quantum computing Archives - The Automatic Earth

Victor Davis Hanson says we’re watching a modern-day French Revolution play out as socialists hijack the Democratic Party.

Once you see it, the similarities are impossible to ignore.

HANSON: “We’re watching a modern-day French Revolutionary-like takeover of the Democratic… pic.twitter.com/giicypyYGW
— Overton (@overton_news) July 2, 2026

While the world was watching bombs fall on Iran,

Trump was attempting the biggest financial heist in 100 years. https://t.co/LBaMivJrza

2 July 2026#Iran #RussiaChina #IStand @ShawnRyan762 @CryptoRichYD @the_irascible @RealAlexJones pic.twitter.com/IBiCOtXKAk
— Steven Eugene Kuhn (@StevenEKuhn) July 2, 2026

US golf courses use 531 billion gallons of water per year. That’s down from 759 billion gallons per year in 2005 and is 0.5% of total annual water withdrawals in this country. And somehow, the country manages to not look like the Sahara Desert.

Meanwhile, data centers – the… pic.twitter.com/BxdtHv0S6W
— Rod D. Martin (@RodDMartin) July 2, 2026

I very much like she includes Dr. King as someone who fought for liberty in America.,

• 250 Years of Fighting for Liberty (Ashley McCully)

The pursuit of freedom has inspired every step of America’s journey and, as we all reflect on what the last 250 years have produced, it is imperative that we view our history through the lens of liberty. America’s story is vastly different from other countries because our definition of freedom is vastly different. From individual colonies to our 47th president, the United States is founded on the idea that our rights come from God, not government. For more than three centuries, we have fought to preserve this belief, and if we want to keep it, the fight will continue for at least another three.

Consider the colonists. They endured filthy, deadly conditions to cross the Atlantic to find freedom. Monarchies consolidated power and exercised it tyrannically, limiting how people could and could not worship God, imprisoning, beating, or fining anyone who did not comply. Rigid European class structure mandated that anyone born in poverty would die in poverty because there was no reason the upper crust should tolerate individualism. These people finally broke free of the Crown only to be hounded and taxed an ocean away, so they fought back with the greatest breakup letter of all time.
“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, that whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government…”
—The Declaration of Independence, July 4, 1776
It’s straightforward: our rights come from God, and men form a government to protect those rights, not to issue or infringe upon them. After winning the Revolutionary War, America’s quest for freedom was only beginning. Yes, we were no longer under the jurisdiction of the Crown, but we did have to secure our sovereignty on the world stage. We wanted to regroup economically, so we opted to stay out of the British-French trade squabble, but neutrality soon became impossible. The British, for all intents and purposes, kidnapped as many as 9,000 American sailors, claiming they were British deserters and forcing our ships into their ports, requiring us to pay their duty tax. Not even 30 years after we threw off the yoke of tyranny, they were after us again, so we fought back in the War of 1812.
“There shall be a firm and universal Peace between His Britannic Majesty and the United States, and between their respective Countries, Territories, Cities, Towns, and People of every degree without exception of places or persons. All hostilities both by sea and land shall cease as soon as this Treaty shall have been ratified by both parties as hereinafter mentioned.”
—Treaty of Ghent, December 24, 1814
Finally free to sit at the grown-up table in world affairs, the United States set out to make its fortune, and it did, on the backs of slaves. Chattel slavery robbed men and women who were created in the image of God—the same God who supposedly endowed all of His creation with inalienable rights outlined in the Declaration of Independence — of their freedoms and dignities. The North and the South both willingly engaged in the slave economy, but enough people understood how egregious and contradictory the practice was and fought back.
“That on the first day of January, in the year of our Lord one thousand eight hundred and sixty-three, all persons held as slaves within any State or designated part of a State, the people whereof shall then be in rebellion against the United States, shall be then, thenceforward, and forever free”
—Abraham Lincoln’s Emancipation Proclamation, January 1, 1863
It would be more than two years before the Civil War came to an end and the last remaining slaves in Galveston, Texas, were notified of their freedom. We added the 13th Amendment to our Constitution, finally and forever abolishing slavery in America. We added the 14th Amendment to afford those born into slavery in America the status of citizens. The 15th Amendment granted citizens the right to vote regardless of the color of their skin.
Women were the unsung heroes of the American abolitionist movement and, once they saw freedom secured for black people, they continued to cast off their own chains. Fighting against assumptions of intellectual ineptitude and the idea that women were far too busy in the home to cast well-informed votes, women pushed themselves across the finish line in 1920 with the 19th Amendment, giving them the right to vote.
The history of mankind is a history of repeated injuries and usurpations on the part of man toward woman, having in direct object the establishment of an absolute tyranny over her. He has compelled her to submit to laws, in the formation of which she had no voice. He has taken from her all right in property, even to wages she earns…
—The Declaration of Sentiments and Resolutions, Seneca Falls Convention, July 20, 1848
Close readers will pick up the thread of freedom shifting ever-so-slightly from rights in life to rights in politics. It is this shift, wherein the government begins to issue rights to participate, that we must pause and reflect, especially when it comes to questioning the next 300 years of freedom in America.
Regardless of laws declaring a person’s right to vote, pervasive Jim Crow laws were unofficial statutes designed to keep black people down. Dr. Martin Luther King, Jr. picked up the thread and moved it back toward rights in life. The Civil Rights Movement in America reminded us that God does not only care about votes, but about how His children are treated. We watched growing numbers of citizens link arms and peacefully march across bridges, endure dog attacks and fire hose boundaries, sit in chairs they were supposedly not good enough to sit in, and people fought back.
“I have the audacity to believe that peoples everywhere can have three meals a day for their bodies, education and culture for their minds, and dignity, equality and freedom for their spirits.”
—Dr. Martin Luther King, Jr., Nobel Prize acceptance speech, December 10, 1964
Today we are still fighting for freedom, at home and abroad. Brave men and women wearing the cloth of a sometimes-grateful nation work to protect us from terrorists who seek to kill us for no reason other than that we are not one of them. God-fearing patriots stand up every day for the unborn and their right to be born. Good guys with guns have to remind politicians and special interest groups that the right to keep and bear arms is not about hunting. As AI increases and privacy is decreasing, it is up to us to come together and protect that which no one has a right to: intrusion of personal information and space.
The definition of freedom has never changed; it has always come from God and will forever need to be protected against government. Our lives, though, have changed substantially, and we are facing new threats to our life, liberty, and pursuit of happiness. We have a constitutional republic, if we can keep it—if we want to keep it. No one said this road would be easy, but we all know in the core of our selves that freedom is worth its price.

The world was ready for it.

• US At 250: Why America Has Been So Successful And Can It Continue (ZH)

So what has caused this incredible success?

The first reason, and one of the most critical historically, has been the US’ political and institutional stability. Clearly, there have been moments of intense turmoil, most notably with the Civil War in the 1860s. Its historical path also should not be over-romanticised, with US territorial expansion during the 19th century having many similarities to that of the Old World colonial empires. Nonetheless, the US is incredibly rare in that its political system is recognizably the same over the last 200 years. This relative stability and early development of property rights provided a fertile environment for long-term investments, which in turn has aided economic growth over the centuries.
The second reason is its geographic advantages. The US possesses vast arable land, navigable rivers, large coastlines, and access to two oceans. It therefore found itself more insulated from the destructive effects of the world wars, with productive capacity not impacted in the same way. Moreover, the country borders Mexico and Canada, who in both population and GDP terms are much smaller than the United States, meaning it didn’t face the security risks that many European powers faced over the 19th and early-20th centuries.
The third reason has been its abundance of energy resources, particularly relative to Europe. In large part a corollary of its geographic strengths, this energy abundance has given the US several advantages. First of all, lowering costs for households and industry, which has helped the economy be more resilient against geopolitical shocks. Moreover, with the US becoming a net energy exporter in recent years, it also strengthens the external position.
The fourth reason for the US’ relative success was that its main competitors in Europe were deeply affected by the world wars and wider political turmoil. Their productive and financial capacity was severely degraded, with the destruction causing huge loss of life as well. Even among those who survived, many scientists, engineers and entrepreneurs left for the US in the first half of the 20th century. Whilst not a US “success” as such, this meant that on a relative basis, the US’ divergence widened considerably. Indeed, in the first half of the 20th century, the US economy grew by 5.7 times, Germany by 3.4 times, the UK by 2.0 times, and France by 1.8 times.
The fifth reason for the US’ outperformance is scale. It has a large domestic market of over 300m people, with high average incomes, a common language, and low internal barriers to trade. This has given firms the ability to reach a large-scale domestically before expanding abroad. Indeed, it is notable that 8 of the world’s 10 largest firms are based in the US, whereas none are in Europe.
The sixth reason is the structural advantage of the US Dollar, which remains dominant in global trade and FX reserves. This dollar demand matters because it lowers borrowing costs and raises demand for US Treasuries. In turn, it leaves the US with an exceptional capacity to run bigger fiscal and external deficits without facing a funding crisis, and expands the geopolitical leverage that the US possesses. This has been dubbed the “exorbitant privilege”, and has been a major advantage in recent decades.
The seventh reason is financial depth. The US has a large banking system, but also a wide range of non-bank financing, which means startups have access to other sources of capital. In fact, in the decade from 2013 to 2023, annual venture capital financing was 0.7% of GDP in the US, compared to just 0.2% in the EU. This financial depth is important because innovative firms can often be loss-making for lengthy periods, so countries with bigger pools of patient risk capital are better placed to commercialise new technologies.
The eighth reason is its self-compounding advantages in education and research. The US has many of the world’s strongest research universities, including 7 of the top 10 in the Times Higher Education World University Rankings for 2026. Moreover, this research also has an economic angle, as scientific discoveries feed into startups, workforce training and industrial scale-ups. In turn, this becomes self compounding, because top global talent is attracted to the US, and ensures it remains at the forefront of new sectors such as artificial intelligence.
The ninth reason is its pro-business architecture, including a greater tolerance of business failure than many European systems. For instance, Chapter 11 reorganisation is designed to preserve and restructure viable firms rather than liquidate them. This more positive approach to business failure ties into the empirical literature, which suggests that more debtor-friendly and efficient insolvency frameworks are associated with greater entrepreneurship and innovation.
The tenth reason is adaptability. The cultural acceptance of failure and capacity to reinvent itself have boosted US ability to adapt to the changing world. This has allowed it to navigate repeat boom-and-bust cycles, as well swings of the policy pendulum – between openness and isolationism, between protectionism and free trade – without threatening overall the institutional stability we highlighted above. And while capitalism has been a key underlying driving force, it is pragmatism rather than ideology that have driven continued success over time.
It is also important to note that these advantages do not play out individually, but are mutually reinforcing, with the interaction between them allowing the US to benefit from network and externality effects that few if any countries can match.

