Jan 162021
 


Pablo Picasso Blue nude 1902

 

Dems Reject Bigger Survival Checks, Float Tax Breaks For The Rich (DP)
79% of Americans Think The US Is Falling Apart (RT)
Americans Are Being Divided As The War On Domestic Terror Expands (TLAV)
Prosecutors Walk Back Story Of Plot To Kill Lawmakers In Capitol Riot (JTN)
Signs and Wonders (Kunstler)
At Least 23 Die After Receiving COVID-19 Vaccine In Norway (DS)
Silicon Valley and WEF Announce Vaccination Credential Initiative (Webb)
Twitter Suspends Account of Russian COVID Vaccine Citing Attempted US Hack (MPN)
Signal Is A Government Op (Levine)
When Will The Window Of Euphoria Close? (O’Rourke)
America’s Biggest Owner Of Farmland Is Now Bill Gates (F.)

 

 

America is united by the spread of the media clickbait used to divide it.

 

 

 

 

People are saying: Jimmy Dore goes on Tucker! He’s a traitor! As if this is not the way things should be, people with different views talking to each other to see what they might have in common.

But that’s not what clickbait feeds on.

https://twitter.com/i/status/1350270466397597698

 

 

New morning in America.

Or: among the growing divide in America, both sides still agree on one thing: stiff the poor.

Dems Reject Bigger Survival Checks, Float Tax Breaks For The Rich (DP)

Just two weeks after Democrats won the U.S. Senate on a promise to immediately pass $2,000 survival checks, party leaders are now proposing $1,400 checks — a lesser amount than many expected, which would save the federal government money and could address conservatives’ concerns that too much money is going to people who supposedly do not need it. And yet, Democratic lawmakers are also considering a new tax break that could cost nearly as much or more as the savings gleaned from reducing the survival checks — and the tax break’s benefits would primarily go to the rich. If passed, the new stimulus proposal released this week by president-elect Joe Biden would significantly boost the minimum wage and funding for unemployment benefits and rental assistance.

But the Biden initiative recommends sending $1,400 checks instead of $2,000 checks — a reduction that would save the federal government somewhere between $164 billion and $200 billion, based on estimates from Congress’s Joint Committee on Taxation and the Committee for a Responsible Federal Budget. At the same time, Democratic lawmakers are reportedly considering resurrecting their past proposal to temporary repeal a cap on state and local tax (SALT) deductions that high earners can deduct on their federal taxes. According to the Joint Committee on Taxation, temporarily repealing the current $10,000 cap on the SALT deduction would cost $136 billion over the next two years, which was the timeframe proposed for such a repeal in legislation pushed by House Democrats last year.

California Republican Rep. Mike Garcia is touting new legislation to repeal the limits on SALT deductions. Bloomberg News reported that “Democrats have been trying to restore unlimited SALT deductions since the 2017 tax law capped the benefit at $10,000.” If Democrats choose to permanently repeal the cap, it would cost almost $600 billion — or three times the amount it would cost to boost the $1,400 checks to $2,000. The survival checks and the SALT tax breaks are mirror opposites when it comes to distributing benefits. $2,000 checks would target help to the bottom 60 percent of income earners, who would see an average increase of 11 percent in their annual income, and it would be a particularly big income boost for the poorest Americans.

By contrast, the SALT deduction would mostly benefit wealthy households, with the top 5 percent of households receiving over 80 percent of the benefit. The top 1 percent of households would get roughly 60 percent of all the benefits of a SALT cap repeal, which translates to “an average tax cut of more than $33,000,” wrote Howard Gleckman of the Tax Policy Center.

Read more …

“The objective is to separate Trump and his supporters, to purge both from the public square, and likewise to leave no alternative to the ruling Democratic-RINO, Big Tech, mainstream media, corporate-state hegemon that threatens to impose its technologically enforced totalitarian rule.”

79% of Americans Think The US Is Falling Apart (RT)

Both Democrats and Republicans think America is disintegrating. But the newspeak narrative says that Trump and his supporters must be cleansed from the nation before it can heal. This totalitarian mindset could be the US’ undoing. A recent Axios-Ipsos poll suggests that 79 percent of Americans believe that the nation is disintegrating. “The question, asked Tuesday and Wednesday, reflects the collision of crises besetting the country — the backdrop of a pandemic, recession, decoupling of red/blue America, and racial injustice and the immediacy of the Capitol insurrection, followed by Impeachment II,” writes Axios AM reporter, Mike Allen. But the question of whether the US is now a failed national project is meant to put a stake into the heart of the Donald Trump presidency and to destroy, entirely, the movement he mobilized.

The purpose of the poll is to leave no doubt in the minds of readers that Trump is responsible for these national crises and must be removed from office, and never allowed to run again. The objective is to separate Trump and his supporters, to purge both from the public square, and likewise to leave no alternative to the ruling Democratic-RINO, Big Tech, mainstream media, corporate-state hegemon that threatens to impose its technologically enforced totalitarian rule. Twitter has banned the sitting president from its platform indefinitely. Facebook and Instagram have banished Trump until at least after Joe Biden’s inauguration. After Twitter began cancelling Trump followers, Amazon Web Services, Apple Store, and Google Play cancelled an entire corporation, Twitter competitor Parler. Other social media platforms could face a similar fate at the hands of the leftist authoritarian Big Tech cartel.

Tens of thousands, if not millions, of Trump supporters have either been purged from mainstream social media platforms or have fled in protest. Twitter CEO Jack Dorsey has recently promised more censorship and purges. Even the libertarian leader of an earlier populist movement, Ron Paul, has faced a Facebook ban (although this was subsequently claimed to be “an error”). Guilt by association seems to the rule, no matter how distant or strained the association. The purges extend well beyond social media. Trump has been cancelled by former business associates, including by one of his former financiers, Deutsche Bank. Blacklists of Trump supporters are being compiled. Congress members have called for the resignation of senators and House members who questioned the election results. If they refuse to resign, say the totalitarian wannabes about to seize complete control, they should be removed from office. ABC News contributor Rick Klein called for the “cleansing” of Trump supporters from the political landscape in a now-deleted tweet.

