political activism is Orson Welles Interviews, edited by Mark Estrin, which states:

Welles had been active in American political life for some time, speaking at anti-Fascist [sic] rallies as early as 1938 and campaigning intensively for Franklin Roosevelt’s re-election in 1944.

The political viewpoints and motivations of Mr. Welles seem to be much more intriguing than any mainstream journalist (and even The Chief) has been willing to admit. But these views are largely beyond the scope of this essay.

After decades of a hard-charging press baron making many powerful and unhinged enemies, Citizen Kane would be their underhanded way to slap back. Long after Hearst died in 1951, movie “experts” and academic malcontents would suddenly discover how “great” this piece of partisan artwork actually was. People who knew the real background were now retired or dead. And the story of a rotten man of “yellow journalism” made for a nice affirmation for the pliable scribes of modern stenography.

During his prolific life Bill Hearst enraged socialists, big business and war hawks alike during his more than 60-year news career. As a result of doing his job and being surrounded by too many lesser peers in the news business, very little positive material can be found in his defense. This is too bad, since Hearst was a fiercely independent defender of the little guy, even if his economic understanding was a bit rough at times, and his respect for authority was what one might expect from a college punk-rock band.

Between Hearst and Roosevelt, the Chief was usually the bigger man. And he paid a much bigger price.

Mr. Hyde Park Cuts Again

Another press target of FDR was John Flynn, author and columnist for the New Republic and other periodicals. One of Flynn’s most popular books, The Roosevelt Myth, is now available online at Unz Review. Flynn was much more the academic thinker and considerably less of a street-brawler than Hearst or McCormick.

Yet Roosevelt’s antipathy for Flynn—daring to criticize the late-1930s war scare in another publication—prompted him to write to the editor of the Yale Review magazine and suggest that Flynn “should be barred hereafter from the columns of any presentable daily paper, monthly magazine or national quarterly, such as the Yale Review. (Raimondo page 114)

There is some debate on whether or not Roosevelt directly influenced the New Republic in their decision to axe one of their top columnists, Flynn, after five years with the magazine. But Roosevelt wanted Flynn silenced. He got caught writing his directions as such to another editor. And Flynn was fired from the New Republic in 1938.

But Mr. Flynn was fortunate and quickly got hired by the Chicago Tribune. Many others facing the wrath of the New Dealers were not so lucky.

A Pox on the ‘Radio Priest’

With Hearst and McCormick damaged and Flynn and Carter fired, political hit men in the New Deal politburo kept plotting ahead on their mission. After years of organized smears from partisan belligerents, the popular liberal radio personality, Charles Coughlin, was finally run off the airwaves for daring to speak out against the rising militarism and other issues he saw as troubling America. The intolerance of FDR and other pro-war agitators of the time arguably provides the most relevance to this ugly chapter of American history. The back story of FDR’s orchestrated censorship campaign against Coughlin warrants a closer look too, as nearly all of it has been omitted from government civics lessons.

Starting on the air in 1926, within less than a decade the passionate and independent Catholic priest had built an estimated audience of 30 million listeners—easily the biggest in the nation—to his one-hour Sunday afternoon show. In comparison on audience size, with more than double the U.S. population today, the leading talk-radio host Rush Limbaugh peaked out at only 20 million weekly listeners.

To avoid the trap of selective outrage (ubiquitous in any analysis of Coughlin), comparisons with modern talk radio and one of his subsequent peers are again useful. The flag-waving hyper-nationalism in broadcasting today is so over-the-top that when conservative FoxNews commentator, Sean Hannity, urges President Trump to “bomb the hell out of” Iran, it barely raises eyebrows. Hannity, too, claims to be a religious man and added “We have the greatest military, thank God, on the face of this earth.” Another leading voice of AM talk radio, Mark Levin, an accomplished author and legal scholar who identifies as a Jew, uses his FCC microphone privileges to sling childish insults at his political opponents and spreads anti-Muslim paranoia on a daily basis. Let’s not forget the atheist radio hawk, Rush Limbaugh, who promotes breathless adoration of the federal military and all its travails. I won’t even bother to cite any of the vile scapegoating that spews continuously from the mouths of left-wing extremists throughout cable news. As far as race-baiting goes, Mr. Coughlin’s supporters never rioted or burned down one, much less 110 cities, in protest as did the followers of a sainted Street Preacher of the 1960s.

Charles Coughlin was at times sanctimonious, but never approached the level of depravity of the leading dissidents of the 1960s or today. During his career, Coughlin was very well informed on foreign policy and also a fairly serious cultural thinker (by New Deal standards) who earned the respect of his broad middle-class audience. According to this harsh review of historian Alan Brinkley’s 1982 book Voices of Protest on Coughlin and Huey Long, “only the faintest undercurrent of religious prejudice can be found in the rhetoric of [Coughlin’s] prime political years.” (Mr. Brinkley’s slanted treatment of Coughlin and Long—denouncing both men in callous terms throughout the book, while offering polite excuses for their censorious opponents—only makes his subjects appear more innocent.)

Another important executive characteristic consistently overlooked by scholars involves the vastly different approaches to media relations between FDR and his predecessor. Father Charles Coughlin and William Randolph Hearst were both highly critical of incumbent Herbert Hoover (and supportive of the challenger Roosevelt) during the 1932 election. But the Republican president apparently never used political power to harm his press critics. The coddled aristocrat, Franklin Roosevelt, took a less forgiving approach—especially with Coughlin and Hearst.

Throughout his public career, Coughlin embraced a standard liberal agenda of “social justice,” nationalized banking, politicized unions, and protecting local merchants from corporate domination. These views were blended with more conservative ideas of criticizing New Deal bureaucracies, resisting international wars and railing against Communism, although his coercive social policies shared significant congruence with socialist goals.

Commonly known as the “Radio Priest,” Coughlin had first come to fame in the 1920s by denouncing a group of white nationalists in his hometown of Detroit. In the late 1930s, he witnessed another assortment of mostly atheist political activists promoting union and political violence at home and wide-scale military bloodshed abroad, and once again sounded a (far more nuanced and cautious) warning. But the folks he attacked in the 1920s had nowhere near the media clout of the socialists and ethnocentric crusaders who had achieved significant political power in the U.S. by the 1930s. Making matters worse, Coughlin increasingly strayed off the path of safe political discourse—particularly after 1938 when his career was threatened by organized Jewish groups and grandstanding Gentile war-enthusiasts. He also dared to criticize the emperor in the White House, usually for not being progressive enough.

Franklin Roosevelt—a man with virtually zero accomplishments outside of politics, who grew increasingly obsessed over his skillfully manufactured public image—never took criticism well. By mid-1934 his administration was quietly working behind the scenes to undermine Coughlin’s ability to stay on the air, viewing the Radio Priest (still a New Deal supporter) as too unpredictable. (Brinkley page 127)

Then in January 1935, Coughlin energized his listeners to bombard Capitol Hill against Roosevelt’s nearly successful attempt to drag America into the quagmire of a World Court. New Dealers fumed at this last-minute, highly publicized defeat. Over the next few years, the liberal priest from Detroit completely broke with the Roosevelt regime on both domestic and foreign policy. With the help of pro-FDR federal broadcasters, Coughlin was bitterly attacked and eventually kicked off the air in 1940 and subsequently tarred as a “filthy goy” and the “wrong kind of socialist,” if you understand modern political slurs.

After an avalanche of abuse, Wikipedia is somewhat helpful in filling in a few gaps. Using the trick of passive reporting to exonerate the aggressors, they state:

After the outbreak of World War II in Europe in September 1939, Coughlin’s opposition to the repeal of a neutrality-oriented arms embargo law resulted in additional and more successful efforts to force him off the air.

Although it was FDR and pro-war extremists pulling the strings here, Wikipedia makes it seem like “Coughlin’s opposition” forced his own censoring. Wikipedia is more direct a few sentences later, stating:

After the devastating Japanese attack on Pearl Harbor, and the U.S. declaration of war in December 1941… The Roosevelt Administration stepped in again. On April 14, 1942, U.S. Attorney General Francis Biddle wrote a letter to the Postmaster General, Frank Walker, and suggested revoking the second-class mailing privilege of [Coughlin’s newspaper] Social Justice, which would make it impossible for Coughlin to deliver the papers to his readers.

The final act of FDR’s retaliation succeeded in silencing Father Coughlin and his loyal fans for good. Rather than acknowledge this act of political despotism by Democratic royalty, most historians (and neo-con admirers as well) choose to “punch down” on the memory of a defrocked radio host rather than stand up to concentrated executive power. Between Coughlin and Roosevelt, Harvard professor Alan Brinkley’s assessment of one of the men got it right: “As the years passed and his popularity grew, a strain of megalomania wore away his self-restraint until finally his excesses destroyed him.”

As is common for books written in the early 1980s (when the Fairness Doctrine was still in effect and State adoration completely dominated mass media) the subsidized historian could only speak harshly of the weak. That Man who nearly “destroyed” the entire country managed to escape Brinkley’s analysis unscathed.

In reality, Charles Coughlin’s biggest failings were more fundamental. Coughlin’s lack of private-sector (i.e., “real world” or “service”) experience, absence of any significant ground support movement, and belief that positive social “uplift” could be achieved through a microphone (or a book or article, for that matter) all spelled doom for his highly energetic efforts. Of course, none of those critiques justified the actions of the New Deal gestapo.

The Darkening Mood of 1939-1941

American political culture during the Great Depression was bad enough in times of peace. But during the 1939-40 covert war buildup by FDR, professional life for an anti-New Deal journalist or filmmaker became miserable.

A mere one day after Pearl Harbor, Roosevelt launched another military action—this time in California. In a June 2018 essay by Ron Unz on the Great Purge of the 1940s, he writes:

Walt Disney was also the only high-ranking Hollywood figure perched squarely within the anti-war camp. And the day after the surprise Japanese attack, hundreds of U.S. troops seized control of Disney Studios, allegedly in order to help defend California from Japanese forces located thousands of miles away, with the military occupation continuing for the next eight months.

