Aug 132024
 


Claude Monet The sheltered path 1888

 

America Is Entering End Times (Paul Craig Roberts)
The Party Line Is a Mighty Squishy Line (Jim Kunstler)
A Harris-Walz Administration Would Be A Nightmare for Free Speech (Turley)
Trump’s ‘Interview Of The Century’ With Elon Musk: As It Happened (RT)
Ex-Twitter Executive Calls For Musk To Be Arrested (RT)
EU Threatens Elon Musk Before Trump Interview (RT)
Trump To Sue DOJ For $100 Million Over Mar-a-Lago Raid (ZH)
Biden: If Trump Wins, There’ll Be No Peaceful Transfer of Power (MN)
American Stasi: Tulsi Gabbard Confirms “Quiet Skies” Nightmare (Matt Taibbi)
Israel Runs the US. No, the US Runs Israel. No, Wait .. (Patrick Lawrence)
Incursion Into Russia Could Spell Doom For Kiev – ex-Austrian Official (RT)
No Talks With Kiev After Attack On Civilians – Putin (RT)
Anyone Not Supporting Ukraine Gets Shot – Serbian Deputy PM (RT)
Debt-Riddled Ukraine Blames ‘Slow’ US Aid, Scrambles to Pay Its Army (Sp.)
Washington’s Web Of Lies Is Backfiring Over Venezuela (Blankenship)
Iron Dome Failure? (ZH)
NASA Inspector General Report Criticizes Boeing’s Quality Control (ET)

 

 

 

 

Vance Walz
https://twitter.com/i/status/1822636313754972262

 

 

Biden KKK

 

 

Crooks

 

 

Golden Voyager=Lucifer.
https://twitter.com/i/status/1822738399079674326

 

 

2026

 

 

 

 

 

 

PCR has his dark-tinted glasses on.

“With Republican fundraisers agreeing with the presstitutes that the election is a toss up, the election is perfectly set to be stolen. And it will be.”

America Is Entering End Times (Paul Craig Roberts)

Does anyone remember the 2020 presidential campaign? Trump campaigned widely and had massive audiences. Enthusiasm was everywhere. Biden ventured out of the basement a few times and no one attended his campaign rallies. Trump got more votes in the 2020 election than he got in the 2016 election, but Biden got more votes than any president in history. Somehow the people elected an invisible candidate. In the swing states vote counting was stopped in the middle of the night while truck loads of boxes arrived, some from out of state, in Democrat controlled vote counting centers. The votes were almost entirely for Biden, and when counting resumed, Trump’s lead disappeared. The same thing is going to happen this November. Trump supporters, clearly a majority of legitimate voters, think Trump is going to win. Trump voters are energized and enthusiasm is high. Has anyone seen a Trump-sized turnout for Kamala? Trump will again win as he did in 2020, but Democrats count swing state votes, and Kamala will “win.”

As I have reported, the presstitutes are busy at work building Kamala into a formidable candidate who is in the lead, especially in the swing states. Fake polls are being reported that Kamala is the favorite. No one has explained why American voters want open borders, war with Russia and Iran, LGBT+ celebrated and normalized, white school children taught that they and their parents are racists, and that they could be born into the wrong body. As the Democrats have made completely clear, this is what Americans are voting for if they vote for Kamala. Unless the American people are further gone that I think, a majority are not voting for Kamala. She will win anyway. Biden had to go because the Democrats knew he could not run a close enough race for them to be able to again steal the election. The fact that not even the Democrats wanted Kamala last month has been consigned to the Memory Hole. Kamala is being media-created as one of the strongest presidential candidates in American history.

Republican fundraisers themselves are playing into the Democrats’ election steal. I get numerous fundraising appeals–even from the usually astute Marjorie Taylor Greene–that Trump might lose because Democrats are raising more money. The opportunistic Republican fundraisers by emphasizing Trump’s possible loss thus support the propaganda spun by the presstitutes that the race is so close that Trump can lose. Only Republicans can be this stupid. With Republican fundraisers agreeing with the presstitutes that the election is a toss up, the election is perfectly set to be stolen. And it will be. In the swing states the election theft methods have been legalized. Just as Republicans and the American people accepted the thefts of the 2020 and 2022 elections, they will accept the theft of the 2024 election. There will be no civil war or anything of the kind. The American people will have been taught that there is nothing they can do to regain their control over government. Neither will they resist when Kamala ignores the Supreme Court, which has no army, and takes away their guns.

If Americans won’t resist stolen elections, they will no more resist the cancellation of the Second Amendment than they resisted the destruction of the First Amendment. By the second year of the Kamala regime the United States will no longer exist as even a remnant of what the Founding Fathers created. The United States will be the worst tyranny ever created. My advice to young white heterosexual males is to get out of America while you still can. A holocaust is coming your way. You are demonized and reduced to second class citizenship. You can be discriminated against in university admissions, employment and promotion. You are not allowed to defend your self from racist charges, because white self-defense is considered racist, as proof of racism. The position of a white gentile heterosexual male American today is the same as that of a Jew in Nazi Germany and a Palestinian in Gaza. There is always hope, but hope requires warriors. Does America have warriors, or only submissive wimps?

Read more …

“I am in no position to predict any actual outcome, but it’s hard to imagine any winning moves by the Harris & Walz team in actual play-by-play.”

The Party Line Is a Mighty Squishy Line (Jim Kunstler)

Does anybody know what this shape-shifting chimera passed off as “our democracy” actually is? I will tell you. Like everything else in the Democratic Party’s tool-bag these days, it’s the opposite of what it appears to mean, namely: You, the demos, give us, officialdom, the power to take whatever we like from you: your savings, your liberty, your stuff, your identity, and your posterity — because we are the boss-of-you, and don’t you forget it. . . and, by the way, the beatings will continue until morale improves. It’s really that simple, though the deceptions cooked up to hide it are convoluted to the max. Like: engineering the illegal entrance to the US of millions from other lands and then using procedural hocus-pocus such as motor-voter registration and public assistance applications (free money + automatic voter registration) to stuff the election drop-boxes with the ballots of non-citizens — who, get this, don’t even have to be the ones casting those ballots, which can just be harvested, like so many oven-ready pullets, by lowly hired shills.

If you catch onto the ruse, you’ll be instructed that borders are arbitrary roadblocks to social justice thrown up by the old white male patriarchy, and that these are “free and fair elections.” And if you object loudly enough, you lose your job, your livelihood, your Facebook account, and maybe get thrown into solitary confinement for a year. Our democracy. Meanwhile, we’re enjoying the spectacle of this evil party’s candidate selection tour with their joyful warriors/avatars, Harris and Walz — joyful because they laugh and laugh in the absence of articulating any actual views on the particulars of governance, and it’s infectious to witness all that mirth. There is, of course, an artificially strenuous air about all this hoopla. It rolls out in an alternative reality like one of those summer techno-pop raves where everyone is stoned on MDMA. The dream girl gets launched into center-stage by invisible forces and is joined by her prom king, and it’s just so heartwarming to get waved at by the grinning, hand-holding couple nobody voted for. This is your demos-free ticket!

Will anybody at the imminent Democratic National Convention notice how this all mysteriously came to be? And might there be any active consternation over it? Perhaps even a welling movement to pull the plug on this rave? You may be apt to wonder what is going on in the Chappaqua redoubt of She-Whose-Turn-Has-Been-(so far)-Thwarted, HRC, boss-of-all-girl-bosses, putatively retired from public life. She’s been awfully quiet since that night over a week ago when she was obliged on-stage somewhere to hug and air-kiss Ms. Harris, and made a face seconds after as if she had thrown up in her mouth. Is she stewing in the broth of grievance but still and nonetheless tirelessly working her phone to canvas the delegates of that looming party meet-up? She might remind them that the DNC (that is, the Democratic National Committee, Inc), went broke in 2016 and got bailed out by the Clinton Foundation checkbook, and, Jeez, we can’t seem to find any repayment check from all’y’all. It seems maybe you owe us. . . something.

And, by the way, HRC could remind said delegates: you have allowed a laughing hyena who drinks her lunch to land at the head of the ticket for the worst reasons (viz., DEI) minus any votes from the party membership, and then managed to duct-tape a China-owned, Cluster-B head-case to her as the veep sidekick. . . and maybe when all the hee-hawing and hooting dies down, you’ll discover what a pair of losers you’ve allowed to be undemocratically implanted to (ha!) represent you. And also, by the way, I happen to be available as her capable-and-experienced replacement. . . whom you can actually vote for on the convention floor, if you manage to get your shit together. . . you know. . . our democracy, and all. Just sayin’. That is, I’m just sayin’ what She might be thinkin’ (and sayin’). I am in no position to predict any actual outcome, but it’s hard to imagine any winning moves by the Harris & Walz team in actual play-by-play.

In case you have forgotten amid all the week-long laughter and euphoria, there are important national issues to discuss about how to manage the malevolent leviathan the federal government has become, and many dilemmas and threats the people face. And there are very different records of each team’s views on these things, party by party. Some of that discussion could happen in the (so far) one scheduled September 10 debate. If Mr. Trump can manage to be polite, he can press Kamala Harris to explain herself on things like the wide-open border, failure to negotiate with the Russians to end the Ukraine War, her party’s antipathy to public safety, her party’s promotion of gender identity insanity, its Gestapo-style lawfare operations, its endless hoaxes, and its disgraceful documented efforts to censor free speech. The record is pretty clear on all of that, and there’s a fair chance that Ms. Harris can’t possibly explain it away. Or laugh it off.

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“..the proudest boast of our free speech jurisprudence is that we protect the freedom to express ‘the thought that we hate.’”

A Harris-Walz Administration Would Be A Nightmare for Free Speech (Turley)

The selection of Minnesota Gov. Tim Walz (D) as the running mate for Vice President Kamala Harris has led to intense debates over crime policy, war claims, gender identity policies and other issues. Some attacks have, in my view, been inaccurate or overwrought. However, the greatest danger from this ticket is neither speculative nor sensational. A Harris-Walz administration would be a nightmare for free speech. For over three years, the Biden-Harris administration has sustained an unrelenting attack on the freedom of speech, from supporting a massive censorship system (described by a federal court as an “Orwellian Ministry of Truth“) to funding blacklisting operations targeting groups and individuals with opposing views. President Biden made censorship a central part of his legacy, even accusing social media companies of “killing people” for failing to increase levels of censorship.

Democrats in Congress pushed that agenda by demanding censorship on subjects ranging from climate change to gender identity — even to banking policy — in the name of combatting “disinformation.” The administration also created offices like the Disinformation Governance Board before it was shut down after public outcry. But it quickly shifted this censorship work to other offices and groups. As vice president, Harris has long supported these anti-free speech policies. The addition of Walz completes a perfect nightmare for free speech advocates. Walz has shown not only a shocking disregard for free speech values but an equally shocking lack of understanding of the First Amendment. Walz went on MSNBC to support censoring disinformation and declared, “There’s no guarantee to free speech on misinformation or hate speech, and especially around our democracy.”

Ironically, this false claim, repeated by many Democrats, constitutes one of the most dangerous forms of disinformation. It is being used to convince a free people to give up some of their freedom with a “nothing to see here” pitch. In prior testimony before Congress on the censorship system under the Biden administration, I was taken aback when the committee’s ranking Democrat, Del. Stacey Plaskett (D-Virgin Islands), declared, “I hope that [all members] recognize that there is speech that is not constitutionally protected,” and then referenced hate speech as an example. That false claim has been echoed by others such as Sen. Ben Cardin (D-Md.), who is a lawyer. “If you espouse hate,” he said, “…you’re not protected under the First Amendment.” Former Democratic presidential candidate Howard Dean declared the identical position: “Hate speech is not protected by the First Amendment.”

Even some dictionaries now espouse this false premise, defining “hate speech” as “Speech not protected by the First Amendment, because it is intended to foster hatred against individuals or groups based on race, religion, gender, sexual preference, place of national origin, or other improper classification.” The Supreme Court has consistently rejected the claim of Gov. Walz. For example, in the 2016 Matal v. Tam decision, the court stressed that this precise position “strikes at the heart of the First Amendment. Speech that demeans on the basis of race, ethnicity, gender, religion, age, disability, or any other similar ground is hateful; but the proudest boast of our free speech jurisprudence is that we protect the freedom to express ‘the thought that we hate.’” As the new Democratic vice-presidential candidate, Walz is running alongside one of the most enthusiastic supporters of censorship and blacklisting systems.

In her failed 2020 presidential bid, Harris ran on censorship and pledged that her administration “will hold social media platforms accountable for the hate infiltrating their platforms, because they have a responsibility to help fight against this threat to our democracy.” In October 2019, Harris dramatically spoke directly to Facebook’s Mark Zuckerberg, insisting “This is not a matter of free speech….This is a matter of holding corporate America and these Big Tech companies responsible and accountable for what they are facilitating.” She asked voters to join her in the effort. They didn’t, but Harris ultimately succeeded in the Biden-Harris administration to an unprecedented degree with a comprehensive federal effort to target and silence individuals and groups on social media.

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The most shocking thing about the Musk-Trump conversation is that it took place, not so much what was said. And after a lot of DDOS and other tech issues.

Trump’s ‘Interview Of The Century’ With Elon Musk: As It Happened (RT)

13 August 2024

02:40 GMT With the interview seemingly concluding, Musk explained to independent and undecided voters why he decided to endorse Trump. ”I’ve not been really political before…and it’s not like I;m some dyed in the wool long-term Republican,” he said, adding that he feels the upcoming election marks a “critical juncture for the country.” “A lot of people thought the Biden administration would be a moderate administration but it’s not, and I think we’re going to see an even further left administration with Kamala,” he continued. “We want to have a future that is prosperous. You are the path to prosperity, and Kamala is the opposite.” “That endorsement meant a lot to me,” Trump replied.

02:23 GMT “Biden actually did something that was impossible. Both sides hate him,” Trump said, referring to the president’s handling of the Israel-Hamas war. “She’s going to be worse than him,” he continued, referring to Harris. “If you’re a person who is very pro-Israel and you vote for her, you ought to have your head examined.” Harris has attempted to court the Democratic Party’s pro-Israel establishment wing and its pro-Palestine progressive wing, with mixed results. When one of her rallies was interrupted by pro-Palestine protesters last week, Harris shushed the demonstrators, telling them “I am speaking now.”

02:18 GMT “Biden is close to vegetable stage, in my opinion,” Trump jeered, referring to photographs of the president taken in Delaware at the weekend. “He couldn’t even lift the chair. The chair is meant for children and old people. He couldn’t lift it.” Trump has repeatedly mocked Biden’s mental acuity, saying earlier in the interview that he had a “very low IQ 30 years ago,” but now he “might not have IQ at all.”

02:04 GMT Musk’s first major difference with Trump is on the subject of climate change, with the Tesla CEO arguing that the US needs to “lean toward” sustainable energy without impeding on Americans’ living standards, and Trump arguing that fossil fuels are essential in manufacturing and charging electric cars. ”Even to create your electric car and create the electricity needed for the electric car, you know, fossil fuel is what really creates that at the generating plants … so you sort of can’t get away from it at this moment,” Trump declared. However, Trump and Musk both agreed that nuclear power is an “underrated” form of green energy.

01:48 GMT Trump has vowed to close the Department of Education if elected, and pass responsibility for education back to the states. The former president complained that despite spending more money per pupil than any other developed country, the US regularly appears at the bottom of most league tables for academic performance.

01:42 GMT Musk has called on Trump to set up a “government efficiency commission” to ensure that taxpayer money is better spent, offering to help out with such a commission. Trump replied that Musk would be ideal for such a role.

01:33 GMT Trump issued a grim pronouncement on Ukraine’s prospects of success against Russia, reminding listeners that Russia managed to defeat the might of Nazi Germany, while Ukraine has been reduced to “using young men and very old men to fight.” “You don’t read about how bloody Ukraine is. Just between the two armies you’ve lost half a million people… Ukraine now doesn’t have enough men,” he said. “I could have stopped that… but we had a president saying stupid stuff, and this could end up in WWIII.”

01:31 GMT Trump said that he watched Russia’s troop buildup on the Ukrainian border in 2022 and thought Putin was attempting to gain leverage with the US. “Then Biden started saying such stupid things,” like publicly declaring that Ukraine “can be a NATO country,” Trump continued. “He said things that were so stupid…that war had zero chance of happening if I were there.”

01:27 GMT Musk and Trump have turned to foreign relations, with Musk insisting that the US must have an “intimidating” president in order to deter “evil dictators” around the world. Trump took the opportunity to talk up his relationships with Russian President Vladimir Putin, Chinese President Xi Jinping, and North Korean leader Kim Jong-un. Trump recalled his “little rocket man” dispute with Kim in 2017, laughing as he recalled how after lobbing insults at the North Korean leader, “all of a sudden I got a call from him… and we got along great.”

01:15 GMT “She’s incompetent, and he’s incompetent, and frankly I think that she’s more incompetent than he is,” Trump told Musk, referring to Harris and Biden. Trump slammed Harris for promising to secure the US’ border if elected president, despite having been in power for three years already. Musk concurred that the US should have a “smooth and efficient” legal immigration system, and that border security is “a fundamental existential issue for the United States.”

Read more …

“Before Musk’s takeover, Daisley claimed, Twitter was “joyously good fun to use,” thanks to restrictive policies that stifled “antisocial behavior.”

We only like people who agree with us. The rest we ban, boycott and arrest.

Ex-Twitter Executive Calls For Musk To Be Arrested (RT)

Tech mogul Elon Musk should be threatened with arrest and detention if he refuses to censor right-wing content on X, the platform’s former vice president for Europe, Middle East and Africa has suggested. In an op-ed published by The Guardian on Monday, Bruce Daisley lamented the free-speech idealism that Musk brought to Twitter when he bought the platform (and renamed it X) in 2022. Before Musk’s takeover, Daisley claimed, Twitter was “joyously good fun to use,” thanks to restrictive policies that stifled “antisocial behavior.” Musk must now be punished for lifting these policies and allowing right-wing thought to spread, Daisley declared. By allowing users to share content related to the recent riots in the UK, and by posting about the riots himself, Musk has “sowed discord.” “In my experience, that threat of personal sanction is much more effective on executives than the risk of corporate fines. Were Musk to continue stirring up unrest, an arrest warrant for him might produce fireworks from his fingertips, but as an international jet-setter it would have the effect of focusing his mind,” Daisley wrote.

Furthermore, British regulators should demand that right-wing influencers like Tommy Robinson be “deplatformed,” while “Britain’s Online Safety Act 2023 should be beefed up with immediate effect.” According to The Telegraph, British Prime Minister Keir Starmer is considering amending the act – to punish social media companies that allow the spread of “legal but harmful” content. The act, which comes into force next year, holds social media companies liable for illegal content posted on their platforms. Drafted by the UK’s previous Conservative government, it was originally set to include a “legal but harmful” clause, but the passage was ultimately pulled after Business and Trade Minister Kemi Badenoch complained that it amounted to “legislating for hurt feelings.” London’s Metropolitan Police commissioner, Sir. Mark Rowley, announced last week that his officers may charge foreigners for social media posts about the unrest.