Read more …

“..the US has moved from the “War on [foreign] terror” to the “War on domestic terror”

Americans Are Being Divided As The War On Domestic Terror Expands (TLAV)

The first week of 2021 kicked off with chaos at the Capitol in Washington D.C. Was it a protest, a riot or an insurrection? Were there provocateurs, and if so, were they Antifa, the cops, and/or the Feds? As usual, everyone on the internet thinks they know the answer within ten minutes. Unfortunately, this genuinely leads to the spreading of unfounded theories – many based on nothing but speculation and emotion. But while the public is debating over theories and arguing amongst themselves, the newly emboldened Military Industrial Complex is eagerly anticipating the incoming Biden Administration as an opportunity to expand the War on Domestic Terror. In the immediate aftermath of the “storming of the Capitol”, the media pundits, intelligence community, and politicians began foaming at the mouth in excitement over the chance to push through Domestic Terror legislation.

Michigan representative Elissa Slotkin, also former Acting Assistant Secretary of Defense and CIA analyst, said, “the post 9/11 era is over. The single greatest national security threat right now is our internal division. The threat of domestic terrorism.” Slotkin went on to say that she urges the Biden administration to “understand that the greatest threat now is internal.” TLAV writer Whitney Webb responded to Slotkin’s comment by reminding the audience that, “before Congress, Elissa worked for the CIA and the Pentagon and helped destabilize the Middle East during the Bush and Obama admins. What she says here is essentially an open announcement that the US has moved from the “War on [foreign] terror” to the “War on domestic terror”.”

The Federal Bureau of Investigations (FBI) also reportedly released a bulletin warning that “domestic extremists” are planning a nationwide protest to stop Joe Biden from being sworn in as President. According to ABC News, “The FBI has also received information in recent days on a group calling for “storming” state, local and federal government courthouses and administrative buildings in the event President Donald Trump is removed from office prior to Inauguration Day. The group is also planning to “storm” government offices in every state the day President-elect Joe Biden will be inaugurated, regardless of whether the states certified electoral votes for Biden or Trump.”

Since the bulletin has not been publicly released the report should be viewed skeptically. However, it’s only one of many emerging reports and articles stoking the flames of civil war and internal chaos. The fact of the matter is that this is not a new attempt to demonize the American people. This current effort is simply a continuation of the effort to label Americans as terrorists that has been taking place since at least the mid-1990’s following the Oklahoma City bombing false flag. These efforts were expanded further after the attacks of 9/11. In fact, as most readers know by now, it was Joe Biden who wrote the anti-terror legislation in the 90’s which became the basis for the Patriot ACT after 9/11.

Read more …

The “Qanon shaman” story was always just obvious bogus. But the seed has been planted, so it’s now safe to walk it back.

Prosecutors Walk Back Story Of Plot To Kill Lawmakers In Capitol Riot (JTN)

The acting U.S. Attorney for the District of Columbia Michael Sherwin announced on Friday that there is no “direct evidence” indicating that the crowd of people who breached the Capitol on Jan. 6 had any intention of killing or kidnapping members of Congress. He told reporters, “We don’t have any direct evidence of kill-capture teams,” which seemed to contradict federal prosecutors in Arizona who had alleged on Thursday in a court filing that there was evidence rioters wanted “to capture and assassinate elected officials.” Reuters reported that Sherwin was attempting to “walk back” the claims filed in Arizona, which were about Jacob Chansey, the so-called “Qanon shaman” who was shirtless and wearing horns in the Senate chamber. He allegedly left a note saying, “it’s only a matter of time, justice is coming.”


Sherwin said that his office in D.C. is taking the lead on prosecuting crimes related to the breach of the Capitol, adding that there may have been a “disconnect” with other offices on some of the evidence. “The cases are all being charged here in D.C., and with our law enforcement partners, and what makes this case in particular unprecedented and unusual and extremely complex is the fact that, after the event, obviously thousands of people went back to their home districts,” said Sherwin. “And that has complicated things.”

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“..The poor schlemiel is headed straight into history’s discontinued merchandise bin…”

Signs and Wonders (Kunstler)

It’s late in the game but something appears to still be in play, and the Resistance is keenly aware of it: a trove of declassified documents laying out their crimes against their own countrymen. Nothing has stuck to the Resistance because they controlled the levers of adjudication. What if, under the extraordinary conditions of the moment, those levers are transferred to one arm of the government that has not disgraced itself: the military? I wrote in this blog more than once in recent years that political disorder could lead to this. Has that moment come? Thousands of troops are billeted in and around Washington DC now. Why is that? The figment of more white supremacists coming to reenact last week’s incident at the Capitol? I don’t think so. A BLM / Antifa riot, like the ones staged in cities (including Washington DC) all through the summer and fall? (Weren’t they mostly peaceful?)


Or is something else up, something that will mark an epochal shift in the fortunes of the USA? Did you catch Joe Biden on TV last night? Did his appearance fill you with the sweet, warm unction of reassurance? Or did you get the impression that I got: of a near-mummy in a state of panicky confusion, sent from his hidey-hole out to a podium to give an impersonation of someone in authority? I didn’t believe the performance for a minute. The poor schlemiel is headed straight into history’s discontinued merchandise bin. He will probably wonder what awful vanity propelled him down the memory hole as he descends into the darkness… but his memory preceded him down the memory hole and he will have forgotten how the whole thing started. His exit will be a merciful one compared to the people who trussed him up and shoved him onstage to flesh out their lame narrative.

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Increasing calls to refuse the Pfizer vaccine for people over 80.

At Least 23 Die After Receiving COVID-19 Vaccine In Norway (DS)

At least 23 people who received the COVID-19 vaccine developed by U.S. firm Pfizer and Germany’s BioNTech have died in Norway, with 13 of the fatalities linked to the vaccine’s side effects, authorities said Thursday. All 13 individuals were above the age of 80, according to the Norwegian Medicines Agency. It noted that the Pfizer-BioNTech vaccine’s common side effects, such as fever and nausea, could have contributed to the death of some elderly recipients of the shot. Along with the 13 deaths, nine cases of serious side effects and seven instances of less serious side effects have been recorded, the agency’s medical director, Steinar Madsen, told national broadcaster NRK.


Norway launched its vaccination campaign last month, right after the Pfizer-BioNTech vaccine was approved by the European Medicines Agency (EMA). Nearly 33,000 people have received a dose in the country, according to data by U.K.-based tracker OurWorldInData. The latest figures show Norway’s virus caseload currently stands at 57,736, including 511 fatalities.