Disney immediately complied, producing absurdities like “The Thrifty Pig,” which cast the role of Big Bad Wolf as a Nazi, and other pro-war films. During the war, Roosevelt would frighten the public with vast military hardware parades that one might expect from North Korea or the old Soviet Union. People were bombarded with non-stop propaganda posters and movies encouraging people to enjoy wartime rationing, glamorizing America’s military heroics and depicting the enemy as sub-human. All of Hollywood cooperated. All of America shipped their eligible boys to the battlefront, sent their wives to the factories, bought patriotic war bonds and looked to Washington for salvation.

If Roosevelt’s New Deal planners excelled at anything, it was planning. This would be an all-out war against two very formidable foes. U.S. Central Command needed absolute obedience on the battlefield and unwavering support at home. A servile media was always FDR’s preference; now he had the perfect excuse. In the years immediately prior to Pearl Harbor, it was just a matter of arranging the chess pieces for maximum chance of victory.

The Sage of Baltimore Goes Silent; Celebrity Aviator Gets Shot Down

One of the last sturdy knights (or so it would seem) remaining on the anti-New Deal chessboard was voluminous author and syndicated columnist for the Baltimore Sun, H.L. Mencken. As we’ve seen, by 1940, the mood in America was so grim that newspaper publishers fully understood the message: go along with New Deal economic ruination and military intervention… or expect a public thrashing.

Mencken had always been a fierce defender of individual liberties and against mass political movements. As an independent thinker in a time of political conformity, during the 1930s his critics were increasingly labeling him as “right-wing.” A summation of Mencken and another libertarian writer, Albert Jay Nock (blacklisted in 1941) and their alleged “drift” to the right, Murray Rothbard wrote in 1962:

The great individualist Albert Jay Nock has written that, while in the 1920’s he was generally considered a flaming “radical,” and in the 1930’s as a bitter “reactionary,” his political philosophy remained, in these decades, exactly the same. The same might be said of his friend Mencken, who also remained, throughout, an individualist and a libertarian. In the 1920’s, Mencken directed his fire against the tariff and other special privileges to favored business groups, against laws and edicts against free speech and other personal liberties, and especially against the monstrous tyranny of Prohibition. In the 1930’s, Mencken directed his major attacks against the major threat to liberty of that era: the New Deal.

A 2002 profile of Mencken in The Atlantic concluded that “Nothing seemed to matter more to him than uncensored self-expression.” This common view does not explain Mencken’s abrupt departure from the public scene around 1940; I can’t find anyone who attempts to explain it. By the start of U.S. entry into World War II, Mencken had continuously written for newspapers or magazines for over 40 years.

Yet around 1940, the opinionated Sage of Baltimore went into self-imposed hibernation to work on writing books. These would be autobiographical books—Happy Days (1940), Newspaper Days (1941), and Heathen Days (1943)—that lacked any of his prior fury towards political shenanigans.

Mencken’s abrupt change of mood simply makes no sense. And the lack of scholarship on this crucial period in Mencken’s and America’s history also strains credibility. After all, this was one of the country’s most popular writers, a man about whom dozens of books and hundreds of articles have since been written.

The early 1940s was a time period of crushing U.S. media intolerance. In September 1941, a popular spokesman for the anti-interventionist movement, aviator Charles Lindbergh, found himself condemned and outcast after talking at an America First rally in Iowa. This now infamous anti-war speech (captured at length in Wikipedia) acknowledged Jewish “persecution” in Germany and correctly noted “the British, the Jewish, and the Roosevelt Administration” as three groups “pressing this country toward war.” (Subsequent tales about Lindbergh “singling out” Jews are simply false.) But open dialogue was the last thing on the pro-war agenda.

Lindbergh’s sober assessment that war in Europe would be devasting to Jews has been forgotten in the rush to condemn the last great voice of moderation in the 1940s. But dozens of photos from early-war European labor camps made available by religious scholar Nathanael Kapner (compared to the endless displays of gruesome late-war photos promoted by Hollywood and federal broadcasters) suggest the aviator was once again correct. The evident conclusion that Allied terror bombing of German civilians made food scarce for everyone has been assiduously censored by pro-war belligerents ever since.

During this same period, editor for the liberal Nation magazine, Oswald Garrison Villard was “blacklisted” and “lost his editorship as a direct consequence of his intransigent opposition to the war.” (Raimondo page 133)

Yet, Mencken—who turned 60 in September 1940—simply “retired” from the strenuous job of… opinion writing? (“retired” quote from Raimondo page 134, with no hint of curiosity)

These were ugly times for free speech. And the Roosevelt machine—as it had shown with McCormick, Hearst, Coughlin and others—was eager to squash all opposition. And print publications were American liberty’s last line of defense.

Pro-FDR media historian, Betty Houchin Winfield, recounts that as of 1940, NBC and CBS (who were pro-war and pro-welfare as she fails to mention) occupied a commanding “86 percent of the total night-time radio power in the country.” And the desperate man in the White House was still smarting from a 1938 mid-term election that saw Republicans gain 81 seats in the House, 8 seats in the Senate, and 13 new governorships. (Winfield pages 110 and 139)

In the face of this daunting opposition, I suppose it’s possible that the literary giant of “uncensored self-expression” voluntarily retreated into the shadows to go write books about himself. But I’m thinking there’s more to the story.

Whatever the motive for Mencken’s sudden departure from journalism, the reason seems more complex than the trite description offered in Wikipedia: during the 1940s, Mencken “ceased writing for The Baltimore Sun for several years.” The executed rebel “ceased breathing” makes as much sense.

Ten hours of searching history books and online accounts returned similar vagueness, which fits with the larger pattern. Nearly all mainstream media accounts of other documented New Deal censorship consistently downplay Roosevelt’s harsh treatment of press critics. So I’m thinking some sloppy reporting may be at work here, or possibly willful omissions of embarrassing FDR activity. I remain hopeful that Unz Review commenters may possess some better answers.

The Demise of the Saturday Evening Post

Once the sharpest minds and passionate voices of political discourse were severely tarnished or entirely removed from public access, it was easier for New Dealers to clamp down on any remaining pockets of resistance. One of the last such voices of reason in the mainstream press was the Saturday Evening Post.

During the 1920s and 30s, the Saturday Evening Post had been America’s most popular weekly magazine. The Post accomplished this by finding and developing the best fiction and non-fiction writers and illustrators in the country (including Jack London, Garet Garrett, Norman Rockwell and dozens of other household names of the era) and by appealing to classic American values. This was “a culture that valued achievement, hard work, self-improvement, independence, self-discipline, and the entrepreneurial spirit” as Old Right media historian and longtime editor, the late Justin Raimondo once described it.

Two decent books that provide contemporary insight to American culture during the Roosevelt years are collections of Garet Garrett’s articles originally published in the weekly magazine. The first book is Salvos Against the New Deal: Selections from the Saturday Evening Post 1933-1940 and the second is Defend America First: The Antiwar Editorials of the Saturday Evening Post 1939-1942. Both books are edited by journalist Bruce Ramsey of the Seattle Times and were published in 2007 and 2003, respectively. Once again, the Radio Act of 1927, the Communications Act of 1934 and federal broadcasting controls are not mentioned at all in either book.

But the detailed history (particularly on union militancy, NRA collusion and agricultural follies) within both collections gives a glimpse of what mainstream reporting looked like at the time—and it most definitely was not liberal or some version of the right-wing Neanderthals found foraging at AM talk radio and FoxNews. If anything, the articles in both collections go to excessive lengths to present long-winded, intellectually sanitized murmurings against the total state; this style seems to reflect conservative meekness throughout the Great Depression. In hindsight, it’s amazing that Roosevelt would bother to censor a magazine of such mild critiques, particularly for their insipid 1939-1942 anti-war editorials.

Nevertheless, the Saturday Evening Post was a popular fixture of middle-America that Roosevelt viewed as an impediment to his glory. Over the prior two generations, the magazine had successfully labored to establish a refined pedigree of its own in conservative cultural commentary. From 1899 to 1936, the Post was led by the steady hand of its editor George Horace Lorimer, a man of sound economic and legal principles with a healthy distain for foreign military adventurism. (The prior Wikipedia link misses all of that and provides only a photo and basic shell outline.)

After Lorimer’s retirement in late 1936, editorial direction fell to Wesley Stout, who held similar anti-New Deal views as Lorimer. But the Post’s owner, Curtis Publishing Company, was growing increasingly uneasy with standing against the angry tides of collectivism and militarism rising in New York and Washington.

After much private and public acrimony, in 1942, a pro-government delinquent named Ben Hibbs was installed to pacify New Dealers and minimize attacks on the magazine, which were becoming unbearable. Under the new pliant Post leadership, a state-controlled economy and European warfare suddenly seemed quite reasonable. The only thing left was to purge the remaining opposition.

Economics columnist and author of 13 books, Garet Garrett was forced out within months, after twenty years of writing at the Post. So was editor Wesley Stout, another twenty-year veteran. In Stout’s 1971 obituary in the New York Times, the paper whitewashes this pivotal event as:

Mr. Stout resigned as editor of The Saturday Evening Post in 1942 because of what was termed “a firm but friendly disagreement with the Curtis Publishing Company on policy.”

Again, we see the tell-tale use of passive language (“was termed” by whom?) in the above blurb. The reality, which NYT was not only aware of but also contributed to, was much less pleasant. By 1942, with Roosevelt’s achievement of dragging the U.S. into battle, the climate of fear and intolerance was so intense in American publishing that Garrett was blacklisted for the next two years. Along with other recently purged voices of liberty, they faced “harassment, vilification, and deprivation of livelihoods.” (Raimondo page 88)

Former Post editor from 1937-1942, Wesley Stout, who had brought the magazine to it all-time peak circulation (as NYT admits) would find work at the Chrysler Corporation in Detroit—a logical and voluntary career change in the narrative of the Times. Garrett finally found employment writing for a magazine of the National Industrial Conference Board, reaching a much smaller audience but avoiding the wrath of FDR and his loyal shock troops.