“Being a keyboard warrior does not make you safe from the law,” he said, naming “the likes of Elon Musk” as potential targets for investigation. As of Friday, more than 700 people had been arrested and more than 300 charged over their alleged participation in the riots, which kicked off after a teenager of Rwandan descent killed three children and injured ten others in a stabbing spree in the town of Southport late last month. Of those arrested, more than 30 have been charged with online offenses, such as sharing footage of the riots or posting content that – according to the Crown Prosecutorial Service – “incites violence or hatred.” Musk has heavily criticized the response to the riots, accusing the British government of operating a “two-tier” justice system where dissent is punished more harshly than violent crime. In a post to X on Monday, he shared an excerpt from a 1946 UN resolution, stating that “freedom of information is a fundamental human right, and the touchstone of all the freedoms to which the United Nations is consecrated.”

Read more …

The original headline said “EU Threatens Elon Musk Over Trump Interview”, but Breton really threatened him BEFORE a single word was spoken.

EU Threatens Elon Musk Before Trump Interview (RT)

European Commissioner Thierry Breton has ordered X owner Elon Musk to step up censorship of “harmful content” related to his upcoming interview with former US President Donald Trump, or face a “full toolbox” of legal repercussions. Musk is set to interview Trump on Monday night, with the conversation airing live on the tech mogul’s X platform. Trump made his long-anticipated return to X earlier on Monday, posting a slew of campaign videos after an almost uninterrupted three-and-a-half year hiatus from the platform. In a letter to Musk, European Commissioner for Internal Market Thierry Breton warned that Brussels will be monitoring the interview closely. Musk must ensure that “effective mitigation measures are put in place regarding the amplification of harmful content” in connection with the live interview, Breton wrote, before claiming that Musk had failed to stop the spread of such content during a recent spate of right-wing riots in the UK.

“We are monitoring the potential risks in the EU associated with the dissemination of content that may incite violence, hate and racism in conjunction with major political – or societal – events around the world, including debates and interviews in the context of elections,” he continued. Breton did not explain whether EU regulators would blame X for allegedly inciteful comments uttered by Trump, or by X users watching the interview. Under the EU’s Digital Services Act (DSA), X is considered a ‘Very Large Online Platform’ and is legally required to restrict the “dissemination of illegal content” and “address the spread of disinformation. The entire text of the DSA mentions the word “disinformation” 13 times without defining it.

X is already under investigation by Breton’s office for alleged breaches of the DSA, with EU regulators accusing the platform of misleading users by allowing anyone to pay for a verification checkmark, and refusing to allow its data to be scraped by “researchers.” If found liable, X could be ordered to pay a fine equal to 6% of its annual turnover. In his letter on Monday, Breton said that any “negative effect” stemming from the Trump interview could influence the investigation and the EU’s “overall assessment of X’s compliance with EU law.” Musk claimed last month that the investigation was opened because he refused to accept a “secret” censorship deal with the EU. “If we quietly censored speech without telling anyone, they would not fine us,” Musk said. “The other platforms accepted that deal. X did not.” Responding to Breton’s letter on Monday, Musk shared a meme containing the text: “Take a big step back and literally, f**k your own face!”

Read more …

Interesting for sure. Do read it all at ZH (click the headline).
Note: there is no way to bring this case before the election, so they can all keep -falsely- labeling Trump a “convicted felon” (he’s not).
Note 2: Trump is persecuted by Garland, Wray and Smith using taxpayers’ money, but has to defend himself with his own.
Note 3: Trump attorney Daniel Epstein sounds sharp.

Trump To Sue DOJ For $100 Million Over Mar-a-Lago Raid (ZH)

Former President Donald Trump is set to sue the DOJ for $100 million in damages over the 2022 raid on his Mar-a-Lago property in Palm Beach, Florida – arguing that it was done “clear intent to engage in political persecution.” According to a memo obtained by Fox News, the lawsuit will claim “tortious conduct by the United States against President Trump.” Trump and his legal team intend to sue the Justice Department for its conduct during the FBI’s raid on Mar-a-Lago on Aug. 8, 2022, amid the federal investigation into his alleged improper retention of classified records. After the raid, Special Counsel Jack Smith was appointed to investigate. Smith ultimately brought 37 felony counts against Trump, including willful retention of national defense information, conspiracy to obstruct justice, and false statements. Trump pleaded not guilty to all counts. Last month, US District Judge Aileen Cannon dismissed the DOJ’s case against Trump – ruling that Smith was unlawfully appointed and funded, citing the Appointments Clause in the constitution.

The notice to sue was filed by Trump attorney Daniel Epstein, and gives the DOJ 180 days from the date of receipt to respond and come to a resolution. If no agreement is made, Trump’s case will move to federal court in the Southern District of Florida. “What President Trump is doing here is not just standing up for himself – he is standing up for all Americans who believe in the rule of law and believe that you should hold the government accountable when it wrongs you,” Epstein told Fox Business’ Lydia Hu. According to the filing, the “tortious acts against the president are rooted in intrusion upon seclusion, malicious prosecution, and abuse of process resulting from the August 8, 2022 raid of his and his family’s home at Mar-a-Lago in Palm Beach Florida,” adding that decisions made by the DOJ and FBI in conducting the raid were “inconsistent with protocols requiring the consent of an investigative target, disclosure to that individual’s attorneys, and the use of the local U.S. Attorney’s Office.”

Epstein further argues that decisions made by Attorney General Merrick Garland as well as FBI Director Christopher Wray were not based on “social, economic, and political policy,” but instead were in “clear dereliction of constitutional principles, inconsistent standards as applied to” Trump and a “clear intent to engage in political persecution – not to advance good law enforcement practices.” “Garland and Wray should have never approved a raid and subsequent indictment of President Trump because the well-established protocol with former U.S. presidents is to use non-enforcement means to obtain records of the United States,” wrote Epstein. “But notwithstanding the fact that the raid should have never occurred, Garland and Wray should have ensured their agents sought consent from President Trump, notified his lawyers, and sought cooperation.” “Garland and Wray decided to stray from established protocol to injure President Trump,” the filing continues.

Epstein argued that the DOJ violated Florida law, intrusion upon seclusion, which is recognized as a form of invasion of privacy. Intrusion upon seclusion includes “an intentional intrusion, physically or otherwise, into the private quarters of another person” and the intrusion “must occur in a manner that a reasonable person would find highly offensive.” -Fox News “The FBI’s demonstrated activity was inconsistent with protocols used in routine searches of an investigative target’s premises,” the filing continues, adding that Trump “had a clear expectation of privacy at Mar-a-Lago. Worse, the FBI’s conduct in the raid – where established protocol was violated – constitutes a severe and unacceptable intrusion that is highly offensive to a reasonable person.”

The filing also argues that the DOJ and special counsel’s office “brought a lawless criminal indictment,” which constitutes “malicious prosecution.” “As such, given the Supreme Court’s immunity decision and Judge Cannon’s dismissal of the prosecution on grounds that the Special Counsel’s appointment violated the appointments clause and his office was funded through an improper appropriation, there was no constitutional basis for the search or the subsequent indictment.” Trump is also planning to sue for punitive damages. “For these harms to President Trump, the respondents must pay punitive damages of $100 million,” Epstein wrote, adding that there was an “abuse of process,” and that the methods used against Trump were “unconstitutional and aimed at politically persecuting the former President, which led to extensive legal costs and negative consequences for him.”

Read more …

Joseph Robinette Biden and Sigismund Schlomo Freud.

Biden: If Trump Wins, There’ll Be No Peaceful Transfer of Power (MN)

President Joe Biden uttered an interesting Freudian slip when he said that “if Trump wins” the election he’s not confident there’ll be a peaceful transfer of power. Biden made the remarks during an interview with CBS News. “Are you confident that there will be a peaceful transfer of power in January 2025,” Biden was asked. “If Trump wins, no, I’m not confident at all,” he responded. There then appeared to be a cut in the interview before Biden corrected himself, “I mean, if Trump loses, I’m not confident at all.”

While Biden is infamous for his verbal gaffes, many respondents on X actually believed this to be a revealing Freudian slip. As we highlighted earlier, during the same interview, Biden confirmed that high ranking Democrats pushed him out of the race, essentially corroborating the accusations of a coup. “A number of my Democratic colleagues in the House and Senate thought that I was going to hurt them in the races,” Biden said. The president was reportedly told by Nancy Pelosi that he would be removed either by means of “the easy way” or “the hard way,” after he desperately tried to cling onto the nomination despite being humiliated during a presidential debate with Donald Trump.

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Lawfare. Against an Iraq war veteran and current Army reservist. “..it’s bringing to the forefront… how brazen the political retaliation and abuse of power continues to be under the Biden-Harris administration.”

American Stasi: Tulsi Gabbard Confirms “Quiet Skies” Nightmare (Matt Taibbi)

Tuesday night, while self-styled Democratic nominee Kamala Harris pledged to defend “freedom, compassion, and the rule of law” to cheers in Philadelphia, Hawaii’s Tulsi Gabbard described being tracked by teams of government agents in a surveillance regime more reminiscent of East Germany than a free country. Whistleblowing Air Marshals told Uncover DC Gabbard was singled out as a terror threat under the so-called “Quiet Skies” program, and the former presidential candidate says she noticed. “The whistleblowers’ account matches my experience,” says Gabbard. “Everything lines up to the day.” This story began two weeks ago, when the former Hawaii congresswoman returned home after a short trip abroad. In airport after airport, she and her husband Abraham Williams encountered obstacles.

First on a flight from Rome to Dallas, then a connecting flight to Austin, and later on different flights for both to cities like Nashville, Orlando, and Atlanta, their boarding passes were marked with the “SSSS” designation, which stands for “Secondary Security Screening Selection.” The “Quad-S” marker is often a sign the traveler has been put on a threat list, and Gabbard and Williams were forced into extensive “random” searches lasting as long as 45 minutes. “It happened every time I boarded,” says Gabbard. The Iraq war veteran and current Army reservist tends to pack light, but no matter. “I’ve got a couple of blazers in there, and they’re squeezing every inch of the entire collar, every inch of the sleeves, every inch of the edging of the blazers,” she says. “They’re squeezing or padding down underwear, bras, workout clothes, every inch of every piece of clothing.”

Agents unzipped the lining inside the roller board of her suitcase, patting down every inch inside the liner. Gabbard was asked to take every piece of electronics out and turn each on, including her military phone and computer. That was the other strange thing. “I use my military ID to get through security sometimes,” says Gabbard, who among other things traveled to her reservist base in Oklahoma during this period. Once, she was unable to get through security with military ID. A Transportation Security Administration (TSA) agent saw the “SSSS” marker. “The TSA agent said, ‘Why are you Quad-S? You’re in the military,’” explains Gabbard. “And I said, ‘That’s exactly what I’m wondering.’ Gabbard goes on: “Then I said, ‘The only thing I can think of is, I work in politics.’ And he said, oh.”

The agent told her he’d encountered supporters of a certain former president who’d had no issues traveling before, but were now “marked quad-S every time they traveled.” Gabbard shrugged and slogged through, still encountering extra security. At one flight, she says, there were “at least six TSA agents doing additional screening,” along with canine support. “There were dogs in Dallas when we got there, dogs at a couple of the gates.” She called a colleague, who told her: these things happen, don’t worry. “So I thought, ‘Maybe I’m just being paranoid,’” Gabbard says. Then she saw this past Sunday’s report in Uncover DC, a site edited by the well-known Twitter writer Tracy Beanz. Uncover interviewed Sonya LaBosco, the Executive Director of the Air Marshal National Council (AMNC), an advocacy association for Federal Air Marshals. Disclosing Gabbard had been placed on a domestic terror watch list, the former Marshal LaBosco told a disturbing story:

According to LaBosco… Gabbard is unaware she has two Explosive Detection Canine Teams, one Transportation Security Specialist (explosives), one plainclothes TSA Supervisor, and three Federal Air Marshals on every flight she boards. Uncover DC said Gabbard was initially placed on the list on July 23rd, and that trios of Air Marshals first began following her on flights on July 25th. As Racket would learn, surveillance was conducted on at least eight flights, with different three-Marshal teams for each flight, part of the Transportation Security Administration (TSA) “Quiet Skies” regimen that can literally surround people with human watchers. There are “potentially 15 or more TSA uniformed and plain clothes” at a gate for such assignments, LaBosco told Racket. The story about Gabbard was surfaced by two TSA whistleblowers, including one detailed to follow her. When Gabbard read this, she felt a shock of recognition.

“When I saw that, I thought, ‘Wow, okay. So everything I was experiencing was exactly what I feared was going on,’” she says. Though clearly outraged, Gabbard stresses the important part of her story isn’t any inconvenience or insult she’s gone through. “This is not a woe-is-me situation,” she explains. Instead, “it’s bringing to the forefront… how brazen the political retaliation and abuse of power continues to be under the Biden-Harris administration.”

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“Who controlled whom that day? The immediate answer, perhaps obvious, is the terrorist at the podium..”

Israel Runs the US. No, the US Runs Israel. No, Wait .. (Patrick Lawrence)

That deranged speech Bibi Netanyahu delivered to a joint session of Congress last month: I cannot get it entirely out of my mind. It did not change anything — neither the Israeli prime minister nor his hosts seem to desire or intend to change anything in U.S.–Israeli relations. And in this way, there is not much to say about that weird hour the world’s No. 1 terrorist — yes, think about it and tell me I’m wrong — spent at the podium under the Capitol’s rotunda. But the speech did clarify certain things, and then it raised an important question. Let us see about these matters. There is, to begin with, the question of Netanyahu’s mental stability. If we consider his many outlandish assertions — Israel has minimized civilian casualties in Gaza, Israeli soldiers are to be commended for their moral conduct, those protesting in behalf of Palestinians are probably in Iran’s pay, and so on — we must conclude that the man given to such preposterous misrepresentations is, let’s say, perpendicular to reality.

I am sure Netanyahu spoke in large measure for effect. This must be so. But I am equally sure — note the demeanor in the videos, for instance — he was certain of the truth of what he had to say. Dr. Lawrence’s diagnosis: A man consumed with resentment and hatred, who has led Israel to the brink of a cataclysmic war at the irretrievable cost of its international standing, while dragging the U.S. into it (at similar cost), suffers from severe psychosis with symptoms of paranoia and obsessive-compulsive megalomania. I do not say this to indulge some cheap denigration of one of the many contemptible political figures now walking around the Western world and its appendages. After Netanyahu’s notably strange performance in Congress July 24 — at times he seemed pure id — I say this diagnosis would hold in a clinical setting. We should all take note of this and brace ourselves accordingly. Never mind who’s driving the bus: It would be better in this case if no one were driving it.

There is also the reception Netanyahu enjoyed on Capitol Hill. Seventy-two ovations by my count, 60–odd of them standing, for a war criminal, a flouter of international law, a man who commits to waging “a seven-front war” across the Middle East? Bibi’s big theme, running all through his remarks, was congruence, the perfect alignment of Israeli and American interests. Remember? “Our enemies are your enemies, our fight is your fight, and”—here the left fist pounded—“our victory is your victory.” The response among those in attendance tells you all you need to know about what America’s lawmakers think of this idea. Netanyahu was looking merely for reaffirmation of standing arrangements at a moment when when terrorist Israel’s conduct had begun to turn more stomachs than he had bargained for. And he got what he wanted, needless to say.

This brings us to the question Netanyahu’s speech forces upon us. Does the U.S. control Israel or does Israel control the U.S.? Is the apartheid state another of Washington’s client regimes, albeit — let’s borrow a little from the Chinese — a client with Zionist characteristics? Or is Israel a case — rare, if not unique — of a distant outpost that dictates to the imperial center? The periphery exercises power over the metropole, this to say: This would have to be something new under the sun, surely. This is not a new question. A lot of people have pondered it for months, if not longer — over dining tables or on barstools or in published material on the internet. Who’s in charge, anyway? It has sometimes struck me as an absolutely classic Gordian Knot: Untie this and you will understand all. And at other times it reminds me of a Zen koan, insoluble short of a sudden satori. I haven’t, accordingly, spent much time thinking this through. To date I have concluded it is an angels-on-a-pin question and the answer does not much matter. When others bring it up, my mind drifts.

But after that shocking spectacle in Congress a few weeks ago, I don’t think I can get away with this dodge any longer. The occasion of Netanyahu’s address, his fourth before a joint session, puts all the complexities before us. Who was, in that hour, in charge — the insane man from the periphery, driven by rage, or his audience of adoring lawmakers at the imperial center, driven by… driven by what? I would say driven by greed, ideology and the work of running an imperium that is failing but has not failed yet. Who controlled whom that day? The immediate answer, perhaps obvious, is the terrorist at the podium. It cannot be lost on anyone paying attention that more or less every member of Congress in attendance — and good on the 100 or so members who boycotted — has in the past taken and continues to take money from the Israel lobby, notably but not only the profoundly antidemocratic American Israel Public Affairs Committee, the infamous AIPAC.

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They set their own trap. And walked right into it.

Incursion Into Russia Could Spell Doom For Kiev – ex-Austrian Official (RT)

Ukraine’s incursion into Kursk Region across the border in Russia is a risky gamble that could backfire and lead to a major defeat and a loss of Western support, Gustav Gressel, a former Austrian Defense Ministry official, has told Der Spiegel. Kiev’s forces launched a major cross-border operation in Kursk Region earlier this week. Clashes in the border areas have been ongoing since last Tuesday. The Kremlin called Kiev’s move a large-scale provocation and accused Ukrainian troops of indiscriminate attacks on civilians and civilian infrastructure. The Russian Defense Ministry has stated on multiple occasions that Ukrainian attempts to penetrate deeper into the region have been thwarted. Nevertheless, Kiev’s troops are still present in some border settlements in Kursk Region where heavy fighting continues, according to the ministry. Gressel, who is currently a senior policy fellow at the European Council on Foreign Relations, described Kiev’s actions as a “risky strategy.”

“If Ukraine wants to hold the area for several months, this will result in military costs that are hardly sustainable,” the expert, who previously served in the Austrian military, explained. Extending the front line “benefits Russia first and foremost,” he said an interview published on Saturday. The incursion failed to force Russia to divert forces away from its ongoing major offensive in Donbass, where Moscow’s troops continue to gain ground. Ukraine’s units in the area are “pretty worn out” and are in dire need of reinforcements, according to the expert. Moscow “has more weapons, ammunition and personnel that it can deploy to a longer frontline. Ukraine’s advantage of surprise could quickly turn into a disadvantage,” said Gressel, who also held a post in the Bureau for Security Policy of the Austrian Defense Ministry.

The worst-case scenario for Kiev would be a defeat both in Kursk Region and Donbass, the expert warned. According to Gressel, Ukraine is hoping its operation on Russian soil will lift the morale both of its soldiers and the Ukrainian population, and, he believes, it will not give up on it even in the face of Russia’s military superiority. Russia would then “first hold Ukraine back and then wear it down” as Kiev would pour its limited resources into the operation. “Ukraine could be seen as an unreliable daredevil,” Gressel said, adding that Kiev’s forces in Donbass “would run out of strength” as well. “There would be major territorial losses there.” Kiev’s Western backers such as Germany and the US would also likely reduce their support under these circumstances or even withdraw it completely, the expert warned. “The Kursk maneuver could herald the end of Ukraine militarily,” Gressel stated.

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“The enemy will receive a worthy response. All of our goals will undoubtedly be achieved.”