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There’s not one single word here that is not scary as all hell.

Silicon Valley and WEF Announce Vaccination Credential Initiative (Webb)

On Thursday, tech giants with deep ties to the US national-security state—Microsoft, Oracle, and the MITRE Corporation—announced that they had partnered with several health-care companies to create the Vaccination Credential Initiative (VCI) to advance the implementation of digital COVID-19 vaccination records. According to a Reuters report, the VCI “aims to help people get encrypted digital copies of their immunization records stored in a digital wallet of their choice” because the “current system [of vaccination records] does not readily support convenient access and sharing of verifiable vaccination records.” The initiative, on its website, notes that the VCI is a public-private partnership “committed to empowering individuals with digital vaccination records” so that participants can “protect and improve their health” and “demonstrate their health status to safely return to travel, work, school and life while protecting their data privacy.”

The initiative is essentially built on a common framework of digital vaccination “wallets” called SMART Health Cards that are meant to “work across organizational and jurisdictional boundaries” as part of a new global vaccination-record infrastructure. The host of the VCI website and one the initiative’s key backers is the Commons Project Foundation. That foundation, in partnership with the World Economic Forum (WEF), runs the Common Trust Network, which has three goals that are analogous to those of VCI. As listed on the WEF website, the network’s goals are (1) to empower individuals by providing digital access to their health information; (2) to make it easier for individuals to understand and comply with each destination’s requirements; and (3) to help ensure that only verifiable lab results and vaccination records from trusted sources are presented for the purposes of cross-border travel and commerce.

[..] The SMART Health Cards framework was developed by a team led by the chief architect of Microsoft Healthcare, Josh Mandel, who was previously the Health IT Ecosystem lead for Verily, formerly Google Life Sciences. Verily is currently heavily involved in COVID-19 testing throughout the United States, particularly in California, and links test recipients’ results to their Google accounts. Their other COVID-19 initiatives have been criticized due to still-unresolved privacy concerns, something that has also plagued several of Verily’s other efforts pre-COVID-19, including those involving Mandel.

Of particular concern is that Verily, and by extension Google, created Project Baseline, which has been collecting “actionable genetic information” with a focus on “population health” from participants since 2017. Yet, during the COVID-19 process, Project Baseline has become an important component of Verily’s COVID-19 testing efforts, raising the unsettling possibility that Verily has been obtaining Americans’ DNA data through its COVID-19 testing activities. While Verily has not addressed this possibility directly, it is worth noting that Google has been heavily involved in amassing genomic data for several years. For instance, in 2013, Google Genomics was founded with the goal of storing and analyzing DNA data on Google Cloud servers. Now known as Cloud Life Sciences, the Google subsidiary has since developed AI algorithms that can “build your genome sequence” and “identify all the mutations that an individual inherits from their parents.”

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The CIA is hacking Russian Twitter accounts?!

Twitter Suspends Account of Russian COVID Vaccine Citing Attempted US Hack (MPN)

The Twitter account of the Russian COVID-19 “Sputnik V” vaccine was suspended yesterday after the Silicon Valley-based platform detected suspicious attempts to log into it. Raising more eyebrows was the stated location of the attempted hack: not Russia, but Virginia, U.S.A. The news immediately prompted Internet sleuths to question who was behind the hack. “Now who in Virginia might want to sabotage a global health initiative by one of Washington’s “official enemies?” wrote former MintPress contributor Morgan Artyukhina. Virginia is, of course, home to many of the three-letter national security agencies engaged in online warfare, including the CIA. Many social media users suggested this was evidence of a failed nefarious action. Sputnik’s Twitter account has since been reinstated.

Named after the first manmade satellite to orbit the Earth, the vaccine is among the first to be developed and brought to market. With rich nations buying up huge quantities of Western vaccines before they were even approved, leaving little for poorer states, Sputnik is primarily being used in Russia, Asia, and Latin America. Already, 727 million doses have been ordered by 50 countries, including 200 million from India and 160 million from Russia. Meanwhile, Brazil has ordered 100 million and Mexico 24 million. Bolivia, Argentina, and Venezuela are also major customers. In December, Hungary became the first EU nation to purchase the shots, and there is a possibility that the vaccine could be rolled out across the continent soon. Testing occurred in a number of nations in the Global South and the vaccine will be produced in nine countries.

Like Western variants, Sputnik must be delivered in two shots weeks apart and must also be stored in deep freezer conditions (-18°C/-0.4°F). Developed by the state-run Gamaleya Institute, it is a viral vector vaccine, meaning that it employs another virus to carry the DNA encoding of the desired immune response into cells. Protein coding genes from the coronavirus are inserted into two common cold-like viruses that have been genetically modified so they cannot replicate inside the human body. Trial results suggest that the injections are between 91-95% effective, similar to the Moderna and BioNTech/Pfizer vaccines. However, Western politicians and press have been casting doubts and fears on the safety and effectiveness of the product for months, describing it as “controversial” (The Guardian) or “rushed” (BBC). Others, such as CNN and CNBC have characterized it as unsafe and ineffective.

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Interesting.

Signal Is A Government Op (Levine)

Signal — the privacy chat app favored by the world’s leading crypto experts — is trending again. In the wake of Twitter and Facebook’s MAGA Maidan Internet purge (which was followed by Facebook’s announcement that it was gonna start siphoning data off its WhatsApp property), Signal shot up to being the top downloaded messenger app on the planet. The New York Times is writing about it. Edward Snowden is tweeting about it, telling his fans that Signal is the only reason he’s able to stay alive (and not the fact that he’s being protected round-the-clock by Russia’s security apparatus.) Hell, Even Elon Musk is out there telling people to go Signal. So many people are flooding the app that it’s been crashing.

Given that the app is blowing up, I figure it’s a good time to roll out my periodic public service announcement: Signal was created and funded by a CIA spinoff. Yes, a CIA spinoff. Signal is not your friend. Here are the cold hard facts. Signal was developed by Open Whisper Systems, a for-profit corporation run by “Moxie Marlinspike,” a tall, lanky cryptographer who has a head full of dreadlocks and likes to surf and sail his boat. Moxie was an old friend of Tor’s now-banished chief radical promotor Jacob Appelbaum, and he’s played a similar fake-radical game — although he’s never been able to match Jake’s raw talent and dedication to the art of the con. Still, Moxie wraps himself in air of danger and mystery and hassles reporters about not divulging any personal information, not even his age. He constantly talks up his fear of Big Brother and tells stories about his FBI file.