The full story of what had transpired would only come out over a decade later, in 1953, when Garrett’s most popular book was published. In Reclaiming the American Right(pages 92-93) Justin Raimondo provides more details on the period but the following passage captures the essence:

On the dust jacket of The People’s Pottage, we are told that Garrett’s Saturday Evening Post editorials “created much bitter controversy and caused the New Deal to threaten the life of that magazine.”

With Lorimer dead and Garrett and Stout gone, the once-cherished magazine of Main Street U.S.A. could now safely appeal to the higher prerogatives of the publishing establishment. And the conversion didn’t take long.

The next year would see a face plant for the ages. But this too would be shrouded in journalistic folklore. The stupefying naivete of Norman Rockwell’s “Four Freedoms” oil paintings would be published in the Saturday Evening Post in 1943. In this popular series, the artist and magazine expressly catered to FDR’s launch of those platitudes in January 1941 during a State of the Union address. Roosevelt’s Four Freedoms debut was clairvoyantly 11 months before the “surprise” Japanese attack and would subsequently be used ad nauseum to boost public support for his long-anticipated military intervention on behalf of England and France.

In the war-time fog of state-sponsored patriotism during World War II, none were left in mass media or government to question the absurdity of a Commander in Chief—a man who distained free speech, preferred subsidized religion over the freely administered variety, despised free-market prosperity, and reveled in public fear-mongering—lecturing anyone on “essential human freedoms” that we must pursue “everywhere in the world.” And the weary public, across all political persuasions, devoured Rockwell’s and the Post’s soothing comforts with hopeless abandon.

Decades later, curators of the Saturday Evening Post would rationalize their prior disloyalty against the New Deal and make amends. Its managing editors issued a revealing article in 2017 titled “On the Side of Social Security: The Post argued for government assistance in 1952 after several years of opposition.”

Another retrospective published in July 2019 celebrates the joys of arbitrary Thought Crime legislation and selective racial revenge, something the Post would have unequivocally opposed in its heyday. The puff piece is titled “The Civil Rights Act of 1964 Still Works for You: Proposed by President John F. Kennedy and delivered after his assassination, the Civil Rights Act of 1964 reckoned with the malignancy of discrimination.” The 2019 article forgot to mention the enormous economic progress of black Americans during the 1940s and 50s, which seriously undercuts the demand for federal skin-color legislation in the first place.

It’s barely worth mentioning what the Post’s view on World War II and subsequent military endeavors now entails. Suffice to say, FDR would have been proud.


Does New Deal history have any significance today? Let us count the ways.

For starters, the open celebration of an abusive tyrant—with a 12-year record of immense failure, media manipulation and lawless usurpations—should remove any doubt over the corruption of American institutions who have thoroughly whitewashed this vital period. Anyone not already convinced of the totalitarian inclinations of the original New Deal and its recent “green” reincarnation should think again.

On media controls, the pervasive hypocrisy of the education-media-entertainment industries couldn’t be more glittering. The same ones who cry foul over the slightest impediment to poor people voting for more welfare and their own freedom to slander at will, fully accept the total obstruction of FCC barriers that block over 99.9% of Americans from the powerful platforms of radio and television.

Populists and liberals who repeat the mantra about “six giant corporationscontrolling 90% of the media” entirely miss the point. Their longstanding support of political press interference created that disparity which they now abhor.

Even more bizarre is the conservative-libertarian wing of neo-con journals, talk radio, and FoxNews. Their silent approval of speech rationing indicates that once a person reaches the inner sanctum of broadcast privilege, any notion of “free market” spectrum access becomes obsolete.

Yet the question remains, what next?

Getting a clearer picture of the importance of independent journalism certainly helps, as does recognizing the inherent drawbacks of federal broadcast interference. It’s no coincidence that accurate reporting and robust analysis can, most often, only be found on internet sites free of government privilege—just as it was in newspapers and magazines up until the 1930s.

After that realization comes the reality check. America didn’t become great from people sitting around, writing and reading books and articles—whining about ancient grievances or launching bombastic comments—always assigning external blame for our vast cultural ills. You can only tell other people “you’re wrong” so many times before the message gets stale and the original goal becomes forgotten. Progress came from people who first got informed, then decided to invest their personal labors in hope of building a better tomorrow.

Is there a critical mass of Americans willing to perform the task of rebuilding functioning local institutions and eventually establishing a sane framework for the larger community? The answer to that question may determine if we ascend towards another Renaissance or drift into another long winter of discontent.

Tyler Durden Sun, 10/27/2019 - 22:20
Published:10/27/2019 9:45:45 PM
[Markets] Charles Hugh Smith: "This Is What Worries Me" Charles Hugh Smith: "This Is What Worries Me"

Authored by Charles Hugh Smith via OfTwoMinds blog,

In this disintegrative phase, people are increasingly indignant if their magical-thinking "solution" is challenged.

It's practically un-American to confess you're worried. Can-do self-help and cheerfulness are expected, promoted and rewarded. So to say I'm profoundly worried about the state of the nation is to swim against the optimistic zeitgeist.

Nonetheless, I'm worried, because I sense the long-wave/cycle disintegrative phase is gathering momentum. Though the timing and outcome are unknown, these phases end badly when people lose their ability to learn new ideas, experiment, cooperate and adapt.

As I've noted in previous posts, economic decline manifests as social and political decay. People are angry, easily inflamed, seeking scapegoats, hardening their own views, all of which manifest economic decline and insecurity.

People are increasingly demanding that everyone agree with them, rather than seek solutions and common ground. People aren't really seeking solutions or common ground, they seek confirmation that you concur 100% with their views, and if you don't, they are indignant: how dare you disagree with me!

This is not a healthy development. People are increasingly prone to repeat their positions dogmatically, and your refusal to agree 100% increases their dogmatism and their agitation.

After three or four such outbursts--we cannot call them exchanges, because nothing is being exchanged--there's nothing to say.

It's extremely dangerous when people stop being interested in solutions and finding common ground, and are only interested in confirming that everyone agrees with them. This is psychologically akin to seeking scapegoats to blame for all our troubles or projecting our Monster Id onto some "other."

As the social fabric unravels, extremes quickly become normalized: another giant homeless encampment springs up and our ability to consider this extraordinarily troubling dissipates in a haze of normalization.

When everything is unraveling, our herd instinct kicks in, and we become increasingly skittish and uneasy. One manifestation of this group anxiety is conflicts suddenly break out over nothing: riots at ball games, demonstrations that become free-for-alls, family gatherings that suddenly dissolve in extreme acrimony over some trivial event.

I'm witnessing these behaviors in comments and correspondence. The Oftwominds audience has always been genteel. People disagree or correct me with civility, and I respond in kind. One of the motives behind the title "of two minds" is that there are generally several perspectives and I can change my mind as new information or experiences are presented.

But this is not what I'm seeing: I'm seeing once reasonable people harden their views into a seething dogmatism, and expressing indignation or anger if I don't agree with them 100%.

I'm afraid these readers never bothered to understand my work, which is admittedly outside the mainstream; they found something they didn't like and keyed off of that.

The turmoil over "facts" and "fake news" is another manifestation. As financial commentator Ben Hunt recently put it, the "tells" are all being manipulated to support a dominant narrative. So the unemployment rate, consumer inflation and the stock market are all manipulated to support the illusion that all is going swimmingly.

As the distance between these fantasy "facts" and experiential reality widen, trust in these "tells" (i.e. trustworthy indicators) declines.

As trust in these "facts" and the "experts" who gin them up declines, the corporate media and authorities double-down in support of their fictitious "facts": any doubters are "conspiracy theorists," purveyors of "fake news," or dastardly Russian stooges repeating "Kremlin talking points."

There is no middle ground left in such a state, and indeed, no desire for middle ground, as the mere existence of middle ground would mean whomever demands 100% agreement with their position is not going to get it.

In this disintegrative phase, people are increasingly indignant if their magical-thinking "solution" is challenged. Technology, to take a common example, will magically solve all our problems. Challenging this as unrealistic or impossible triggers a great indignation in the true believer: again, how dare you doubt tech innovation will save us! Or Universal Basic Income, Medicare For All, and so on.

As a small-time trader in financial markets, I'm accustomed to contemplating several conflicting points of view: some are bullish, some are bearish, some are neutral. Everyone makes their case, and if you decide to make a trade, you're going to be right or wrong. Once you realize you're wrong about the direction of the market, you can either change your mind and exit the trade, or you can double-down and absorb losses in the belief/hope that the market will eventually do what you're betting it will do.

This doubling-down is a dangerous strategy, because we tend to harden our convictions as the market turns against our bet. This leads us to suffer catastrophic losses, when we could have exited the trade with modest losses early on.

In other words, to reduce our anxiety and uncertainty, we harden our views and become dogmatic, blocking out all evidence that our position is untenable / not a solution.

This is what I fear is taking hold in the U.S. Rather than reinforce the traits of successful adaptation and problem-solving--flexibility, experimentation, developing an appetite for numerous small failures as the necessary foundation of advancement, keeping an open mind--we're embracing the Dark Side of the herd instinct, doubling down on rigid, dogmatic, inflexible, untenable positions, a strategy that leads to catastrophic losses and collapse.

This is why I wrote my book Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic, to explain why the traits of successful adaptation are essential to surviving disintegrative phases. Once we lose interest in actual solutions, with all the sacrifices, experimentation, uncertainties and failures that real solutions require, solutions become impossible.

*  *  *

My recent books:

Will You Be Richer or Poorer? Profit, Power and A.I. in a Traumatized World (15% discount in October, Kindle $5.95, print $10.95) Read the first section for free (PDF).