No Talks With Kiev After Attack On Civilians – Putin (RT)

Any peace talks with Ukraine are impossible as long as it conducts strikes on civilian populations and threatens nuclear power plants, Russian President Vladimir Putin has said. Speaking at a meeting with senior officials on Monday, Putin addressed Ukraine’s recent incursion into the border region of Kursk, as well as a drone strike that damaged Russia’s Zaporozhye Nuclear Power Plant. He suggested that Ukraine’s most recent actions show why it has refused to revisit plans to settle the conflict based on either on a Russian proposal, or roadmaps presented by neutral parties. Apparently, the enemy, relying on the help of its Western masters… is striving to improve its negotiating positions in the future. But how can we talk about negotiations with those who conduct indiscriminate strikes on civilians, civilian infrastructure, or try to threaten nuclear energy facilities?

Putin went on to say that one of Kiev’s main goals in Kursk is to divert attention from Donbass, where Russian forces have been steadily gaining ground in recent months. “But what are the results? The pace of offensive operations… not only have not slowed down, but on the contrary increased by one and a half times.” By striking into Kursk Region, Ukraine also sought to undermine the morale of the Russian population, but also achieved contrary results, Putin said, noting an increased stream of volunteers to join the military and defend the border.

Moscow’s main goal at this stage is to drive back the Ukrainian forces from Russian territory. “The enemy will receive a worthy response. All of our goals will undoubtedly be achieved.” Ukraine launched an attack on Kursk Region last week, the largest cross-border assault since the outbreak of the conflict, with media reports suggesting that the offensive involved some of Kiev’s best-equipped brigades. While Ukrainian forces made some gains, the Russian Defense Ministry said the advance had been halted. The Russian military has estimated Kiev’s losses at around 1,600 troops and 200 armored vehicles. On Sunday, Moscow accused Kiev of launching a drone attack on Russia’s Zaporozhye Nuclear Power Plant, which damaged one of its cooling towers.

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“..something happens to everyone calling for a peaceful resolution on Ukraine, they get shot at.”

Anyone Not Supporting Ukraine Gets Shot – Serbian Deputy PM (RT)

Serbian President Aleksandar Vucic is risking his life by refusing to back Western nations on the Ukraine conflict, a senior member of his government has claimed. Serbia, a traditional Russian ally, has declined to impose sanctions on Russia or support the policies of the US and Kiev’s other backers. Brussels in-turn has insisted that Belgrade’s aspiration to join the EU will not be realized unless it changes course. In an interview with Russia’s RIA Novosti published on Monday, Deputy Prime Minister Aleksandar Vulin said that Serbian authorities are concerned about the president’s safety, following attempts on the lives of Slovak Prime Minister Robert Fico and former US President Donald Trump. “After the attempt on Mr. Fico, and later Trump, I told Vucic to be on guard,” Vulin said, “that’s because something happens to everyone calling for a peaceful resolution on Ukraine, they get shot at.”

In May, Fico, a vocal critic of the Western Ukraine policy, survived a shooting by a 71-year-old man. His government blamed incendiary rhetoric by opposition politicians for motivating the shooter. Trump, who claims he could end the Ukraine conflict in 24 hours if reelected, was grazed by a bullet during a presidential campaign rally in July. The shooter was killed by a counter-sniper. US investigators have not disclosed any suspected motive for the attempted assassination. Vulin also criticized organizers of a mass protest which took place in Belgrade last Saturday, claiming that its ultimate goal may be to topple the Serbian government. “As we know, [sometimes] ouster [of the national leader] means not only the change of power, but also physical elimination of the person imbued with the power,” the minister said.

The demonstration, which attracted some 27,000 protesters, according to government estimates, was staged in opposition to a project to develop lithium mining, which critics claim will cause massive environmental damage. Belgrade granted a license to extract the valuable metal to the British-Australian company Rio Tinto in 2022, but later revoked it following public pressure. The project resumed last month, however, after a Serbian court overruled the government’s decision. President Vucic intends to put the issue to a referendum. Vucic also said last week that the Russian government had warned Serbian authorities that the rally may be a cover for a ‘color revolution’ – a hostile foreign operation that uses anti-government demonstrations and spiraling public disorder to force regime change.

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“To fill the gaping hole of military expenses, the official claimed, Ukraine will have to fall back on unpopular measures such as cutting spending, selling state assets, and hiking up taxes..”

Debt-Riddled Ukraine Blames ‘Slow’ US Aid, Scrambles to Pay Its Army (Sp.)

An increasingly debt-riddled and ingrate Ukraine is starting to turn on its Western sponsors, blaming them for lagging weapons deliveries to bolster the ongoing proxy war. Kiev is particularly faulting the US for its huge budget deficit, which has brought Ukraine to the brink of default. A US loan payout worth $50 billion needs to be accelerated, the Zelensky regime’s Finance Minister Serhiy Marchenko told the Financial Times. According to him, it’s the slow delivery of NATO weapons, especially from Washington, that is to blame for the $12 billion rise in military spending. While the US Congress approved $27 billion in direct US military aid in April this year, Marchenko bemoaned the fact that its disbursement was too “slow.” With the Western cash infusion delayed, the regime was forced to dip into its own coffers to buy weapons and ammunition, he was quoted as saying, using up money set aside “to cover salaries for our troops.”

To fill the gaping hole of military expenses, the official claimed, Ukraine will have to fall back on unpopular measures such as cutting spending, selling state assets, and hiking up taxes. The Ukrainian government has proposed a rise in its tax charged on people’s salaries from 1.5% to 5%. Ukraine’s national debt has almost doubled under Zelensky. According to the country’s Finance Ministry, its state debt amounted to $152.2 billion by July, a record 88.4% of GDP. The main growth is due to Ukraine’s external debt, which increased by $59.5 billion to reach $103.7. The domestic debt increased by $14.4 billion to $40.5 billion. The $50 billion that Ukraine is clamoring for is to be finalized by the Group of Seven this year.

In June, the G7 countries agreed during their summit in Italy to provide the funds by utilizing revenues generated from the interest on Russia’s $325 billion in assets illegally frozen in countries of the collective West. Most of these assets are held at Belgium’s Euroclear. However, talks between the US and EU on finalizing the $50 billion loan have stalled. Furthermore, there has been a lack of unanimity within the European bloc, as Hungary has repeatedly objected to the use of Russian frozen assets for funding NATO’s proxy war in Ukraine. Time is of the essence for the neo-Nazis lodged in Kiev as they suffer combat failures on the front line and manpower shortages. They are also hounded by fears that a potential triumph by Republican candidate Donald Trump in the US presidential election in November could throw a wrench in the works. Trump has repeatedly threatened to cut off US aid to Ukraine.

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“The days preceding the election showed a monumental advantage that Nicolas Maduro and the PSUV had over the opposition in terms of manpower and the sheer strength of its electoral mobilization.”

Washington’s Web Of Lies Is Backfiring Over Venezuela (Blankenship)

The 2024 presidential election in Venezuela, held on July 28, has stirred international concern – much like the preceding elections in the Caribbean state. A clear divide has emerged, with the United States and its allies supporting the opposition, while countries in the emerging multipolar world order are backing President Nicolas Maduro. In much the same way that the US and its allies have disputed the legitimacy of Maduro’s presidency since the 2018 election, spurring an artificial “presidential crisis” with former opposition leader Juan Guaido recognized by Washington as the “legitimate” president, the West is doing this again with former diplomat Edmundo Gonzalez.The opposition has released copies of official tally sheets collected by poll watchers from most of the nation’s polling centers. The sheets show an apparent landslide victory of 80% for Gonzalez, a claim that is now being widely circulated and amplified by the Western press.

Meanwhile, the results released by the National Electoral Council showed a narrow victory for Maduro with 52%, resulting in opposition protests. The Venezuelan government has criminalized such demonstrations and moved to stamp down opposition leaders. Given the state of the Venezuelan economy and widespread poverty, it is not outside the realm of basic reason that Maduro could have actually lost. Researchers, including Steve Levitsky, an expert on democracy at Harvard University, have also noted how improbable the official results are. He told the New York Times that this recent vote is “one of the most egregious electoral frauds in modern Latin American history.” But others disagree. Denis Rogatyuk, a reporter with El Ciudadano who covered the election for the independent media platform, told RT: “The days preceding the election showed a monumental advantage that Nicolas Maduro and the PSUV had over the opposition in terms of manpower and the sheer strength of its electoral mobilization.”

“The closing rallies for President Maduro drew in crowds six to seven times larger than those of Gonzalez and Machado. And the second bulletin released by the CNE on August 2nd, showing 6,408,844 votes for Maduro, aligns perfectly with this notion, and the fact that the combined membership of the PSUV and its allied parties is just over 6 million as well,” he concluded. However, the more interesting dynamic with regard to the situation in Venezuela is the fact that the US is failing to garner the requisite support needed to apply the pressure it wants on Caracas. It shows a dwindling of American soft power in what was once considered the empire’s backyard. For example, the situation in Bolivia in 2019, in which former President Evo Morales was forced to resign in the wake of widespread pressure from the police and military after international interference, has clearly left a sour taste in Latin Americans’ collective mouths.

The three most prominent countries in the region – Brazil, Mexico, and Colombia – have not condemned Maduro. In fact, the Organization of American States (OAS), which had previously passed a resolution against Morales in 2019, failed to pass a resolution over the situation in Venezuela. While 17 members voted to condemn Maduro, 11 abstained – including Brazil and Colombia – and five delegations, including Mexico, skipped the session altogether. The OAS needed 18 votes to pass it. Even the European Union has failed to muster support after Hungary blocked a joint statement by the bloc that would have cited “flaws and irregularities” in the election, forcing EU foreign policy chief Josep Borrell to publish it in a personal capacity.

What we see here is a classic case of the boy who cried wolf. The US has continually cried wolf over alleged breakdowns of democracy in Latin America, using its soft power to thwart independent governments through international forums and mafia diplomacy. It has spawned coup after coup, leaving nothing but destruction and destitution in its wake. People in the hemisphere – and indeed the world – are sick of injustice and maltreatment. This time, Washington may have actually been right. It could be the case that Maduro lost in this election. It could also not be the case, and that is well-established by the fact that the US and its henchmen are pathological liars. In any case, wherever objective truth may lie, no one believes Uncle Sam’s claims anymore, evidently because he has abused his power for too long in his cynical pursuit of domination.

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“..it is clear from widely circulating videos (though unverified) that many of them got through Israel’s sophisticated anti-air systems.”

Iron Dome Failure? (ZH)

Hezbollah has fired dozens of rockets from Lebanon into northern Israel, calling it retaliation for Israeli attacks last week. Israel’s military says its Iron Dome defence system intercepted some, but not all, of the projectiles. In the overnight and early morning hours Hezbollah pounded northern Israel and the Western Galilee with at least 30 rockets. While Israel’s military says intercepted some of the rockets, it is clear from widely circulating videos (though unverified) that many of them got through Israel’s sophisticated anti-air systems.

A number of regional analysts are remarking on the utter failure of Israel’s Iron Dome air defense system during the salvo; however, Ynet says many rockets struck open fields and uninhabited areas, causing fires. Lebanese Hezbollah said the target was an IDF military installation near Kibbutz Ga’aton. The Israeli side reported no casualties in the wake of the overnight assault. A regional source indicates that “One of Israel’s interceptors hit the Hydro Therapy Centre located in the Mount Hermon region, damaging a building.” The Iran-backed Lebanese paramilitary group has been vowing revenge for the assassination strike by Israel of senior Hezbollah commander Fuad Shukr in Beirut on July 30.

The next day, an Israeli operation in Tehran killed Hamas leader Ismail Haniyeh. Israel says it is busy strengthening defenses ahead of the still anticipated Iranian response, which is expected to include stepped-up Hezbollah action. Defense Minister Yoav Gallant told a meeting of defense leader, “We are in the days of vigilance and readiness, the threats from Tehran and Beirut may materialize and it is important to explain to everyone that readiness, preparedness, and vigilance are not synonyms for fear and panic.” As for the claims of the Iron Dome utterly failing in the latest attack, others pointed to the following video, which like the above remains unverified…

Israeli officials are meanwhile monitoring Lebanese media reports which say Hezbollah has entirely evacuated its Beirut headquarters in anticipation of a significant flareup. Some Hezbollah-aligned Lebanese politicians have also issued new threats: Nabih Berri, the speaker of the Parliament of Lebanon and a staunch Hezbollah ally, says of a tensely anticipated joint Iranian and Hezbollah attack on Israel that “revenge is a dish best served cold.” He warns that the “response is inevitable” after the recent killings of top Hezbollah military commander Fuad Shukr in an Israeli airstrike in Beirut and Hamas leader Ismail Haniyeh in Tehran.

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It’s not just the civil aviation sector, the rot is everywhere at Boeing.

NASA Inspector General Report Criticizes Boeing’s Quality Control (ET)

NASA’s Office of Inspector General (OIG) has raised concerns over quality control and standards at plane maker Boeing and its efforts to help the space agency return astronauts to the Moon. A report from NASA’s OIG released on Aug. 8 focuses on the Space Launch System (SLS) version 1B—the powerful heavy-lift rocket system that NASA plans to use to send the crewed Orion spacecraft and large cargo to the Moon in 2028 as part of the Artemis IV mission. According to NASA’s report, a “critical component” of this upgrade is Boeing’s development of the SLS’s new upper stage, the Exploration Upper Stage (EUS), which will aid in sending the Orion on its mission. Once it is complete, EUS will give the SLS a 40 percent upgrade in carrying capability, going from 27 metric tons under Block 1—the SLS rocket’s first iteration—to 38 metric tons with Block 1B, according to the report.

However, progress on the SLS, which has been under development since 2014, has been plagued with issues, including Boeing’s “ineffective quality management and inexperienced workforce,” along with continued cost increases and schedule delays, the report said. As part of its report, NASA’s OIG interviewed officials at NASA Headquarters, Marshall Space Flight Center, Boeing, and DCMA between August 2023 through May 2024. It also visited the Michoud Assembly Facility in New Orleans, Louisiana, to observe the SLS core stage and EUS production. The OIG found that Boeing’s quality management system at Michoud “does not adhere” to international standards established under the global association SAE International. The report pointed to 71 “Corrective Action Requests”(CARs) issued by the Defense Contract Management Agency (DCMA) at Michoud between 2021 and 2023 to address “deficiencies in quality.”

NASA’s OIG said this is a “high number of CARs for a space flight system at this stage in development and reflects a recurring and degraded state of product quality control.” “Boeing’s process to address deficiencies to date has been ineffective, and the company has generally been nonresponsive in taking corrective actions when the same quality control issues reoccur,” the report said. The report highlights other issues, including “foreign object debris ” identified inside the SLS Core Stage 2 liquid hydrogen fuel tank.The debris included “metal shavings, Teflon, and other debris on and underneath the entry platform and ladder assembly on the forward dome panels inside of the tank.” “Foreign object debris can damage hardware and potentially injure flight crew when entrapped within crewed flight articles,” the report stated. The liquid hydrogen fuel tank was subsequently cleaned, reinspected, and found to meet standards, according to the report.

In another incident during its visit to Michoud in April 2023, the OIG said it observed substandard welding on a liquid oxygen fuel tank dome, a critical component of the SLS Core Stage 3. The report said that on another occasion, Boeing officials “incorrectly approved hardware processing under unacceptable environmental conditions.” Boeing’s EUS contract has soared from the initially agreed-upon cost of $962 million in 2017 to over $2 billion through 2025, and the company’s delivery of the EUS to NASA has been postponed six years from an initial February 2021 date established in 2016 to April 2027, the report stated. “Given Boeing’s quality management and its related workforce challenges, we are concerned these factors could potentially impact the safety of the SLS and Orion spacecraft including its crew and cargo,” it concluded.

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Right after 9/11, there was a clip in which Larry Silverstein said: “We decided to pull the building” (WTC7). To do that, you need to first have it fitted out with explosives. Takes days. But why were there explosives there? And if WTC7, what about the others? I stopped following 9/11 “news” right there and then.

https://twitter.com/i/status/1822601565577883747

 

 

Dog kisses

 

 

Elephant

 

 

Lots a frens
https://twitter.com/i/status/1822668304856785284

 

 

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Jul 062019
 


Jack Delano A welder in the roundhouse of the Chicago and North Western Railroad’s Proviso yard 1942

 

It’s rare that I reach back into the past of the Automatic Earth, but it’s not entirely unique either. The reason I do it today is not only the relevance of the article -in my view-, or the fact it was published so long ago, but it’s that the ‘world’ has changed so much since January 1 2014, the date I wrote the piece below, as Everything Better Is Purchased At The Price Of Something Worse. It’s gained much new relevance since.

This essay, way back when, dealt with Carl -Gustav- Jung, probably the most influential psycho-analist we’ve ever known (he’s having a heated discussion with Freud about this as we speak, over a glass of brandy), and his take in the 1950s on our ability to incorporate new technologies into our lives, our minds and brains.

Jung couldn’t have dreamt how much of that was yet to come, but he already put some very dire warnings out there. His main point appears to be that our capacity to ’embrace’ anything new is per definition -very- limited because we ARE our ancestors, and whatever they never knew, we will have a hard if not impossible time making part of our lives.

It’s just that, as he warns, we are completely blind to this. Once you lose the link to your ancestors, you will move away from them ever faster. Because there’s nothing left to anchor you. But at the same time, you ARE your ancestors.

I am thinking about this on a near constant basis as I see people sit or move around with their iPhones et al, and their Facebook and Instagram et al, and I wonder what they did with their lives before they could walk the streets bumping into each other -or the odd car- before a constant link to faraway places seemed appropriate and/or needed.

Jung already thought about this, before it existed, 60-odd years ago. He framed it as: what are you giving up for what you gain? But of course the whole younger part of the poulation, who’ve never known anything else, have no notion of having given up anything. They never did anything else with their lives.

Well, Jung had a completely different idea. He said our brains haven’t even processed the times we never knew, ‘primitivity’, ‘antiquity’, or the Middle Ages yet, let alone radio, TV, or the internet. “We are very far from having finished completely with the Middle Ages, classical antiquity, and primitivity, as our modern psyches pretend.”

Carl Jung claimed that our only true frame of reference is our ancestors, and since they never knew radio, TV, internet, we cannot incorporate such things into our lives without losing our connection to them. But we ARE them, and if we would ever lose that connection, we would be beyond lost. We’d be gone. First mentally, then -inevitably- physically.

And what we label ‘progress’ is then merely a way to move ever faster awasy from what we really are, which is the ancestors that gave birth to us. Gone, lost, into some empty space, with no grounding and no purpose.

Perhaps that goes a ways towards explaining why we are destroying the planet we live on. We lost the connection to who we are. We are focused today only on progress, on the future, and not on the present, because the present requires a link to the past.

Here’s my take on this 5.5 years ago. Before all these millions of zombies were stalking the streets looking only at their phones, eagerly – nay, desperately- awaiting messages from people thousands of miles away. Mostly about what food they eat, no less, or what dress they wear.

The concept of what constitutes our lives has changed profoundly. It is no longer the people around us, or even the landscape, our lives now are made up of people who are not here (and landscapes in travel brochures and nature documentaries). That is quite something.

Carl Jung said quite a while ago that our minds and brains cannot handle that. But there you are and here we go.

 

 

Ilargi, Jan 1 2014: I thought I’d start off 2014 on a philosophical note, with something that I hope perhaps people will remember as the year progresses, or even through the rest of their lives, and share with those around them. In my humble view, that would do the planet a world of good. But it’s not easy; we have wandered far.