So how big a threat is Moxie to the federal government? This big: After selling his encryption start-up to Twitter in 2011, Moxie began partnering with America’s soft-power regime change apparatus — including the State Department and the Broadcasting Board of Governors (now called the U.S. Agency for Global Media) — on developing tech to fight Internet censorship abroad. That relationship led to his next venture: a suite of government-funded encrypted chat and voice mobile apps. Say hello to Signal. If you look at Signal’s website today, you’ll find all sorts of celebrity endorsements — Edward Snowden, Laura Poitras, and even Jack Dorsey. You’ll also find a “donate” button — which, by the way, you shouldn’t press because Signal has plenty of tech oligarch cash on hand these days. What you won’t find is an “about” section that explains Signal’s origin story — a story that involves several million dollars in seed and development capital from Radio Free Asia, a CIA spinoff whose history goes back to 1951 and involves all sorts of weird shit, including its association in the 1970s with the Moonies, the hardcore anti-communist Korean cult.

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“A window of euphoria as a $21 Trillion economy digests $10 Trillion of stimulus. What happens after that?”

When Will The Window Of Euphoria Close? (O’Rourke)

These certainly are interesting times. Despite a global pandemic, the S&P 500 is 5 days removed from all-time highs. Additionally, there are 20,000 members of the National Guard protecting Washington DC, notably Capitol Hill. That is 4x the amount of US soldiers in Iraq and Afghanistan. Their purpose is obvious – to protect the nation’s “peaceful” transfer of power from supporters of the outgoing President. Violence is expected throughout the nation next week. While those events are uncomfortable for Americans to contemplate, they have had no effect on the financial markets. Equities remain elevated and bonds have sold off, no haven bid necessary.

[..] There is little doubt as to what is fueling this insanity. In 2020, there was nearly $5 Trillion of fiscal stimulus pumped into the United States economy. There was an additional $3.25 Trillion of monetary stimulus and zero interest rate policy added as well. President elect Biden is seeking an additional $1.9 Trillion in fiscal stimulus in the coming month, and the Federal Reserve will add another $1.4 Trillion in monetary stimulus this year. This is a massive stimulus driven bubble. Market participants frequently talk about generational buying opportunities like Q1 2009, or maybe even March of 2020. Take note, 2021 is setting up to be a generational selling opportunity.

In the span of 12 months’ time, we are setting up to witness approximately $6.5 Trillion of fiscal stimulus and $3.5 Trillion of monetary stimulus for a $21 Trillion economy. $10 Trillion of stimulus is a tremendous amount of stimulus to digest. In his futile quest for consumer price inflation, Fed Chairman Jay Powell has created a historic asset bubble that will be the downfall of the US economy. [..] The charts below of call option activity and total equity volumes reinforce that this is simply a speculative snapshot in time. A window of euphoria as a $21 Trillion economy digests $10 Trillion of stimulus. What happens after that? The window should be used for tactical exits and certainly not as entry. The day will come when this window slams shut, and it is likely to be in the coming months.

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“While Gates may be the country’s biggest farmland owner, he by no means is the largest individual landowner.”

America’s Biggest Owner Of Farmland Is Now Bill Gates (F.)

Bill Gates, the fourth richest person in the world and a self-described nerd who is known for his early programming skills rather than his love of the outdoors, has been quietly snatching up 242,000 acres of farmland across the U.S. — enough to make him the top private farmland owner in America. After years of reports that he was purchasing agricultural land in places like Florida and Washington, The Land Report revealed that Gates, who has a net worth of nearly $121 billion according to Forbes, has built up a massive farmland portfolio spanning 18 states. His largest holdings are in Louisiana (69,071 acres), Arkansas (47,927 acres) and Nebraska (20,588 acres). Additionally, he has a stake in 25,750 acres of transitional land on the west side of Phoenix, Arizona, which is being developed as a new suburb.

According to The Land Report’s research, the land is held directly and through third-party entities by Cascade Investments, Gates’ personal investment vehicle. Cascade’s other investments include food-safety company Ecolab, used-car retailer Vroom and Canadian National Railway. While it may be surprising that a tech billionaire would also be the biggest farmland owner in the country, this is not Gates’ only foray into agriculture. In 2008, the Bill and Melinda Gates Foundation announced $306 million in grants to promote high-yield, sustainable agriculture among smallholder farmers in sub-Saharan Africa and South Asia. The foundation has further invested in the development and proliferation of “super crops” resistant to climate change and higher-yield dairy cows. Last year, the organization announced Gates Ag One, a nonprofit to advance those efforts.

It is not entirely clear how Gates’ farmland is being used, or whether any of the land is being set aside for conservation. However, there is some indication that the land could be used in a way that aligns with the foundation’s values. Cottonwood Ag Management, a subsidiary of Cascade, is a member of Leading Harvest, a nonprofit that promotes sustainable agriculture standards that prioritize protections of crops, soil and water resources. [..] While Gates may be the country’s biggest farmland owner, he by no means is the largest individual landowner. In its list of 100 top American landowners, The Land Report gives the top spot to Liberty Media Chair John Malone, who owns 2.2 million acres of ranches and forests. CNN founder Ted Turner ranked number three with 2 million acres of ranch land across eight states. Even Amazon CEO Jeff Bezos is investing in land on a large scale, landing the 25th spot with his ownership of 420,000 acres, mainly in west Texas.

Read more …

 

 

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“Rarely do we find men who willingly engage in hard, solid thinking. There is an almost universal quest for easy answers and half-baked solutions. Nothing pains some people more than having to think.”
– Martin Luther King Jr.