He talks like it’s his annniversary.

“America, in Mamdani’s view, is a sad place where heartless, racist, xenophobic plutocrats rule the roost ..”

• Mamdani Gives 250th Anniversary Speech (Robert Spencer)

New York City’s Communist Twelver Shi’ite Mayor Zohran Mamdani has bestowed upon a waiting world his speech commemorating America’s 250th anniversary, and it is just as small, petty, grievance-laden, fantasy-based, and angry as you’d expect a speech from a man who hates America to be.

The visual effect was even worse, as Mamdani delivered the speech while seated at a desk that seemed to be turned the wrong way around, while surrounded by a social studies-book array of glum-looking, unsmiling, unhappy people, all black and brown and hijabed and whatnot and all forlornly holding small flags of the country their mayor despises, with a single grim-faced white guy standing in the back (as is his place). But even if one didn’t avail oneself of the joys of watching Mamdani, who was just as grim as his prop companions, what the young Commie mayor said was bad enough.

Communist NYC Mayor Zohran Mamdani, who just came to this country, chose to become an American, is deciding he is the foremost authority to tell Americans what it means to be American.

He has the AUDACITY, on America's 250th birthday, to call our great nation "an arena of… pic.twitter.com/sayf6IDu90
— Benny Johnson (@bennyjohnson) July 3, 2026

America, in Mamdani’s view, is a sad place where heartless, racist, xenophobic plutocrats rule the roost and oppress the rest of us to the degree that you wonder why anyone from elsewhere would want to immigrate in the first place. Mamdani does hold out some hope in the end, saying that the foes of these cruel tyrants can throw off their yoke and remake this unhappy land in their own image. And that, of course, is just what Mamdani has set out to do.
Mamdani began by painting a verbal picture of the “land, lush and teeming with life” to which newcomers arrived, only to encounter “men waiting at the docks to take them into bondage” and “tenements rife with squalor.” As you’d expect, he claimed that the Declaration of Independence established “the ideals our nation still strives to fulfill,” with no indication of how marvelously it has fulfilled them already, or how it has inspired the world in doing so.
The mayor goes on to fill in all the expected blanks, telling the story of how a freed slave made a new life for himself, thereby showing America to be “a place each of us has the power to make.” Immigrants poured into America, not yet seeing “the nativism they would face — the jobs they would be refused, the landlords who would not rent to them, and the abject labor and living conditions they would withstand.” Still, they kept coming.
Mamdani goes on to mock and misrepresent the idea of American exceptionalism, and here he begins to claim that “we are told” a series of things that few people, if any, have ever been told. “We are told that America is exceptional because we are richer, stronger, more powerful than everyone else.” On the contrary, in less fractious days, we were told that we were “richer, stronger, more powerful than everyone else,” because we were a uniquely just society in which anyone could make something of himself.
Mamdani, however, couldn’t possibly admit that without betraying his Marxist ideas, which tell him that America is inherently oppressive, and his Islamic beliefs, which tell him that only a Sharia society is truly just. And so instead, he claims that “the powerful” view America as “an arena of supremacy, where only a select few are allowed freedom, where not all are created equal. America, if you ask them, becomes less the more people it welcomes. America, they will tell you, belongs only to those with the right accent or the right shade of skin. The rest of us, they insist, should be grateful for merely being allowed to visit.”
This is pure leftist rage fantasy. Who ever says any of that? Can Mamdani produce even one “powerful” person who says even one of those things? Donald Trump doesn’t (contrary to leftist claims). Elon Musk doesn’t. Mamdani would be hard pressed to substantiate his smear here, and he prudently refrains from naming any names as he continues to lambaste these imaginary capitalists: “How small they are, how weak, how unoriginal.”
Apparently hoping you won’t notice how divisive his hateful speech really is, he goes on to slam his fantasy foes for supposedly fostering “division.” This apparently involves wanting sensible immigration controls, so that the country isn’t overwhelmed with criminals, terrorists, and people who do nothing but put an added burden upon American citizens: “And yet today, too many of our leaders do not believe in a vision of this nation as an asylum for the persecuted — but rather as one that persecutes those seeking asylum.” Persecutes, i.e., by not letting them in and paying for their every need.
Mamdani then goes on to offer a frankly Marxist vision: “We see the wealthiest country in the history of the world — one where children go to sleep hungry while the world’s first trillionaire hungers for more.” By all means, the wealth this trillionaire has earned must be confiscated! “We see monopolies that dominate every industry and oligarchs who buy elections. We see masked agents terrorizing our streets, eating food cooked by our undocumented neighbors before spiriting them away in unmarked vans.”

We’ve read about this Andy Burnham guy as a leader for 2+ weeks now, but he hasn’t shown his face.

What’s wrong with him? Something must be.

• UK Labour Party Proves Why America Was Right to Ditch Parliament (Queen)

As we celebrate the 250th anniversary of our last day as colonists on Friday, the UK is giving us a huge reason to be glad that we got out from under the crown and the parliamentary system. The current leadership turnover in the Labour Party makes our republic look more sensible than ever. Prime Minister Keir Starmer is stepping down as leader of the Labour Party — and as prime minister along with it — and the frontrunner to replace him is newly minted Member of Parliament Andy Burnham. My friend and colleague Stephen Green pointed out that Burnham stands to drag Labour further to the left and take the UK along with him.

The trouble is that Burnham has been awfully quiet on policy. As Michael Gove and Madeleine Grant put it on The Spectator’s Quite Right! podcast, Burnham acts like he can lead a major political party on vibes alone. Charles Moore writes at The Spectator: “The British constitution is an admirably flexible thing, so I would not claim that Andy Burnham’s leadership campaign, and the coverage thereof, is unconstitutional, but it is certainly unseemly. Why did a BBC helicopter follow his train from Manchester to London (which arrived, of course, late) as if he were Lenin heading for the Finland Station? And why was he allowed to pre-empt his result with a mass selfie with about 200 of his supporting MPs in Westminster Hall?
He is merely a new Member of Parliament, until he isn’t. Turning the place into his stage set is a way of intimidating possible challengers. If he is challenged, he will surely still become leader, but the point of a challenge is to force him to say what he means to do. So far, no one – not even, one suspects, Andy Burnham – knows what Andy Burnham stands for.” Moore suggests that Burnham might abandon the UK’s horrific net zero climate policy. The biggest blowback to that might happen at home; Burnham’s wife is on the board of an NGO and an EV company executive who expresses a “passion for sustainability and the green economy” and for “championing the fair and accessible transition to electric vehicle ownership.”
In a Spectator column, Grant likens Burnham’s campaign launch to the sickly sweetness of Tony Blair’s campaign. The optimism of this leadership challenge is at odds with the way many Britons feel about the state of their nation. “His promise of ‘a new era of possibility’ was a lot of style – mingled with some inevitable Burnhamite sentimentalism: ‘hope in every heart and good growth in every postcode,’” she writes. “It made me long for a gun in every hand and a cyanide capsule in every drawer.” Ross Clark has plenty of daggers for Burnham in a Spectator column. He sees Burnham as a different sort of throwback.
“Whoever thought of putting him in a grey outfit against the backdrop of a grey door for [Monday] morning’s speech in Manchester certainly wasn’t thinking of injecting a bit of colour into national life,” he writes. “It was like watching Harold Wilson: the last PM before colour TV was introduced to Britain.” Clark also has his doubts that Burnham’s big vision will get many people excited (although I wouldn’t mind something like this in the U.S.):
Burnham’s big mission for the country – to devolve power to the regions and localities – also wasn’t exactly calculated to set pulses racing. Rightly or wrongly, few things can be relied upon to provoke a yawn in British life than local government. Just look at the turnout in local elections and the increasing tendency for the electorate to use them as little more than a referendum on national government. It was, after all, the local elections which finally did for Keir Starmer and put Burnham in the position he is now.
If Burnham can really make the British public excited about local government, he will have achieved something genuinely impressive, but I would say he has an uphill task.

Quantum computing is not a reality, despite what the article suggests.

Which is good, because we’re nowhere near ready.

“.. whoever gets there first could lock in “irreversible strategic superiority.. ”

• The AI-Quantum Race Is About Who Governs the Future (Jeff Dornik)

President Donald Trump’s June 22, 2026, executive orders on quantum computing should be understood for what they are: not a shiny technology announcement, not a photo-op for the federal innovation class, and not another soothing Washington press release telling us that “America remains competitive,” which is usually government-speak for “we found the cliff and are now forming a task force to admire it.”

Executive Order 14413 directs the federal government to accelerate quantum innovation, commercialization, deployment, manufacturing, and national-security applications, while Executive Order 14412 warns that large-scale quantum computers in adversarial hands will threaten widely used cryptographic systems and enable hostile actors to collect encrypted American data now and decrypt it later. The White House’s companion post-quantum cryptography effort requires federal agencies to prioritize migration of vulnerable cryptographic systems with the objective of mitigating quantum risk by December 31, 2030.
That is the right level of urgency, because quantum computing is not merely faster computing, and artificial intelligence is not merely better software. AI is already becoming the decision layer of the digital world, shaping what people see, how companies operate, how banks assess risk, how governments investigate threats, how militaries plan, and how institutions increasingly outsource judgment to machines that speak with the confidence of a consultant who has never once been interrupted by reality. Quantum computing, once mature enough for practical cryptographic and scientific use, becomes an amplifier for problems that classical computers cannot solve at a useful scale.
Put them together, AI as the mind and quantum as the accelerator, and the winner does not simply build a better tool, but actually builds the operating system for global power.The U.S.-China Economic and Security Review Commission has already noted that nations that integrate quantum with AI-driven research platforms will compound their advantages exponentially, and that the country achieving quantum supremacy in quantum computing and AI will gain disproportionate and likely enduring advantages in intelligence collection, encryption, precision targeting, materials science, energy, medicine, and the digital economy.
The Commission also warned that whoever gets there first could lock in “irreversible strategic superiority,” especially because current global infrastructure remains exposed to attacks on public-key encryption. That is why this is an all-or-nothing race. America is not competing against a friendly research consortium at a science fair where everyone claps politely and shares their grant proposals over room-temperature coffee. We are competing against the Chinese Communist Party, a regime that does not have our Constitution, our courts, our churches, our independent press, our civil society, our due process traditions, our free-speech protections, or our national gift for holding seven hearings before deciding whether a light switch is racist.
China can centralize resources, compel cooperation, absorb civilian research into state priorities, hide its most sensitive work, and deploy technologies against its own people without any meaningful legal restraint from the governed. Human Rights Watch reports that under Xi Jinping, there is no independent civil society in China and no freedom of expression, association, assembly, or religion, while critics and human rights defenders are persecuted.
The technological edge is narrowing because China has made quantum a state priority and is building the infrastructure to match. CSIS reports that China’s superconducting, photonic, trapped-ion, and neutral-atom quantum computing efforts are moving from laboratory prototypes toward commercial use, with Chinese systems including Zuchongzhi, Origin Wukong, and Tianyan-504 supported by universities, research centers, state-linked firms, and companies such as China Telecom Quantum Group and Origin Quantum. The Special Competitive Studies Project has also noted that China has made quantum computing a strategic priority since the 14th Five-Year Plan, with government funding showing China’s strategic prioritization of quantum technology at a projected $15 billion compared to $4 billion in the United States.

