Apr 012022
 


Rembrandt van Rijn The Anatomy Lesson of Dr. Nicolaes Tulp 1632

 

Ukraine: Transfer of Power Balance from West to East (Leckie)
The New, Resource-Based Global Reserve Currency (Escobar)
Putin Says Russia to Keep Supplying Gas Amid Shift to Rubles (BBG)
German Chemical Giant Warns Of “Total Collapse” If Russian Gas Supply Cut (ZH)
31 Years After End of Warsaw Pact, NATO Continues As Regional Disrupter (GT)
Ukraine Journalist Finds Charred Remains Where War Crime Was Filmed (IC)
Fight With Clinton Campaign And DNC Looms In Sussmann Case (Pol.)
White House Stands By Biden’s Claim That Hunter Didn’t Profit Off China (WE)
Pakistan Warns Of Foreign-backed Regime-change Attempt (M/P)
WSJ Misleads Public on Ivermectin, Ignores Revelations About ‘Hidden Author’ (CHD)

 

 

 

 

 

 

It really is this simple.

Ukraine: Transfer of Power Balance from West to East (Leckie)

The Russian military is running an “economy of effort” operation. It has effectively fixed in place the garrisons defending Ukraine’s major cities leaving them incapable of supporting the troops in the Donbass. Meanwhile Russia is progressively destroying the military infrastructure of the Ukraine (resupply, maintenance and command and control facilities and weapon systems such as air defense, artillery and armored vehicles) through a combination of air strikes, cruise missiles, rockets and traditional artillery across the breadth and depth of Ukraine. Approximately 60,000 of Ukraine’s best trained and equipped troops are located in the Donbass.

It would appear unlikely that this force is capable of anything other than localized tactical level manoeuvre at this point due to a combination of ever dwindling supplies of ammunition, fuel and rations, Russia’s dominance in the air and ground based combat power, and the effects of combat to date. Despite the alleged incompetence of the handling of the initial stages of the war, the Pentagon assesses that the Russian forces still retain nearly 90 percent of the initial combat power assigned to the invasion. With Russian forces on the verge of completing the capture of Mariupol, it will only be a matter of time before the Ukrainian forces in the Donbass are fully encircled and subsequently destroyed or forced to surrender.

Whilst there may be many weeks, or even months of fighting ahead, the writing is on the wall that Russia, barring outside intervention (i.e. NATO — which has repeatedly ruled out direct military intervention), will achieve its military objectives. The direct Russo-Ukraine conflict is however just one level of this conflict. Ukraine is actually an unfortunate pawn in the much bigger conflict. As long time Russia analyst Gilbert Doctorow notes this is a “full-blown proxy war between the United States of America and the Russian Federation, and it is about ending or perpetuating American global hegemony.” Whilst the war in Ukraine will end sooner or later, the implications at a global scale of this proxy war will be of much greater consequence for a much greater period of time.

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“..trifecta (imminent blitzkrieg on Donbass; US bioweapon labs; Ukraine working on nuclear weapons) as the casus belli..”

The New, Resource-Based Global Reserve Currency (Escobar)

The Russian Central Bank nationalized foreign exchange earnings of all major exporters. There was no default. The ruble keeps rising – and is now back to roughly the same level before Operation Z. Russia remains self-sufficient, food-wise. American hysteria over “isolated” Russia is laughable. Every actor that matters across Eurasia – not to mention the other 4 BRICS and virtually the whole Global South – did not demonize and/or sanction Russia. As an extra bonus, arguably the last oligarch capable of influence in Moscow, Anatoly Chubais, is gone. Call it another momentous historical trickery: Western sanction hysteria de facto dismembered Russian oligarchy – Putin’s pet project since 2000. What that implies is the strengthening of the Russian state and the consolidation of Russian society.