 

 

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Jan 312018
 


Paul Gauguin Farm in Brittany 1894

 

Market Euphoria May Turn to Despair If 10-Year Yield Jumps to 3% (BBG)
Forget Stocks, Look At EU Bonds – They Are The Real Problem (Luongo)
The Ticking Time Bomb in the Municipal-Bond Market (Barron’s)
UK Interest-Only Mortgagees Are at Risk of Losing Their Homes
US National Debt Will Jump by $617 Billion in 5 Months (WS)
Trump Urges Congress To Pass $1.5 Trillion In Infrastructure Spending (R.)
Trump Joins Bezos, Dimon, Buffett In Pledge To Stop Soaring Drug Prices (MW)
Trump Says ‘100%’ After He’s Asked to Release GOP Memo (BBG)
Saving Rate Drops to 12-Year Low As 50% of Americans Don’t Have Savings (WS)
U.S. Regulators Subpoena Crypto Exchange Bitfinex, Tether (BBG)
Customer Lawsuits Pummel Spanish Banks (DQ)
Britons Ever More Deeply Divided Over Brexit (R.)
The GDP of Bridges to Nowhere (Michael Pettis)

 

 

If central banks and governments have really lost control over bonds, find shelter.

Market Euphoria May Turn to Despair If 10-Year Yield Jumps to 3% (BBG)

It’s getting harder and harder to quarantine the selloff in Treasuries from equities and corporate bonds. The benchmark 10-year U.S. yield cracked 2.7% on Monday, rising to a point many forecasters weren’t expecting until the final months of 2018. For over a year, range-bound Treasuries helped keep financial markets in a Goldilocks state, with interest rates slowly rising due to favorable forces like stronger global growth and the Federal Reserve spearheading a gradual move away from crisis-era monetary policy. Yet the start of 2018 caught many investors off guard, with the 10-year yield on pace for its steepest monthly increase since November 2016. It’s risen 30 basis points this year and reached as high as 2.73% in Asian trading Tuesday.

Suddenly, they’re confronted with thinking about what yield level could end the good times seen since the presidential election. For many, 3% is the breaking point at which corporate financing costs would get too expensive, the equity market would lose its luster and growth momentum would fade. “We are at a turning point in the psyche of markets,” said Marty Mitchell, a former head government bond trader at Stifel Nicolaus & Co. and now an independent strategist. “A lot of people point to 3% on the 10-year as the critical level for stocks,” he said, noting that higher rates signal traders are realizing that quantitative easing policies really are on the way out.

U.S. stocks have set record after record, buoyed by strong corporate earnings, President Donald Trump’s tax cuts and easy U.S. financial conditions. The S&P 500 Index has returned around 6.8% this year, once reinvested dividends are taken into account, and the U.S. equity benchmark is already higher than the level at which a Wall Street strategists’ survey last month predicted it would end 2018. What often goes unsaid in explaining the equity-market exuberance is that Treasury yields refused to break higher last year. Instead, they remained in the tightest range in a half-century, allowing companies to borrow cheaply and forcing investors to seek out riskier assets to meet return objectives.

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It’s all bonds, not even just sovereign bonds. Investors will move from equities into bonds all over the place.

Forget Stocks, Look At EU Bonds – They Are The Real Problem (Luongo)

While all the headlines are agog with stories about the Dow Jones dropping a couple hundreds points off an all-time high, German bunds are getting killed right before our eyes. The Dow is simply a market overdue for a meaningful correction in a primary bull market. And it’s a primary bull market brought on by a slow-moving sovereign debt crisis that will engulf Europe. It’s not the end of the story. Hell, the Dow isn’t even a major character in the story. In fact, similar stories are being written in French 10 year debt, Dutch 10 year debt, and Swiss 10 year debt. These are the safe-havens in the European sovereign debt markets. Meanwhile, Italian 10 year debt? Still range-bound. Portuguese 10 year debt? Near all-time high prices. The same this is there with Spain’s debt. All volatility stamped out. Why? Simple. The ECB.

The ECB’s quantitative easing program and negative interest rate policy (NIRP) drove bond yields across the board profoundly negative for more than a year. [..] the ECB is trapped and cannot allow rates to rise in the vulnerable sovereign debt markets — Italy, Portugal, Spain — lest they face bank failures and a real crisis. The problem with that is, the market is scared and so they are selling the stuff the ECB isn’t buying – German, French, Dutch, Swiss debt. In simple terms, we are seeing the flight into the euro intensify here as investors are raising cash. The euro and gold are up. The USDX continues to be weak even though capital is pouring into the U.S. thanks to fundamental changes to tax and regulatory policy under President Trump. In the short term Dow Jones and S&P500 prices are overbought. Fine. Whatever. But, the real problem is not that. The real problem is the growing realization in the market that governments and central banks do not have an answer to the debt problem.

[..] The U.S. economy is about to be unleashed by Trump’s tax cut law. It will be able to absorb higher interest rates for a while. Yield-starved pension funds, as Armstrong rightly points out, will be bailed out slightly forestalling their day of reckoning. And in doing so, higher rates in the U.S. are driving core-rates higher in Europe. An overly-strong euro is crushing any hope of further economic recovery in the periphery, like Italy. The debt load on Italy et.al. has increased relative to their national output by around 20% since the end of 2016. This will put the ECB at risk of a massive loss of confidence when Italian banks start failing, Italy’s budget deficit starts expanding again and hard-line euroskeptics win the election in March. As capital is drained out of Europe into U.S. equities, the dollar, gold and cryptocurrencies, things should begin to spiral upwards rapidly.

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See? More bonds. Meredith Whitney was 10 years early.

The Ticking Time Bomb in the Municipal-Bond Market (Barron’s)

There’s a looming disaster in the market for municipal debt. Every market participant knows about it, and there isn’t much any of them can do about it. Many state and local governments, even more than corporations, have promised generous pensions they can’t afford. The promises may have looked plausible in the past, especially during the dot-com boom, when money that pension funds put in the markets was doubling. When the market crashed, so did their returns—and, a few years later, the global financial crisis took out another substantial chunk. And with interest rates at historic lows, bonds have failed to deliver the income the funds relied on. While governments delay dealing with the problem as long as they can, analysts and researchers are wondering if we have reached the point of no return. For investors in municipal bonds, it could mean future defaults and losses.

“We are increasingly wary of high pension exposure, especially among state and local credits,” the Barclays muni-research team wrote this month, citing “inflated return targets, low funded ratios, growing obligations, perhaps heavy allocations to equities and compressed tax revenues make for especially adverse conditions.” What’s more, “short-term investment gains won’t be sufficient to plug liability gaps.” Yet many pensions still assume they will be able to generate the returns they saw in the past. New Jersey’s pension and the California Public Employees’ Retirement System have lowered their assumed rate of return to 7%. But with the 30-year Treasury yielding less than 3% and stocks already at record highs, it’s unclear how public markets can generate 7%—which is why many pensions have turned to higher-risk, lower-liquidity strategies, such as private equity.