Never enough money for never enough electricity (power).

“Virginia’s “Digital Gateway” project, a mega site roughly twice the size of New York’s Central Park with city-sized power needs.”

Zero Hedge take from almost a year ago.

• World’s Largest Data Center Project On Verge Of Collapse (ZH)

Up until now, when it comes to real estate, Blackstone was best known in recent years for dumping many of its trophy office properties – which in the aftermath of work from home never recovered their projected cash flow potential – at a huge discount. Now, it may be pulling a page from its old, pre-Lehman playbook by calling the top in yet another commercial real estate segment: data centers.

Two days ago we reported that Blackstone was selling its stakes in a trio of data centers across Northern Virginia for $3.5 billion, cashing out of part of a bet it made less than three years ago. According to Bloomberg, Digital Realty Trust would pay $1.2 billion of cash and offer $2.3 billion of its shares (which the PE giant has largely cashed in by now) to Blackstone funds; in exchange, the data center company will acquire Blackstone’s 80% interest in two 96-megawatt data centers in Manassas, Virginia, and a 50% interest in a 96-megawatt center in nearby Sterling.
We said that “the question is why did Blackstone decide to pull the cord now, just as fresh doubts are creeping whether the Mag 7s will continue funding the AI expansion with virtually unlimited capex.” Two days later we have an answer. The digital ink is barely dry on its Virginia data center sales, and we learn that Blackstone’s QTS (QTS Realty Trust) is again quietly fading its AI exposure by walking away from plans to build its portion (which at this point is the only portion left after its partner already pulled out days ago) of a 2,100-acre data center campus in Virginia – also known as Prince William Digital Gateway which would house as many as 37 data-center buildings – handing a win to residents who fought for years to topple the project.

QTS’s proposed facility at 9400 Godwin Drive in Manassas

The data center developer had planned to transform more than 800 acres in Northern Virginia’s Prince William County, a project that would have spanned 22 million square feet, making it the largest data center campus in the world. Located on the edge of an historic Civil War battlefield and on what used to be land protected from development, the project ignited strong pushback from homeowners and has been stalled by lawsuits.
As part of Wall Street’s broader push into data centers, investment has poured into Northern Virginia, which is considered the country’s largest data center market, and is better known as “Data Center Alley”. But in a strategic U-turn, in recent days QTS executives decided that it isn’t worth pressing forward in court, the Bloomberg sources said. The firm’s attorneys plan to inform the court of their decision as soon as this week, the people said, asking not to be named discussing non-public information. QTS’s rapid growth has made it a poster child of how private equity has fueled the data center industry’s breakneck expansion. Those ambitions are colliding with public anxiety over strains to electricity grids and home prices from AI data centers.
The retreat may be the final blow to Virginia’s “Digital Gateway” project, a mega site roughly twice the size of New York’s Central Park with city-sized power needs. The initiative was supposed to bring in some $100 billion in spending and create one of the world’s largest technology corridors. Not any more. The project had sparked contentious, drawn-out public hearings. A clerical blunder related to a key zoning meeting created setbacks for developers. Already, Brookfield-backed Compass Datacenters, which was supposed to build on more than 800 acres at the site, had pulled out in May. The U-turns by both firms, Bloomberg writes, amount to one of the most dramatic retreats by developers from a data center project.
It’s a reminder of how tech firms’ race for the computing infrastructure to support AI advances is increasingly facing the same bottlenecks, from power shortages to supply crunches, we have been warning about for the past two years and which Citadel Securities warned about just yesterday. Organized opposition is mounting, forcing firms and developers to be more deliberate about where they choose to build. This is precisely what we warned one year ago would happen as more grassroots organizations pushed back against the relentless data center rollout. At least we haven’t gotten to the arson stage (yet).

between exploding electricity bills and lack of jobs for grads, a new luddite revolution is coming – they will be burning down data centers within a year
— zerohedge (@zerohedge) August 25, 2025

Paint me skeptical. I can take missing 1 or 2 warnings, maybe even 5. But 102?

“The Homeland Security Department report lists communications failures and security lapses that led up to the gunman opening fire from a rooftop.”

• Secret Service Missed 102 Warnings Before Trump Assassination Attempt (ET)

The U.S. Secret Service missed multiple opportunities to detect, prevent, and disrupt the attempted assassination of Donald Trump in Butler, Pennsylvania, in 2024, including missing more than 102 radio transmissions warning of a suspicious person, a Department of Homeland Security report concluded. The report, released on July 2 by the department’s Office of Inspector General, chronicles a series of communication failures, inadequate planning, limited intelligence sharing, and security lapses that combined to create the conditions that allowed gunman Thomas Crooks to open fire from the roof of a nearby building during a July 13, 2024, campaign rally in Butler. Crooks was fatally shot by a Secret Service agent.

Among the report’s most significant findings was that Secret Service members did not receive 102 radio transmissions “that local law enforcement officers in a separate communications room received concerning an increasingly intense search for a suspicious person. Instead, we found that the Secret Service received only five phone calls and three text messages about Crooks. As a result, Secret Service members did not alert President Trump’s protective detail about concerns of a suspicious person.” The Secret Service would have delayed Trump’s speech or removed him from the stage had they been aware of the search for Crooks, the report stated.
The report also said the Secret Service failed to detect a drone that Crooks flew over the rally site about two hours before the shooting. Investigators said the agency’s counter-drone system was inoperable because of a malfunction, and the lone operator assigned to the event lacked sufficient training to repair the equipment. The system remained offline while Crooks flew the drone for nearly nine minutes, allowing him to survey both the stage and the rooftop he later used to carry out the attack.
The report also found serious communication breakdowns between the Secret Service and local law enforcement. The Secret Service never received three radio reports from law enforcement that Crooks had climbed onto a roof with a rifle. The inspector general also found that classified intelligence concerning a long-range threat to Trump was not shared with the Pittsburgh field office or agents responsible for planning security at the rally. The report said broader dissemination of that intelligence likely would have resulted in additional security personnel being assigned to the event.
Investigators further concluded that the Secret Service failed to ensure the American Glass Research complex, where Crooks launched the attack, was secured by state and local law enforcement. In addition, the agency did not use available resources to block the rooftop’s line of sight to the stage, despite recognizing it as a potential vulnerability. The inspector general issued seven recommendations to improve protective operations. The Secret Service agreed with all of them, and the report said some have already been implemented while others remain in progress.

I wonder how Tulsi now views what’s becoming of her work.

• Tulsi Gabbard Outlines the Mechanics of the Deep State (CTH)

Former Director of National Intelligence, Tulsi Gabbard, gives a speech outlining the mechanics of the Deep State and how the people within it operate. At around 3:30 of the presentation, Gabbard gives a specific example of the attitude of the employees on assignment to the ODNI. Obviously, I am not certain, but Tulsi seems to be describing the FBI liaison desk within the DNI as she explains how this federal government employee refuses to participate in the DNI request. Listen and you gain an appreciation of the challenge that exists for any appointed leadership. WATCH:

There is no apple; it’s all worms!

This goes back to 2024, and the Biden FBI. So of course Newsom accuses…Trump.

• FBI Mole Wore Wire Inside Newsom’s Inner Circle: Lawyer (ZH)

A mole working for the Biden FBI was secretly recording Gavin Newsom’s inner circle before the agency expanded its corruption probe into the California governor and his wife, according to a bombshell report by the NY Post. Democrat insider Alexis Podesta, a 45-year-old Sacramento consultant and Newsom appointee – no known relation to John Podesta – secretly taped conversations for the FBI as early as June 2024, while Joe Biden was still in the White House, according to McGregor Scott, the former US attorney now representing Dana Williamson. Williamson, 53, ran Newsom’s office as chief of staff until late 2024; in May she pleaded guilty to conspiracy to commit bank and wire fraud, filing a false tax return, and lying to federal agents.

Federal prosecutors accused Williamson and others of orchestrating a scheme to siphon roughly $225,000 from a dormant campaign account which belonged to former HHS Secretary Xavier Becerra -disguising the payments as legitimate consulting fees while routing the money to benefit Becerra’s former chief of staff, Sean McCluskie. According to Podesta’s attorney, she was placed in charge of overseeing the account in question – but did not know the payments were improper. Becerra is now the Democratic nominee to succeed Newsom as governor. “Alexis wore a wire, and Dana did not,” said Williamson’s lawyer and former US attorney for the Eastern District of California, McGregor Scott.
“A lot of people received letters essentially informing us that there were certain periods of time where the FBI was given access to follow phone calls,” said assemblymember Josh Hoover (R-Folsom), who said he was among those who received a letter even though he had never spoken with either Podesta or Williamson. “I don’t know how these investigations work, but it sounds like they cast a pretty broad net across the Capitol community to see what they could find.”
A separate source with knowledge of the matter said they knew of four Sacramento insiders who also received FBI notifications confirming they had been recorded.= One recipient told the source: “Dude, I got this f—ing letter. I never even met with Dana Williamson!” “Their curiosity was that they never even met with Dana Williamson, so they were wondering what this is all about,” the source said. “And now you have the answer.” -NY Post. News of the wire comes just over two weeks after Newsom claimed that the Trump administration is punishing him because he may run for president in 2028.
“They’re demanding records, they’re abusing the grand jury process, digging through years and years of random documents. Donald Trump isn’t just coming after me because of my mean tweets, he’s coming after me because I’m considering running for president, because he hates that I’ve consistently called him out over and over again for his lies and deceit,” Newsom said, before sending a mass email asking for political donations. Sources close to the investigation, however, told The Post that the feds have spent the past year digging into Newsom, his staff, and his wife’s taxes after whistleblowers reportedly dropped the dime that led to the probe. Williamson’s attorney told the outlet that his client declined to cooperate because she didn’t have anything on Newsom.
Podesta – a former staffer for the late Dianne Feinstein, is a longtime Democratic power broker who remains on California’s State Compensation Insurance Fund board – to which Newsom appointed her in January 2020. She also held senior positions in Gov. Jerry Brown’s administration, and served as secretary of the California Business, Consumer Services and Housing Agency. While she hasn’t been charged with a crime, her attorney identified her as an uncharged co-conspirator in the Williamson indictment.
Of note, Podesta is still getting paid $60,797 by the state while cooperating with the FBI, while she sits on the Insurance Fund Board. nCampaign finance records show Becerra’s committee making $10,000 monthly payments to ‘Podesta Company’ during 2023 and 2024. During this period, Williamson – while Newsom’s CoS – shared confidential info with Podesta regarding a corporate client that has now been identified as Activision Blizzard.