There are many things we have neglected and forgotten, if not never understood or even thought about, that are nevertheless essential to our personal well-being and that of our surroundings. If anyone in the western world has considered and analyzed these forgotten ‘things’, it’s Carl Gustav Jung, the psycho-therapist who died in 1961. Jung defined the collective unconscious, archetypes and synchronicity, among many other things. It was his active interest in Eastern civilization and philosophies that led him to ponder how the collective unconsciousness influences our notion of progress.

In general, Jung suggested that our minds are woefully ill-equipped to incorporate progress into our lives when it takes the shape of new methodology, and new machinery, gadgets, because we don’t have a suitable frame of reference for them. We interpret the world through the frame of reference embedded in our minds that was built through countless generations of our ancestors. That is not to say we can never comprehend or incorporate new things, but that it must always be a gradual process, and if we are not at all times sufficiently aware of how this process takes place, as it takes place, we will lose ourselves, because we risk losing our connection to our ancestors, and we ARE, in essence, our ancestors.

In particular, we need to be aware of the fact that there is no such thing as absolute progress, that every time we add something to our world, we take something away as well. It’s the Eastern notion of balance, of yin and yang, at play: Everything Better Is Purchased At The Price Of Something Worse. Life does not by definition only get better when someone invents a new phone or car or facial cream, even if that phone makes it easier to talk to someone thousands of miles away, or the car makes it easier to go see people, or get away from them, or the cream dissolves wrinkles like magic. It doesn’t work like that. We pay a price: for everything we add, we lose something. The question then becomes: what do we value most. But that’s a question we never ask: we see everything new as an addition to our lives, and ignore what gets taken away from us.

As Jung wrote about these issues, probably in the late 1950s, the world was very different from what it is today. If he were alive now, he would undoubtedly have found that difference very painfully unsettling, and declared it dangerous for all of mankind. When we lose our connection to the collective references passed on by those whose DNA we carry, references that we are born with, we lose our connection with ourselves, and we become disoriented, dissatisfied.

There is no happy ending to this process. It needs to be shut down at some point, and therefore it will, in order for us to reconnect with our own minds and brains, which owe their composition and very existence to our forefathers. But for the process to be shut down, we must be deprived of both our ability and our drive to generate progress, since we will never volunteer to stop. We must go on, because we lost our connection to ourselves. There is no way back, not if we insist on keeping on going “forward”. That suggests a return to a sort of stone age world is the only possible outcome.

 

It is precisely Jung and Freud’s insights into the human mind that have made it possible for politicians and advertisers and other tricksters to fool us into thinking we want or need the things that make our world poorer, not richer. There is a huge amount of irony in this: that we use our increased ability to understand our minds in order to fool ourselves. If that doesn’t prove that Everything Better Is Purchased At The Price Of Something Worse, what does?

Although it would be best to incorporate the principle into our lives as just that, a general principle, it is of course possible to name specific examples. The automobile, the car, has brought us a lot of pleasure and comfort. It has also polluted our world like maybe no other single invention has ever done. And that’s not even the worst part: the car has cut through our communities like a gutting knife (to the point where we have no recollection of what these communities used to look like), separating us from each other, turned public space into no-go zones, and arguably been made more important than the people whose comfort they were was supposed to serve. For many people who have no car, for one reason or another, their own communities have become de facto inaccessible and unnavigable.

And the car is an easy example. What about medicine? We have, through progress in medicine, been able to save so many people from dying, and/or enabled them to die later, that our population has exploded, a huge problem in more ways than I could even attempt to discuss here. And that’s a hard one: nobody, including me, will suggest we stop saving lives, or start killing people, but there is a problem all the same. Everything Better Is Purchased At The Price Of Something Worse.

We can all come up with many examples, fridges, supermarkets, nuclear plants, photographs, indoor plumbing, and think about how they have changed our lives for the better or the worse. But I don’t think it’s a good idea to risk losing ourselves in examples. We should keep sight of the overriding principle: that we risk destroying our world as we seek to improve it. And that the lessons from a behemoth mind like Jung’s should be used to make us wiser, not to fool us into buying things that harm our lives.

You could be forgiven for thinking that Jung’s prolific writing should be obligatory course material in every single educational institution on the planet, but then you wouldn’t understand your world’s priorities, now, would you? We go with what we find convenient, not with what can make us wiser people. We pick material wealth over mental wealth any day and every day, or mental wealth only if there’s money in it. And perhaps that points to the reason why we find people like Carl Gustav Jung so easy to ignore.

I’ll leave you with Jung’s own words, after saying this: Our rush to obtain new things, a rush we call progress, and to make money from these new things – after all, what money is there in old things? – has disconnected us from our ancestors. Unfortunately, we ARE our ancestors. There is a price we pay for everything that is different today from what is was when our parents were our age, and our grandparents, and their parents before them, and so on. We ignore that price, and pretend we don’t need to pay it, encouraged by the fact that it doesn’t always have to be paid immediately, and we can leave it to our kids to settle the bill. Something we do all too willingly, which somehow puts our connections to our ancestors in a cynical, bleak light even more.

 

Here’s Jung from his book ‘Memories, Dreams, Reflections’, published in 1963, 2 years after his death, in the paragraphs with which he closes the chapter “The Tower”:

 

Our souls as well as our bodies are composed of individual elements which were all already present in the ranks of our ancestors. The “newness” in the individual psyche is an endlessly varied recombination of age-old components. Body and soul therefore have an intensely historical character and find no proper place in what is new , in things that have just come into being. That is to say, our ancestral components are only partly at home in such things. We are very far from having finished completely with the Middle Ages, classical antiquity, and primitivity, as our modern psyches pretend.

Nevertheless, we have plunged down a cataract of progress, which sweeps us on into the future with ever wilder violence the farther it takes us from our roots. Once the past has been breached, it is usually annihilated, and there is no stopping the forward motion. But it is precisely the loss of connection with the past, our uprootedness, which has given rise to the “discontents” of civilisation and to such a flurry and haste that we live more in the future and its chimerical promises of a golden age than in the present, with which our whole evolutionary background has not yet caught up.

We rush impetuously into novelty, driven by a mounting sense of insufficiency, dissatisfaction, and restlessness. We no longer live on what we have, but on promises, no longer in the light of the present day, but in the darkness of the future, which, we expect, will at last bring the proper sunrise. We refuse to recognise that everything better is purchased at the price of something worse; that, for example, the hope of greater freedom is cancelled out by increased enslavement to the state, not to speak of the terrible perils to which the most brilliant discoveries of science expose us.

The less we understand of what our fathers and forefathers sought, the less we understand ourselves, and thus we help with all our might to rob the individual of his roots and his guiding instincts, so that he becomes a particle in the mass, ruled only by what Nietzsche called the spirit of gravity.

Reforms by advances, that is, by new methods or gadgets, are of course impressive at first, but in the long run they are dubious and in any case dearly paid for. They by no means increase the contentment or happiness of people on the whole. Mostly, they are deceptive sweetenings of existence, like speedier communications, which unpleasantly accelerate the tempo of life and leave us with less time than ever before. Omnis festinatio ex parte diaboli est – all haste is of the devil, as the old masters used to say.

Reforms by retrogressions, on the other hand, are as a rule less expensive and in addition more lasting, for they return to the simpler, tried and tested ways of the past and make the sparsest use of newspapers, radio, television, and all supposedly timesaving innovations.

In this book I have devoted considerable space to my subjective view of the world, which, however, is not a product of rational thinking. It is rather a vision such as will come to one who undertakes, deliberately, with half-closed eyes and somewhat closed ears, to see and hear the form and voice of being. If our impressions are too distinct, we are held to the hour and minute of the present and have no way of knowing how our ancestral psyches listen to and understand the present – in other words, how our unconscious is responding to it. Thus we remain ignorant of whether our ancestral components find elementary gratification in our lives, or whether they are repelled. Inner peace and contentment depend in large measure upon whether or not the historical family, which is inherent in the individual, can be harmonised with the ephemeral conditions of the present.

In the Tower at Bollingen it is as if one lived in many centuries simultaneously. The place will outlive me, and in its location and style it points backwards to things of long ago. There is very little about it to suggest the present. If a man of the sixteenth century were to move into the house, only the kerosene lamp and the matches would be new to him; otherwise, he would know his way about without difficulty.

There is nothing to disturb the dead, neither electric light nor telephone. Moreover, my ancestors’ souls are sustained by the atmosphere of the house, since I answer for them the questions that their lives once left behind. I carve out rough answers as best I can. I have even drawn them on the walls. It is as if a silent, greater family, stretching down the centuries, were peopling the house. There I live in my second personality and see life in the round, as something forever coming into being and passing on.

 

 

 

 

Nov 092014
 
 November 9, 2014  Posted by at 7:56 pm Finance Tagged with: , , , , , , , , , , , ,  10 Responses »


Wyland Stanley Peerless touring car, Bay Area 1923

As I was writing The Broken Model Of The Eurozone yesterday, I already knew there would have to be a sequel, because doing everything in one go would have been too much. And then, considerably less than two seconds later, it dawned on me that if I wanted to cover broken models and systems, a book would be the very least. But I don’t want to write a book, or, certainly, not here and now. Therefore, the best I think I can do is to sit down and let it flow, train of thought, stream of consciousness, probably the approach that suits me best to begin with.

There’s no question that the eurozone is by no means the only broken model, design, system, structure, in our world, though its built-in fatal flaws are perhaps easier to pinpoint than they are in other models. Everyone can see why having no mechanism to keep poor member nations from getting poorer must of necessity doom the eurozone, and the euro. Everyone, that is, but the people with the most vested interests.

That said, when you get to think about it, it’s hard to find a model, a system, in our ‘modern’ societies that is not broken, through similar design flaws. Just the past few days, we had the US midterm elections, and it doesn’t come more broken than that. As Ron Paul stated once again, US politics is a monopoly system, not a democracy. That part exists only in people’s dreams and in media stories. In reality, it’s pick your favorite identical twin. Yet for some reason, people still vote. Go figure.

Then there was the BLS unemployment report, which is no longer even a joke, but such an outright insult to Americans that it’s difficult to see why anyone looks at it anymore, other than for propagandistic reasons. A model designed to ignore the combined erosion in labor participation, wages and benefits that has taken place in the US since 2007, and the number of people who can’t make enough to pay their bills and feed their kids, is useless as a gauge for the American economy.

What these, and just about any other model I can think of that we use to run our world, have in common, is/are a number of flaws:

First, they were designed to operate exclusively in growing economies. Perhaps not even on purpose, but they sure don’t function in less glorious days, if only because no provisions were made for such days. It’s at least one reason why protagonists are so eager to point to growth even where there is none.

Second, whether in days of growth or of non-growth, they offer no protection from destructive exploitation of the natural world, either by nations, by corporations or by ourselves. A self defeating model.

Third, they are so far removed from the ‘human scale’ that we can’t internalize the ways they work and don’t work, other than perhaps in abstract theory. We can’t understand how the systems work that govern our lives, and therefore not why they fail.

These three characteristics guarantee inherent self limitation, self defeat and eventual self destruction. Sort of like the spy message that destroys itself 10 seconds after being read.

I was reading John Michael Greer’s recent Dark Age America: The End of the Market Economy, in which he reiterates how an increase in complexity of a society means ever more intermediaries take position in between productive economic participants, skimming off the fruits of other people’s daily labor. And how a decrease in complexity, such as the one we’re seeing today in our world, forced by diminishing economic returns, will lead to those intermediary positions disappearing, and a renewed form of feudalism taking the helm.

There are many shapes and sizes of these intermediaries active in our present societies, but none are more powerful, in more than one way, than politicians and traders/investors. The political world and financial world don’t produce anything of value, they owe their wealth and power solely to others who do.

The past century – or two – of ultra cheap fuels, which have enabled one single human being to produce as much as a thousand of her ancestors, created the space in which the financial and political intermediate powerholders operate. The debt machine gone haywire of the last few decades either created even more of that space or made up for what was lost due to rising fuel prices. Both fossil fuels and debt now stumble on their last legs, and society will need to be remolded, along principles that may indeed well resemble feudalism more than anything else.

To be sure, Greer doesn’t define feudalism along the lines of the bad rap it has gotten, but simply as a system in which rights and obligations for both lords and servant are clearly defined.

What he doesn’t specify, but I will, is that the feudal model operates on a human scale. That points to another aspect: the servant – for lack of a better word – in a balanced feudal system knows his master. We, today, do not. We only know a bunch of people pushed forward for their gift of gab and telegenic faces. The way our leaders are (pre-) selected is not much different from seeing how many second hand cars or tupperware bowls they can sell on a TV sales channel.

But then those leaders are (s)elected to head entities so far beyond the human scale it should be obvious to anyone that they cannot function properly no matter how much growth there is. Leaders of entities like the US, the EU or China have little in common with the people they supposedly represent, and they don’t have to, nobody expects them to. The US midterms were mostly a a battle of the bulge, as in candidates’ bulging wallets.

And on top large scale national politics we have created yet another, even more anonymous layer of power. UN, World Bank, IMF, NATO, there’s an ever growing collection of supra-national organizations that keep on guzzling up more power and more money every single day.

Like ‘smaller’ entities such as the US and EU, only more, the supra-nationals attract a certain kind of people, those that like to assert power without being held directly accountable. In structures that far exceed the human scale, they are like fish in water. And that’s why we should never accept having them in those positions. IMF and World Bank have a history of at best disputable and at worst very bloody interventions in nations across the globe.

We should have today celebrated the end of NATO along with that of the Berlin Wall 25 years ago. But it’s still there, and playing an active role in the flaring up of the Ukraine civil war. As for the UN, there should be a place for an organization like it, but not with the money gobbling corporate structure, serving shady interests, that it has today.

Our political systems don’t work. Our economic systems don’t work. We live on a steady – but hardly nutritious – diet of debt and propaganda. Our societies are no longer productive enough to allow for the numbers of intermediaries they have given birth to. But it’s the intermediaries who have more often than not taken up the most powerful positions in our societies. So they will fight, and initially often successfully, to keep their positions, at the cost of the more productive segments. It’s a mechanism that’s much easier to understand than it is to fight.

I tend to think that it’s easier to make the effort to get rid of things like models and systems and structures when you know they will need to go soon anyway. But that’s without counting in propaganda. Without including Freud and spin doctors and Edward Bernays and why detergent commercials work so well. When you do take all those into account, things don’t look so easy anymore.

What the EU has in common with all present day political and financial structures, bar none, is that it can, and indeed was built to, function only in times of growth. Take away growth and inherent flaws become exposed. Take away growth and panic ensues. Well, we no longer have growth, other than in our dreams and spin.

Or more accurately, there is indeed one thing that does still grow: our debt. It’s all we have left to keep up the pretense that we’re still growing. That and a pack of lies that grows more outrageous as time goes by. We run our societies on debt and propaganda. To a large extent, propaganda about why and how debt, and more debt, can’t hurt us.

Because as long as we believe that, we’ll leave our political and financial structures and power holders keep their plush seats. And as long as we believe it, they’re free to take more and more away from us. Something we feel powerless to stop, because we’re scared of what may happen when we stop believing. In broken models.

Oct 212014
 
 October 21, 2014  Posted by at 8:10 pm Finance Tagged with: , , , ,  7 Responses »


Dorothea Lange Rear window tenement dwelling, 133 Avenue D, NYC June 1936

I am thinking about the similarities between a financial crisis and for instance a family crisis, the death of a loved one or close friend, a divorce, or a personal bankruptcy.

And I wonder why in the case of our recent (aka current) financial crisis, we allow nothing to enter our communications, and our train of thought, but the idea of recovery and a return to growth. Has everyone always reacted that way after earlier financial crises – history is full of them -, or is something else going on?

Why do we insist on returning to something we once had, even if we have no way of knowing whether we can ever return? Why don’t we focus – more – on what lies ahead, instead of what is behind us? Is it because we loved what we had so much? Or is something else going on?

Even if we do love what once was so much, there’s a time to move on after every disaster, every death in the family, every bankruptcy. And deep down we know that very well. Life will never be the same, but it’ll still be life. It seems safe to say that in general, life is about turning, not returning. Life changes, we change, every day, every minute, every millisecond.

This refusal to turn a new leaf and find out what’s on the other side of the hill has enormous consequences. We are actively digging ourselves so deep into debt that it’s preposterous to claim this debt is ours only, because it’s painfully clear, though we would never admit it (too painful perhaps?), that we can never pay it back. We leave that honor to our children, and to the generations after them.

We should undoubtedly have protected us from ourselves, by making it illegal and punishable by law to engage in such behavior (something along the lines of Child Protection Services). We chose instead to be blind to it. We still could – should – write such legislation, but it looks as if present politics and economic ‘thinking’ will only exacerbate a situation that is already far worse than we care to know.

The overruling ‘wisdom’ looks to be that we miraculously freed ourselves from the yoke of a balanced budget, an idea seemingly justified by the fact that a return to growth has been elevated to the status of a law, of either physics or a deity of our choice, growth that will subsequently make all debts melt like the snow on the Kilimanjaro.

That overruling wisdom, as should be obvious, is at best wishful thinking, but far more likely pure fantasy. Which has become our main, make that only, approach of the crisis we find ourselves in. If only we believe, our leaders will deliver us to growth heaven.

But what if this is the end of the growth story? What if it’s already behind us? It’s not as if growth has been a constant factor in the lives of our ancestors. And it’s not as if the laws of physics put no limits on everlasting growth. Growth is a passing thing, it’s a phase.

Most of us have heard of the seven stages of grief. Shock, Denial, Anger, Bargaining, Guilt, Depression, Acceptance. Where are we in our journey through these stages when it come to the financial crisis, and to growth? There’s only one stage that even remotely sounds right: Denial. We’re not even close to Anger yet, not when it comes to the larger population.

We simply deny that something has really changed. And even if you wish to claim that it hasn’t, no-one can deny the possibility that it has. Still, that is exactly what happens. Denial, everywhere you look.

The something else that is going on is that our brains have been kidnapped by those who (probably not even always consciously) seek to strengthen their – power – political and financial positions by making us believe in the growth story long after it has – for all we can see – died. That’s why we listen only to the growth story, to the exclusion of any and all other stories.

It’s a form of progress, though not a benign one. Freud’s ideas are (ab)used to hide reality from us (to ‘sell’ the message), while Keynes’ ideas are abused to hide the reality that you can’t buy growth with debt your children will have to pay back. Pretty simple, when you think about it.

If you know how to sell people detergents and presidents, abstract ideas is easy. And if those ideas are about economics, that nobody knows much about and all the trusted experts and press have the same message about 24/7, the circle is pretty much closed. All that’s left then is places like the Automatic Earth and others to get your alternative stories, but that’s no match for full blown propaganda.

Still we’re seeing, we’re living in, the last days of the growth story. And when the master class decides to drop that story, watch out. The emperor is one ugly wrinkled old duckling when he’s naked. You don’t want your kids to see that.

Aug 152014
 
 August 15, 2014  Posted by at 6:48 pm Finance Tagged with: , , , ,  5 Responses »


DPC The shores of Biscayne Bay, Miami, Florida 1910

That’s not a bad metaphor to work with. “Conditioned to catch the falling knife”. The expression comes from the investment world, but it describes a much larger world today pretty accurately.

Investors use it to describe people who see a stock fall, rapidly, from for instance $50 to $20, call the low, and decide it’s a good buy, only to be stuck with huge losses (the knife that cuts their hand) as it goes down all the way to 25 cents.