Muni investors, for their part, are increasingly sensitive to pensions’ widening gap. After the financial crisis and the ensuing recession, they suddenly became interested in pension finances. A report late last year by the Center for Retirement Research at Boston College found that, as pension liabilities grew, spreads between state and local municipal bonds and Treasuries also increased. When such issuers came to issue new debt, they discovered the market was charging them more to borrow. “Pensions have become increasingly relevant to the municipal bond markets and can have a meaningful impact on the borrowing costs of a municipality,” the report says.

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Rising bond yields mean higher mortgage rates. Australia is overflowing with interest only loans. Plenty other countries have loads of it too.

UK Interest-Only Mortgagees Are at Risk of Losing Their Homes

Some borrowers with interest-only mortgages may lose their homes as a result of shortfalls in repayment plans, the U.K.’s Financial Conduct Authority warned. The FCA has identified three peaks in interest-only mortgage repayments, the first of which is currently underway. Defaults are less likely in the present wave of maturities because the homeowners are approaching retirement and have higher incomes. The next two peaks, from 2027 through 2028 and in 2032, are more at risk of shortfalls, the regulator said. Customers are reluctant to discuss with their lenders how they’ll pay off the loans, limiting their options, the FCA found. Almost 18% of outstanding mortgages in the U.K. are interest-only or involve only partial payment of the capital, according to the statement.

“Since 2013, good progress has been made in reducing the number of people with interest-only mortgages,” Jonathan Davidson, executive director of supervision retail and authorization at the regulator, said in a statement. “However, we are very concerned that a significant number of interest-only customers may not be able to repay the capital at the end of the mortgage and be at risk of losing their homes.” The FCA reviewed 10 lenders representing about 60% of the interest-only mortgage market for the study. The supervisor also urged lenders to review and improve their own strategies regarding repayment of the loans.

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Now add some infrastructure.

US National Debt Will Jump by $617 Billion in 5 Months (WS)

While everyone is trying to figure out how to twist the new tax cut to their advantage and save some money, the US Treasury Department just announced how much net new debt it will have to sell to the public through the second quarter to keep the government afloat: $617 billion. That’s what the Treasury Department estimates will be the total amount added to publicly traded Treasury securities — or “net privately-held marketable borrowing” — through the end of the second quarter. This will be the net increase in the US debt through the end of Q2. By quarter: During Q1, the Treasury expects to increase US public debt by $441 billion. It includes estimates for “lower net cash flows.” During Q2 – peak tax seasons when revenues pour into the Treasury – it expects to increase US public debt by $176 billion.

It also “assumes” that with these increases in the debt, it will have a cash balance at the end of June of $360 billion. So over the next five months, if all goes according to plan, the US gross national debt of $24.5 trillion currently – which includes $14.8 trillion in publicly traded Treasury securities and $5.7 trillion in internally held debt – will surge to about $25.1 trillion. That’s a 4% jump in just five months. Note the technical jargon-laced description for this (marked in green on the chart). The flat lines in 2013, 2015, and 2017 are a result of the prior three debt-ceiling fights. Each was followed by an enormous spike when the debt ceiling was lifted or suspended, and when the “extraordinary measures” with which the Treasury keeps the government afloat were reversed. And note the current debt ceiling, the flat line that started in mid-December.

In November, Fitch Ratings said optimistically that, “under a realistic scenario of tax cuts and macro conditions,” the US gross national debt would balloon to 120% of GDP by 2027. The way things are going right now, we won’t have to wait that long. Back in 2012, gross national debt amounted to 95% of GDP. Before the Financial Crisis, it was at 63% of GDP. At the end of 2017, gross national debt was 106% of GDP! Over the next six month, the debt will grow by about 4%. Unless a miracle happens very quickly, the debt will likely grow faster over the next five years due to the tax cuts than over the past five years. But over the past five years, the gross national debt already surged nearly 25%, or by $4.1 trillion. So that’s a lot of borrowing, for an economy that is growing at a decent clip.

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Coverage of SOTU proves my point: Moses split the nation.

As for infrastructure, they will go for what provides most short term gain. That is, make people pay. For roads, not public transport, for instance.

Trump Urges Congress To Pass $1.5 Trillion In Infrastructure Spending (R.)

President Donald Trump called on the U.S. Congress on Tuesday to pass legislation to stimulate at least $1.5 trillion in new infrastructure spending. In his State of the Union speech to Congress, Trump offered no other details of the spending plan, such as how much federal money would go into it, but said it was time to address America’s “crumbling infrastructure.” Rather than increase federal spending massively, Trump said: “Every federal dollar should be leveraged by partnering with state and local governments and, where appropriate, tapping into private-sector investment.” The administration has already released an outline of a plan that would make it easier for states to build tollways and to privatize rest stops along interstate highways.

McKinsey & Company researchers say that $150 billion a year will be required between now and 2030, or about $1.8 trillion in total, to fix all the country’s infrastructure needs. The American Society of Civil Engineers, a lobbying group with an interest in infrastructure spending, puts it at $2 trillion over 10 years. Trump said any infrastructure bill needed to cut the regulation and approval process that he said delayed the building of bridges, highways and other infrastructure. He wants the approval process reduced to two years, “and perhaps even one.” Cutting regulation is a top priority of business lobbying groups with a stake in building projects and the U.S. Chamber of Commerce.

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Just the kind of folk you want in charge of your health. With your medical needs standing in the way of their profits.

Trump Joins Bezos, Dimon, Buffett In Pledge To Stop Soaring Drug Prices (MW)

President Trump pledged to bring down drug prices. “One of my greatest priorities is to reduce the price of prescription drugs,” Trump said during his State of the Union address on Tuesday evening. “In many other countries, these drugs cost far less than what we pay in the United States and it’s over, very unfair. That is why I have directed my administration to make fixing the injustice of high drug prices one of our top priorities for the year.” Mark Hamrick, Washington, D.C. bureau chief at Bankrate.com, said the president has made that promise before. “Will his choice of a former drug industry executive, Alex Azar, now the head of Health and Human Services, deliver results on that front?” he said. “I’d prefer to place my bet on the partnership just announced by Berkshire Hathaway, J.P. Morgan Chase and Amazon.”