FYI.

• Need Another Reason to Loathe Michelle Obama? (Matt Margolis)

I’m sure you don’t, but I’ll give you one anyway.

Michelle Obama has spent years selling herself as America’s warm, approachable former first lady. Remember the whole “when they go low, we go high” thing? We knew then it was just an empty slogan, because whenever she had a chance to prove she’s the bigger person, she just proved the opposite. According to a Daily Mail report, Barack Obama’s wife personally torpedoed Cheryl Hines’ return to the small screen when Larry David’s new HBO series, Life, Larry and the Pursuit of Unhappiness: An Almost History of America, began casting. The show premiered last week. Higher Ground, the production company the Obamas own, produces it.
Hines, 60, spent all 12 seasons of Curb Your Enthusiasm playing Larry David’s wife, and having her return for the new show made sense. But apparently, Obama couldn’t handle the fact that Hines is married to Robert F. Kennedy Jr., Trump’s Secretary of Health and Human Services. According to unnamed sources cited by the Daily Mail, that was disqualifying. One insider claims that Obama wanted Kennedy’s wife banned from the cast outright because she is “all-MAGA, all-the-time.” Another source says Obama reacted sharply when production staffers who knew Hines from Curb floated the idea of bringing her back.
According to one insider, Obama’s message was simple. “She’s not one of us,” she reportedly said. Funny thing is, Hines is most definitely a leftist herself. She spent decades as a reliable Hollywood liberal long before she ever said “I do” to Kennedy. None of that bought her a pass. In Obama’s world, being married to someone in the Trump administration gets you blacklisted. A third source confirmed to the Daily Mail that the exclusion had nothing to do with talent and everything to do with Hines’ perceived politics, tied to her marriage and her proximity to Trump’s circle. Obama reportedly stayed out of the writers’ room and never touched a script. But casting, including guest stars, was hers to control. She used that control to keep Hines off the set.
An insider says Hines felt devastated when she learned producers had cut her, and who could blame her? She reportedly believed that David could look past his own politics for the sake of a 12-season friendship. Another source says that David didn’t have that option. Michelle made the call, and David felt that he had no room to overrule her. David has made his own politics abundantly clear. He’s a rabid leftist who despises Trump. Could he have fought for Hines? Probably. But it may not have done any good, and he shouldn’t have had to fight for Hines anyway.
In the end, this just gives us another reason to loathe Michelle Obama, who says, “when they go low, we go high,” one day, then blacklists an actress over her husband’s Cabinet post the next. That’s the opposite of going high. Hines has learned the hard way just how horrible her side is. Back in November, she told Bill Maher that while Republicans have treated her with basic kindness and respect (even when RFK Jr. was running as a Democrat), her fellow Democrats reacted with spite and the urge to exile anyone who steps out of line. Hines indeed has become living proof that the party that preaches “tolerance” has become a cult of cancellation, while the people they demonize are the tolerant ones.

He’s dragging the country to its grave. It is too late.

“Merz was shocked not only by the technological capability, but also by the Chinese industrial work ethic and capabilities of the workforce.”

• Chancellor Friedrich Merz Delivers Statement to German Workforce (CTH)

This next storyline needs context to understand appropriately what just happened. In February of this year, German Chancellor Friedrich Merz travelled for the first time in his business and life to China. Merz a lawyer by training, worked in business and corporate life doing mergers and acquisitions (Blackrock), but had never been to China. Despite his upward climb in German politics, his worldview was always dominated by an internal acceptance that Germany was the industrial heart of the European Union.

Chancellor Merz believed that Germany was unrivaled within industrial manufacturing, particularly in aeronautics and mechanical engineering (auto sector). So, when Merz went to China -while he held no trade capabilities as an outcome of the EU collective controlling everything- he also had no idea what Chinese industrial capacitary actually looked like. To say Chancellor Merz was stunned by the advancements in robotics and industrial manufacturing within China would be an understatement. Merz was shocked not only by the technological capability, but also by the Chinese industrial work ethic and capabilities of the workforce.
Merz returned to Germany and immediately began discussing how Chinese industrial capacity was far beyond anything he previously estimated. Merz was shook. His reaction was, essentially, the #1 industrial nation within the EU confronting a reality of years of industrial complacency. Immediately he began talking about how things in Germany must change; how the German workforce must immediately start to get serious about productivity and production capacity. That was late February and early March.
Today, Friedrich Merz announced a series of reforms, radical modifications within the German industrial workforce. German workers are no longer allowed to call in sick. The German government will now adopt a policy to make sure all workers report to their jobs, or else. The German workforce may not like this at all. There is a certain, shall we say, “Fascist irony,” when you think about mandated private sector productivity compliance and the relationship with official government policy.
Germany’s coalition government has announced a wide-ranging package of pension, tax and labor reforms aimed at boosting economic growth and strengthening competitiveness. Chancellor Friedrich Merz said the measures would create jobs, reduce bureaucracy and preserve key social welfare protections. The 34-point plan includes income tax relief for low- and middle-income households as well as a gradual increase in the retirement age.

Expect fighting in the streets.

“As the AfD heads to its party congress in Erfurt, Germany’s collapsing mainstream braces for protests, panic, and a deeper political rupture..”

“..every sixth German is at risk of poverty.”

• Germany’s Rotten Center Is Heading For A Reckoning (Amar)

In the summer of 2026, Germany is a punch-drunk country reeling from harsh knocks, many of which are self-inflicted. In the short term, it has just suffered a humiliating defeat at the UN General Assembly, where it was punished for Berlin’s brazen arrogance, political provincialism, and last but not least, steadfast support for Israel and its crimes, including genocide. At the World Cup, the German team was booted out of the tournament early and crushingly. To make things worse, German Chancellor Friedrich Merz felt this was just the right moment to release some X posts apparently meant to be reassuring but stunning the nation by their cack-handed ineptitude and sheer disconnect with reality.

Why settle for a mere national depression if you can trigger a raging s**t-storm in addition? Germany’s fundamentals are also thoroughly catastrophic. According to Handelsblatt, Volkswagen, a traditional flagship of the German car industry at the core of the national economy and national pride, is stuck “in the greatest cost and structural crisis in decades.” Around 100,000 jobs are on the chopping block. And yes, that is representative of the economy as a whole.
The country’s birth rate – at 1.35 children per woman – is the lowest since the mid-1990s, which reflects the mood of anxiety and pessimism across the country. Even Germany’s public (de facto state) broadcasters, not known for unbiased reporting or serious criticism of the powers that be, are admitting that poverty is becoming entrenched. In what was once a country of economic success and optimism, according to official statistics, every sixth German is at risk of poverty.
And all of the above is happening under a succession of textbook-centrist governments, based on coalitions of parties and politicians that share a fundamental lack of convictions (apart from the blind urge to fight Russia again), egotism, careerism, and a coldhearted indifference, if not disdain, for the worsening problems and hardships that shape the lives of ordinary Germans. At this point, the latest iteration of centrist uselessness warming seats in Berlin unites deeply unpopular Social-Democrats (SPD) – 12% in the polls – and widely scorned mainstream conservatives (CDU/CSU) – 22% and falling. No wonder that a whopping 53% do not trust any political party, while an abysmal 77% are dissatisfied with Merz.
It is this catastrophic decline, ruling fecklessness, and national frustration that will really be at stake in what is soon going to happen in the eastern German city of Erfurt, where the AfD (Alternative for Germany) will hold its party congress July 4-5. Ahead of the meeting, Germany has the jitters. While the AfD is expecting hundreds of party delegates as well as guests, the authorities are predicting that 35,000 to 70,000 protesters will gather as well. That is a significant number by any measure. But it is even more impressive – or concerning – if you consider that Erfurt is historic (with one of Germany’s oldest universities) but not big, with a population of not quite 220,000.
It is extremely unlikely that all the anti-AfD protests about to converge on Erfurt will remain peaceful. While calling for calm, the local authorities and police are clearly trying to prepare for disturbances and violence, including blockades and worse. Bjoern Hoecke, the key representative of the AfD Right and the powerful leader of the party in Thuringia, where Erfurt is located, may have been a touch hyperbolic when speaking of “civil war-like conditions.” Yet leaked documents show that Thuringia’s police are warning of thousands of violent activists who they believe will stage firebomb attacks from roofs, accept severe injury and death among their targets, and even execute an “endgame scenario” of storming the AfD congress.
The police union is concerned about not having enough officers on the ground. Whatever happens in Erfurt, it is already clear that the scene has been set for some big symbolic showdown theater. According to centrist and mainstream narratives, the battle lines are as Manichean as the best of Tolkien: Here, the forces of Mordor of the AfD, widely labeled as hostile to democracy and the constitution if not outright fascist; and there, the Hobbit forces of light of conformist protest, civil society, and a wholesome resistance that knows its place. If the latter features serious violence as well, then that will be written off as the exception, and ultimately the fault of the AfD.
So much for the childish story you will hear a lot about in the mainstream media.

President Trump tells Joe Kernen that he sent Elon Musk a note congratulating him when he became a trillionaire.

He says he maintains a “very good” relationship with Musk to this day.

KERNEN: “Have you spoken to Elon since he became a trillionaire?”

TRUMP: “I haven't.”

“No, I… pic.twitter.com/otCEQDYUHi
— Overton (@overton_news) July 2, 2026

🚨 JUST IN: President Trump says he’s thinking about putting Sen. Ted Cruz on the Supreme Court and you just KNOW the swamp choked on their coffee. “I’m thinking about putting him in the Supreme Court! He’s the only guy who’d get 100% of Democrats AND Republicans because they all… pic.twitter.com/pgHN0MwGtC
— John Fitzgerald Kennedy Jr. (@MrJohnJnr) July 2, 2026

RFK Jr: "If you look at the studies of the Pfizer vaccine — the people who got the vaccine had a 23% percent higher death rate from all causes."