Tyler Durden quotes Bloomberg’s Richard Breslow as saying this about financial markets:

Conditioned To Catch The Falling Knife

… there is this enormous consensus in all ideas and positions, everyone knows that central banks are there and driving everyone’s positioning“; my friend Bob Savage said yesterday:

“We’ve been trained to catch the falling knife by the central banks, one of those trading strategies that will work until it doesn’t and when the knife slips you will really have a taper tantrum.

It’s becoming harder and harder to look at the news and then guess what markets did in response [..] the expectation tends to be much more logical than the reaction.

If you look at how markets are trading, they move ahead of a central bank meeting, or a strong or weak number, then everyone is caught with the same position and you end up being right but proven wrong.”

Just like most of today’s investors are Pavlovians potty trained by central banks, most people don’t have opinions of their own on most other issues either; some never did, some recently lost them, but all of them are shaped by media and politics, not innate critical thinking.

It may seem that this is something of all times, but there is a difference, since as one’s exposure to media rapidly increases, so does the influence they have, or the way in which they have it.

In earlier days, most people’s opinions were formed by the communities they lived in, the churches they visited, the schools they attended – if any -, albeit admittedly in ways no less nefarious than the present ones.

But in those days far fewer people were even under the impression that they indeed did form their own opinions – who could read and write? – and were capable of critical thinking.

Now, just about everyone does, and that makes for a different view of the world of the individual. And a different approach to manipulation for opinion makers, of both the individual and the masses.

I’ve often talked with friends about how and why 100 years ago people went into World War 1 in Europe’s battlefields from all over the world. How all those Canadian boys got to be killed over in Belgium and France. And how none of us could imagine doing anything like that in this day and age.

But people then did, partly because the risk of dying wasn’t perceived as being as high as it turned out to be, but certainly also because of community pressure, shaped by schools and churches. If all boys in town go, who are you to stay behind?

Things have changed. We are to a much larger extent individuals now. We live in smaller family units, with much more space per capita and therefore much less direct interaction with others.

We also have had a lot more education, and feel that entitles us to pass judgments. We think school has provided us with objective ideas about the world.

But that’s where the pinch is. We are being fed preconceived ideas from day one – though that’s never what they’re called – and few of us can shake them.

To name an example, there are very few people who will tell you a particular TV ad for a detergent makes them buy the product, but that ad wouldn’t be there if it didn’t work, ergo: who buys the stuff? We have Freud and Jung and their findings of the sub- and unconscious to thank for that.

So how does a government today go about justifying going to war? How does it create an “enormous consensus in all ideas and positions”? It’s not that hard, when you think about it.

Political ideas and ideologies, and politicians themselves, can all be sold to the individual, and the masses, the same way detergent is. By appealing to the unconscious. The means through which ideas are transferred may have changed, but the “pillars” they are based on have not. Jung spent a lot of time working on archetypes, and the bogeyman stands out as a prime example of that. If you give the enemy a name and a face, the job’s half done.

Add to that that the enemy and his people do terrible things to babies, eat them, bury them alive, the image has always worked wonders, and still does. Throw in horrid abuse of women and it’s clear sailing. Rinse and repeat. Lots of rapid repetition, something our present media are ideally suited for. Repetition works miracles, in politics as it does in advertizing. It’s not a huge stretch to say that repetition outweighs evidence.

That’s how Saddam Hussein, Gadaffi and Osama Bin Laden, and today Vladimir V. Putin, have become household names in the US and Europe. And everyone recognizes their portraits too. Though Saddam was never proven to have had WMD, there’s no evidence for Bin Laden’s involvement in 9/11, and Putin so far is merely an unsubstantiated evil media figurehead as well.

People at a certain point simply feel sure that they “know”. Because they’ve seen the names and faces so many times a day, confirming their earlier preconceptions. It has precious little to do with critical thinking. It has to do with what everyone around them says.

To get back to the falling knife, investors – potty trained as they are – all think they’re going to come out winners, even though they know they can’t all win, and even though they know all of their friends and competitors think the exact same way they do, and make the same decisions.

That is the herd mentality. Perhaps not an archetype as such, but, if anything, something even older and more deeply engrained in our brains. What Richard Breslow says is that the vast majority of investors will end up catching the knife in their bare hands, and it’s going to hurt something bad. ” … everyone is caught with the same position and you end up being right but proven wrong”

That is, but of course, exactly what will happen to all of us who blindly follow our politicians and their cleverly disguised media messages on our bogeyman enemies and the wars we have to wage against them.

All we want is to be right in the end, that is to say, we want to conform to the meme common to our herd, and whether or not that will prove us wrong is not on our radar.

Still, just as investors will get burned by blindly following every single move and every single word that comes out of the Fed, we will all get burned and cut and hurt by following every word our politicians and media rinse and repeat. We risk doing quasi irreparable damage to our relations with various people in Russia and Iraq and many other places around the world, who don’t want us as their enemies anymore than we want them, just because our “leaders” seek to advance their agenda’s by demonizing these people.

It’s a dangerous sort of deceit, which doesn’t start when war, be it physical or trade or any other kind, is declared, it starts with how and why we elect the people who have the power to declare it in our name.

And then “when the knife slips you will really have a taper tantrum.”, or in other words, when you find out your Pavlovian preconceptions (yes, you!) have been awfully off the mark, you still have to deal with the consequences, and they may hurt. Whether it’s oil that’s no longer delivered, so you’re cold and miserable and stuck where you are and everything runs to a standstill, or it’s someone attacking your communities because the leaders you elected chose to attack theirs halfway around the world, you may find you’re the one who ends up catching that knife.

And then, inevitably, maybe someday you’ll realize that what you’ve caught, and got cut by, and have fallen into, is your own knife. You threw it up into the air. And you were conditioned to catch it.

Conditioned To Catch The Falling Knife (Zero Hedge)

The numbers out last night were once again largely on the weak side of disappointing, with very little reaction and even less of an intuitive reaction. As Bloomberg’s Richard Breslow writes, this is the downside of everyone having the same positions. Simply put, we’ve been trained to catch the falling knife by the CBs, one of those trading strategies that will work until it doesn’t and when the knife slips you will really have a taper tantrum. Via Bloomberg’s Trader’s Notes…

Some strategists are even finding good news in the euro area growth data, noting that it is impressive there is any growth at all when none was expected, unlike U.S. where 1H numbers disappointed — some people just don’t like black and white analysis. As we have mentioned before, it seems there is this enormous consensus in all ideas and positions, everyone knows that central banks are there and driving everyone’s positioning, my friend Bob Savage said yesterday: “we’ve been trained to catch the falling knife by the central banks, one of those trading strategies that will work until it doesn’t and when the knife slips you will really have a taper tantrum.”

It’s becoming harder and harder to look at the news and then guess what market did in response – although it’s a fun game to play at 3 in the morning when you can’t sleep. May perhaps be better to consider not so much trading the reaction to events, instead trade movements in anticipation thereof, trade the expectation, then go into the number flat, the expectation tends to be much more logical than the reaction. If you look at how markets are trading, they move ahead of a central bank meeting, or a strong or weak number, then everyone is caught with same position and you end up being right but proven wrong.

Welcome to the new normal.

Read more …

Two articles about a serious hiccup in the oil that keeps the engine sputtering along.

Banks Retreat From Repo Market That Keeps Cash Flowing (WSJ)

A critical part of the plumbing that keeps money flowing through the financial system is experiencing turmoil as new regulations prompt banks to step back from the multitrillion-dollar “repo” market. The large and opaque market for repurchase agreements helps keep finance and trading moving, allowing hedge funds, investment banks and other financial firms to borrow and lend short-term funds, often overnight. But there have been increasing signs of trouble. Big banks, which act as middlemen between borrowers and lenders, have been pulling back. In recent weeks, senior bankers have said they are reluctant to participate in the market because of regulatory requirements that make repo trading more expensive. Goldman Sachs reduced its repo activity by about $42 billion in the first six months of this year, citing capital requirements. Barclays cut back lending through repos and similar agreements by roughly $25 billion, to $289 billion in the first half of the year.

Bank of America and Citigroup made first-half reductions in repo lending of about $11.4 billion and about $8 billion, respectively. J.P. Morgan’s repo lending stayed roughly flat. Repos function as short-term loans, which are backed by collateral, such as a U.S. government bond. Borrowers agree to sell the bonds to another party for cash, with the promise to repurchase the bond at a slightly higher price some time in the future. Borrowers are often hedge funds and lenders are typically money-market funds. The banks’ pullback could make it harder for hedge funds to borrow, and money-market funds may have fewer places to invest. Investors generally may find it harder to find a trading partner for hedges or short sales. Risks posed by the repo market are the focus of a conference on Wednesday sponsored by the Federal Reserve Bank of New York. The diminishing role of banks in repos “could exacerbate swings in markets when interest rates rise” or other financial turbulence emerges, said Barclays analyst Joseph Abate.

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From A Flood Of Treasury Debt To A Scarcity Of Repo Collateral (Stockman)

Here’s a shocking tidbit. The Fed’s financial repression policies have so contorted the government bond market that repo on 5-year treasuries has recently been trading at a negative 25 basis points. That’s right. The hunger for good collateral is so great on Wall Street that some players are willing to lend short-term cash at a negative rate in order to get their hands on Uncle Sam’s debt paper. Now that’s some kind of financial deformation. For the past 14 years, in fact, Washington has been spewing red ink at unprecedented rates. Since the year 2000, publicly held treasury debt has soared from $3.5 trillion to about $12.6 trillion at present. And its first cousin—–defacto government debt issued by GSE’s such as Fannie and Freddie—-has exploded from $2 trillion to more than $6 trillion. So in theory, the markets should be floating on a sea of “good” collateral.

But that’s where this century’s massive outbreak of central bank money printing comes in. In their lunatic quest to stimulate jobs and growth through ultra-low interest rates, the central banks have absorbed massive amounts on government debt through their QE operations. The US central bank alone has expanded its balance sheet from $500 billion to nearly $4.5 trillion since the time of the dotcom bust in 2000. That means that enormous amounts of otherwise available collateral has been stuffed in the vaults of the state’s monetary central planning agency. During the final phase of QE, in fact, the Fed has focused its purchases on the so-called “belly” of the curve, scarfing up huge amounts of treasury paper in the 3-7 year maturity range. Accordingly, it has created an enormous and insensible scarcity which, in turn, has driven the yield on the 5-year treasury note to the absurd level of 1.6%.

Now the fact of the matter is that US treasuries are taxable; the current CPI rate is running at 2%; and it has averaged 2.4% over the last decade and one-half. So the real after-tax return on the 5-year note is deeply negative. Needless to say, nothing like that could happen in an honest free market for debt that was not pegged and administered by the Fed. Moreover, the Fed has had a lot of central bank help in creating this destructive artificial scarcity in the government debt market. Altogether, the central banks of the world and their sovereign investment fund affiliates own about $6 trillion or nearly half of the publicly held US treasury debt. It has simply been stuffed in the central bank vaults which function as a convoy of monetary roach motels: The bonds go in, but they never come out!

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Yeah, let’s start complaining about the meth running out.

More Money Down Adds to U.S. First-Time Buyer Blues (Bloomberg)

The challenges facing prospective buyers of the least expensive homes in the U.S. are getting harder to overcome. Already beset by stagnant wages, growing student debt and competition from investors who are snapping up listings, those looking to purchase moderately priced houses must also provide more cash up front. The median down payment for the cheapest 25% of properties sold in 2013 was $9,480 compared with $6,037 in 2007, the last year of the previous economic expansion, according to data from 25 of the largest metro areas compiled by brokerage firm Redfin Corp. The higher bar is a symptom of still-tight credit that is crowding out first-time buyers even as interest rates remain near historical lows. Younger adults, who would normally be making initial forays into real estate, are among those most affected, weakening the foundations of the housing market and limiting its contribution to economic growth.

“The numbers tell the story of why we have millions of potential homeowners who are renters or living with their parents,” said Susan Wachter, a professor of real estate and finance at the University of Pennsylvania’s Wharton School. “What has changed is the ability to become an owner. And that’s changed through a down payment that’s more than doubled.” [..] Mortgage originations dropped last quarter to the lowest level in 14 years, contributing to a decline in total consumer debt, the Fed of New York reported today. Mortgage originations decreased by $46 billion in the second quarter to $286 billion, marking the lowest level of new mortgage activity since 2000, the data show. Banks don’t want to make loans to borrowers they consider to be riskier because they’re worried about having to buy back the loans, said Mike Calhoun, president of the Center for Responsible Lending. And if they do give mortgages to borrowers who have lower credit scores, they’ll require a larger down payment to offset that risk, he said.

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Germany should get out of the eurozone just as much as Italy should. Much better for both.

End of the Wirtschaftswunder? Germany’s Sudden Slowdown (Reuters)

The German soccer team’s romp to victory in last month’s World Cup was hailed at home as a symbol of the country’s emergence as a confident global economic power. But in an ironic twist, the feel-good triumph in Brazil may have come at a time when Germany’s new “Wirtschaftswunder”, or economic miracle, is coming to an end. In recent weeks, the economy that proud German politicians have taken to describing as a “growth locomotive” and “stability anchor” for Europe, has been hit by a barrage of bad news that has surprised even the most ardent Germany skeptics. The big shocker came on Thursday, when the Federal Statistics Office revealed that GDP had contracted by 0.2% in the second quarter. The euphoria that we’ve seen, the perception that the German economy is booming is simply misplaced,” said Marcel Fratzscher, director of the DIW economic institute in Berlin. So why is Germany suddenly ailing? The standoff with Russia over Ukraine has received its fair share of blame in the German media.

But that conflict may not hit the economy with full force until the third quarter. It was only last month that Europe stung Moscow with economic sanctions, prompting a tit-for-tat response from Russian President Putin. In reality, economists and some government officials acknowledge, there are deeper reasons for the recent downturn. And they have little to do with the spike in geopolitical tensions in eastern Europe or the Middle East. They start at home, where Chancellor Angela Merkel’s abrupt exit from nuclear energy after the Fukushima disaster in Japan and aggressive push into renewables has unnerved German industry. A recent overhaul of the country’s complex renewable energy law has done little to alleviate uncertainty over future policy or assuage fears about German energy competitiveness. “Energy intensive industries in particular have lost confidence in the future of Germany as a business location,” said Thomas Mayer, a former chief economist at Deutsche Bank. “I think this is a major issue that will burden German industry for years to come.”

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Would QE have been good for Europe? Put it this way: has the US really reached escape velocity, or is that just an illusion brought about by debt, an illusion that will crack as soon as interest rates go up?

Germany Is Itself A Victim Of EMU Austerity Fanatics (AEP)

So now we learn. Germany had a double-dip recession last year without telling us. This could soon turn into triple-dip after contraction of 0.2% in the second quarter. German bond yields are pricing in stagnation as far as the eye can see. 10-year Bunds fell below 1% this morning for the first time in history, and far below levels seen during the deflationary episodes of the Second Reich in the late 19th Century. The bond markets are flashing deflation warnings, but they are also indicting the European authorities for gross incompetence. Professor Paul De Grauwe from the London School of Economics says policy elites have misdiagnosed the fundamental cause of Europe’s chronic slump and its failure to recover. They are treating a demand crisis as if it were a supply crisis, imposing “reforms” – an Orwellian touch – that can only exacerbate EMU-wide distress in the short-run. “They are doing everything they can to stop recovery taking off, so they should not be surprised if there is in fact no take-off,” he said.

“It is balanced-budget fundamentalism, and it has become religious. We know from the 1930s that if everybody is trying to pay off debt and the government then deleverages at the same time, the result is a downward spiral,” he said. “The rigidities in the European economy have been there for ages. They have absolutely nothing to do with the problem we face today.” The claim that Spain’s recovery validates the EMU strategy of retrenchment and reform makes you want to weep. To the extent that Spain has reached self-sustaining take-off – questionable given the collapse of investment and the damage from labour hysteresis – it is largely because Spain is pursuing a beggar-thy-neighbour wage squeeze policy, just as Germany did nine years ago with such malign effects for the eurozone as a whole. This displaces the contractionary pressures into France and Italy. “You can do this in one country but it can’t possibly be a model for the whole eurozone. If everybody does this it leads to generalised deflation, and that is what we are seeing,” he said.

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Too late.

France Calls On ECB To Act As Eurozone Growth Grinds To A Halt (Guardian)

France piled pressure on the European Central Bank to do more to boost growth on Thursday after news that economic activity across the 18-nation single currency area came to a halt in the second quarter. With France registering zero growth for a second successive quarter, Michel Sapin, the country’s finance minister, halved his growth forecast for this year, abandoned the deficit reduction target and said it was up to the Frankfurt-based ECB to respond to an “exceptional situation of weak growth and weak inflation across the eurozone”. Sapin’s demand came as the latest figures from Eurostat, the European Union’s statistical agency, showed that problems in the single currency’s Big Three economies – Germany, France and Italy – resulted in no increase in eurozone gross domestic product in the three months to June. That compares with an increase of 0.2% in the first quarter.

But financial markets saw no immediate prospect of the ECB launching its own money creation (quantitative easing) programme until next year at the earliest, amid concerns that countries such as France and Italy would row back on structural reform if fresh growth-boosting stimulus policies were introduced. The interest rate – or yield – on 10-year German bonds briefly fell below 1% for the first time as dealers anticipated a protracted period of low growth, low inflation and low interest rates. Markets already knew that Italian output had contracted by 0.2% in the second quarter but were surprised by a similar-sized fall in Germany, which was hurt by a more challenging climate for its key export sector.

France made it clear it blamed foot-dragging on the part of the ECB for the failure of the eurozone’s second-biggest economy as it reduced its growth forecast for 2014 from 1% to 0.5% and ditched the 1.7% forecast for 2015, saying it would not expand by much more than 1%. Francois Hollande’s government had negotiated special dispensation from Brussels to run a budget deficit of 3.8% of GDP this year rather than 3%, but Sapin said it was the ECB’s fault that this would not be hit. “We must adapt the pace of deficit reduction to the exceptional situation … of growth that is too weak everywhere in Europe and the exceptional situation of inflation that is too weak across Europe,” Sapin told Europe 1 radio. He also used an article in Le Monde to urge the ECB to do more to combat the threat of deflation and to reduce the level of the euro. “The truth is that, as a direct consequence of sluggish growth and insufficient inflation, France will not meet its public deficit target this year despite a complete control of spending.”

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What else could they possible do?

France Risks EU Deficit Clash After Scrapping Targets (Bloomberg)

The French government abandoned its 2014 deficit targets after the economy unexpectedly failed to grow for a second straight quarter, risking a clash with European partners striving to meet their own fiscal goals. Finance Minister Michel Sapin said that European policy is partly to blame for the lack of expansion in the region’s second-biggest economy. French gross domestic product stagnated in the three months through June, national statistics office Insee said today in Paris. Economists forecast a 0.1% gain, a Bloomberg survey showed. Sapin’s comments will fan a debate about France’s repeated inability to meet European Union fiscal rules it helped write, with Germany advocating reforms and prudent spending to help meet deficit targets and other EU members led by Italy seeking more budgetary leeway. The European Commission has already allowed France to delay deficit targets twice in the wake of the region’s sovereign debt crisis. “There are European causes and there are French causes for the lack of growth,” Sapin said on Europe 1 radio. “The rules allow flexibility for the situation we are facing.”

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Wait a minute: if not consumer spending or exports, where did the UK get its (was it 5.1%?! UPDATE: it was 3.1%, just raised to 3.2%) growth number from?