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

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

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

*  *  *

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

Tyler Durden Fri, 10/25/2019 - 19:20
Published:10/25/2019 6:32:17 PM
[Markets] Flyover Folk Fume As TX Court Okays A Seven-Year-Old's Transition Flyover Folk Fume As TX Court Okays A Seven-Year-Old's Transition

Authored by Sarah Cowgill via,

What a week it was for the folks in flyover states. The first hard frost banished those annoying little insects back to the Hell from whence they came, fall foliage erupted in a burst of reds, umber, and orange, and the harvesting of crops was finally underway. But mouths fell agape as one Texas dad went to court in an attempt to keep his ex-wife from transitioning their seven-year-old boy into a girl, jeers at hints that Hillary may be attempting a comeback, and cheers as the Republicans seemingly – finally – grew a pair and stormed a secret squirrel Democratic Caucus meeting.

Adam Schiff

If nothing else was accomplished, the look of astonishment on the sour face of Rep. Adam Schiff (D-CA) raised spirits of an impeachment-exhausted nation.  Just this past week, 184 Republicans backed a bill to censure Mr. Schiff for his handling, or mishandling, of the impeachment investigative requirement. But frustrations reached a fevered pitch, and Republicans stormed a closed hearing room to demand answers.

Rep. Michael Waltz (R-FL) rallied the beleaguered electorate through remarks on Twitter: “I have fought from #Afghanistan to West Africa – I have operated in countries in third world countries who have fairer processes to deal with their elected leadership than what we see today.”

Of course, the Democrats warbled and whined, but it was all for naught as the once Silent Majority applauded the efforts of 24 Republican representatives. As Idaho Falls voter Steve Preuss stated, “Well, there are now 24 republicans I would vote for in 2020. I’m not very interested in those who are sitting on their hands.”

And most heartlanders agreed: It was a good start that needed to gain momentum.

In Traverse City, MI, Kay Doty celebrated the uprising:

“We the people want action. I’m glad some members of Congress have the guts to call these people out,” while down the road a pace in Shelby Township, Bob Bucci went a bit further: “I say we storm the polls come election day. Not only just for Donald Trump but to vote these crooked Democrats out. We owe that much to Donald Trump after all he’s done for us. PS … no RINOs.”

Cheryl Wuelfing in Tennessee took aim at the lame stream press, “What has happened to our press??!! When did it become ok to support and help communism tactics??!!! I hope to God President Trump’s fight rubs off on the Republicans.”

Yet it was John Baldasarre’s words that had commenters signing up to assist: “They should have gave Pencil neck a wedgie while they were at it!”

This Is Out Of Hand

An event in Texas has the Lone Star voters and the rest of the common-sense thinking electorate foaming at the mouth to lock up a pediatrician for child abuse. Dr. Anne Georgulas, a mother of twin seven-year-old boys, apparently wants a little girl and has petitioned the court to allow a chemically medical transition on one twin, which would include puberty blockers and cross-sex hormones. One thoughtful Oklahoman asked, “If he doesn’t go through puberty how does he even know he wants to be a girl?”

“James” or as the mother refers to him, “Luna.”

A good question, though a lot of folks went a bit radical on answers. No one was for allowing the mother the right to practice medicine on any other child, and many were all for removing the twins from her custody.

In Texarkana, Jimmy James was shaken.

“So sick. Shouldn’t be allowed to do this. It’s a decision that this kid when an adult should make.  The mother is insane !!!”

Tinna Alongi wasn’t very kind in her assessment of the situation:

“Hard to fathom a jury sided with the mother, allowing her sole medical rights.  Also hard to fathom this bats**t crazy mother is a pediatrician.”

She’s Back – Ugg

Also during the roller coaster ride through the Middle America came the drumbeat emanating from the Swamp that Hillary Clinton was prepping to run – and win – in 2020 against President Donald Trump.  Becky Ronstadt in North Dakota simply asked, “Hillary who?”  While others repeated a single word: “Benghazi.”

But along with the horror from many at the thought of Hillary running again, some welcomed a second, perhaps even more humiliating jaunt through the history books for the Clinton Clan matriarch.  Or as Mike Culver, said: “That’s Hillaryous.”

Tyler Durden Fri, 10/25/2019 - 10:35
Published:10/25/2019 9:58:40 AM
[Markets] Instead Of Buying-Back Billions In Stock, This Is What Boeing Should Have Done Instead Of Buying-Back Billions In Stock, This Is What Boeing Should Have Done

Authored by Bill Blain via Shard Capital,

“You steal a little and they throw you in jail. Steal a lot and they make you King.”

It’s Mario Draghi’s last day chairing an ECB meeting today. End of an era – move along, nothing to see..

Boeing – yet more evidence they are numpties.

I have to accept I am a complete idiot.  

I’ve been so focused on the many trees representing Boeing’s multiple problems: its failure to make planes airlines want to buy, its pursuit of profits and management bonuses over safety, it’s wobbly finances in the wake of unpaid for aircraft, potential fines and claims, plus the loss of credibility - that I missed the forest:  the dismal quality of its management who clearly understood precisely nothing about their company.

The proof is in its Stock Buyback history.  In 2018 it bought back $9 bln of its own shares, and boosted dividends by 20%.  It approved a further $20 bln stock buyback for 2019.  Its stock price has rising pretty much in line with the $40 plus bln in equity its bought back in recent years.

Source: Bloomberg

Conventional logic says companies buy back stock when they perceive it as the most efficient thing to do with their profits.  It’s also an alarm bell warning of unimaginative/poor management.  Perhaps the right thing for Boeing to have done in the mid-2010s would have been to invest $10 bln to develop a new modern smaller regional single airliner?  Instead Boeing’s bosses went with the bull stock market, stuck some bigger engines on the venerable and increasingly unbalanced B-737 and gave it the snappy Max moniker, while awarding themselves bigger bonuses.

The cost of the Max debacle will far exceed $10 bln and could crush the company.  Their failure to invest in the future during times of easy money is the ultimate management failure – failing to ensure the company’s long-term future with new products.  Instead they chased a higher stock price and higher bonuses juiced by the buybacks.  Numpties indeed.  Sack them all.

How many other senior company executives have made the same short-term mistake?  How many were seduced by the rising stock market, access to cheap and easy debt from the bull bond market?  Leverage up companies to push up stock prices?

 The rot goes right across the corporate world. Central banks and politicians are complicit – QE, Austerity, bad regulation… The unintended consequences of the last 10-years are coming back to bite us all.

Tesla – a profit?

Long-term porridge readers know I blow hot and cold on Tesla. It surprised the market to the upside last night, by producing numbers that we’re nearly as bad as the market expected.  It’s on course to sell shy of 400,000 cars this year, which still means it’s a small fry specialist firm.  Yet its valuation would say it’s a world leader.

Declaration: I own 10 Tesla Shares.  I keep them out of curiosity.  They will either be worth nothing or a lot.  I’m just not sure which.  There is massive value in the data Tesla has collected in terms of driverless cars, but I reckon we are years away for that reality.  They dominate the EV sector and forcing everyone else to play catch up – with raises long-term competition issues for them.  Their existing line up of cars is looking tired, but they will intro a new sports next year.  The only thing I’m certain of – Tesla is probably not worth $50 bln.  That doesn’t mean it doesn’t have a future.

I do find it hilarious to view the comments sections on any Tesla story: opinion is extreme – with Telsaphobes or Musk-o-philes and few perspectives inbetween. Some will praise Musk as the greatest visionary of all time, and say they’ve invested their whole pension pot in him. Others call him a con-man.  I’m pretty sure the reality is out there somewhere… (I’d judge Musk by his actions: his disgraceful accusations about the British diver who rescued kids trapped in a cave does not speak in his favour.)

Goldman Sachs..

I read a story this morning about Goldman Sachs sacking a senior banker over compliance violations in the Middle East.  Excellent stuff.  Suggests the Squid is learning.. but far too late.  It’s also the day a couple of former Deutsche Bank traders will face the judge in NY accused of the most heinous crime in financial history – rigging LIBOR!  Anyone with any real understanding knows the charges are bunkum – individual traders wishing for a high or low rate were more than balanced, and the real effect of the “fraud” will have been a rounding error. Yet the authorities are determined that justice is seen to be done and the guilty proven so!

All of which compares rather badly to what’s going on in Malaysia.  I am reading a superb book at the moment. For a racy story and improbable characters, I really can’t recommend better than The Billion Dollar Whale.  (If you can’t find the time, try the BBC’s Channel 4 Storyville: “The PM, The Playboy and the Wolf of Wall Street” for the gist of the story.)  The fact a Malaysian Sovereign Wealth fund got conclusively turned over by the country’s kleptocracy is bad enough, but in the introduction to the book is the line:  “Goldman Sachs has made unfathomably large profits helping the fund raise money”.  It looks like about half the $8 bln Goldman raised for the fund was nicked.

Gosh. Surely not?  Goldman is the universally admired top investment bank, advisor to the rich and powerful and centre of the Davos set…. Someone must have pulled the wool over their eyes?  (US Readers – raised eyebrow (denoting sarcasm) alert.)  That the Vampire Squid Sucking the Face off Humanity (allegedly) might have been duped into ramming its feeding funnel into the Malaysian people’s rainy day development fund must be profoundly shocking to clients of the firm.. but the only surprises for anyone working in professional finance will be they apparently got caught.

In today’s compliance driven banking business it should be 110% impossible to be facilitate, or miss a financial heist on the scale of 1MDB.  But, no. The story confirms its relatively easy. It’s always been easier to steal a couple of billion dollars than it is the steal a loaf of bread.

I won’t go into the whole story – check it for yourself – but I do think the book doesn’t dwell enough on just how deep Goldman’s involvement in the fraud might have been – despite describing the bond deals as “one of Goldman’s biggest ever paydays”.   The book is littered with similar comments about how the bank operated.  I’d like to understand more, but I’m pretty sure the US journalists who wrote have had it explained carefully to them why they should not to go there.