We still don’t have all the facts, but a case can be made that after years of careful evaluation Putin opted to really go for broke and break the West’s back – using that trifecta (imminent blitzkrieg on Donbass; US bioweapon labs; Ukraine working on nuclear weapons) as the casus belli. The freezing of foreign reserves had to have been forecasted, especially because the Russian Central Bank had been increasing its reserves of US Treasuries since November last year. Then there’s the serious possibility of Moscow being able to access “secret” offshore foreign reserves – a complex matrix built with Chinese insider help.

The sudden switch from dollars/euros to rubles was hardcore, Olympic-level geoeconomic judo. Putin enticed the collective West to unleash its demented hysteria sanction attack – and turned it against the opponent with a single, swift move. And here we all are now trying to absorb so many in-synch game-changing developments following the weaponization of dollar assets: rupee-ruble with India, the Saudi petroyuan, co-badged Mir-UnionPay cards issued by Russian banks, the Russia-Iran SWIFT alternative, the EAEU-China project of an independent monetary/financial system.

Not to mention the master coup by the Russian Central Bank, pegging 1 gram of gold to 5,000 rubles – which is already around $60, and climbing. Coupled with No Rubles No Gas, what we have here is energy de facto pegged to gold. The EU Chihuahuas and the Japanese colony will need to buy a lot of rubles in gold or buy a lot of gold to have their gas. And it gets better. Russia may re-peg the ruble to gold in the near future. Could go to 2,000 rubles, 1,000 rubles, even 500 rubles for a gram of gold.

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No disruptions, but a lot of support for the ruble. Also from much higher prices. Who’s winning?

Putin Says Russia to Keep Supplying Gas Amid Shift to Rubles (BBG)

Russia aims to keep supplying gas to European customers even as it demands they shift to payment in rubles, President Vladimir Putin said, easing fears that the shift could lead to disruptions from the continent’s biggest supplier. “Russia values its business reputation, we have complied and will comply in the future with obligations under all contracts, including gas contracts,” he told officials in televised comments laying out the new mechanism for ruble payments. “We will continue to supply gas in the volumes and at prices set down in the current long-term agreements,” he added, warning that shipments would be stopped for customers who don’t accept the new terms starting Friday.

European officials said the change isn’t likely to affect supplies. “For us, with regard to Putin’s threat or announcement or plan — one doesn’t really know what to call it anymore — to get paid in rubles, the main point is that the contracts are being kept,” German Economy Minister Robert Habeck said. When Putin first announced the ruble-payment demand last week, European officials rejected it, saying the move would violate contract terms. But the Kremlin Thursday published a presidential decree outlining the mechanism to allow foreign buyers to convert their dollars and euros into the Russian currency through a state-controlled bank. European benchmark gas jumped after the order was published but pared gains later. Fear of a possible cutoff of Russian gas — worsened by the threats on ruble payments — had driven prices higher in recent days.

An official at the French presidency, speaking on condition of anonymity, said the new mechanism doesn’t change the payments as mandated in the contracts, which will continue as before. But the official said France is preparing a contingency plan for gas, given all the uncertainties. Putin initially portrayed the move against “unfriendly countries” as retaliation for sweeping Western sanctions imposed over his invasion of Ukraine. The Kremlin, seeking to use its leverage as Europe’s largest gas supplier, hinted it might cut off countries that refused. But the Group of Seven leading industrial nations flatly rejected the demand, saying it violated contractual terms. Authorities in Germany and Austria warned that the dispute could lead to an interruption in vital supplies.

Gas buyers were still seeking clarity on the change Thursday. Germany’s E.ON SE said it’s not clear which contracts are covered, while Denmark’s Orsted AS said it hasn’t been approached by Russian gas giant Gazprom and until that happens, assumes the contract conditions are unchanged. Payments for gas shipped in April are due late in the month or in May, depending on the contract, according to a person familiar with Russia’s supply deals. German Chancellor Olaf Scholz, who discussed the issue in a call with Putin, said Thursday, “in any case, it remains the case that companies want to, can and will continue to pay in euros.”

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I just said: NO disruptions.