UK Exports To EU Are ‘Dead In The Water’ (BBC)

The UK’s economic recovery is unlikely to be export driven as its biggest trading partner is “dead in the water”, a Bank of England policymaker has said. In a rare interview by a Monetary Policy Committee member, David Miles told the BBC it was “pretty difficult” to see UK exports growing because of economic problems in the eurozone. But he said the UK’s recovery was no longer being led by consumer spending. Earlier official figures showed eurozone GDP was flat. Professor Miles told Radio 5 Live’s Wake up to Money, UK export growth had been “pretty disappointing” over the last two or three years. He said the “single biggest factor” behind the lack of export growth had been that demand in the eurozone had been close to zero during that time. Professor Miles added: “So our single biggest export market has been, I’m tempted to say, dead in the water. It hasn’t been growing at all. And it’s pretty difficult in that environment to see exports growing very strongly. So the recovery, very welcome as it is, has been a bit dependant on consumer spending.”

The Bank policymaker’s comments highlight the difficulties the government faces in its attempts to re-balance the economy and boost exports. The government wants UK exports to reach £1trn in value a year by 2020 and for 100,000 more UK companies to be exporting by the end of the decade. In his March Budget statement, the chancellor announced help for firms to encourage more investment and exports. The annual 100% tax allowance for business investment was doubled to £500,000 and will run to the end of 2015. The amount of government credit available to support overseas sales was also doubled, to £3bn. “We’re not going to have a secure economic future if Britain doesn’t earn its way in the world,” Mr Osborne said at the time. “We need our businesses to export more, build more, invest more and manufacture more.” Professor Miles’ remarks followed official figures released on Wednesday showing average wages grew at their slowest annual pace since records began in 2001.

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Germany, France and Italy are 2/3 of the Eurozone economy. That 2/3 contracted.

Europe’s Economy Is Broken (Bloomberg)

Investors were expecting bad numbers, but not this bad: Europe’s economies stalled in the second quarter, new figures show. How much longer will Europe’s policy makers just stand there? Since the global financial crisis of 2008, the U.S. and the U.K. have seen output grow more slowly than in previous recoveries. That’s nothing to boast about. Still, six years on, gross domestic product is higher in both countries than it was at the pre-crisis peak. Europe’s output remains 2.4% below that benchmark. And the gap isn’t closing. All three of the euro area’s biggest economies — Germany, France and Italy — are failing. Germany’s output actually fell in the second quarter. So did Italy’s, for the second consecutive quarter. (Whether this is a new recession for Italy or a continuation of the old one is debatable.) The European Central Bank currently forecasts a rise in euro-area output of 1% this year. Expect that to be revised down next month.

With inflation in the euro area running at 0.4% — way below the ECB’s target of less than but close to 2%, and far too close to outright deflation — why isn’t the ECB trying harder to ease monetary policy? Its official answer is that it adopted new measures in June, including an expanded program of support for bank lending. These, it says, should be given time to work. Patience is often a virtue in central banking, but not in this case. The ECB’s measures in June were timid, and the risks are increasingly skewed toward deflation and further prolonged stagnation or worse. The euro area needs quantitative easing of the kind applied by the U.S. Federal Reserve and the Bank of England. The case for this has been strong for months; now it’s overwhelming. The ECB is nervous because outright QE faces political and legal obstacles. One way or another, those issues will have to be resolved — and that’s what ECB President Mario Draghi needs to start saying. Whatever it takes, Mr. Draghi.

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Nothing blip about it.

Japan’s Sudden, Sharp Contraction May Be More Than A Blip (Economist)

The government of Shinzo Abe, Japan’s prime minister, has put a brave face on the news that GDP shrank by 1.7% in the second quarter of this year. Akira Amari, the economy minister, blamed the fall, of an annualised 6.8%—the steepest since the earthquake and tsunami that pummelled Japan in 2011—on the decision to raise the consumption tax from 5% to 8% in April and said the economy will rebound. Not everyone is so sanguine. Worryingly, private consumption plunged by 5% from the previous quarter. Besides having stocked up ahead of the tax rise, households are feeling squeezed by higher prices in the shops. Mr Abe’s most vaunted achievement has been to reverse years of stubborn deflation, a strategy that depends on wages rising. Yet in real terms they fell by 3.2% year-on-year in the second quarter, the steepest drop in 18 quarters, according to Barclays Research in Tokyo.

Most analysts expect Japan’s increasingly tight labour market to push wages up in the coming months, but many of the jobs created under Mr Abe are “non-regular”, with lower pay and benefits. That will embolden critics of Abenomics, who claim that it is enriching corporations and investors and leaving the rest behind. The signs for Mr Abe are ominous: his popularity has fallen below 50% for the first time since he took office in December 2012. The Bank of Japan has pumped billions of dollars into the economy to buy up government debt, which has driven the yen down against the dollar. Yet exports have been sluggish; the main impact of the cheaper yen seems to have been to push up the price of Japan’s imported-fuel bill. The new data also complicate Mr Abe’s pledge to raise the consumption tax by a further two%age points next year. Everyone remembers the effect of a previous tax hike, from 3% to 5%, in 1997. Then, a recovering economy tumbled back into recession.

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But as income sources for the shadow banks are repleted through government policies, the highly leveraged products they hold risk blowing up in domino fashion.

China’s Savers Put Record $2.1 Trillion in Wealth Products (Bloomberg)

Chinese households increased the amount of savings diverted into wealth-management products to a record 12.7 trillion yuan ($2.1 trillion) as the government tries to manage risks from an explosion in shadow banking. The outstanding value rose 24% in the first half from the end of last year, the China Banking Wealth Management Registration System said on its website today. The average annualized return was 5.2%, compared with 3% for benchmark one-year deposits. As signs emerge of weakening demand and rising default risks for higher-yield trust products, sales of the wealth products may keep surging. For banks, a more than 12-fold increase in the value of the products since 2009 is pushing up funding costs, threatening to weigh on profits. “Compared with trust products, wealth-management products are less risky,” Cao Yang, an analyst at Shanghai Pudong Development Bank Co., said by phone.

China’s government is trying to contain risks outside the formal banking system while sustaining growth as the property market slumps and the economy heads for the slowest expansion since 1990. Trust companies’ assets under management fell in June, the China Trustee Association said Aug. 11. Investors have protested outside some banks this year after delays in trust-product payments. Wealth-management products typically require a minimum investment of 50,000 yuan, while trusts target wealthy clients with a minimum investment of 1 million yuan. Today’s number compares with a 44% gain in the value of the wealth products in 2013, according to the China Banking Regulatory Commission. Almost 70% of the outstanding value of the wealth funds was invested in bonds, the money market and bank deposits as of the end of June, according to today’s report. About 23% were in so-called non-standard credit assets, such as loans.

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From a 1.4% increase in January to 1.2% in July to 0.4% now. Pretty fast. What’s next?

Bank of Japan Mulls Cutting 2014 Growth Forecast – Again (Bloomberg)

The Bank of Japan may cut its growth forecast for this fiscal year for a fourth time, as exports fail to bolster an economy weakened by April’s sales-tax increase, according to people familiar with the central bank’s discussions. The expansion for the 12 months through March 2015 is likely to be lower than the 1% median forecast of BOJ board members, said the people, who asked not to be named because the talks are private. Growth is likely to be 0.4%, according to the median estimate in a survey of 24 economists by Bloomberg News on Aug. 13-14.

Another downward revision when the board reviews its outlook in October would underscore waning momentum in the world’s third-biggest economy. Governor Haruhiko Kuroda faces increased pressure to boost his unprecedented stimulus after Japan’s deepest contraction in more than three years in the second quarter, according to economists at Citigroup Inc. and Morgan Stanley MUFG Securities Co. “We think the BOJ will have no option but to revise down its projections again,” said Takeshi Yamaguchi, an economist at Morgan Stanley MUFG Securities Co. The weaker outlook contrasts with the government’s decision last month to raise its assessment of the economy for the first time in six months. The downturn in demand that followed the sales-tax increase was easing, the Cabinet Office said in a report on July 17.

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The Flame-Out Of Abenomics, in One Crucial Chart (WolfStreet)

Abenomics had its moments. At first, given the soaring stock market and the feel-good atmosphere, the economy perked up, growing in the first half of calendar year 2013 at a nice clip. Then stocks tanked, optimism faded. Promise, hype, and hope were replaced by reality and by “inflation without compensation.” Hence near stagnation in the second half of 2013. Then a miracle happened: The effective date of the consumption tax hike, April 1, the beginning of Japan’s fiscal year, moved closer and triggered a historic bout of frontloading by consumers and businesses alike. In an environment where money in low-risk investments earned nothing, and where inflation was rising, the government had handed consumers and businesses a way to save 3% at every major purchase. It’s like 3% risk-free income. For households, it was tax-free! Frontloading turned into a frenzy. And GDP jumped 1.6% in the January-March quarter. It was the finest moment of Prime Minister Shinzo Abe’s regime, and Abenomics apologists scattered across the globe, praising his endless wisdom.

Then in the April-June quarter (Q1 in Japan), a terrific hangover set in. More than a hangover.GDP plunged 1.7% from prior quarter, an annual rate of -6.8%, the Cabinet Office reported. It was the worst decline since January-March 2011 when the earthquake and tsunami on March 11, and the subsequent triple meltdowns at the Fukushima nuclear plant, nearly brought the Japanese economy to a halt, freezing up supply chains and transportation systems. Thousands of aftershocks, some of them serious earthquakes in their own right, continued to wreak havoc for months. Electricity was in short supply…. Those were terrible months. During that tragic quarter, GDP plummeted 1.9%.That GDP in the April-June quarter this year was just two notches less terrible (-1.7%) is a sign that it wasn’t just a hangover from a bout of frontloading. It ate up not only the entire growth of the January-March quarter (+1.6%) but also half of the growth of the September-December quarter (+0.2%). It’s not a pretty picture:

Note the sudden impact of the stimulus after the earthquake in 2011, followed by its big fade that lasted four quarters. That’s how stimulus works. Then, in the first half of 2013, the beginning of the Abenomics era, the economy got high on promise, hype, and hope and on money-printing. In the second half, reality set in, and the economy languished. And so far in 2014, the net effect of frontloading and hangover is that GDP has actually declined. The last quarter was ugly throughout. Consumption by households dropped 5.2%, and excluding “imputed rent,” 6.2%. Consumers drastically cut back on buying big-ticket items and confronted steep price increases while their incomes stagnated. Private residential investment plunged 10.3%. Only government consumption ticked up. But that’s not the whole story to the GDP fiasco: Imports had soared during the quarter, compared to the same period a year earlier, while exports limped along. So the trade deficit for the quarter ballooned by 23.6% year over year.

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“The more interesting mystery is how the ISIS fighters learned how to use Uncle Sam’s advanced weaponry so quickly. Perhaps the CIA knows.”

Washington’s Iraq Puzzle Palace Keeps Getting Curiouser (Stockman)

Not surprisingly, after the US had “liberated” Iraq from 90 years of dictatorship—democracy took hold with lightening speed subsequent to the 2011 departure of American GIs. The “rule of the majority”—that is, the Shiite majority—-soon ripped through most governmental institutions, but especially the military. In short order the “Iraqi” army became a Shiite army. Hence the precipitous surrender and flight from the battles of Mosul and other northern cities. That was Sunni and Kurd territory—–not a place where Shiite soldiers wanted to be shot dead or caught alive. The more interesting mystery is how the ISIS fighters learned how to use Uncle Sam’s advanced weaponry so quickly. Perhaps the CIA knows. It did train several thousand anti-Assad fighters in its secret camps in Jordan in preparation for Washington’s “regime change” campaign in Syria. Undoubtedly, in the fog of war—-especially the sectarian wars in the Islamic heartland that have been raging for 13 centuries—it is difficult to have friend and foe vetted effectively.

But effective vetting or no, the purpose of training Sunni fighters in Syria was to achieve a key Washington strategic objective. Namely, to breakup and disable the fearsome “Shiite Crescent”, ranging from Hezbollah in Lebanon through Assad’s Alawite-Shiite regime in Syria to the seat of the Axis-Of-Evil itself—-the purportedly nuke seeking Shiite theocracy of Iran. To be sure, the CIA had re-certified as recently as 2008 that the Iranians had disbanded a few incipient nuclear weapons experiments years earlier. Likewise, the medieval mullahs who rule Iran had issued fatwas against a nuclear weapons program in any form. But so great was the Shiite threat deemed to be by Washington that both Secretary of State Hillary Clinton and the peace president himself announced the Assad “must go” peacefully or Washington would wage war against him. And this was all part of the grand scheme of disabling the fearsome Shiite Crescent.

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“It’s very difficult for the EU to squeeze Islamic State through sanctions because the group is selling oil in a global market through Turkey, and is doing so at a 75% discount of about $25 a barrel …”

EU Weighs Oil Steps Against Islamists While Arming Kurds (Bloomberg)

European Union governments are set to explore ways to squeeze the finances of Islamist militants bolstered by oil fields captured during their advance through Iraq. EU foreign ministers due to attend an emergency meeting in Brussels today plan to consider options on oil-market measures and the direct supply of arms to Kurdish forces fighting Islamic State in northern Iraq, an EU official told reporters, asking not be named because the discussions are private. Representatives of the 28 EU governments are stepping up their collective response with the U.S. to the cross-border threat posed by Islamic State that has prompted thousands of Yezidis and Christians to flee their advance. Iraq and Ukraine are on the agenda for the talks called by EU foreign-policy chief Catherine Ashton, scheduled to start at noon.

The EU will have an uphill struggle to curb the militants’ revenue from oil, Philipp Chladek, a London-based energy analyst at Bloomberg Intelligence, said by phone. “It’s very difficult for the EU to squeeze Islamic State through sanctions because the group is selling oil in a global market through Turkey, and is doing so at a 75% discount of about $25 a barrel,” he said. On Ukraine, the foreign ministers will discuss the outlook for international humanitarian aid for eastern areas of the country, where government forces are fighting pro-Russian rebels, and the impact of Russia’s recent ban on imports of some EU foods. The ministers will probably stop short of expanding sanctions against Russia imposed as a result of its encroachment in Ukraine, the EU official said yesterday.

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Key line: “European energy companies will have to agree major contract revisions when purchasing Russian natural gas”…

Ukraine Approves Law On Sanctions Against Russia (Reuters)

The Ukrainian parliament approved a law on Thursday to impose sanctions on Russian companies and individuals supporting and financing separatist rebels in eastern Ukraine. The government has already prepared a list of 172 citizens of Russia and other countries, and of 65 Russian companies, including gas export giant Gazprom, on whom they could impose sanctions “for financing terrorism”. After Thursday’s vote, Prime Minister Arseny Yatseniuk told parliament that Ukraine had taken a historic step. “By approving the law on sanctions, we showed that the country is able to protect itself,” he said. “The law should give a clear answer to any aggressor or terrorist who threatens our national security, our government and our citizens.” Ukraine said on Monday that European energy companies will have to agree major contract revisions when purchasing Russian natural gas if parliament approved sanctions on Gazprom.

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So who’s paying and arming them? Or should we say: who’s actually doing the fighting?

Ukraine’s Broke Military Is Underpaid and Undertrained (BW)

A group of men and a few women clad in neat, matching camouflage uniforms and combat boots walk through an airport, presumably on their way to the front. As the soldiers make their way toward their gate, people around them rise in applause. A message appears on the screen: “Come back alive,” along with directions for contacting Ukraine’s volunteer brigades and donating to the military. The video commercial shows the army Ukraine would like to have: a streamlined, battle-ready group that’s a source of pride for the country. But it also hints at the fighting force that Ukraine has today: one with a heavy reliance on support from volunteer soldiers and donations from across the country to help keep it properly outfitted. “At the beginning of March, there was nothing,” says Oleksiy Melnyk, an analyst with Razmykov Center, an independent think tank in Kiev. When Russia annexed Crimea about a month after the EuroMaidan uprising, the interim government had limited options.

To prevent the loss of Ukraine’s eastern Donetsk and Lugansk regions to pro-Russia separatists, the government has reinstated the military draft and launched a national campaign asking for donations to replenish the military’s depleted coffers. Thus far the donation campaign has raised more than $11.7 million, according to the BBC. Volunteers, many spurred on by a rise in patriotism in the wake of the Maidan protests, have also helped to boost the armed forces’ numbers. The National Guard has integrated former members from Maidan’s self-defense forces into its ranks. Other informal fighting battalions have emerged in recent months that are sometimes very loosely affiliated with, or entirely independent from, official government forces. The emergence of such battalions is a reflection of how weak Ukraine’s military was at the beginning of the eastern conflict. “I think the only reason that these battalions get a chance is because at this time, three months ago, the Ukrainian government was ready to accept probably any help it could get,” says Melnyk.

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And he’ll keep on making the deals, one by one.

Putin Says Russia Should Aim To Sell Energy In Roubles (Reuters)

President Vladimir Putin said on Thursday Russia should aim to sell its oil and gas for roubles globally because the dollar monopoly in energy trade was damaging Russia’s economy. “We should act carefully. At the moment we are trying to agree with some countries to trade in national currencies,” Putin said during a visit to the Crimea region, which Moscow annexed from Ukraine earlier this year.

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Hungary is in an interesting location.

Europe “Shot Itself In The Foot” With Russia Sanctions: Hungary PM (Reuters)

The European Union has shot itself in the foot economically with the sanctions its has imposed on Russia over Ukraine, Hungarian Prime Minister Viktor Orban said on Friday, calling for a rethink of policy. “The sanctions policy pursued by the West, that is, ourselves, a necessary consequence of which has been what the Russians are doing, causes more harm to us than to Russia,” Orban said in a radio interview. “In politics, this is called shooting oneself in the foot.”

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Scarier by the day.

Evidence Suggests Ebola Toll Vastly Underestimated (Reuters)

Staff with the World Health Organization battling an Ebola outbreak in West Africa see evidence the numbers of reported cases and deaths vastly underestimates the scale of the outbreak, the U.N. agency said on its website on Thursday. The death toll from the world’s worst outbreak of Ebola stood on Wednesday at 1,069 from 1,975 confirmed, probable and suspected cases, the agency said. The majority were in Guinea, Sierra Leone and Liberia, while four people have died in Nigeria. The agency’s apparent acknowledgement the situation is worse than previously thought could spur governments and aid organizations to take stronger measures against the virus. “Staff at the outbreak sites see evidence that the numbers of reported cases and deaths vastly underestimate the magnitude of the outbreak,” the organization said on its website. “WHO is coordinating a massive scaling up of the international response, marshaling support from individual countries, disease control agencies, agencies within the United Nations system, and others.”

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Misleading numbers: you can’t maintain a stable grid with more than 15% intermittent energy. So Germany can only be this “green” because its neighbors, on the same grid, are not.

Germany Gets 31% of Its Electricity From Renewables (BW)

As Europe struggles to ease its dependency on Russian gas, Germany is getting ever greener: During the first half of 2014, the nation generated 31% of its electricity from renewable energy sources, according to a recent report by the Fraunhofer Institute. Excluding hydro, renewables accounted for 27% of electricity production, up from 24% last year. “Solar and wind alone made up a whopping 17% of power generation, up from around 12% to 13% in the past few years,” according to Renewables International, which provides a helpful rundown of the Fraunhofer report. The country’s solar power plants increased total production by 28% compared with the first half of 2013, while wind power grew about 19%. Germany still derives most of its energy from coal, though consumption of brown coal dropped 4%. Power from natural gas fell 25%, while nuclear power decreased by only about 2%.