It really doesn’t matter.  Facts are simple.  Goldman was involved.  The only question is how gullible they were, or how guilty might they be?

Goldman’s former star Asian banker and regional chairman Tim Leissner has already pled guilty in the US to Money laundering and bribing foreign officials.  The books says he admitted circumventing compliance because he knew Jho Low, the playboy at the centre of the scandal, was “dodgy”.  Yikes.

Earlier this week Bloomberg carried a story naming Goldman’s top HK banker, Andrea Vella, currently on a break “preparing for a triathalon” from the bank, as “Co-Conspirator No 4” in the investigation of the fraud in Malaysia.  Court documents says he was briefed on plans to pay bribes and kickbacks to ensure the Fund was able to raise bond finance, for which Goldman was paid extraordinarily high fees for what should have been a quasi-sovereign deal.

Goldman apparently earned 8% fees on $8 bln of effectively SSA bond debt it raised for 1MBD.  That should have set alarm bells ringing.  Vella arranged the deals.  Goldman’s ex-employee Leissner has told US investigators the he and others arranged the fundraising for 1MBD as bond issues specifically to generate higher fees. Who was asking questions internally about it?  He’s said a lot of other things – allegedly.  (Thanks Mr Hislop for reminding me to add that qualifier.)

I suspect the book and its allegations must be true-ish – the efforts made to prevent its publication were extraordinary.  Being gullible of allowing fraud, or being guilty of fraud are both financial crimes.  Has Goldman been punished?  I even read the US Department of Justice is investigating Deutsche Bank over a former Goldman Sacks banker involved in the story its hired.  I was wondering how long it would take for DB to be implicated.

And that’s the really interesting thing…  Can you imagine how the US authorities would be reacting to a European bank so clearly wrapped up – either for being gullible or guilty - in something as fraudulent as 1MDB?  They would have been fined for gross incompetence or for facilitating it.  If it was Deutsche Bank, HSBC or Barclays, I bet my bottom dollar they’d already have paid fines in double digit billions.  But this is Goldman.  So That’s different.  Isn’t it?

Thus far Goldman does not appear to have paid any fines in relation to the case.  At one stage the Malaysian Government was looking for Goldman to divvy up about $7 bln to settle the case for “misreprenting to investors” the proceeds of the bond sales would be used for legitimate purposes, although the latest rumours say a $3.3-2 bln settlement is more likely.  Although the bank intends to “vigorously defend itself”, a settlement that ends the investigation will be great news for the 17 Goldman executives currently under investigation by the Malaysians for their involvement in the trades underlying the fraud.  The US DoJ say they are investigating.

On the much wider global scale, zoom out and look at this in terms of all the other things now breaking across markets: the collapse and bust of the hollow WeWork model, the fact Boeing isn’t making any planes airlines want to buy and has potentially fatally wrecked its future, Nissan and Renault self-destructing over pride, or Saudi Aramco failing to convince investors their fossil fuel based business is worth as much as they think it is.  Snapshots of disintegrating business entitled capitalism?

Goldman is a bank with a reputation for making money.  The fact they are being exposed for not particularly caring how… well that’s for their clients to opine on and for markets to value in terms of their stock price.  Seller.  

*  *  *

Blain’s Financial Porridge Podcast on Website (Subscribe to Audioboom podcast or go via Spotify or iTunes (Other channels available from Audioboom).  Book: The Fifth Horseman – How to Destroy the Global Economy, is on Amazon in Kindle or book format.

Tyler Durden Thu, 10/24/2019 - 10:17
Published:10/24/2019 9:22:32 AM
[Markets] The Unraveling Quickens The Unraveling Quickens

Authored by Charles Hugh Smith via OfTwoMinds blog,

Even if we don't measure the erosion of intangible capital, the social and political consequences of this impoverishment are manifesting in all sorts of ways.

The central thesis of my new book Will You Be Richer or Poorer? is the financial "wealth" we've supposedly gained (or at least a few of us have gained) in the past 20 years has masked the unraveling of our intangible capital: the resilience of our economy, our social capital, i.e. our ability to find common ground and solve real-world problems, our sense that the playing field, while not entirely level, is not two-tiered, and our sense of economic security--have all been shredded.

The unraveling of everything that actually matters is quickening. While every "news" outlet cheerleads the stock market ("The Dow soared today as investor optimism rose... blah blah blah"), our "leadership" and our media don't even attempt to measure what's unraveling, much less address the underlying causes.

The hope is that if we ignore what's unraveling, it will magically go away. But that's not how reality works.

The unraveling is gathering momentum because prices have been pushing higher while wages lag, feeding the rising precariousness and inequality of our economy. The connection between people losing ground and social disorder/disunity has been well established by historians such as Peter Turchin Ages of Discord and David Hackett Fischer The Great Wave: Price Revolutions and the Rhythm of History.

In our era, trust in the legitimacy of our institutions is unraveling because the statistics presented as "facts" are so clearly designed to support the status quo narrative that everything's getting better every day in every way rather than the politically unwelcome reality that the bottom 95% are losing ground and whatever they do earn and own is increasingly at risk from forces outside their control.

Economic decay leads to social and political disorder / disunity. The sudden rise of vast homeless encampments is one manifestation of the social fabric unraveling. In the political realm, the insanity of accusing Democratic candidates of being "Russian agents" matches the hysterical destructiveness of the McCarthy era in the 1950s.

It all starts with economic decay, so let's look at some charts. Here's a chart of income inequality which helps drive wealth inequality.

Note that the only group that benefited from the past 20 years of speculative bubbles is the top 1%. The whole idea that inflating bubbles creates a "wealth effect" that "trickles down" is preposterous, as evidenced by the decline of the middle 60% of households while the speculators and owners of bubble-assets skimmed the vast majority of income gains.

Meanwhile, we're told inflation is less than 2% annually while rising costs have outpaced meager wage increases. What's a more realistic measure of real-world inflation--the official Consumer Price Index (CPI) at 18% over ten years or rent and healthcare at 34% and 45%?

According to the Chapwood Index, real-world inflation in urban America is running 9% to 13% annually. This is more in line with reality than the bogus CPI, as evidenced by this chart of wages and healthcare costs:

Even if we don't measure the erosion of intangible capital, the social and political consequences of this impoverishment are manifesting in all sorts of ways: large-scale social disorder is breaking out around the globe, and the political middle ground has completely vanished: no matter which way an issue is decided, one camp will refuse to accept the outcome.

The only way forward with any chance of success is to start by acknowledging the decay of our economy due to rampant financialization, legalized looting, the pathologies of "winner take most" speculation and the realities of a two-tiered system in which entrenched elites are "more equal" than the rest of us, economically, socially and politically. We have to accept the limits of technology to reverse the unraveling and assess the damage that's already been done to our shared capital.

Acting as if the system is working just fine and the problem is perception/optics is accelerating the unraveling.There's more in my new book Will You Be Richer or Poorer? Profit, Power and A.I. in a Traumatized WorldRead the first section for free (PDF).

*  *  *

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

*  *  *

My recent books:

Will You Be Richer or Poorer? Profit, Power and A.I. in a Traumatized World (15% discount in October, Kindle $5.95, print $10.95) Read the first section for free (PDF).

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

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

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

Tyler Durden Wed, 10/23/2019 - 16:30
Published:10/23/2019 3:47:58 PM
[Entertainment] Women, once relegated to supporting roles, are becoming the protagonists of their own stories A slew of new books shows the importance of who gets to claim a narrative. Published:10/23/2019 10:17:33 AM
[Markets] Is It Time For The Market To Start Discounting A Hard Left Turn? Is It Time For The Market To Start Discounting A Hard Left Turn?

Via Global Macro Monitor,

Last week was a very bad week for President Trump and may, in hindsight, be the tipping point of his presidency and the Republican Party.   We list and explain the four political bombshells that exploded, which we believe will work its way through the American political system and eventually adversely impact the risk markets.

Senate Republicans will soon have to choose between Mr. Trump or the rule of law and the Constitution.  Public opinion is quickly moving toward the later, where a majority of the country now supports the impeachment and removal of President Trump.

We suspect public opinion for impeachment and removal will continue to move north putting pressure on Senate Republicans, especially the 23 who are running for re-election next year.  They will be no longer be able to evade and obfuscate their support for Trump and will be forced to go on record for the history books during a Senate trial early next year.

We think resignation is more likely than removal but Trump won’t go quietly, increasing the political risk on the American street.  President Trump is becoming increasingly toxic to the Republican Party and we sense they know it.

The President consistently polls 20-30 points underwater with women and younger voters.

Mr. Market and President Warren

Our priors are that a huge 2020 Blue Tsunami swamps the White House, Senate, and House is a much higher probability than is currently priced.  The markets will soon have to discount the potential for a President Warren,  backed by a Democratic House and Senate, and we don’t believe it will be a bullish repricing.

Political Demographics

The math of the country’s political demographics just are not conducive anything close to a Red Tide in 2020 or beyond, and last week’s events reinforced it.   Far from it.

In fact, the math over the next few decades is going to be brutal for Republicans.

The younger generations, who are woke, are left of the salad fork, and now, for the first time, a larger voting block than the boomers.

A Democratic voter’s race, sex or education level doesn’t predict which candidate he or she is leaning toward, but age does.

In one early New Hampshire poll, Joe Biden won 39 percent of the vote of those over 55, but just 22 percent of those under 35, trailing Bernie Sanders. Similarly, in an early Iowa poll, Biden won 41 percent of the oldster vote, but just 17 percent of the young adult vote, placing third, behind Sanders and Elizabeth Warren.

As Ronald Brownstein pointed out in The Atlantic, older Democrats prefer a more moderate candidate who they think can win. Younger Democrats prefer a more progressive candidate who they think can bring systemic change.  – NY TImes

If the young, who traditionally to like stay home and play on their iPhones on election day, come out and vote en masse in 2020, as they did and almost doubled their turnout in the 2018 midterms,  you best start getting used to saying, President Warren,  Speaker Pelosi, and Majority Leader Schumer.