Earlier Tuesday, Amazon, Berkshire Hathaway and JP Morgan Chase, three of the biggest companies in the U.S., surprised the health-care industry on Tuesday with a plan to form a company to address rising health costs for their U.S. employees. They said it will be “free from profit-making incentives and constraints.” Health-care costs have skyrocketed over the last 60 years, according to the Kaiser Family Foundation, a nonprofit, private foundation based in Washington, D.C. In 1960, hospital costs cost $9 billion. In 2016, they cost $1.1 trillion. In 1960, physicians and clinics costs were $2.7 billion, but ballooned to $665 billion. Prescription drug prices soared from $2.7 billion in 1960 to $329 billion. U.S. health-care spending reached $3.3 trillion, or $10,348 per person in 2016.

The Trump administration has pledged to roll back the 2010 Affordable Care Act, perhaps Barack Obama’s signature achievement as U.S. president. Roughly 1 million people will lose their insurance under Trump’s plans, according to the Congressional Budget Office. Berkshire Hathaway chairman and CEO Warren Buffett didn’t hold back in excoriating the health-care industry. “The ballooning costs of health care act as a hungry tapeworm on the American economy,” Buffett said. Amazon founder CEO Jeff Bezos and J.P. Morgan Chase chairman and CEO Jamie Dimon were more measured in their remarks. “Amazon, Chase and Berkshire Hathaway think they can do it better than the insurance companies,” said Jamie Court, president of Consumer Watchdog. “There’s a lot of frustration with the high cost of health insurance, yet government’s offering almost no systemic solutions. It’s as big a change as I have seen in the market in years.”

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Just do it?! Perhaps it makes sense not to release it before SOTU, it would have been the only talking point.

Trump Says ‘100%’ After He’s Asked to Release GOP Memo (BBG)

President Donald Trump was overheard Tuesday night telling a Republican lawmaker that he was “100%” planning to release a controversial, classified GOP memo alleging bias at the FBI and Justice Department. As he departed the House floor after delivering his State of the Union address, C-SPAN cameras captured Representative Jeff Duncan, a South Carolina Republican, asking Trump to “release the memo.” Republican lawmakers say the four-page document raises questions about the validity of the investigation into possible collusion between Trump’s campaign and Russia, now led by Special Counsel Robert Mueller. “Oh yeah, don’t worry, 100%,” Trump replied, waving dismissively. “Can you imagine that? You’d be too angry.”

Republicans in the House moved to release the memo, authored by House Intelligence Chairman Devin Nunes, in a party-line vote on Monday. The move has been opposed by Democrats, who argue the memo gives an inaccurate portrayal of appropriate actions undertaken by law enforcement, and by the Justice Department, which has said it should remain classified. Releasing the memo has become a cause for conservative congressional Republicans, who say the FBI and the Justice Department pursued the investigation of possible Russian ties to the Trump presidential campaign under false pretenses. Trump has as many as five days to review the document for national security concerns, and White House officials insisted earlier Tuesday he hadn’t yet seen the document.

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Talk about your American Dream: “..households are living paycheck-to-paycheck even if those paychecks are reasonably large and even if life is comfortable at the moment.”

Saving Rate Drops to 12-Year Low As 50% of Americans Don’t Have Savings (WS)

In terms of dollars, personal saving dropped to a Seasonally Adjusted Annual Rate of $351.6 billion, meaning that at this rate in December, personal savings for the whole year would amount to $351.6 billion. This is down from the range between $600 billion and $860 billion since the end of the Financial Crisis. But who is – or was – piling up these savings? Numerous surveys provide an answer, with variations only around the margins. For example, the Federal Reserve found in its study of US households: Only 48% of adults have enough savings to cover three months of expenses if they lost their income. An additional 22% could get through the three-month period by using a broader set of resources, including borrowing from friends and selling assets. But 30% would not be able to manage a three-month financial disruption. 44% of adults don’t have enough savings to cover a $400 emergency and would have to borrow or sell something to make ends meet.

Folks who had experienced hardship were more likely to resort to “an alternative financial service” such as a tax refund anticipation loan, pawn shop loan, payday loan, auto title loan, or paycheck advance, which are all very expensive. Similarly, Bankrate found that only 39% of Americans said they’d have enough savings to be able to cover a $1,000 emergency expense. They rest would have to borrow, sell, cut back on spending, or not deal with the emergency expense. All these surveys say the same thing: about half of Americans have little or no savings though many have access to some form of credit, including credit cards, pawn shops, payday lenders, or relatives. So what does it mean when the “saving rate” declines?

Many households spend more than they make. For them, the personal saving rate is a negative number. This negative personal saving rate translates into borrowing, which explains the 5.7% year-over-year surge in credit card debt, and the 5.5% surge in overall consumer credit. It boils down to this: most of the positive saving rate, with savings actually increasing, takes place at the top echelon of the economy – at the top 40%, if you will – where households are flush with cash and assets and where the saving rate is very large. But the growth in borrowing for consumption items (the negative saving rate) takes place mostly at the bottom 60%, where households are living paycheck-to-paycheck even if those paychecks are reasonably large and even if life is comfortable at the moment.

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Peculiar: $2.3 billion ‘worth’ of a dollar-pegged ‘currency’, backed by nothing much in proof.

U.S. Regulators Subpoena Crypto Exchange Bitfinex, Tether (BBG)

U.S. regulators are scrutinizing one of the world’s largest cryptocurrency exchanges as questions mount over a digital token linked to its backers. The U.S. Commodity Futures Trading Commission sent subpoenas on Dec. 6 to virtual-currency venue Bitfinex and Tether, a company that issues a widely traded coin and claims it’s pegged to the dollar, according to a person familiar with the matter, who asked not to be identified discussing private information. The firms share the same chief executive officer. Tether’s coins have become a popular substitute for dollars on cryptocurrency exchanges worldwide, with about $2.3 billion of the tokens outstanding as of Tuesday.