Bill Maher: "But that could be the disease itself…"

RFK Jr: "Then the vaccine doesn’t work, does it?" pic.twitter.com/Rb7wAtww41
— Joe Rogan Podcast News (@joeroganhq) July 2, 2026

Trump's teleprompter dies mid speech at the Theodore Roosevelt Presidential Library, so he just keeps going: "This thing doesn't work… I'd give it about a 2 on a scale of 10." Minutes earlier he was teaching the crowd real American history, McKinley, Roosevelt, and the Panama… pic.twitter.com/rXmcYwSUTj
— Sean Hannity 🇺🇸 (@seanhannity) July 2, 2026

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Debt Rattle February 10 2015

Feb 102015

February 10, 2015 Posted by Raúl Ilargi Meijer at 10:58 am Finance Tagged with: China, credit crisis, EU, Grexit, oil, pitchforks, quantum computing, Syriza 3 Responses »

Arthur Rothstein Scene along Bathgate Avenue in the Bronx Dec 1936

• Global Financial System Stands On The Brink Of Second Credit Crisis (Telegraph)

• Chinese Inflation Falls To 0.8% Amid Fears Of Deflationary Spiral (Guardian)

• Greek Revolt Over Austerity Is Long Overdue (CNBC)

• If Germany Holds Firm On EU Deal, Greece Can Look To US, Russia, China (RT)

• US Defends Unruly Greece As Europe Steps Up ‘Grexit’ Threats (AEP)

• The ECB Should Stay Out of Politics (Bloomberg)

• Tsipras’ Strategy Gives Greeks A Voice (Deutsche Welle)

• Greece Needs To Play By The Rules: France (CNBC)

• Greece Is Playing To Lose The Debt Crisis Poker Game (Anatole Kaletsky)

• ‘Peasants With Pitchforks’ Seen If Profits Get Any Fatter (Bloomberg)

• How Japan Borrows $9 Trillion Practically for Free (Bloomberg)

• Citi: Oil Could Plunge to $20, and This Might Be ‘the End of OPEC’ (Bloomberg)

• North Sea Oil Bankruptcy Risk Surges Amid Calls For Tax Cuts (Telegraph)

• American Oil Jobs Start Drying Up (Bloomberg)

• Brazil’s Rousseff Pours Gas on Petrobras Fire (Bloomberg)

• Speculation Against Denmark’s Euro Peg Proving Relentless (Bloomberg)

• Masters of Parallel Universes (Dmitry Orlov)

• All Twerked Out (Jim Kunstler)

• Europe Slaughters Sea Life In The Name Of ‘Science’ (Monbiot)

• China Nears Launch Of Hack-proof ‘Quantum Communications’ Link (Caixin)

• Heart Of Earth’s Inner Core Revealed (BBC)

“The second global credit crisis is now already unfolding in China..”

• Global Financial System Stands On The Brink Of Second Credit Crisis (Telegraph)

The world economy stands on the brink of a second credit crisis as the vital transmission systems for lending between banks begin to seize up and the debt markets fall over. The latest round of quantitative easing from the European Central Bank will buy some time but it looks like too little too late. It was the collapse of US house prices back in 2007 that resulted in the seizure of the credit markets and banking crisis of 2008. And it would be easy to lay the blame for the 2008 financial crisis at the doorstep of American home owners, easy but wrong. The collapse of the US housing market was not the cause of the crisis, it was merely a symptom of the more insidious ills of cheap credit, low risk and the promise of another bailout round the corner.

The Keynesian pump priming that has taken place on a colossal scale across the world is failing. The Chinese economy was growing at 12pc in 2010, but that slowed to 7.7pc in 2013 and 7.4pc last year — its weakest in 24 years. Economists expect Chinese growth to slow to 7pc this year. It is the once booming property sector that has turned into a bust, and is now dragging down the wider economy as the bubble deflates. The second global credit crisis is now already unfolding in China some 6,800 miles away from the epicentre of the first in the US. The bonds of Chinese real estate companies are now falling like dominoes. Kaisa, a Hong Kong-listed developer that raised $2.5bn on international markets had to be bailed out by rival group Sunac last week after it defaulted onits debts. The bonds of other Chinese real estate groups such as Glorious Property and Fantasia have also sold off heavily as the contagion spreads.

Chinese authorities have responded to try and contain the situation. The People’s Bank of China introduced a surprise 50-point cut in the Reserve Requirement Ratio (RRR) from 20pc to 19.5pc. But this misses the point, the credit system in China is completely unsustainable unless new money is printed every year to refinance the old, simply tinkering to ease liquidity won’t cut it. The strain in its banking system is highlighted by the elevated levels of the Shanghai Interbank Offered Rate (SHIBOR), which shows Chinese banks are worried about lending to each other. There is no schadenfreude in watching China unravel. The idea that this is an isolated incident is laughable, remember the very same was said of US subprime. The problem is that banks such as Standard Chartered and HSBC have both rapidly increased their lending operations in Asia since 2008.

Prices rise 0.8%, but the economy grows at 7.4%?

• Chinese Inflation Falls To 0.8%, Fuelling Fears Of Deflationary Spiral (Guardian)

Chinese inflation plunged to 0.8% in January, its lowest level for more than five years, official data showed on Tuesday, fuelling fears the world’s second-largest economy is on the brink of a deflationary spiral. The rise in the consumer price index (CPI) was sharply down from the 1.5% recorded in December, and was lower than the 1% expected by economists. It was also the weakest number since 0.6% in November 2009. Moderate inflation can be a boon to consumption as it encourages consumers to buy before prices go up, while falling prices encourage shoppers to delay purchases and companies to put off investment, both of which can hurt growth. Slowing demand, a property downturn and falling commodity prices – especially oil – have all driven prices lower and point towards persistent weakness in the world’s second largest economy.

Warmer than average weather in January also caused vegetable, fruit and fish prices to fall, the NBS said. Analysts warned of deflation in the Chinese economy, a key driver of global growth, and called for more economy-boosting measures by Beijing. A collapse in global oil prices have already unleashed a wave of monetary easing around the world as central bankers from Europe to Canada to Australia sought to defuse the deflationary pressures and bolster their economies. “The weak inflation profile suggests that the deflation has become a real risk for China, thus paving way for further monetary policy easing,” ANZ economists Liu Ligang and Zhou Hao said.

Liu Dongliang at China Merchants Bank noted that consumption may have started to feel the pain of China’s growth slowdown, as services and consumer goods prices slumped last month.“We should get vigilant about this sign and pay high attention to changes in the job market,” he said in a research note. Falling inflation is likely to keep downward pressure on the price of other commodities such as iron ore, Australia’s biggest export earner, which has fallen 50% in the past 12 months. However, the prospect of more stimulus measures in China pushed the Australian dollar higher to US78.4c. Analysts also said that factory deflation was a big concern. The data showed producer price index dropped 4.3% in January from a year earlier, worse than a 3.8% fall expected by analysts and extending factory deflation to nearly three years. Price cuts have sapped profitability of Chinese manufacturers.

Amen.

• Greek Revolt Over Austerity Is Long Overdue (CNBC)

Germany has been sacking Greece and other Mediterranean economies for years, and the Hellenic revolt against austerity is overdue. When the euro was established in 1999, prices were translated from the mark, franc and other currencies into euro at prevailing exchange rates. (Greece joined the euro zone in 2001, giving up the drachma.) National prices reflected differences in labor costs and efficiency across countries, but owing to a variety of social and demographic conditions, productivity improved more rapidly in Germany and other northern countries. Making goods in the South became too expensive, and Greece and others could no longer export enough to pay for imports. Without a single currency, the values of the drachma and other Mediterranean currencies would have fallen against the German mark to restore competitive balance.

Europe has few of the mechanisms that facilitate adjustment in the United States, which has a single currency across a similarly wide range of competitive circumstances. A single language permits workers to go where the jobs are, whereas most Greeks and Italians are stuck where they are born. New Yorkers’ taxes subsidize public works, health care and the like in Mississippi through the federal government in ways the European Commission cannot accomplish. Germany uses its size and influence to resist changes in EU institutions that could alter fiscal arrangements. Hence, the Greeks and other southern Europeans were forced to borrow heavily from private lenders in the north—mostly through their commercial banks—to provide public services, health care and similar services that were hardly overly generous when measured by German standards.

All this kept German factories humming and German unemployment low. When the financial crisis and meltdown of global banking made private borrowing no longer viable, Greece and other southern states were forced to seek loans directly from Germany and other northern governments. Bailouts implemented by Germany through the ECB, the IMF and the European Commission required labor market reforms, cuts in wages and pensions, higher taxes, and less government spending. All to restore Greek competitiveness, growth and solvency—and all have absolutely failed. Starved for investment, the Greek industry is now even less capable of exporting to pay for the imports of everyday items Greeks need. GDP is down 25%, unemployment is about 25%, and health care spending is down 40%. When austerity began, Greece’s sovereign debt was 110% of its GDP. Now it is 160%, grows larger by the day and can never be repaid.

“..if we see that Germany remains rigid and wants to blow apart Europe, then we have the obligation to go to Plan B. Plan B is to get funding from another source..”

• If Germany Holds Firm On EU Deal, Greece Can Look To US, Russia, China (RT)

Greece warns that if informal EU leader Germany remains rigid on granting Athens a new deal, it will seek assistance elsewhere. The US, Russia and China are the possible candidates. The warning came from new Greek Defense Minister Panos Kammenos, who assumed office after the populist Syriza party won a general election in January and its leader Alexis Tsipras took over as prime minister from Antonis Samaras. “What we want is a deal. But if there is no deal – hopefully (there will be) – and if we see that Germany remains rigid and wants to blow apart Europe, then we have the obligation to go to Plan B. Plan B is to get funding from another source,” Kammenos told Greek television on an overnight show running into early Tuesday, as reported by Reuters. “It could be the United States at best, it could be Russia, it could be China or other countries,” he said.

Syriza gained a plurality of votes thanks to its EU-skeptic platform and a promise to oppose austerity measures imposed on the ailing Mediterranean nation by the “Troika” of foreign creditors in exchange for a debt bailout. Kammenos is not a member of Syriza, but comes from the Independent Greeks, an ally in the coalition government. In the program he said his party and Syriza had converging views on “80% of issues” and that the way of dealing with the debt is among those they agree on. The new Greek cabinet wants part of the national debt written off, a demand that Germany has rejected. Athens also opposes some of Brussels’ policies, most notably the anti-Russian sanctions over the Ukrainian crisis, which led to a painful trade war between Russia and Europe. In the wake of Syriza’s victory, Moscow indicated that it may consider offering a loan to Greece.

“..Mr Tsipras vowed to implement the party’s radical Thessaloniki Programme in its “entirety”, including a demand for €11bn of war reparations from Germany, a move deemed deeply offensive in Berlin.”

• US Defends Unruly Greece As Europe Steps Up ‘Grexit’ Threats (AEP)

Europe’s creditor powers have reacted with fury as Greece presses ahead with plans to smash its EU-IMF Troika programme and demand war reparations for Nazi occupation, raising the risk of a traumatic rupture with Athens by the end of the month. Wolfgang Schauble, Germany’s finance minister, said there could be no bridging agreement for the radical Syriza government, insisting that it must stick rigidly to the terms of Greece’s €245bn bail-out package and secure a negotiated extension, or face the consequences. “If they want to deal with us, they need a programme,” he said. He issued a clear warning to the new Greek premier Alexis Tsipras that his country will be left penniless in a hostile world. “I don’t know how financial markets will handle it, but maybe he knows better,” he said.