The U.S. produces far more renewable energy than Germany in terms of quantity. But as a % of total energy production, America falls short. In 2013 wind accounted for 4% of total electricity generation, and solar made up 0.23%, according to the U.S. Energy Information Administration. Geothermal was at 0.41%; biomass, 1.48%. Germany’s government and population are famous for their environmental zeal. “Green, do-gooding Germans have long been at the sharp end of jokes, often for good reason,” writes Rose Jacobs in her Newsweek piece, “Doing It the German Way.” “Their water conservation efforts were so enthusiastic in the 1990s and early 2000s that by 2009 sewage systems were suffering from too little water running through them.”

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Jul 022014
 
 July 2, 2014  Posted by at 4:37 pm Finance Tagged with: , , , ,  3 Responses »


Marion Post Wolcott Main street of old mining town Leadville, Colorado. Sep 1941

Oh yeah, sure, optimism is oozing from every single one of America’s pores. Or so they’ll have you believe. 281,000 new jobs says the ADP report, most since December 2012. Of which small business added 117,000 and medium sized business 115,000. And the media are just besides themselves with joy. Shame that the markets react lukewarm at best. Then again, they do better the worse the news gets, all they reflect anymore these days is the level of distortion and convolution that they obey (or is that the other way around?).

One might be inclined to think US small and medium business owners were so busy hiring those new employees that they had no time to read last month that US GDP plunged that -2.96% in Q1. But maybe that’s not quite true, because three weeks ago, the National Federation of Independent Business issued this news release:

NFIB Optimism Index rose 1.4 points in May to 96.6, the highest reading since September 2007. However, while May is the third up month in a row, the Index is still far below readings that have normally accompanied an expansion and there have been similar gains in the past that haven’t panned out in this recovery period. Five Index components improved, one was unchanged and four fell, although not by much.

“May’s numbers bring the Index to it’s highest level since September 2007. However, the four components most closely related to GDP and employment growth (job openings, job creation plans, inventory and capital spending plans) collectively fell 1 point in May. So the entire gain in optimism was driven by soft components such as expectations about sales and business conditions,” said NFIB chief economist Bill Dunkelberg. “With prices being raised more frequently in response to rising labor and higher energy costs it is clear that small businesses are unwilling to invest in an uncertain future. As long as this is the case the economy will continue to be “bifurcated”, with the small business sector not pulling its historical weight in the GDP numbers.”

‘The entire gain in optimism’ was based on nothing but .. optimism bias. That news release does not make small busniess sound anywhere near as optimistic as today’s news reports. How you get from that to a way above expectations hiring spree is not immediately clear. Isn’t it perhaps true that America is so desperate for that recovery to finally materialize that it’s now damn the truth and the torpedoes time?

Things like this from Bloomberg, written earlier today before the ADP report came out, sound as if they’ve been written solely to create a mood in the country. Some people tell some survey they plan something. Thing is, how do you get from there to journalism?

Americans on the Road Again as Economic Recovery Gains Traction

About 34.8 million people plan to drive 50 miles or more from home during the five days ending July 6, up from 34.1 million last year and the most since 2007, AAA, the biggest U.S. motoring organization, said June 26. The travel recovery is boosting sales for hotels and attractions, a sign that consumer confidence and consumer spending are on the mend, said Mark Zandi, chief economist at Moody’s Analytics. “Stronger business travel and tourism is a very good barometer of the health of the broader economy,” Zandi said. “Spending on travel is more discretionary and expensive. The revival in travel is thus a good sign that the economic recovery is gaining traction.”

What recovery? How is -2.96 Q1 GDP growth a recovery? In what universe? This next one is also from Bloomberg and written before the ADP report came out:

U.S. Companies Show Broad Recovery as Hiring Pace Surges

Industries from construction to autos to oil and gas are increasing jobs as growth accelerates after a harsh winter stunted business. As some sectors, such as floor retail sales, have yet to rebound and wages have been kept in check, the recovery is likely to be a steady climb rather than a boom, according to Jeffrey Joerres, executive chairman of Manpowergroup Inc. Nonfarm payrolls may rise by 215,000 in June, which would mark a fifth straight month of increases topping 200,000, according to the median of 89 economists. That also would be the longest streak of monthly gains since September 1999-January 2000. [..]

The U.S. economy is forecast to accelerate after year-on-year growth slowed to 1.5% in the first quarter when severe snowstorms battered the U.S. and kept customers away from stores, shut factories and gummed up transportation of goods. With consumer spending still tepid, companies aren’t hiring in anticipation demand will rise, as in other recoveries, Joerres said. Instead they are they are expanding when they have orders in hand, he said. “We’re not seeing wage inflation at the rate you would think and we’re not seeing increased hours worked at the rate you would think,” said Joerres, whose firm has more than 400,000 clients worldwide.

What is this, a charm offensive? “Year-on-year growth slowed to 1.5% in the first quarter”? You sure that’s all? We have numbers that say otherwise. Plus, wages are not rising, hours are not increasing, but still ‘U.S. Companies Show Broad Recovery as Hiring Pace Surges’? Got a sneak peek at the ADP numbers perhaps?

I can’t help wondering what a reporter or editor expect from publishing nonsense like this. What use is it exactly to make people feel better about a lousy economy? It only lasts for a day. Factory orders just come in, down 0.5%. Guess they’re going to lay off all those 281,00 new hires again over the summer. The thing for me is, I’m getting so tired of all this empty fluff.

What I would want to see from well-paid journalists at Bloomberg and other main media is research into the effects of QE on the US economy, what the price is the American public has to pay to have stock markets rally to new records, what those markets would look like without QE, what home prices are expected to do without it, what the effects of rising interest rates will be on the man in the street and his home in that same street. And don’t go ask the usual expert suspects at Bloomberg or Reuters, they’re the most biased clowns in the crowd.

We live in the age of triggering responses from people’s unconsciousness, where they are most vulnerable, both individual and collective, almost 100 years after Freud and his nephew Edward Bernays, for very different reasons, figured out how to do that. The best proof we live in that age is probably that we never talk about it.

This means that unless you want to be a clueless victim of advertizing and other, more sinister, sorts of manipulation, you need to be awake and alert. And even then. And what better place to start than to write to your Congressman and to your newspaper and tell them you’re a grown up and you can take quite a bit of truth, and if they don’t stop incessantly bullshitting you, you’re not going to vote for them or buy their paper anymore.

World’s ATM Moves to Frankfurt as Yellen’s Fed Slows Cash (Bloomberg)

As Janet Yellen winds down the Federal Reserve’s money-printing operation, Mario Draghi is boosting Europe’s cash supply. That means the dollars Yellen’s Fed is removing could be compensated for by cheap euros from the European Central Bank. The result may be enough cash sloshing around to underpin this year’s run-up in risk assets even if the Fed begins mulling higher interest rates too, says Marios Maratheftis at Standard Chartered in Dubai. “If any central bank can take over the Fed’s role in terms of its impact on global liquidity, it’s the ECB,” according to a June 30 report by Maratheftis and colleagues David Mann and Italo Lombardi. They reckon the relative importance of the Fed in propelling liquidity worldwide has fallen since April 2013. During the last year it has slowed the bond buying it began in December 2008 as financial panic gripped the world.

Regulators’ more recent demands that banks increase reserves also may mean a higher money supply in the U.S. boosts liquidity less elsewhere too. For every $10 billion increase in the U.S. money supply, there is now a $20.5 billion increase globally, down from $24.4 billion a year ago, according to the Standard Chartered economists. Meantime, for every $10 billion rise in the euro area’s money supply there’s a $19.7 billion boost globally, up from $18 billion. With its quantitative-easing program winding down, the Fed has gone from having 35% more impact than the ECB a year ago to 5% today. The economists also calculate that to keep global money supply stable, the ECB would need to provide $10 billion of liquidity for every $9.5 billion withdrawn by the Fed.

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Global Investors Pare Risky Bond Holdings, Brace For Sell-off (Reuters)

Some of the biggest global investors have started to pull back from riskier fixed-income assets even as the Federal Reserve keeps on a green light for risk. Loomis Sayles, GAM, and Standish are among those who say U.S. investment grade and high yield corporate bond prices have gone too far, making returns less compelling. They’re aiming to get ahead of a market reversal that could be unpleasant once the Fed starts raising interest rates, probably next year. “Valuations are getting stretched,” said Jack Flaherty, investment manager at GAM, part of GAM Holding AG, a publicly-listed Swiss company with more than $120 billion in assets. “You’d rather be early in getting out because when it does turn, it could be more violent than expected.” Bonds had a solid start to 2014, with the Barclays U.S. Aggregate Index returning about 3.8 percent for the first six months of the year. Interest from overseas investors and pensions has kept flows into fixed income funds strong.

That has reduced the extra premium investors are willing to pay to hold these bonds instead of the safer U.S. Treasuries. This premium, or spread, is now at its lowest since 2007, and suggests confidence in the prospects of the U.S. corporation issuing the debt. GAM has pared its U.S. high-yield bond holdings, and plans to cut back more over the next few months. It’s re-allocated to emerging market local debt and convertible bonds – debt that can be converted into shares of stock. Flaherty is concerned that after the Fed raises rates, liquidity could be a big problem because of Wall Street brokerages’ reduced presence in the corporate bond market. in the past, big banks could be counted on to make it easier to buy and sell bonds because of their sizable inventory. But new rules have made it more costly to hold such assets.

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‘ … when one lends him more money in order for him to pay back what he owes, one is not bailing him out but rather pushing him in a bigger hole!’

Credit: The Molotov Cocktail (Macronomics)

When somebody has too much debt and cannot reimburse it, how do you bail him out? Obviously by restructuring his debts, which imply losses for his creditors. But when one lends him more money in order for him to pay back what he owes, one is not bailing him out but rather pushing him in a bigger hole! The game until now has been to “print” more money and to add more debt on the shoulders of the indebted ones, to gain some time in the hope that growth will resume and reduce de facto the weight of the existing debt burden and the additional new debt issued to support the initial debt troubles. This is a big misunderstanding of debt dynamics and its effects on the economy. When debt becomes too big, which it is now the case in many parts of Europe, the servicing drains all the available cash flows and reduces the growth potential. Credit dynamic is based on Growth. No growth or weak growth can lead to defaults and asset deflation. We hate sounding like a broken record but: no credit, no loan growth, no loan growth, no economic growth and no reduction of aforementioned budget deficits and debt levels. [..]

Again we reminded ourselves the wise words of Dr Jochen Felsenheimer: “Banks employ too much debt, because they know that they will ultimately be bailed out. Governments do exactly the same thing. Particularly those in currency unions with explicit – or at least implicit guarantees. It is just such structures that let governments increase their debt at the cost of the community. For example, in order to finance very moderate tax rates for their citizens so as to increase the chance of their own re-election (see Italy). Or to finance low rates of tax for companies and at the same time boost their domestic banking system (see Ireland). Or to raise social security benefits and support infrastructure projects which are intended to benefit the domestic economy (see Greece). Or to boost the property market (Spain and the USA). This results in some people postulating a direct relationship between failure of the market and failure of democracy.”

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I think they already have.

Central Banks Risk Making Global Economy Permanently Unstable: BIS (Telegraph)

Ultra low interest rates and the failure of policy to “lean against” the build-up of financial imbalances are in danger of making the global economy permanently unstable, the Bank for International Settlements has warned. In its annual report, the Swiss-based “bank of central banks” spelled out the risks of relying too heavily on monetary policy to stimulate the economy. The BIS warned that central banks including the Bank of England and US Federal Reserve could keep monetary policy loose for too long, with potentially damaging consequences. “The prospects for a bumpy exit together with other factors suggest that the predominant risk is that central banks will find themselves behind the curve, exiting too late or too slowly,” the BIS said on Sunday.

It added that a “persistent easing bias” by fiscal, monetary and prudential policymakers had lulled governments “into a false sense of security” that delayed needed consolidation and created a risk that instability could “entrench itself” in the system. “Policy does not lean against the booms but eases aggressively and persistently during busts,” the BIS said. “This induces a downward bias in interest rates and an upward bias in debt levels, which in turn makes it hard to raise rates without damaging the economy – a debt trap. “Systemic financial crises do not become less frequent or intense, private and public debts continue to grow, the economy fails to climb onto a stronger sustainable path, and monetary and fiscal policies run out of ammunition. Over time, policies lose their effectiveness and may end up fostering the very conditions they seek to prevent.”

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‘ If the Fed can just create money to increase demand, why bother doing it the hard way? Why do you need to earn money to create demand when you can just create it?’

Don’t Mistake This Sham Boom for the Real Thing (Bonner)

The US economy is 70% consumer spending, reason the geniuses at the Fed. So anything they can do to boost consumer spending will also boost the economy. This sort of simpleminded logic is either breathtakingly naïve or mind-bogglingly stupid. Consumers need to have money to spend before they can spend it. If the economy is working properly, they earn it from honest bussing and schlepping. But suppose the economy is in a funk? Then what are they supposed to do? No problem, say the economists. We’ll just create it. This ersatz money is supposed to stimulate the consumer to spend… whereupon, businesses will spring to life. They’ll offer him a job, boost his wages… and then he’ll have real money to spend! But wait. If the Fed can just create money to increase demand, why bother doing it the hard way? Why do you need to earn money to create demand when you can just create it?

This point has never been clarified. Nor have the feds ever noticed that consumer demand is the result of savings, investment, work, skill… and all the other things that go into producing a real product or service. Consumer demand is not what causes those things to happen. In the abstract, demand is unlimited. But output is not. Nor has it ever been demonstrated that central financial planning works. And as of last week we have more evidence that it doesn’t … What last week’s figures tell us is there is no real recovery. Just a sham boom created by EZ money. We’ve now got two months of figures for the second quarter. They tell us the same thing the first quarter’s numbers told us. Consumers aren’t spending like it was 2007. They’re spending like it was 2009… or 2010… or 2011.

In other words, they’re spending as though they were reasonable people who have realized how the system works. The Fed creates a world where its friends and cronies can borrow at below the rate of consumer price inflation. The 1% gets richer. The other 99% struggles to keep up with the bills. As we have been warning, consumer prices are rising faster than the Fed admits. That leaves the typical household with less money to spend than the numbers suggest. We see the effect of it on consumer spending. The Fed pinched off savings, investment and employment. Now, it gets what you’d expect: low GDP! Six years of “stimulating” the economy by giving it more of what it least needed has produced no real recovery… just more debt. It has also produced a corrupt money system in which almost every race is fixed. The 1% wins every time. The consumer is barely able to limp around the track.

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Fooling All The Experts With Seasonal Adjustments, All Of The Time (Zero Hedge)

Reading the economists’ comments in response to today’s ISM report (which, incidentally, missed expectations) one would think that the US has practically entered a second golden age. Here is a sample:

  • Manufacturing index “has now stabilized at a level reflecting a solid pace of expansion,” Thomas Simons, economist at Jefferies, writes in note
  • June data consistent with Barclays estimate of 2Q GDP growth rate of 4%, according to note from Cooper Howes, economist at firm.
  • June’s reading of 55.3 “has to be viewed as a good result, even if it was lower than expectations,” Rob Carnell, economist at ING, writes in note
  • ISM index shows factories humming along in Q2, according to UBS
  • And especially this one from TD Securities: Increase in new orders, as tracked by ISM factory report, is “especially encouraging as it augurs very well for future manufacturing sector activity”

So what exactly are all these “experts” looking at to be so convinced, once again, that the “imminent” economic surge that thay have all been predicting for so long, incorrectly, is finally here. The answer – the all import New Orders index – the key driver of the headline ISM print and the one most important sub-headline index. And if we were also simply looking at the reported number of 58.9, which printed at the highest level since December, we too would assume that the US economy is finally rebounding. Alas, here lies the rub: what none of the abovementioned experts realize is that for some inexplicable reason, the ISM survey is, just like the vast majority of all other economic indicators, also seasonally adjusted.

Recall that it was ISM’s seasonal adjustment SNAFU last month, when it used the wrong “adjustment factor”, that caused the reported number to become a humiliating farce after the ISM had to revise it not once but twice with what ultimately ended up being a “factor” leading to a far higher, and consensus expectation-beating, headline ISM print of 55.4. But what really happened in June? For the answer we need a refresher of just how the ISM survey results in reported numbers. What the ISM does is ask respondents to comment on how they are seeing any given query category as performing in the current month. The response options are simple: better, same, or worse. The ISM then takes the%age of “better” responses and adds half the%age of “same” (ignoring the worse answers) for any of the following categories:

  • New Orders (58.9 in June)
  • Production (60.0)
  • Employment (52.8)
  • Delivery Time (51.9)
  • Inventories (53.0)

Then it simply takes the equal-weighted average of these 5 series and gets the final number (in the case of June 55.3 down from May’s adjusted 55.4). However, before the final tabulation, the ISM also applies a little-known seasonal adjustment factor to the actual unadjusted survey reponse result before getting a seasonally adjusted number that feeds into the above calculation. Why a survey needs to be seasonally adjusted – considering it merely captures sentiment which already reflects the periodicity of the seasons when it is, well, experienced – is beyond the scope of this article, and/or logic.

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And that’s a big problem when they come invest in you home town. But nobody talks about it.

Quality Of Chinese Data ‘Unknowable’ (CNBC)

Founder of short-seller Muddy Waters Research, Carson Block, claimed on Tuesday that Chinese economic data lacked credibility following the release of China PMI data, which came in at a 6-month high. Block is well-known for issuing damning research and short selling Chinese companies mostly listed in the U.S. and Canada. He became a controversial figure after claiming the firms he was shorting were fraudulent. The companies, meanwhile, have questioned Muddy Waters’ sources. Chinese mobile security software company NQ Mobile, which saw a huge drop in its shares after Block described the firm as a “massive fraud”, has said Block’s firm does not disclose who its researchers are and what documents they examine.

Block said the China was facing a “massive credit and asset bubble” and questioned the legitimacy and quality of Chinese GDP prints. “I think we have to understand (that) what China is printing on GDP is really for political reasons internally. It is unknowable what the quality of the data really is,” Block told CNBC. Block is the not the first voice in the market to question the credibility of Chinese data. China’s official purchasing manager’s index (PMI) for June came in at a six-month high of 51, in line with expectations and up from 50.8 in May.

Global chief economist at Unicredit, Erik Nielsen said the figures were “curious”. “Why is it that the Chinese are having PMIs around 50 and growth at about 6 or 6.5%? It is constructive in every other country for 50 to be above flat,” he said. “It is simply a curious question, if you look through GDP numbers in any other country, you cannot construct any logical explanation for why they have such little volatility in growth in China,” he said. Block argued that a corrupt elite in China controls the banking system. “They control a huge swath of the economy through non-financial state owned enterprises. The core of the economy is subject to this kind of corruption,” he said. Block also questioned the legitimacy of the anti-corruption crackdown launched by President Xi Jinping, adding “things aren’t getting any different”.

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Is Asia The Next Financial Center Of The World? (CNBC)

In 1602 the Dutch East India Company opened the world’s first stock exchange in Amsterdam. The new company was on its way to dominating the lucrative international trade in spices from the Far East, and it needed huge amounts of cash to finance its fleet of merchant ships. Hence, the Amsterdam Bourse, which started life as an open-air market where traders could buy and sell the East India Company’s stocks and bonds. Those traders soon invented the first derivative contracts, simple call and put options that gave them the right to trade shares in the future. Other companies started issuing shares on the Bourse, which moved to a handsome new building in 1611. Rival European capitals launched their own stock exchanges. The securitization of the world was under way.