Mr. Market is going to have big trouble getting there.

Last Week’s Big Four Events And The Tipping Point

1. The Revenge Of The Four Stars

A retired four-star admiral, who led the raid and capture of Osama Bin Laden pens an Op/Ed piece that states the country is effectively under attack by the President of the United States.  Then the POTUS is openly mocked by his former Defense Secretary and a four-star General at Thursday’s annual Al Smith dinner.  Stunning and unprecedented.

These patriots aren’t exactly “deep state” bureaucrats and can’t be easily dismissed in a 6 AM Tweet.

We think President Trump really hurt himself by trashing his former defense secretary and retired four-star General James Mattis during the now-infamous “all roads with you lead to Putin” meeting with Congressional leaders that went way-off the rails at the White House on last Wednesday.   President Trump called Mattis “the world’s most overrated general.” 

The “Warrior Monk” is well respected and loved throughout the U.S. military and defense community.    

Mattis responded, albeit with humor, to Trump’s remarks at  the Al Smith dinner on Thursday night.

I earned my spurs on the battlefield,” he said at a charity gala in New York on Thursday night. “Donald Trump earned his spurs in a letter from a doctor.” – Washington Post


At least watch the first two minutes of the following video of his speech on Wednesday, then fast forward to minute 8:00, where the General cites President Lincon.  Better yet, watch the speech in its totality. 

Along with most of the country, we really admire  the Warrior Monk, especially after reading this story,

…Mattis has a compassionate side to him. The story goes that Mattis stood duty on Christmas back when he was a brigadier general so that a younger Marine could spend the holiday with his family.

…retired Marine Gen. Charles Krulak, who was commandant when the story took place. Every Christmas during his tenure, Krulak delivered cookies to every Marine duty post around Washington and Quantico, Va.

Back in 1998, he was making his final delivery to Marine Corps Combat Development Command headquarters at Quantico when he asked the Marine on duty who the officer of the day was.

“The young Marine said, ‘Sir, it’s Brigadier General Mattis.’”

Krulak thought the Marine had misunderstood him, so he asked again, but he got the same answer.

“I looked around the duty hut and in the back, there were two cots: One for the officer of the day and one for young Marine. I said, ‘OK, let me cut through all of this: Who was the officer who slept in that bed last night?’

“And the Marine said, ‘Sir, Brigadier General Mattis.’”

At that moment, Mattis walked around the corner.

“So I said to him, ‘Jim, what are you standing the duty for?’ “And he said, ‘Sir, I looked at the duty roster for today and there was a young major who had it who is married and had a family; and so I’m a bachelor, I thought why should the major miss out on the fun of having Christmas with his family, and so I took the duty for him.’ ”  — Stars & Stripes

What a good man and incredible warrior.

The Other Four Star

Go no further for more evidence the President is losing the confidence of the top military brass, at least, publicly, by retired admirals and generals, than Admiral McCraven’s Op/Ed in the NY Times.  McRaven, is a retired Navy Seal, and was charged with the raid that captured Osama Bin Laden.  I just finished his book, Sea Stories: My Life in Special Operationswhere he devotes a fascinating and gripping chapter to Operation Neptune Spear.

Here are the money quotes from his NY Times piece,

  • …beneath the outward sense of hope and duty that I witnessed at these two events, there was an underlying current of frustration, humiliation, anger and fear that echoed across the sidelines. The America that they believed in was under attack, not from without, but from within.

  • These men and women, of all political persuasions, have seen the assaults on our institutions: on the intelligence and law enforcement community, the State Department and the press. They have seen our leaders stand beside despots and strongmen, preferring their government narrative to our own. They have seen us abandon our allies and have heard the shouts of betrayal from the battlefield. As I stood on the parade field at Fort Bragg, one retired four-star general, grabbed my arm, shook me and shouted, “I don’t like the Democrats, but Trump is destroying the Republic!

  • ..We are not the most powerful nation in the world because of our aircraft carriers, our economy, or our seat at the United Nations Security Council. We are the most powerful nation in the world because we try to be the good guys. We are the most powerful nation in the world because our ideals of universal freedom and equality have been backed up by our belief that we were …champions of justice, the protectors of the less fortunate

  • If our promises are meaningless, how will our allies ever trust us? If we can’t have faith in our nation’s principles, why would the men and women of this nation join the military? And if they don’t join, who will protect us? If we are not the champions of the good and the right, then who will follow us? And if no one follows us — where will the world end up?

  • …if this president doesn’t understand their importance, if this president doesn’t demonstrate the leadership that America needs, both domestically and abroad, then it is time for a new person in the Oval Office — Republican, Democrat or independent — the sooner, the better. The fate of our Republic depends upon it. 

– Admiral McRaven former commander of the United States Special Operations Command

2. G7 At Trump National Doral — The Damage Is Done

Though President Trump almost immediately reversed himself on holding next year’s G7 Summit at one of his properties, caving to major pushback from the Republican Senate,  the political damage is done.  How many moderates do you think he lost by this blatant act of corruption?

One thing we have learned with and since the election of Donald Trump is the electorate doesn’t do swamp.  Ask Joe Biden, who is now plummeting in the polls as voters become aware of the jobs and money his son, Hunter, made, through the nepotism of his father.  It may have not been illegal but it sure as hell was swampy.

Nothing compares to the ultimate swampiness of Trump trying to hold the G7 at Trump National Doral, however.  It’s jaw-dropping swampiness and, more important, outright illegal.

We pecked out the following on Friday afternoon fully anticipating the G7 was never going to happen at Trump National Doral.   We weren’t expecting such a quick reversal, however,  but think you will find what we wrote informative, if not a  bit entertaining, nonetheless.

We thought, at least, at the very last resort (pun intended)  the Federal courts would step in never allow it under the “phony”, according to President Trump,  Emoluments Clause of the U.S Constitution, Article I, Section 9:

Clause 8, Titles of Nobility and Emoluments

“Clause 8: No Title of Nobility shall be granted by the United States: And no Person holding any Office of Profit or Trust under them, shall, without the Consent of the Congress, accept of any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince, or foreign State.” – U.S. Constitution

We suspect President Trump lost the support of many, if not most of the remaining moderates just by the announcement the G7 Summit will be held at his Trump National.  That is about as swampy as it gets, folks.

Walking it back won’t bring the moderates back but may eventually add to one of his articles of impeachment.

Nonetheless, the choice of Doral was very apropos as it’s location is only 42 miles north of the Everglades National Park, one of the world’s most famous swamps.

Do the math, folks, that is less distance than 10 rounds of golf from the 7,510 yards Tips at Doral’s Blue Monster golf course.

3. Confessions Of An “Acting” Chief of Staff

President Trump’s acting Cheif of Staff, Mick Mulvaney’s quid pro quo and “get over it” presser on Thursday may go down as one of the most famous confessions since Saint Augustine’s classic book.

He walked it all back the next day in the Augustinian spirit of “Lord, make me chaste  – but not yet!”   We wait with great anticipation to see if walks back the walk back under oath or after he is thrown under the greyhound.

We are not going to comment on the news conference but will let you view it in full, right here.

4. Trump and Pence Rolled By Erdogan Like A Cheap Cigar

Donald Trump got “rolled” by Turkish President Recep Tayyip Erdogan, a National Security Council source with direct knowledge of the discussions told Newsweek.

In a scheduled phone call on Sunday afternoon between President Trump and President Erdogan, Trump said he would withdraw U.S. forces from northern Syria. The phone call was scheduled after Turkey announced it was planning to invade Syria, and hours after Erdogan reinforced his army units at the Syrian-Turkish border and issued his strongest threat to launch a military incursion, according to the National Security Council official to whom Newsweek spoke on condition of anonymity

…”President Trump was definitely out-negotiated and only endorsed the troop withdraw to make it look like we are getting something—but we are not getting something,” the National Security Council source told Newsweek. “The U.S. national security has entered a state of increased danger for decades to come because the president has no spine and that’s the bottom line.”  – Newsweek

We are all for bringing our troops home and ending the forever wars.  But these troops are not coming home and they were tantamount to the Dutch boy with his finger in the dike holding back the dam from breaking.   The dam is now broken and we will witness the consequences of the disastrous flood unfold during the next year of the presidential campaign.  Not Republican positive, in our opinion.

America Throws The Kurds Under The Bus, Again 

The poor Kurds.  I do remember how Bush #41 left them hanging out to dry after the first Gulf War for Sadaam to slaugter.

Nothing in this world is certain except death, taxes, and America betraying the Kurds.

The U.S. has now betrayed the Kurds a minimum of eight times over the past 100 years. The reasons for this are straightforward.

The Kurds are an ethnic group of about 40 million people centered at the intersection of Turkey, Syria, Iran, and Iraq. Many naturally want their own state. The four countries in which they live naturally do not want that to happen.  — The Intercept


The world seems Fubared with little hope but we can’t stop fighting, folks.   Republican, Democrat, or Independent.

Should stocks be making new all-time highs?   We don’t think so, but they seem to want to, for now.

[ZH: Ironically Warren is sliding as Hillary picks up]

Source: Bloomberg

We believe the market is in a long topping process, are at historically high valuations, and on the eve of an ugly bear market.   Not much upside, lots of downside, and we just laid out another potential catalyst.

We don’t know the future and nobody else does.  We also, as always, recognize we could be wrong but not because we haven’t done our homework.

Stay frosty, folks.

Tyler Durden Wed, 10/23/2019 - 09:35
Published:10/23/2019 8:47:12 AM
[Markets] How Democrats Became The Party Of Monopoly And Corruption How Democrats Became The Party Of Monopoly And Corruption

Authored by Matt Stoller via,

The following is an excerpt from Goliath: The 100-Year War Between Monopoly Power and Democracy.