Jean-Claude Juncker, the European Commission’s chief, urged Syriza not to trifle with the EU or to overplay its hand after winning a landslide mandate last month to end austerity. “Greece shouldn’t assume that the overall mood in Europe has changed,” he said. The EU authorities have told Mr Tsipras that a series of crucial meetings in Brussels this week are his last chance to retreat from hot campaign rhetoric and agree to an extension of the Troika bail-out. The clear threat is that the European Central Bank will cut off €60bn of emergency liquidity support for the Greek financial system when the existing Troika arrangement expires on February 28. This would force Greece to impose capital controls, nationalize the banks, and reintroduce the drachma within days.

Even if the ECB agrees to a stay of execution, Athens will start to run out of money in March, when it faces repayments to the IMF, followed by other creditors. Tax revenues have dried up over recent weeks as Greeks wait to see what Syriza does in office. The treasury’s cash reserves have fallen to €1.5bn. Fears of an imminent collision set off fresh alarm in Greek markets on Monday. The yield on three-year Greek bonds jumped over 300 basis points to 21pc, while bank stocks fell 9pc. Greek lenders are under serious stress. The ECB’s shock decision last week to stop letting them use Greek bonds and Greek-guaranteed debt as collateral for loans has forced them to take on emergency liquidity that is more costly. It also imposes greater “haircuts”, effectively contracting of credit.

This comes at a time when non-performing loans are already the highest in the world at over 40pc and still rising. Greek property prices fell a further 5pc in the fourth quarter of 2014, pushing large numbers of mortgage holders yet deeper into negative equity. Data released today showed that Greece’s industrial output fell 3.8pc in December. Europe’s leaders were stunned by the aggressive tone of Mr Tsipras’s address to the Greek parliament on Sunday night. They had assumed that Syriza would hold out an olive branch once it was safely in office, shifting its stance in time-honoured EU fashion. Instead Mr Tsipras vowed to implement the party’s radical Thessaloniki Programme in its “entirety”, including a demand for €11bn of war reparations from Germany, a move deemed deeply offensive in Berlin.

“..the ECB largely makes up its own rules about what to accept as collateral. If it wanted to, it could continue to accept Greek bonds as collateral after the bailout program ends. There was certainly no need to announce that, even before the program ends, Greek bonds would no longer qualify.”

• The ECB Should Stay Out of Politics (Bloomberg)

Has the European Central Bank made itself the judge of which countries remain members of the euro area? That would be an amazing assertion of power — on the face of it, completely at odds with its usual insistence that it stands outside politics. Yet that is more or less what the ECB seemed to do with its pronouncements on Greek debt last week. Greece’s new government has promised voters not to renew the European Union’s bailout program, due to expire at the end of this month. It wants new terms, and a financial breathing-space while they’re negotiated. Last week the ECB said that since it can no longer assume a program will be in place, it would stop accepting Greek government bonds and government-guaranteed debt as collateral for lending to Greek banks. After February 11th, it would no longer act as a lender of last resort for Greece.

If that was all there was to it, the ECB announcement would have been tantamount to expelling Greece from the euro system. Greeks have been pulling money out of their banks in recent weeks and months. If a full-scale run developed, and the banks could no longer call on the ECB for liquidity, Greece would need to close its banks and, in short order, begin issuing its own currency. No more monetary union. As you might expect, it’s a bit more complicated than that. For now, the ECB said, Greek banks could continue to access “emergency liquidity assistance” from the Bank of Greece, its local subsidiary. At some point, a supermajority of the ECB’s governing council could vote to suspend that privilege as well. Until that happens, Greece still has a lender of last resort – albeit a quasi-national one, which heightens doubts about the long-term integrity of the euro system.

So what on earth did the ECB hope to achieve with its announcement last week? The ECB said the move was “in line with existing euro system rules.” No doubt that’s true: The ECB hasn’t broken any rules. But the implication that the rules obliged it to act as it did is also wrong. It didn’t need to say anything. That’s why the announcement surprised the markets. Note, too, that the governing council was split on the decision. When it comes to liquidity assistance, the ECB largely makes up its own rules about what to accept as collateral. If it wanted to, it could continue to accept Greek bonds as collateral after the bailout program ends. There was certainly no need to announce that, even before the program ends, Greek bonds would no longer qualify.

“..Tsipras’ insistence on sticking to his pre-election promises is playing very well at home..”

• Tsipras’ Strategy Gives Greeks A Voice (Deutsche Welle)

Vaso Vouvani, a quiet and determined middle-aged mother, had long wanted a leader who stood up for the interests of Greeks, “not bankers, Eurocrats or German politicians.” “We need fighters, not servants of the troika,” she said, referring to the international lenders who had given Greece billions in bailout loans in exchange for punishing austerity measures that deflated the Greek economy. “We have lost our money and our dignity these last five years. We can’t let leaders in Brussels and Berlin continue to hit us with austerity. It’s not working!” During the crisis, Vouvani lost her business, and she hasn’t worked in four years. So she’s been relieved and heartened to see 40-year-old Prime Minister Alexis Tsipras, whose leftist, anti-austerity party Syriza came to power two weeks ago, stand up to everyone from eurozone finance chief Jeroen Dijsselbloem to Greek oligarchs evading taxes.

“I hope he fights them all,” she said. “I will be really disappointed if he backs down. I don’t want to see another Greek politician lower his head to people who treat us like we’re nothing.” In his first address to parliament, Tsipras said exactly what she wanted to hear. He promised to end austerity measures, help impoverished Greeks get sustenance and electricity, reform a corrupt political system, go after big-money tax evaders, even sell the taxpayer-funded luxury cars used by cabinet members and parliamentary deputies. “Our government wants to be the voice of the people, to express the people’s will,” he declared in a long, emotional speech that earned him a standing ovation.

Nick Malkoutzis, editor of the Athens-based economic and political analysis website macropolis.gr, told DW that Tsipras’ insistence on sticking to his pre-election promises is playing very well at home. “This is driven by his belief that, unlike previous governments, this Syriza-led administration should live up to as many of the election pledges that it can,” said Malkoutzis. “And unlike previous leaders, that he shouldn’t cave in at the first sign of pressure from Greece’s lenders.” That pressure has already come. The European Central Bank, for instance, has cut off credit to Greek banks. And the leaders of Germany, which has provided most of the bailout loans to Greece, have refused to back debt relief or any renegotiation of its debt deal.

The Greeks voted out a government because it made certain deals, but the new government is still bound by the same deals. Certainly that’s not 100% democratic.

• Greece Needs To Play By The Rules: France (CNBC)

Both sides in the increasingly heated debate over the future of Greece in the euro zone have to respect the each other’s views to reach an agreement, French finance minister Michel Sapin has told CNBC. “There is another way, as long as we respect two principles,” he told CNBC Tuesday on the sidelines of the G-20 finance meeting in Istanbul. “First: we have to respect the Greek vote. A new government was chosen. It is not possible to ask this government to do exactly the same thing we asked from the previous government. Second: Greeks need to know that rules exist in Europe, in the relationship with the IMF, with the ECB, with the European Union. We all have to respect each other and there will be room for an agreement.”

However, Sapin warned, Greece will have to abide to the conditions of the €240 billion bailout agreement. “Greeks can’t behave as if they arrived in a game where there was no rule. In Europe, there are rules. Greeks have always been part of the IMF; Greeks have been part of the EU almost from the beginning. Greeks say themselves that the ECB is their central bank. So it is in that framework that they have to work.” Time is rapidly running out for Greece. The “troika” of organizations overseeing the country’s loans —the ECB, IMF and EC – have said Greece will not receive a final tranche of aid if it does not comply with the conditions of its bailout program, which is due to end at the end of February.

In addition, the government has asked the ECB for a bridging loan, which the bank has refused. As global markets show no signs of calming over the future of the bailout program, all eyes are on the Greek government’s “Plan C” to find a compromise with lenders. On Wednesday, Greek Finance Minister Yanis Varoufakis is expected to meet his euro zone counterparts in Brussels – the eurogroup of finance ministers – to discuss a new set of reform proposals. As well as what has been called “10 surprise reforms” to replace some current austerity measures that the government does not like, Varoufakis is expected to ask for a “bridge program” to cover the government’s funding needs while a new debt pact is agreed, Greek newspaper Protothema reported Monday.

Despite repeated insistence from the euro zone that Greece must continue with austerity measures, miniters in the anti-austerity government led by Syriza told CNBC they are confident a solution can be found Wednesday. “We think we’ve made a very reasonable set of proposals about what we could take from the old program and what we add to the new program,” Euclid Tsakalotos, alternate minister for International Economic Relations for Syriza, told CNBC Monday. “What we’re saying is, yes, there can be a compromise, yes, we have a mandate (to govern) and yes, there are 18 other mandates in the euro zone so we accept that but to listen to our mandate needs time and we think we have been reasonable asking for that time.”

Kaletsky thinks he’s mighty smart.

• Greece Is Playing To Lose The Debt Crisis Poker Game (Anatole Kaletsky)

Greece’s idealistic new leaders seem to believe that they can overpower bureaucratic opposition without the usual compromises and obfuscations, simply by brandishing their democratic mandate. But the primacy of bureaucracy over democracy is a core principle that EU institutions will never compromise. The upshot is that Greece is back where it started in the poker contest with Germany and Europe. The new government has shown its best cards too early and has no credibility left if it wants to try bluffing. So what will happen next? The most likely outcome is that Syriza will soon admit defeat, like every other eurozone government supposedly elected on a reform mandate, and revert to a troika-style programme, sweetened only by dropping the name “troika”.

Another possibility, while Greek banks are still open for business, might be for the government to unilaterally implement some of its radical plans on wages and public spending, defying protests from Brussels, Frankfurt, and Berlin. If Greece tries such unilateral defiance, the ECB will almost certainly vote to stop its emergency funding to the Greek banking system after the troika programme expires on 28 February. As this self-inflicted deadline approaches, the Greek government will probably back down, just as Ireland and Cyprus capitulated when faced with similar threats.

Such last-minute capitulation could mean resignation for the new Greek government and its replacement by EU-approved technocrats, as in the constitutional putsch against Italy’s Silvio Berlusconi in 2012. In a less extreme scenario, Varoufakis might be replaced as finance minister, while the rest of the government survives. The only other possibility, if and when Greek banks start collapsing, would be an exit from the euro. Whatever form the surrender takes, Greece will not be the only loser. Proponents of democracy and economic expansion have missed their best chance to outmanoeuvre Germany and end the self-destructive austerity that Germany has imposed on Europe.

“Fear breeds bargains. You cannot have a bargain in the absence of fear.”