German Chemical Giant Warns Of “Total Collapse” If Russian Gas Supply Cut (ZH)

CEO of Germany’s multinational BASF SE, the world’s largest chemical producer, has warned that curbing or cutting off energy imports from Russia would bring into doubt the continued existence of small and medium-sized energy companies, and further would likely spiral Germany into its most “catastrophic” economic crisis going back to the end of World War 2. Company CEO Martin Brudermuller issued the words in an interview with Frankfurter Allgemeine newspaper just ahead of German officials by midweek giving an “early warning” to industries and the population of possible natural gas shortages, as Russia appears ready to firmly hold to Putin’s recent declaration that “unfriendly countries” must settle energy payments in rubles, related to the Ukraine crisis and resultant Western sanctions.

According to Bloomberg he mused that while “Germany could be independent from Russia gas in four to five years” it remains that “LNG imports cannot be increased quickly enough to replace all Russian gas flows in the short term.” But in the meantime, Brudermuller described that “It’s not enough that we all turn down the heating by 2 degrees now” given that “Russia covers 55 percent of German natural gas consumption.” He emphasized that if Russian gas disappeared overnight, “many things would collapse here” – given that “we would have high levels of unemployment, and many companies would go bankrupt. This would lead to irreversible damage.” He continued:

“To put it bluntly: This could bring the German economy into its worst crisis since the end of the Second World War and destroy our prosperity. For many small and medium-sized companies in particular, it could mean the end. We can’t risk that!” The dire warning of coming disaster in the event Russian gas is shut off came in response being questioned over whether it’s at all possible to abandon Russian energy. Asserting that this issue is not “black and white” – and that the German economy stands on the brink of catastrophe, the BASF CEO said that if this standoff continues to escalate it will “open the eyes of many on both sides”…

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View from China.

31 Years After End of Warsaw Pact, NATO Continues As Regional Disrupter (GT)

It has been 31 years since the formal dissolution of the military structures of the Warsaw Pact on March 31, 1991. NATO, another product of the Cold War era, however, has not dissolved with the end of the Cold War and the disbandment of the Warsaw Pact. NATO’s activities have aroused regional and global insecurities. And the ongoing Ukraine crisis was largely triggered by the bloc’s eastward expansion. The continued existence of NATO is mainly to serve the global military hegemony system of the US. Even in the era of the Cold War, the US-led NATO was not only meant to counter the Warsaw Pact, but also served as a tool to dominate the world militarily. This was reinforced after the end of the Cold War. Through military cooperation, Washington can put a grip on many Western countries, especially those in Europe.

As a member of the military group, Europe has been heavily impacted by the US in terms of defense policy and strategic decisions. As Washington has regarded Moscow as its foe and rival, it has exploited many European countries to contain and deter it. Today, NATO has become an instrument to maintain US’ military hegemony. NATO has set a target of 2 percent of a member state’s GDP to spend on defense. But many countries have failed to meet the target in the past several years, to the annoyance of the US. As a response to the Ukraine crisis, more countries vowed to raise spending to 2 percent. Furthermore, the US took advantage of the Ukraine crisis to sell more weaponry to Europe and ramp up its military deployment against Russia. It can be said that the ongoing Russia-Ukraine crisis has intensified Washington’s control over NATO members in Europe.

After the end of the Cold War, in a bid to prove the value and legitimacy of its existence, NATO has created various imaginary enemies and provoked regional conflicts many times, including the Ukraine crisis. Some experts said that the absolute security of NATO is the absolute insecurity of the rest of the world. With NATO’s eastward expansion, the bloc has intensified conflict with Russia and greatly suppressed its strategic space. This has worsened Russia-Europe relations and threatened the peace and stability of Eastern Europe. The pursuit of absolute security has indeed led to regional and global instability. French President Emmanuel Macron said in 2019 that NATO was experiencing “brain death.” On March 17, he told a press conference that he took “full responsibility” for what he said in 2019, but added that “Russia has just provided an electroshock … the awakening” with its military operations in Ukraine.