In 1985, the Dow Jones average jumped 27.66 percent. Making money in stocks, as a journalist put it, "was easy." With lower interest rates, low inflation, and "takeover fever," investors could throw a dart at a list of stocks and profit.

The next year was also very good. The average gain of a Big Board stock in 1986 was 14 percent, with equity market indexes closing at a record high.

For the top performers, the amounts of money involved were staggering.

In 1987, Michael Milken awarded himself $550 million in compensation. In New York City, spending by bankers—a million dollars for curtains for a Fifth Avenue apartment, a thousand dollars for a vase of precious roses for a party—was obscene. A major financier announced in the Hamptons one night that "if you have less than 750 million, you have no hedge against inflation." In Paris, a jeweler "dazzled his society guests when topless models displayed the merchandise between courses." In west Los Angeles, the average price of a house in Bel Air rose to $4.6 million. There was so much money it was nicknamed "green smog."

Ambitious men now wanted to change the world through finance. Bruce Wasserstein had been a "Nader's Raider" consumer advocate; he now worked at First Boston as one of the most successful mergers and acquisitions bankers of the 1980s. Michael Lewis wrote his best-seller Liar's Poker as a warning of what unfettered greed in finance meant, but instead of learning the lesson, students deluged him with letters asking if he "had any other secrets to share about Wall Street." To them, the book was a "how-to manual."

Finance was the center, but its power reached outward everywhere. The stock market was minting millionaires in a collection of formerly sleepy towns in California. Sunnyvale, Mountain View, Los Altos, Cupertino, Santa Clara, and San Jose in the 1960s had been covered with "apricot, cherry and plum orchards," and young people there often took summer jobs at local canneries. Immediately after Reagan's election, in December of 1980, Apple Computer went public, instantly creating 300 millionaires, and raising more money in the stock market than any company since Ford Motor had in its initial public offering of shares in 1956. A young Steve Jobs was instantly worth $217 million.

Meanwhile, the family farmer had lots of people who said they were friends at election time - even the glamorous music industry put on a giant "Farm Aid" concert in 1985 to raise money for bankrupt growers. But there was no populist leader like Congressman Wright Patman had been during the New Deal in the Democratic Party anymore. On the contrary, "new" Democrats like Dale Bumpers and Bill Clinton of Arkansas worked to rid their state of the usury caps meant to protect the "plain people" from the banker and financier. And the main contender for the Democratic nomination in 1988, the handsome Gary Hart, with his flowing—and carefully blow-dried—chestnut brown hair, spoke a lot about "sunrise" industries like semiconductors and high-tech, but had little in his vision incorporating the family farm.

It wasn't just the family farmer who suffered. On the South Side of Chicago, U.S. Steel, having started mass layoffs in 1979, continued into the next decade, laying off more than 6,000 workers in that community alone. Youngstown, Johnson, Gary—all the old industrial cities were going, in the words of the writer Studs Terkel, from "Steel Town" to "Ghost Town." And the headlines kept on coming. John Deere idled 1,500 workers, GE's turbine division cut 1,500 jobs, AT&T laid off 2,900 in its Shreveport plant, Eastern Air Lines fired 1,010 flight attendants, and docked pay by 20 percent. "You keep saying it can't get worse, but it does," said a United Autoworker member.

And all the time, whether in farm country or steel country, the closed independent shop and the collapsed bank were as much monuments to the new political order as the sprouting number of Walmarts and the blizzard of junk-mail credit cards from Citibank. As Terkel put it, "In the thirties, an Administration recognized a need and lent a hand. Today, an Administration recognizes an image and lends a smile."

Regional inequality widened, as airlines cut routes to rural, small, and even medium-sized cities. So did income inequality, the emptying farm towns, the hollowing of manufacturing as executives began searching for any way to be in any business but one that made things in America. It wasn't just the smog and the poverty, the consumerism, the debt, and the shop-till-you-drop ethos. It was the profound hopelessness.

Within academic and political institutions, Americans were taught to believe their longing for freedom was immoral. Power was re-centralizing on Wall Street, in corporate monopolies, in shopping malls, in the way they paid for the new consumer goods made abroad, in where they worked and shopped. Yet policymakers, reading from the scripts prepared by Chicago School of Economics "experts," spoke of these changes as natural, "scientific," a result of consumer preferences, not the concentration of power.

By the time of the 1992 election, there was a sullen mood among the voters, similar to that of 1974. "People are outraged at what is going on in Washington. Part of it had to do with pay raises, part of it has to do with banks and S&Ls and other things that are affecting my life as a voter," said a pollster. That year, billionaire businessman Ross Perot ran the strongest third-party challenge in American history, capitalizing on anger among white working-class voters, the Democrats who had switched over to Reagan in the 1980s. He did so by pledging straightforward protectionism for U.S. industry, attacking the proposed North American Free Trade Agreement (NAFTA), and political corruption. Despite a bizarre campaign in which he withdrew and then reentered the race, Perot did so well he shattered the Republican coalition, helping throw the election to the Democrats. There would be one last opportunity for the Democrats to rebuild their New Deal coalition of working-class voters.

The winner of the election, Bill Clinton, looked like he might do so. He had run a populist campaign using the slogan "Putting People First." He attacked the failed economic theory of Reagan, criticized tax cuts for the rich and factory closings, and pledged to protect Americans from foreign and domestic threats. "For too long, those who play by the rules and keep the faith have gotten the shaft," Clinton said. "And those who cut corners and cut deals have been rewarded." His campaign's internal slogan was "It's the economy, stupid," and the 1992 Democratic platform used the word "revolution" 14 times.

As a candidate, Clinton’s Democratic platform called for a "Revolution of 1992," capturing the anger of the moment. But the platform was written by centrist Democratic Leadership Council boss Al From, and for the first time since 1880 there was no mention of antitrust or corporate power, despite a decade with the worst financial manipulation America had seen since the 1920s. This revolution would be against government, in government, around government. In 1993, a book came out on lobbying in Washington. Wayne Thevenot, a Clinton donor, laid out the new theme of the modern Democratic Party: "I gave up the idea of changing the world. I set out to get rich."

Like Reagan, Clinton went after restrictions on banking. Reagan sought to free restrictions on finance by allowing banks and non-banks to enter new lines of business. Clinton continued this policy, but over the course of his eight years attacked restrictions on banks themselves. In 1994, the Clinton administration and a Democratic Congress passed the Riegle-Neal Interstate Banking and Branching Efficiency Act, which allowed banks to open up branches across state lines. Clinton appointed Robert Rubin as his treasury secretary, super-lawyer Eugene Ludwig to run the Office of the Comptroller of the Currency, and reappointed Alan Greenspan as the chairman of the Federal Reserve.

All three men worked hard through regulatory rulemaking to allow unfettered trading in derivatives, to break down the New Deal restrictions prohibiting commercial banks from entering the trading business, and to let banks take more risks with less of a cushion. Citigroup finally got an insurance arm, merging with financial conglomerate Travelers Group, approved by Greenspan, who granted the authority for the acquisition under the Bank Holding Company Act. In 1999, Clinton and a now-Republican Congress passed the Gramm-Leach-Bliley Act, which fully repealed the Glass-Steagall Act that had shattered the Houses of J.P. Morgan and Andrew Mellon. The very last bill Clinton signed was the Commodity Futures Modernization Act of 2000, which removed public rules limiting the use of exotic gambling instruments known as derivatives by now-enormous banks.

Clinton signed the Telecommunications Act of 1996, which he touted as "truly revolutionary legislation," and this began the process of reconsolidating the old AT&T as the "Baby Bells" merged. At the signing ceremony, actress Lily Tomlin reprised her role as a Ma Bell operator. Huge pieces of the AT&T network came back together, as Baby Bells merged from seven to three. Clear Channel grew from 40 radio stations to 1,240. In 1996, the Communications Decency Act was signed, with Section 230 of the Act protecting certain internet businesses from being liable for wrongdoing that occurred on their platform. While not well understood at the time, Section 230 was one policy lever that would enable a powerful set of internet monopolies to emerge in the next decade.

Clinton also sped up the corporate takeover of rural America by allowing a merger wave in farm country. Food companies had always had some power in America, but before the Reagan era, big agribusinesses were confined to one or two stages of the food system. In the 1990s, the agricultural sector consolidated under a small number of sprawling conglomerates that organized the entire supply chain. Cargill, an agricultural conglomerate that was the largest privately owned company in America, embarked on a series of mergers and joint ventures, buying the grain-trading operations of its rival, Continental Grain Inc., as well as Azko Salt, thus becoming one of the largest salt production and marketing operations in the world.

Monsanto consolidated the specialty chemicals and seed markets, buying up DeKalb Genetics and cotton-seed maker Delta & Pine Land. ConAgra, marketing itself as selling at every link of the supply chain from "farm gate to dinner plate," bought International Home Foods (the producer of Chef Boyardee pasta and Gulden's mustard), Knott’s Berry Farm Foods, Gilroy Foods, Hester Industries, and Signature Foods. As William Heffernan, a rural sociologist at the University of Missouri, put it in 1999, a host of formal and informal alliances such as joint ventures, partnerships, contracts, agreements, and side agreements ended up concentrating power even further into "clusters of firms." He identified three such clusters—Cargill/Monsanto, ConAgra, and Novartis/ADM—as controlling the global food supply.

The increase in power of these trading corporations meant that profit would increasingly flow to middlemen, not farmers themselves. Montana senator Conrad Burns complained his state's farmers were "getting less for our products on the farm now than we did during the Great Depression." The Montana state legislature passed a resolution demanding vigorous antitrust investigations into the meatpacking, grain-handling, and food retail industries, and the state farmer's union asked for a special unit at the Department of Justice to review proposed agricultural mergers. There was so little interest in the Clinton antitrust division that when Burns held a Senate Commerce Committee hearing on concentration in the agricultural sector, the assistant attorney general for antitrust, Joel Klein, didn't bother to show up. "Their failure to be here to explain their policies to rural America," said Burns, "speaks volumes about what their real agenda is."