• ‘Peasants With Pitchforks’ Seen If Profits Get Any Fatter (Bloomberg)

Rob Arnott, chief executive and co-founder of Research Affiliates LLC, recently picked up the phone to share some thoughts on the current state of the stock market. Arnott is a pioneer of investing strategies that could be considered “unconventional” if they weren’t slowly but surely becoming more conventional. Among them is the idea of “fundamental indexing,” or weighting stock portfolios by economic metrics like sales, dividends and cash flows rather than the market value of the companies. (The term “smart beta” came later.) As such, fundamental indexes tend to lean toward value stocks instead of growth stocks. How are they doing? Well, the FTSE RAFI U.S. 1000 Total Return Index returned 140% in the 10 years through 2014 compared with 114% for the Russell 1000 Index, even though growth far outperformed value in the same decade. Anyway, when talking to a person like this, sometimes it’s best for a reporter to just shut the heck up, save the bad jokes for the next happy hour, and let the smarter person do all the talking. So here goes.

Q: Does it seem like the market will move back to a value orientation?
A: “I think the market’s stretched both in terms of valuation levels and the spread between growth and value. It doesn’t feel like the tech bubble to me, it feels a little bit more like ’98 or early ’99 in terms of the magnitude by which things are stretched. But you do have some relatively extreme examples, companies that are trading at large multiples to revenue, let alone multiples of earnings or cash flow. And that hearkens back to the ’98-’99 experience. So I think we’re seeing echoes of the bubble in today’s global market behavior.

“There is a flight to safety and the snapback from that, when it comes, will reward the value investor handily. You also see a huge spread between the comfort markets, the United States at a Shiller P/E ratio of 27 times earnings, and the fear markets, emerging markets, where a fundamental index in emerging markets is currently at a Shiller P/E ratio of 10 and a half. My goodness, 60% discount to the S&P 500. That’s startling. Why would it trade at such a vast discount? Because people are afraid. Fear breeds bargains. You cannot have a bargain in the absence of fear.”

Ideal situation for digging an even deeper debt hole.

• How Japan Borrows $9 Trillion Practically for Free (Bloomberg)

Japan’s outstanding national debt is more than 1 quadrillion yen ($8.4 trillion) and more than twice the size of the economy. That’s way more even than Greece, which is fighting with the rest of Europe for some relief over its debt load. Yet Japan has the world’s fourth-lowest borrowing costs, even as its borrowings continue to rise. Weird, right? Here’s why Japan, home to the world’s largest debt burden, can borrow massive amounts of money at little or no cost.

Borrow from domestic investors, mostly banks and consumers Foreign ownership of Japanese government bonds and treasury bills was 8.9% at the end of September, according to central bank data. That compares with 48% of U.S. treasuries held by foreigners, according to data compiled by Bloomberg.

Have a few giant public entities that invest long-term in your debt At the end of September, the following three public institutions held at least 46% of Japan’s debt. The central bank: The Bank of Japan has bought government bonds since 2001 in an attempt to stimulate the economy and beat deflation, with its holdings doubling since the current monetary easing policy started in April 2013. At the end of September it had 23% of government bonds and treasury bills. And this has continued to rise. The post office: Japan Post Holdings held 167 trillion yen of the government’s debt, about 16% of the total and the most after the central bank. About 70% was at the Japan Post Bank, and the rest was at Japan Post Insurance. The pension system: Public pension funds held 62 trillion yen of the government’s securities, more than 6% of the total. Most of these were at the Government Pension Investment Fund, the world’s biggest pension manager. Almost half of its 130.9 trillion yen in assets were in domestic bonds at the end of September, with the GPIF aiming to cut this to 35%.

Have a low rate of inflation and slow growth When growth and inflation are low, this encourages investors to purchases government bonds, which guarantee a risk-free return. Japan’s economy grew an average of 0.8% in the 10 years through 2013 and probably expanded 0.2% last year after a sales tax hike pushed it into recession mid-year. By comparison, the U.S. grew an average 1.6% in the 10 years through 2014. Japan’s consumer prices excluding fresh food rose to 0.5% in December from a year earlier, once you strip out the effect of the sales-tax rise. In the five years through the end of 2014, price were little changed, rising an average 0.04%.

Citi’s all over the map. Goal seeked.

• Citi: Oil Could Plunge to $20, and This Might Be ‘the End of OPEC’ (Bloomberg)

The recent surge in oil prices is just a “head-fake,” and oil as cheap as $20 a barrel may soon be on the way, Citigroup said in a report on Monday as it lowered its forecast for crude. Despite global declines in spending that have driven up oil prices in recent weeks, oil production in the U.S. is still rising, wrote Edward Morse, Citigroup’s global head of commodity research. Brazil and Russia are pumping oil at record levels, and Saudi Arabia, Iraq and Iran have been fighting to maintain their market share by cutting prices to Asia. The market is oversupplied, and storage tanks are topping out. A pullback in production isn’t likely until the third quarter, Morse said.

In the meantime, West Texas Intermediate Crude, which currently trades at around $52 a barrel, could fall to the $20 range “for a while,” according to the report. The U.S. shale-oil revolution has broken OPEC’s ability to manipulate prices and maximize profits for oil-producing countries. “It looks exceedingly unlikely for OPEC to return to its old way of doing business,” Morse wrote. “While many analysts have seen in past market crises ‘the end of OPEC,’ this time around might well be different,” Morse said. Citi reduced its annual forecast for Brent crude for the second time in 2015. Prices in the $45-$55 range are unsustainable and will trigger “disinvestment from oil” and a fourth-quarter rebound to $75 a barrel, according to the report. Prices this year will likely average $54 a barrel.

“In the absence of successful consolidation, we expect that as many as 50 companies in the sector face administration in the next eighteen months.”

• North Sea Oil Bankruptcy Risk Surges Amid Calls For Tax Cuts (Telegraph)

The number of British oil and gas related companies at risk of going bankrupt has increased by almost three quarters amid a steep decline in the fortunes of the North Sea following a plunge in the price of crude. Data from insolvency specialists Begbies Traynor released exclusively to The Telegraph shows that the number of UK oil and gas businesses experiencing “significant” financial distress increased by 69pc to 486 in the fourth quarter, compared with 288 companies a year earlier. “We expect there to be a major wave of consolidation in the industry as businesses race against time to deliver cost synergies or face falling into greater distress,” said Julie Palmer, partner at Begbies Traynor.

“In the absence of successful consolidation, we expect that as many as 50 companies in the sector face administration in the next eighteen months.” The oil industry is lobbying Chancellor George Osborne hard for tax breaks and financial incentives to boost the North Sea amid fears of cut backs by operators and falling production. Oil prices have bounced recently but remain down around 50pc at just under $60 per barrel when compared with levels achieved in June last year. “Smaller oil and gas companies will be hardest hit by historically low oil prices and major cuts to investment in the industry as they lack the cash reserves the big players have to weather the storm.

In particular, we expect service firms to face rapidly deteriorating trading as oil rigs are taken offline and extraction firms race to reduce their cash burn in an environment where it is increasingly challenging to raise new funds,” said Ms Palmer. Around 16bn barrels of oil are thought to remain in the region, which started being exploited in the early 1970s. But rates of decline have increased in recent years as the cost of production has increased. More than 450,000 jobs in the UK are thought to depend on the industry, which is estimated to be worth £35bn to the British economy.

“Last month was more than seven times as bad as the next-worst January for energy industry layoffs..”

• American Oil Jobs Start Drying Up (Bloomberg)

It’s been a Spindletop-like five years for the American oilman. As fracking projects mounted from the expanse of south Texas to North Dakota’s Drift Prairie, hiring did too. Last year, about 198,000 workers were employed in oil and gas extraction, the most since 1987. Another 325,500 were working in the industry’s support services, the most since the Labor Department began tracking those figures in 1990. Combined, some 523,500 were on company payrolls in 2014, more than twice the number a decade earlier. That’s likely to change this year. A report last week from global outplacement firm Challenger, Gray & Christmas showed 20,193, or 38%, of the 53,041 announced job cuts in January were in the energy industry. Oilfield service company Schlumberger last month said it will eliminate 9,000 jobs; Baker Hughes and Halliburton have said they expect to cut 7,000 and 1,000 positions, respectively.

Not all of those will occur in the U.S., and the Challenger announcements have to be taken with a grain of salt because they include foreign affiliates of American companies. Also, many job cuts are carried out through early retirement and some may not even occur at all. Still, exploration and production customers have so far slashed spending budgets by as much as 30% for this year, Halliburton CEO Dave Lesar said in January, and that doesn’t bode well for the industry’s employment picture. More than 37% of the announcements in January originated from the nation’s No. 1 oil-producing state – Texas. Mine Yucel, head of research at the Federal Reserve Bank of Dallas, said last month that 140,000 Texas jobs directly and indirectly tied to energy will be lost this year if oil stays near $50 a barrel.

North Dakota is conspicuously absent from Challenger’s state breakdown of job-cut announcements, though that too may change. “The economies throughout the northern United States that have been thriving as a result of the oil boom could experience a steep decline in employment across all sectors, including retail, construction, food service and entertainment,” John A. Challenger, the firm’s CEO, said in the report. The January job-cut announcements in the Challenger report are particularly stark when measured against data from the same month going back to 2004. Last month was more than seven times as bad as the next-worst January for energy industry layoffs, in 2009, when companies announced 2,590 job cuts. In 2009, the last year of the recession, oil and gas extraction payrolls declined by 11,800 – and that occurred when crude prices nearly doubled from a January average of around $42.

She better retire.

• Brazil’s Rousseff Pours Gas on Petrobras Fire (Bloomberg)

By making administration loyalist Aldemir Bendine the new head of Brazil’s state-run oil giant Petrobras, President Dilma Rousseff has demonstrated that she’s more interested in protecting her party’s interests than restoring the crown jewel of Brazil’s economy. At the news, investors have dumped Petrobras shares, and you can’t blame them: The company is engulfed in a monumental corruption scandal involving billions in inflated construction contracts, which has implicated scores of executives and politicians. And Bendine, who has been running Banco de Brasil, is closely tied to Rousseff’s Workers’ Party, which has turned Petrobras into a piggy bank for pet programs. Bendine’s reputation is further clouded by an investigation into irregular loans and a large unexplained fine he paid to Brazil’s tax agency in 2012.

Of course, even if Rousseff had named more market-friendly executives to Petrobras’s top management team (after the company’s previous leaders defenestrated last week), they would still be reporting to her, which is enough to make the market nervous. As the chairman of Petrobras from 2003 to 2010, Rousseff either a) did not see, b) chose to ignore or c) took part in the dodgy deals that have caused the company to rack up more than a billion dollars in alleged graft losses and incinerate tens of billions in its market value. Since taking power in 2002, the Workers’ Party has steadily eroded Petrobras’s managerial autonomy, a process that accelerated with the 2007 discovery of enormous oil deposits off the coast of Brazil. At this point, the only thing that can reassure Brazilian investors and restore Petrobras’s luster is a reversal of the most damaging policies the administration has put in place.