Today the Amsterdam Bourse is a branch of Euronext, an exchange holding company that also operates the Brussels and Paris exchanges. Euronext, in turn, is owned by Atlanta-based IntercontinentalExchange (ICE), which operates a total of 23 exchanges around the world, including the venerable New York Stock Exchange, which it acquired late last year for $8.2 billion. It’s worth remembering the original Amsterdam Bourse because it established the template for the modern financial center, a physical place where finance professionals help companies access the capital they need to grow.

Location obviously matters somewhat less in an era of exchange consolidation, globalized capital and 24/7 electronic trading. Even so, the complex infrastructure of modern finance is still clustered in a few major cities around the world. “If you have a laptop and a satellite phone, you can trade from on top of a mountain,” said Mark Yeandle, associate director of London’s Z/Yen Group, which produces a biannual ranking of the world’s top financial centers. “And yet people naturally want to cluster in cities near their clients and suppliers, even if they don’t have to.”

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‘ … offering to buy back homes above the purchase price?!’

China Developers Offering Home Buybacks in Weakest Markets (Bloomberg)

Property developers in two of China’s weakest housing markets are offering to buy back homes above the purchase price to boost sales as demand slows. In Hangzhou, where home prices fell the most in May among 70 Chinese cities watched by the government, Shanheng Real Estate Group is giving homebuyers an option to sell back their apartments in five years for 40% above the purchase price. In Wenzhou, DoThink Group is offering to repurchase homes at three of its projects for 120% of the purchase price after three years. The offers are the latest strategy by developers across China, including reducing prices, delaying project launches and offering incentives to potential buyers, as they seek to maintain sales targets. Prices of new homes fell in May from April in half the 70 cities tracked by the government, the largest proportion since May 2012, according to government data.

A more persistent and sharper downturn in the property sector is the biggest risk for China’s economy in the next couple of years, according to UBS AG. “Obviously they’re relatively cash-thirsty,” said Dai Fang, a Shanghai-based analyst at Zheshang Securities Co. “If it works, there surely will be other developers following suit.” China’s home sales slumped 10.2% in the first five months of this year from the same period a year earlier amid tight credit and an economic slowdown, reversing last year’s 27% jump. The average new-home price in 100 cities tracked by SouFun Holdings fell 0.5% in June from the previous month, accelerating from the 0.3% decline in May that ended 23 consecutive months of gains.

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The Communist party as a bunch of desperate sorcerer’s apprentices.

China’s Repression of Savers Eases (Bloomberg)

The extra interest Yin Xuelan earned last year by socking her savings into wealth management products instead of bank deposits paid for a tour of Taiwan and a microwave oven. “I didn’t need to go to Taiwan and I didn’t need to buy a microwave oven, but with this extra money, why not?” said retired schoolteacher Yin, 60, as she put receipts into her pink purse at an Industrial & Commercial Bank of China branch in central Beijing. “It’s like free money.” Yin is a beneficiary of an easing in China’s financial repression, a term that describes the way savers have suffered artificially low returns on deposits in order to provide cheap loans for investment. Measures used for the size of the toll – such as inflation-adjusted deposit rates, the gap between rates on loans and the pace of economic growth – have shifted in favor of savers in the past four years.

The burden has dropped to the equivalent of about 1% of gross domestic product annually from 5% to 8% as recently as three to four years ago, estimates Michael Pettis, a finance professor at Peking University. That’s a shift of as much as 2.6 trillion yuan ($420 billion) to households from borrowers from 2010 to 2013. “It is a turning point,” said Chen Zhiwu, a finance professor at Yale University in New Haven, Connecticut, and a former adviser to China’s State Council. “It will afford more growth opportunities for domestic consumption and the service sector.” Financial repression refers to policies that force savers to accept returns below the rate of inflation and that enable banks to provide cheap loans to companies and governments, reducing the burden of their debt repayments.

A sustained easing would channel more of China’s wealth to the average person while squeezing bank margins and the debt-fueled investment that’s evoked comparisons with the excesses that generated Japan’s lost decades and the Asian financial crisis. On the flip side, slimmer bank profits may add to risks for an industry grappling with the fallout from record lending in the aftermath of the global financial crisis. “Many local governments and state enterprises have made low-return investments based on the low-cost funding,” said David Dollar, a former U.S. Treasury Department official in China who is now a senior fellow at the Brookings Institution in Washington. “As the cost of capital rises, some of them no doubt will have difficulty servicing their debts and may even be pushed into bankruptcy.”

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Debt.

Record Bond Sales Show China Focused on GDP Growth Over Debt (Bloomberg)

China’s Premier Li Keqiang has promised to cut credit while also meeting a 7.5% economic growth target. Record bond sales last quarter show which pledge he’s prioritizing. Issuance jumped 54% from the previous three months to 1.55 trillion yuan ($250 billion), the most in data compiled by Bloomberg. Yields on two-year AAA rated corporate notes have dropped 137 basis points this year to near a 10-month low of 4.86%, as authorities eased after tightening that had sparked credit crunches in 2013. When Premier Li took office last year he stressed the need for painful reforms to pare the influence of the state, wean industries with overcapacity from debt and ease access to funds for smaller enterprises. The latest filings of more than 4,000 publicly traded non-financial Chinese companies show $2.05 trillion of obligations, up from $1.8 trillion at the end of 2012, with the 10 biggest state-owned borrowers accounting for 18% of the liabilities.

“The government may have sped up the approval of corporate bonds to help stabilize the economy,” said Xu Hanfei, a bond analyst in Shanghai at Guotai Junan Securities, the nation’s third-biggest brokerage. “The issuance may continue to increase in the third quarter because that’s when rising bond sales help the government’s stimulus measures work.” The Finance Ministry called for faster spending of budgeted funds in May, and the State Council said it would increase support to service industries amid “relatively large” downward economic pressure. That followed steps outlined in April for faster railway spending and tax breaks to help ensure the government meets its economic expansion goal. China’s manufacturing expanded in June at the fastest pace this year, the Purchasing Managers’ Index showed yesterday. While such signals support Premier Li’s contention the nation will meet its 7.5% growth target this year, the government’s efforts to prod expansion have added to concern borrowings may continue to rise.

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‘ … the golden age of China’s economic boom is long past’

China’s Infamous Swag Markets Lose Their Shine (CNBC)

As far as market vendor Chang Yu is concerned the golden age of China’s economic boom is long past. “When I arrived [eight years ago], there were so many people you couldn’t even walk here,” she told CNBC, gesturing toward the empty isle where she sells wigs in Beijing’s YaShow market. Beijing’s markets were once the pride of China where the state-supported manufacturing industry supplied the west with a steady stream of goods and lifted millions of people from poverty. These markets thrived in the late 1990’s and early 2000’s, selling surplus, flawed and copycat items. They were meccas for tourists looking to buy something genuine or close to it for next to nothing. For years, young migrant vendors haggled hard to bring home the bacon.

Now they are in decline. [..] Dozens of vendors in Beijing’s famous markets who once proudly paraded their wares before celebrities and heads of state told CNBC that business has never been worse. As China outgrows low-end manufacturing, property values soar and seasoned consumers seek greater convenience and choices online, these markets must evolve or die. Rising production costs have pushed some foreign companies to move production to less developed Asian countries. Average wages in China’s manufacturing sector have risen 96% since 2007, according to Thomas Orlik, an economist at Bloomberg Financial and author of Understanding China’s Economic Indicators. “Manufacturers are facing rising costs for labor, rent and electricity and they have passed some of those on to shopkeepers,” Orlik said.

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You have to wonder when France can expect the first real attacks from the markets.

Europe’s ‘Sick Man’ Fights Housing Crisis (CNBC)

France has in recent weeks unveiled a slew of measures to boost its ailing construction sector and revive growth for the euro zone’s “sick man”, but analysts warn the measures will fall short. The country’s construction sector is currently going through a deep crisis as new building reaches historically low levels. The latest official figures reveal that new housing starts in the twelve months to May were at the weakest level since 1998. It comes as growth in the euro zone’s second-largest economy stalls and France is labeled the “sick man of Europe”. Some 8.5% of the country’s jobs come from the construction sector. The decline in the sector – activity fell 1.4% in the first quarter, well below overall economic output – is expected to continue for the third consecutive year.[..]

Last week, the government unveiled its latest action plan to stimulate the sector with an extension to interest free loans which had been set to be scrapped by the end of 2014. The “0% interest loan”, introduced in 2011, was meant to help middle and low-income first-time buyers by offering them cheap financing. The repayments could be deferred for five years. That figure has now been raised to seven years. Initially restricted to new-build homes, their use has now been extended to old properties in need of renovation in certain areas and access to the loans has been increased. The government believes that the number of beneficiaries will be increased by 60% a year from 40,000 currently to 70,000. But analysts doubt the measures will have much of an impact, given the value of the loans available is fairly modest, especially if you want to buy in Paris, where prices are the highest in the country.

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Biggest Pension Fund Replaces Bank Of Japan Driving Stock Rally (Bloomberg)

Move over, Haruhiko Kuroda. Stock investors, tired of waiting for a boost from the Japanese central bank, have found a new hero in the nation’s 128.6 trillion yen ($1.3 trillion) retirement fund, said Societe Generale Securities. The Topix index rebounded 5% last quarter as the Government Pension Investment Fund moved closer to an asset overhaul that’s expected to pour 3.6 trillion yen into Japan’s equities. The gauge started the year with the developed world’s steepest quarterly slump as the yen gained and Kuroda dashed expectations for more stimulus. “The BOJ’s role is over and the market is now counting on GPIF,” said Akihiro Ohara, head of Japan sales trading at Societe Generale. “I expect the fund to change its asset allocation around September.”

“Economic data and company outlooks suggest Japan is overcoming the tax hike,” Kazuhiro Miyake, chief strategist at Daiwa Institute of Research in Tokyo, said by phone on June 27. “Public pension funds will boost their equity weighting in stages and that will improve supply and demand conditions for the market.” The world’s biggest pension fund may change its strategy as soon as August, Yasuhiro Yonezawa, who heads GPIF’s investment committee, told the Nikkei newspaper last month. It will increase its target for holdings of domestic shares to 20% from 12%, while cutting local bonds to 40% from 60%, according to the median estimates in a Bloomberg survey of analysts and investors in May.

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Great idea. Squeeze the young!

US Student Loan Interest Rates Just Went Up 20% (BW)

July is here, which brings an important development to student borrowers: Higher interest rates for education loans kick in today. Loans for undergraduates will increase to 4.66%, from 3.86%, for all new borrowing during the 2014-15 school year. (Loans that students already took out aren’t affected by the hike.) Historically, Congress set a fixed rate for students loans. It was lowered to 3.4% during the financial crisis. Last summer, that temporary reduction was set to expire, which would have caused the rates to double to 6.8%. A last-minute deal pegged the rates to the government’s borrowing costs, which are at historic lows. The roughly seven out of 10 college seniors who borrow to attend school graduate with about $29,400 in loans on average. If the 2014-15 rate increase were applied to the full debt, the average monthly payment would go up about $10 a month—an amount that won’t make or break many borrowers. Over 10 years, the increase could add about $1,350 in interest expenses.

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While recalls continue to rise.

US Auto Sales Close To Hitting The Brakes (CNBC)

America’s auto industry, in the midst of a five-year run where sales have rebounded more than 55%, is close to seeing a slowdown according to a new study. The AlixPartners 2014 Automotive Study suggests sales of cars and trucks in the U.S. will hit a peak this year and then gradually pull back. “This is a cyclical industry and we think this current cycle has just about run its course,” said Mark Wakefield of AlixPartners. “We’re a little less optimistic than others about the demand for new vehicles staying this strong.” For 2015, AlixPartners estimates U.S. sales will peak at 16.7 million before gradually starting to pull back. A primary reason new vehicle sales are poised to slow down, according to the new study, is the expectation of rising interest rates. “We’re living in an unusually calm world for interest rates,” said Wakefield. “We believe the Fed will start to raise rates and when that happens, interest rates for auto loans will also go up.”

As a result, Wakefield believes the purchasing power for potential car and truck buyers will diminish. He calculates a 3% rise in interest rates will reduce purchasing power by $2,500 while a jump of 7% would cut into consumer’s purchasing power by $5,250. “The threat of higher rates is a very real one and if they go up it will impact auto sales,” said Wakefield. The latest study by AlixPartners highlights two trends that will alter how many see the auto industry. In the U.S., car sharing is a fast-growing trend that has many potential buyers now opting to car share instead. By the end of the decade, an estimated 4 million people will participate in car-sharing programs, up from 1.3 million this year. Meanwhile, the growth of auto sales in China will be slowing down throughout the rest of this decade. “China is still the growth engine for the auto industry, but its growth is slowing,” said Wakefield.

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Good. Ban. But they’ll come after you for the rest of your – public – life.

NY Towns Have Authority To Ban Gas Drilling, Fracking (Reuters)

New York state’s top court ruled on Monday that towns have the authority to ban gas drilling within their borders, giving a boost to opponents of the drilling method known as fracking. The Court of Appeals in a 5-2 decision upheld drilling bans in the Ithaca suburb of Dryden and in Middlefield, near Cooperstown, saying the laws were extensions of the towns’ zoning authority. Drilling company Norse Energy USA and an upstate dairy farmer separately sued the towns, claiming the bans violated a law designed to create uniform statewide regulations on the oil and gas industry. The court disagreed, saying the law was designed to bar only local ordinances that could impede the state’s ability to regulate drilling activities. “Plainly, the zoning laws in these cases are directed at regulating land use generally and do not attempt to govern the details, procedures or operations of the oil and gas industries,” Judge Victoria Graffeo wrote for the court.

The decision affirmed rulings by three lower courts. The plaintiffs had told the court that upholding the bans would make drilling companies reluctant to invest in the state, since they would be faced with a patchwork of local laws that could change. In 2011, Dryden and Middlefield were among the first of more than 170 municipalities in New York to ban gas drilling as state officials considered whether to lift a moratorium on fracking, which is still in place. Fracking involves blasting chemical-laced water and sand deep below ground to release oil and natural gas trapped within rock formations. It has allowed companies to tap a wealth of new natural gas reserves in other states, but critics say the procedure has polluted water and air, and caused seismic activity near wells.

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Let’s see … How about you stop feeding antibiotics to farm and feedlot animals?!

Superbugs ‘Could Send UK Back To The Dark Ages’ (Daily Mail)

David Cameron has vowed Britain will lead a global fightback against antibiotic-resistant superbugs. The Prime Minister said concerted action was needed to prevent the world from being ‘cast back into the dark ages of medicine’. The rise of untreatable bacteria is one of the biggest health threats facing the world, threatening an ‘unthinkable scenario’ where minor infections could once again kill. Tens of thousands of people are already dying of infections that have evolved resistance to common treatments. The World Health Organisation has warned that routine operations and minor scratches could become fatal if nothing is done. Mr Cameron said: ‘For many of us, we only know a world where infections or sicknesses can be quickly remedied by a visit to the doctor and a course of antibiotics.

‘This great British discovery has kept our families safe for decades, while saving billions of lives around the world. ‘But that protection is at risk as never before. ‘Resistance to antibiotics is now a very real and worrying threat, as bacteria mutates to become immune to its effect.’ He warned 25,000 people in Europe already die every year from infections resistant to anti-biotic drugs. ‘This is not some distant threat but something happening right now’, he added. ‘If we fail to act, we are looking at an almost unthinkable scenario where antibiotics no longer work and we are cast back into the dark ages of medicine where treatable infections and injuries will kill once again. ‘That simply cannot be allowed to happened and I want to see a stronger, more coherent global response, with nations, business and the world of science working together to up our game in the field of antibiotics.

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This means it’s now part of the ecosystem, just not in animals’ stomachs anymore, but in their veins. That can’t be good.

Plastic Garbage On Ocean Surface Is Mysteriously Disappearing (LiveScience)

A vast amount of the plastic garbage littering the surface of the ocean may be disappearing, a new study suggests. Exactly what is happening to this ocean debris is a mystery, though the researchers hypothesize that the trash could be breaking down into tiny, undetectable pieces. Alternatively, the garbage may be traveling deep into the ocean’s interior. “The deep ocean is a great unknown,” study co-author Andrés Cózar, an ecologist at the University of Cadiz in Spain, said in an email. “Sadly, the accumulation of plastic in the deep ocean would be modifying this mysterious ecosystem – the largest of the world – before we can know it.” Researchers drew their conclusion about the disappearing trash by analyzing the amount of plastic debris floating in the ocean, as well as global plastic production and disposal rates.

The modern period has been dubbed the Plastic Age. As society produces more and more of the material, storm water runoff carries more and more of the detritus of modern life into the ocean. Ocean currents, acting as giant conveyer belts, then carry the plastic into several subtropical regions, such as the infamous Pacific Ocean Garbage Patch. In the 1970s, the National Academy of Sciences estimated that about 45,000 tons of plastic reaches the oceans every year. Since then, the world’s production of plastic has quintupled. Cózar and his colleagues wanted to understand the size and extent of the ocean’s garbage problem. The researchers circumnavigated the globe in a ship called the Malaspina in 2010, collecting surface water samples and measuring plastic concentrations. The team also analyzed data from several other expeditions, looking at a total of 3,070 samples.

What they found was strange. Despite the drastic increase in plastic produced since the 1970s, the researchers estimated there were between 7,000 and 35,000 tons of plastic in the oceans. Based on crude calculations, there should have been millions of tons of garbage in the oceans. Because each large piece of plastic can break down into many additional, smaller pieces of plastic, the researchers expected to find more tiny pieces of debris. But the vast majority of the small plastic pieces, measuring less than 0.2 inches (5 millimeters) in size, were missing, Cózar said.

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Caribbean Coral Reefs ‘Will Be Lost Within 20 Years’ (Guardian)

Most Caribbean coral reefs will disappear within the next 20 years, primarily due to the decline of grazers such as sea urchins and parrotfish, a new report has warned. A comprehensive analysis by 90 experts of more than 35,000 surveys conducted at nearly 100 Caribbean locations since 1970 shows that the region’s corals have declined by more than 50%. But restoring key fish populations and improving protection from overfishing and pollution could help the reefs recover and make them more resilient to the impacts of climate change, according to the study from the Global Coral Reef Monitoring Network, the International Union for Conservation of Nature and the United Nations Environment Programme. While climate change and the resulting ocean acidification and coral bleaching does pose a major threat to the region, the report – Status and Trends of Caribbean Coral Reefs: 1970-2012 – found that local pressures such as tourism, overfishing and pollution posed the biggest problems.

And these factors have made the loss of the two main grazer species, the parrotfish and sea urchin, the key driver of coral decline in the Caribbean. Grazers are important fish in the marine ecosystem as they eat the algae that can smother corals. An unidentified disease led to a mass mortality of the sea urchin in 1983 and overfishing throughout the 20th century has brought the parrotfish population to the brink of extinction in some regions, according to the report. Reefs where parrotfish are not protected have suffered significant declines, including Jamaica, the entire Florida reef tract from Miami to Key West, and the US Virgin Islands. At the same time, the report showed that some of the healthiest Caribbean coral reefs are those that are home to big populations of grazing parrotfish. These include the US Flower Garden Banks national marine sanctuary in the northern Gulf of Mexico, Bermuda and Bonaire – all of which have restricted or banned fishing practices that harm parrotfish.