While Tether has said all of its coins are backed by U.S. dollars held in reserve, the company has yet to provide conclusive evidence of its holdings to the public or have its accounts audited. Skeptics have questioned whether the money is really there. “We routinely receive legal process from law enforcement agents and regulators conducting investigations,” Bitfinex and Tether said Tuesday in an emailed statement. “It is our policy not to comment on any such requests.” Bitcoin, the biggest cryptocurrency by market value, tumbled 10% on Tuesday. It fell another 3.2% to $9,766.41 as of 9:19 a.m. in Hong Kong, according to composite pricing on Bloomberg. The virtual currency hasn’t closed below $10,000 since November.

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Who’s aiding Spain in keeping its problems hidden? 30,000 complaints in 9 months, and the ECB is silent?!

Customer Lawsuits Pummel Spanish Banks (DQ)

Following a succession of consumer-friendly rulings, bank customers in Spain are increasingly taking their banks to court. And many of them are winning. Last year an unprecedented wave of litigation against banks forced the Ministry of Justice to set up dozens of courts specialized in mortgage matters to prevent the collapse of the rest of the national judicial system. The Bank of Spain, according to its own figures, received 29,957 complaints from financial consumers between January and September 2017 — already double that of the previous year and by far the highest number of complaints registered since 2013, a record year when investors and customers were desperately trying to claw back the money they’d lost in the preferred shares that issuing banks had pushed on their own customers as savings products.

In 2017, eight out of 10 complaints related to one key product: mortgages, and in particular the so-called “floor clauses” contained within them. These floor clauses set a minimum interest rate — typically of between 3% and 4.5% — for variable-rate mortgages, even if the Euribor dropped far below that figure. This, in and of itself, was not illegal. The problem is that most banks failed to properly inform their customers that the mortgage contract included such a clause. Those that did, often told their customers that the clause was an extreme precautionary measure and would almost certainly never be activated. After all, they argued, what are the chances of the Euribor ever dropping below 3.5% for any length of time? At the time (early 2009), Europe’s benchmark rate was hovering around the 5% mark.

Within a year it had crashed below 1% and has been languishing at or below zero ever since. As a result, most Spanish banks were able to enjoy all the benefits of virtually free money while avoiding one of the biggest drawbacks: having to offer customers dirt-cheap interest rates on their variable-rate mortgages. But all that came to a crashing halt in May 2013 when Spain’s Supreme Court ruled that the floor clauses were abusive and that the banks must reimburse all the funds they’d overcharged their mortgage customers — but only from the date of the ruling! Then, on December 21, 2016, the European Court of Justice (ECJ) delivered a further hammer blow when it acknowledged the right of homeowners affected by “floor clauses” to be reimbursed money dating back to when the mortgage contract was first signed. Since the ECJ ruling, law firms are now so confident of winning floor-clause cases that they’re even offering no win, no-fee deals.

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US and UK suffer from the exact same problem.

Britons Ever More Deeply Divided Over Brexit (R.)

The social divide revealed by Britain’s 2016 vote to leave the European Union is not only here to stay but deepening, according to academic research published on Wednesday. Think tank The UK in a Changing Europe said Britons were unlikely to change their minds about leaving the EU, despite the political and economic uncertainty it has brought, because attitudes are becoming more entrenched. “The (Brexit) referendum highlighted fundamental divisions in British society and superimposed a leave-remain distinction over them. This has the potential to profoundly disrupt our politics in the years to come,” said Anand Menon, the think tank’s director.

Britain is negotiating a deal with the EU which will shape future trade relations, breaking with the bloc after four decades, but the process is complicated by the divisions within parties, society and the government itself. Menon said the research, based on a series of polls over the 18-month period since Britain voted to leave the European Union, showed 35% of people self-identify as “Leavers” and 40% as “Remainers”. Research also found that both sides had a tendency to interpret and recall information in a way that confirmed their pre-existing beliefs which also added to the deepening of the impact of the vote. The differences showed fragmentation was more determined by age groups and location than by economic class.

Polls have shown increasing support for a second vote on whether or not to leave the European Union once the terms of departure are known, but such a vote would not necessarily provide a different result, a poll by ICM for the Guardian newspaper indicated last week. The report also showed that age was a better pointer to how Britons voted than employment. Around 73% of 18 to 24-year-olds voted to stay in the EU, but turnout among that group was lower than among older voters. “British Election Study surveys have suggested that, in order to have overturned the result, a startling 97% of under-45s would have had to make it to the ballot box, as opposed to the 65% who actually voted,” the report said.

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How China hides debt through swaps. As US and EU have done for ages now.

The GDP of Bridges to Nowhere (Michael Pettis)

In most economies, GDP growth is a measure of economic output generated by the performance of the underlying economy. In China, however, Beijing sets annual GDP growth targets it expects to meet. Turning GDP growth into an economic input, rather than an output, radically changes its meaning and interpretation. On January 18, 2018, China’s National Bureau of Statistics announced that the country’s GDP grew by 6.9% in 2017. A day earlier, the People’s Bank of China (PBoC) announced that total social financing (TSF) in 2017 had increased to 19.44 trillion renminbi.

[..] I was recently part of a discussion on a listserv that brings together Chinese and foreign experts to exchange views on China-related topics. What set off this discussion was a claim that the Chinese economy began to take deleveraging seriously in 2017. Everyone agreed that debt in China is still growing far too quickly relative to the country’s debt-servicing capacity, but the pace of credit growth seems to have declined in 2017, even as real GDP growth held steady and, more importantly, nominal GDP growth increased. I was far more skeptical than some others about how to interpret this data. It is not just the quality of data collection that worries me, but, more importantly, the prevalence in China of systemic biases in the way the data is collected. Not all debt is included in TSF figures. The table above, for example, indicates a fall in TSF in 2015, but this did not occur because China’s outstanding credit declined.

[..] in 2015 there was a series of debt transactions (mainly provincial bond swaps aimed at reducing debt-servicing costs and extending maturities) that extinguished debt that had been included in the TSF category and replaced it with debt not included in TSF. The numbers are large. According to the China Daily, there were 3.2 trillion renminbi worth of bond swaps in 2015, plus an additional 600 billion renminbi of new bonds issued. If we adjust TSF by adding these back, rather than indicate a decline of 6.4%, we would have recorded an increase of 15.7%. [..] The point is that the deceleration in credit growth implied by TSF data might indeed reflect the beginning of Chinese deleveraging, but it could also reflect the surge in regulatory concern. In the latter case, this would mean that China has experienced not the beginnings of deleveraging, but rather a continuation of the trans-leveraging observers have seen before.

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