“We can see from the forward rates that the market views the current upward pressure on the krone as the greatest ever.”

• Speculation Against Denmark’s Euro Peg Proving Relentless (Bloomberg)

Less than a week after Denmark resorted to its deepest rate cut ever amid historic currency interventions, forward rates suggest some traders and investors still aren’t convinced the central bank can save its euro peg. SEB, the largest Nordic currency trader, says capital flows into AAA-rated Denmark forced the central bank to dump about $4.6 billion in kroner in the first three days of February alone, almost a third the record amount it sold in all of January. Nordea Bank AB, Scandinavia’s biggest lender, says Denmark will need to deliver another 25 basis-point cut to fight back demand for kroner, bringing the benchmark deposit rate to minus 1%.

“The pressure on the krone hasn’t eased yet,” Jens Naervig Pedersen, an economist at Danske Bank, said by phone. “We can see from the forward rates that the market views the current upward pressure on the krone as the greatest ever.” Governor Lars Rohde addressed speculators last week in what he characterized as a verbal intervention to persuade them he won’t let the krone’s peg to the euro collapse. Such a scenario is “unthinkable” and the central bank will do “whatever it takes” to avoid it, he said after delivering a fourth rate cut in less than three weeks. Denmark’s largest institutional investor, ATP, sent a clear message of trust in the peg the same day, revealing it hasn’t bothered to hedge its $110 billion in assets against the possibility that the nation’s currency regime might break.

“Next: do we make the arbitrary leap of judgment and declare that that’s all the lies we will have ever been told, or do we admit the possibility that this is only the tip of an iceberg of lies, that lying is a modus vivendi for the operatives behind them?”

• Masters of Parallel Universes (Dmitry Orlov)

Oddly enough, such quantum effects are quite normal to observe within the political space. Here the physical objects involved are far too large to give rise to the parallel universes of quantum physics, but the narratives they give rise to are not. This is because the narratives are a matter of perception, and there can be historical periods, such as the present one, when the peephole through which the political establishment and the mainstream media allow us to see the world becomes so tiny that it becomes a toss-up as to whether or not any given photon will manage to find its way through it. Here, reality becomes fractured into parallel universes as soon as we make the realization that we are being lied to. Were there weapons of mass destruction in Iraq? No, and the vial of white powder which Colin Powell menacingly held up at the UN was fake.

The Iraqi mobile biological weapons factories did not exist. Was Al Qaeda active in Iraq prior to the US invasion? No, we know that it wasn’t. These lies are now known to be factual—uncontested, commonplace knowledge. Next: do we make the arbitrary leap of judgment and declare that that’s all the lies we will have ever been told, or do we admit the possibility that this is only the tip of an iceberg of lies, that lying is a modus vivendi for the operatives behind them? If we do, then, to be conservative, for every official narrative we must construct one or more unofficial but also plausible (and perhaps much more plausible) narratives. Each of them constitutes a parallel universe, and we can’t know which of them we inhabit until some happy accident—a leak, an investigation, a damning bit of physical evidence, or an outright admission of complicity or guilt—collapses the probability waveform, destroying all the parallel universes but the real one.

“What a shock it would be if Americans began to witness acts of fortitude and valor among us.”

• All Twerked Out (Jim Kunstler)

The Romans, on their journey to decadence, lacked the voltage and the wiring to amplify the anomie overtaking them. We’re bathed and bombarded with the images of exactly how disgusting we are. People of WalMart, throw off your chains of debt, indeed! Imagine trying to govern a land of such vicious dolts. Well, here’s a news flash: no one is really trying — whether from a lack of conviction or courage or intelligence, or out of sheer contempt, it is hard to say. It is heartening, finally, to see Europe attempt to creep away from the intrigues of our Klown Konfederacy at least in the current matter of Ukraine, that poor perpetually over-trodden land of potato-eaters lately torn asunder by America’s idiotic wish to wrest it away from Russia’s 1000-year sphere of influence.

Merkel and Hollande stole over to Moscow last week to confab with Mr. Putin. They evidently omitted to inform the haircut-in-search-of-a-brain, Secretary of State John Kerry. Who would want that mule-faced ninny at the table? The Europeans are beginning to say some sane and arresting things, such as: Russia and Europe are part of the same civilization – note the implication that perhaps America is not so much in that club anymore. Perhaps it should be left twerking out on one of its fabulous lost highways until it is all twerked out. Europe, of course, has its own problems and they are very grave, and they are hard to understand because they derive from a financial system grown so abstruse and impenetrable that the ancient black magic arts look like a game of Go Fish in comparison.

At this late stage, they can only pretend to figure out where all the entwined obligations really lead, and what might happen if someone starts to yank on a thread somewhere. The question for the moment therefore is: can they continue to succeed in pretending? A sickening sense of look-out-below spreads through the sentient ranks. This week will be a doozy. One thing is clearing up: Europe does not want or need to start a war with Russia at America’s insistence. What America needs is a war with itself, a war against the lazy narcissism that has left it susceptible to armies of grifters and racketeers, because ordinary people were too busy twerking and jerking to pay any real attention to the systematic dismemberment of their culture. Waiting in the wings is a whole category of human endeavor quaintly known as virtue, lately absent in the collective consciousness. What a shock it would be if Americans began to witness acts of fortitude and valor among us.

“Eighty-five massive Dutch supertrawlers have now been equipped with electric pulse gear, at a cost of around £300,000 per ship.”

• Europe Slaughters Sea Life In The Name Of ‘Science’ (Monbiot)

One of the biggest jokes in conservation is the Japanese government’s claim to be engaged in “scientific whaling”. All the killing by its harpoon fleet takes place under the guise of “research”, as this is the only justification available, under international rules. According to Joji Morishita, a diplomat representing Japan at the whaling negotiations, this “research programme” has produced 666 scientific papers. While we must respect Mr Morishita’s right to invoke the number of the Beast, which may on this occasion be appropriate, during its investigation of Japanese whaling, the International Court of Justice discovered that the entire “research programme” had actually generated just two peer-reviewed papers, which used data from the carcasses of nine whales.

Over the same period, the Japanese fleet killed around 3,600. So what were the pressing scientific questions this killing sought to address? Here are the likely research areas: • How much money can be made from selling each carcass? • Does whale meat taste better fried or roasted? • To what extent can we take the piss and get away with it? We are rightly outraged by such deceptions. But while we focus our anger on a country on the other side of the world, the same trick – the mass slaughter of the creatures of the sea under the guise of “scientific research” – is now being deployed under our noses.

Our own government, alongside the European commission and other member states, is perpetrating this duplicity. Fishing in Europe with poisons, explosives and electricity is banned. But the commission has gradually been rescinding the ban on using electricity. It began with one or two boats, then in 2010, after ferocious lobbying by the government of the Netherlands, 5% of the Dutch trawler fleet was allowed to use this technique. In 2012 the proportion was raised to 10%. Eighty-five massive Dutch supertrawlers have now been equipped with electric pulse gear, at a cost of around £300,000 per ship.

The NSA is not going to like this.

• China Nears Launch Of Hack-proof ‘Quantum Communications’ Link (Caixin)

This may be a quantum-leap year for an initiative that accelerates data transfers close to the speed of light with no hacking threats through so-called “quantum communications” technology. Within months, China plans to open the world’s longest quantum-communications network, a 2,000-kilometer (1,240-mile) electronic highway linking government offices in the cities of Beijing and Shanghai. Meanwhile, the country’s aerospace scientists are preparing a communications satellite for a 2016 launch that would be a first step toward building a quantum communications network in the sky. It’s hoped this and other satellites can be used to overcome technical hurdles, such as distance restrictions, facing land-based systems.

Physicists around the world have spent years working on quantum-communications technology. But if all goes as planned, China would be the first country to put a quantum-communications satellite in orbit, said Wang Jianyu, deputy director of the China Academy of Science’s (CAS) Shanghai branch. At a recent conference on quantum science in Shanghai, Wang said scientists from CAS and other institutions have completed major research and development tasks for launching the satellite equipped with quantum-communications gear. The satellite program’s likelihood for success was confirmed by China’s leading quantum-communications scientist, Pan Jianwei, a CAS academic who is also a professor of quantum physics.

The satellite would be used to transmit encoded data through a method called quantum key distribution (QKD), which relies on cryptographic keys transmitted via light-pulse signals. QKD is said to be nearly impossible to hack, since any attempted eavesdropping would change the quantum states and thus could be quickly detected by data-flow monitors. A satellite-based quantum-communications system could be used to build a secure information bridge between the nation’s capital and Urumqi, a city that’s the capital of the restive Xinjiang Uyghur Autonomous Region in the west, Pan said. It’s likely the technology initially will be used to transmit sensitive diplomatic, government-policy and military information. Future applications could include secure transmissions of personal and financial data.

Fascinating.

• Heart Of Earth’s Inner Core Revealed (BBC)

Scientists say they have gained new insight into what lies at the very centre of the Earth. Research from China and the US suggests that the innermost core of our planet has another, distinct region at its centre. The team believes that the structure of the iron crystals there is different from those found in the outer part of the inner core. The findings are reported in the journal Nature Geoscience. Without being able to drill into the heart of the Earth, its make-up is something of a mystery. So instead, scientists use echoes generated by earthquakes to study the core, by analysing how they change as they travel through the different layers of our planet. Prof Xiaodong Song, from the University of Illinois at Urbana-Champaign said: “The waves are bouncing back and forth from one side of the Earth to the other side of the Earth.”

Prof Song and his colleagues in China say this data suggests that the Earth’s inner core – a solid region that is about the size of the Moon – is made up of two parts. The seismic wave data suggests that crystals in the “inner inner core” are aligned in an east-to-west direction – flipped on their side, if you are looking down at our planet from high above the North Pole. Those in the “outer inner core” are lined up north to south, so vertical if peering down from the same lofty vantage point. Prof Song said: “The fact we are discovering different structures at different regions of the inner core can tell us something about the very long history of the Earth.” The core, which lies more than 5,000km down, started to solidify about a billion years ago – and it continues to grow about 0.5mm each year.

The finding that it has crystals with a different alignment, suggests that they formed under different conditions and that our planet may have undergone a dramatic change during this period. Commenting on the research, Prof Simon Redfern from the University of Cambridge said: “Probing deeper into the solid inner core is like tracing it back in time, to the beginnings of its formation. “People have noticed differences in the way seismic waves travel through the outer parts of the inner core and its innermost reaches before, but never before have they suggested that the alignment of crystalline iron that makes up this region is completely askew compared to the outermost parts. “If this is true, it would imply that something very substantial happened to flip the orientation of the core to turn the alignment of crystals in the inner core north-south as is seen today in its outer parts.”