In the Reagan era, Walmart had already become the most important chain store in America, surpassing the importance of A&P at the height of its power. But it was during the Clinton administration that the company became a trading giant. First, the corporation jumped in size, replacing the auto giant GM as the top private employer in America, growing to 825,000 employees in 1998 while planting a store in every state. The end of antitrust enforcement in the retail space meant that Walmart could wield its buying power to restructure swaths of industries and companies, from pickle producers to Procter & Gamble. Clinton allowed Walmart to reorder world trade itself. Even in the mid-1990s, only a small percentage of its products were made abroad. But the passage of NAFTA—which eliminated tariffs on Mexican imports—as well as Clinton's embrace of Chinese imports, allowed Walmart to force its suppliers to produce where labor and environmental costs were lowest. From 1992 to 2000, America's trade deficit with China jumped from $18 billion to $84 billion, while it went from a small trade surplus to a $25 billion trade deficit with Mexico. And Walmart led the way. By 2003, consulting firm Retail Forward estimated more than half of Walmart merchandise was made abroad.

Clinton administration officials were proud of Walmart, and this new generation of American trading monopolies, dubbing them part of a wondrous "New Economy" underpinned by information technology. "And if you think about what this new economy means," said Clinton deputy treasury secretary Larry Summers in 1998 at a conference for investment bankers focusing on high-tech, "whether it is AIG in insurance, McDonald's in fast-food, Walmart in retailing, Microsoft in software, Harvard University in education, CNN in television news—the leading enterprises are American."

It was also under Clinton that the last bastion of the New Deal coalition—a congressional majority held by the Democrats since the late 1940s—fell apart as the last few holdout southern Democrats were finally driven from office or switched to the Republican Party. And it was under Clinton that the language of politics shifted from that of equity, justice, and potholes to the finance-speak of redistribution, growth and investment, and infrastructure decay.

The Democratic Party embraced not just the tactics, but the ideology of the Chicago School. As one memo from Clinton’s Council of Economic Advisors put it, "Large size is not the same as monopoly power. For example, an ice cream vendor at the beach on a hot day probably has more market power than many multi-billion-dollar companies in competitive industries."

  • During the 12 years of the Reagan and Bush administrations, there were 85,064 mergers valued at $3.5 trillion.

  • Under just seven years of Clinton, there were 166,310 deals valued at $9.8 trillion.

This merger wave was larger than that of the Reagan era, and larger even than any since the turn of the twentieth century, when the original trusts were created. Hotels, hospitals, banks, investment banks, defense contractors, technology, oil—everything was merging.

The Clinton administration organized this new concentrated American economy through regulatory appointments and through non-enforcement of antitrust laws. Sometimes it even seemed they had put antitrust enforcement itself up for sale. In 1996, Thomson Corporation bought West Publishing, creating a monopoly in digital access to court opinions and legal publishing; the owner of West had given a half a million dollars to the Democratic Party and personally lobbied Clinton to allow the deal. The DOJ even approved the $81 billion Exxon and Mobil merger, restoring a chunk of the Rockefeller empire.

Clinton advisor James Carville very early on in Clinton's first term noted what was happening.

"I used to think if there was reincarnation, I wanted to come back as the president or the pope or a .400 baseball hitter," he said.

"But now I want to come back as the bond market. You can intimidate everybody."

Toward the end of Clinton's second term, with a transcendent stock market, bars in the United States began switching their television sets from sports scores to CNBC, to watch the trading in real time.

In the 1990s, it wouldn't be Herbert Hoover overseeing a bubble, it would be a Democrat.

* * *

Finally, Matt pointed out on Twitter that"This chapter is about Clinton. But there are two chapters before about how Reagan facilitated the merger boom of the 1980s. Our problems came through both parties. Both. That is crystal clear."

Tyler Durden Tue, 10/22/2019 - 22:05
Published:10/22/2019 9:14:03 PM
[Markets] CJ Hopkins: The Putin-Nazis Are Coming (Again) CJ Hopkins: The Putin-Nazis Are Coming (Again)

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

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

We probably should have seen this coming.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

*  *  *

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

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

Authored by Charles Hugh Smith via OfTwoMinds blog,

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

*  *  *

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

My recent books:

Will You Be Richer or Poorer? Profit, Power and A.I. in a Traumatized World (15% discount in October, Kindle $5.95, print $10.95) Read the first section for free (PDF).

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Authored by Charles Hugh Smith via OfTwoMinds blog,

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The Identity of France: Volume One: History and Environment

The Identity of France: Volume Two: People and Production

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

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

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

*  *  *

Will You Be Richer or Poorer? Profit, Power and A.I. in a Traumatized World (15% discount in October, Kindle $5.95, print $10.95) Read the first section for free (PDF).  Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($6.95 (Kindle), $12 (print), $13.08 ( audiobook): Read the first section for free (PDF).  The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 (Kindle), $8.95 (print); read the first chapters for free (PDF).  Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF). If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via

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

Authored by Jeffrey Harding via The Mises Institute,

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

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

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

What Happened to the Golden Years?

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

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

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

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

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

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

The War Against Low-income Renters

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

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

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

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

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

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

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

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

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

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

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

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

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

Adios Gig Economy

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

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

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

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

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

The Tipping Point

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

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

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

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

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

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

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

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

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

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

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

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

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


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

Authored by Jenny Jayne via The Organic Prepper blog,

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

Target the poor.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

It’s an easier target with far less resistance.

Does the government want to keep us broke and powerless?

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

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

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

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

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

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

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

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

Authored by Simon Watkins via,

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

* * *

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

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

Image via Joey L.

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

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

Image via Joey L.

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

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

Image via Joey L.

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

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

Image via Joey L.

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

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

Image via Joey L.

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

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

Image via Joey L.

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

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

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

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

Image via Joey L.

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

Via The New York Times/Conflict Monitor/IHS Markit

* * *

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

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

Authored by Charles Hugh Smith via OfTwoMinds blog,

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Consider the following example: a clothes dryer.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

*  *  *

Will You Be Richer or Poorer? Profit, Power and A.I. in a Traumatized World (15% discount in October, Kindle $5.95, print $10.95) Read the first section for free (PDF). Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($6.95 (Kindle), $12 (print), $13.08 ( audiobook): Read the first section for free (PDF) . The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 (Kindle), $8.95 (print); read the first chapters for free (PDF). Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF). If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via

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

Authored by Guy Milliere via The Gatestone Institute,

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Submitted by SB MH Research

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

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

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

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

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

SunTrust “Agency Shortcut”: Backgrounder

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

SunTrust “Agency Shortcut” Scheme Overview

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

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

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

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

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

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

SunTrust “Agency Shortcut” Scheme Details

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

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

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

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

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

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

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


Summary of Evidence:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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



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

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

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

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

Raoul Pal

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

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

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

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

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

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

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

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

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

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

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

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

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

View image on Twitter

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

Authored by Lance Roberts via,

Trade Deal Done

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

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

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

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

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

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

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

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

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

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

This is the outcome we expected.

  • There is no “actual” deal.

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

  • No one will discuss a trade deal ever again.

It is almost as if Bloomberg read our work:

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

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

So, who won?


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

  • The U.S. gets to suspend tariffs.

Who will like the deal?

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

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

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

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

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

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

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

  • ECB back into easing mode and running negative rates

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

This is also a MAJOR point of concern.

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

Let me repeat what we wrote back in July:

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

The Bull Case For 3300

  • Momentum

  • Stock Buybacks

  • Fed Rate Cuts

  • Stoppage of QT

  • Trade Deal

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

The Fed’s “Not QE”, “QE”

Sure thing, Brian.

As I noted previously:

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

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

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

Think about this logically for a moment.

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

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

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

  4. The Fed begins reducing excess reserves.

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

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

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

The last point was detailed in a recent FOMC release:

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

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

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

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

The reality is the financial system is NOT healthy. 

If it was, then we would:

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

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

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

  4. Not be needing to reduce liquidity requirements.

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

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

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

It’s QE.

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

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

But, it’s not Q.E.

So, what was it then?

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


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

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

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

(Courtesy of ZeroHedge)

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

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

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

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

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

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

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


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

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

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

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

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

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

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

History of Incarceration in the U.S.

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

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

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

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

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

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

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

Overcriminalization = Less Civil Liberties

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

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

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

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

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

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

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

The Principle of Minimum Necessary Force

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

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

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

The Rise of Private Prisons

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

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

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

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

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

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

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

Private Prisons Are Not Safe

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

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

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

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

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

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

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

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

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

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

Prison Guard Unions and Private Prisons Lobbying Elected Officials

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

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

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

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

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

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

Modern Prison Labor

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

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

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

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

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

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

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

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

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

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

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

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

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

Authored by Doug “Uncola” Lynn via,

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

– 2 Timothy 3:1-4

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

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

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

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


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

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

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

– Isaiah 5:20

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

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

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

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

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

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

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

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

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

That is the question, isn’t it?

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

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

– From

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

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

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

Like a Joker.

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

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

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

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

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

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

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

It’s because things are getting serious.

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

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

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

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

Indeed. Life has imitated art.

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

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

Why isn’t that considered boring?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

And is that not the modus operandi of the mob?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Market Snapshot

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

Top Overnight News from Bloomberg

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

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

Top Asian News

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

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

Top European News

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

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

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

In commodities, Brent and WTI have been lifted this morning to gains of over USD 1/bbl at best on the back of early geopolitical newsflow that a Iranian tanker was on fire after a explosion near Saudi’s Jeddah port which led to heavy tanker damage and reports that oil was leaking into the Red Sea. TankerTrackers believe this tanker could be the SINOPA tanker which was on route to Syria and had a cargo of 1mln barrels on board. Subsequently, newsflow noted that the explosion was due to missiles and there were some reports that this originated from Saudi Arabia; however, Iran’s National Tanker Co. have denied reports that they said the missiles originated from