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Even the alt media in the west feel obligated to start a report like this with: “Amid overwhelming evidence that Russian forces have committed war crimes during an unprovoked war of aggression in Ukraine.. “

Ukraine Journalist Finds Charred Remains Where War Crime Was Filmed (IC)

Amid overwhelming evidence that Russian forces have committed war crimes during an unprovoked war of aggression in Ukraine, Ukrainian officials were confronted this week with video that appeared to show Ukrainian soldiers shooting captive Russian soldiers in the legs. Although Ukraine’s senior military leader and its domestic intelligence agency both insisted that the video posted on social networks on Sunday was “a fake” produced by Russia, an adviser to Ukrainian President Volodymyr Zelenskyy promised that the government would investigate and punish those responsible if the incident did take place. On Monday, a well-known Ukrainian journalist, Yuri Butusov, published graphic video showing the charred remains of three men he identified as Russian soldiers, as Ukrainian forces recaptured the town of Malaya Rohan, outside Kharkiv, over the weekend.

Although Butusov made no mention of the video of the alleged war crime, a visual analysis of his footage shows that it was clearly filmed in the same location as the video of the prisoners being shot, some time after that incident. Reporting by open-source investigators and BBC News had already established that the video of the alleged war crime was recorded at a dairy processing plant in Malaya Rohan, which is about 3 miles east of Kharkiv. Multiple visual clues in Butusov’s video show that he discovered the burned bodies in precisely the same part of the dairy plant’s courtyard where, in the prior video, at least eight captives were filmed bleeding on the pavement, several with their hands bound behind their backs and bags over their heads.

According to Butusov, the editor of the Ukrainian news site Censor.net, he arrived in Malaya Rohan “a few hours after the battle” there. By that time, his footage shows, several of the buildings at the dairy factory had been partially destroyed by explosions or fire. Those same structures had not yet been damaged when the video showing the prisoners being shot was recorded.

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Durham won’t let go.

Fight With Clinton Campaign And DNC Looms In Sussmann Case (Pol.)

A looming legal battle could reveal new details about the decision by Hillary Clinton’s 2016 presidential campaign to commission a research project that produced a controversial dossier on Donald Trump’s alleged ties to Russia. Prosecutors on special counsel John Durham’s team handling a criminal false-statement case against a top lawyer for Democratic causes, Michael Sussmann, indicated on Thursday that they planned to challenge claims of attorney-client privilege raised by the Democratic National Committee and Clinton’s campaign. The issue has lingered for years, with the Democratic groups claiming that the investigative firm that produced the dossier, Fusion GPS, did so as part of attorney-requested research related to potential litigation.

However, Durham’s prosecution of Sussmann, a former Perkins Coie partner, may bring the question to a head as prosecutors seek to call witnesses from the law firm and Fusion GPS. “It’s obviously a bit of a hornet’s nest,” defense attorney Sean Berkowitz said on Thursday during a pretrial hearing for Sussmann, who’s accused of lying to the FBI by denying he was working for any client when in September 2016 he brought FBI general counsel James Baker computer data that hinted at links between Trump entities and Russia. Berkowitz said that on Wednesday night, Durham’s team indicated that it planned to contest the privilege claims in the lead-up to Sussmann’s trial, set to open May 16 in Washington. The defense attorney denounced the prosecution’s move as “wildly untimely” and “an ambush that could change the entire parameter and focus of the case.”

“We’re very concerned about it,” Berkowitz told U.S. District Court Judge Christopher Cooper. During a House Intelligence Committee investigation in 2017, Clinton campaign general counsel Mark Elias, a Perkins Coie attorney, testified — with permission from the DNC and the campaign — that he selected Fusion GPS to do research on Trump and individuals in his orbit. He said Clinton campaign manager Robbie Mook approved the work, but wasn’t involved in picking the firm. But details of who in Clinton’s orbit knew about the sensitive project, handled primarily by former British intelligence officer Christopher Steele, remain murky. “We have had conversations and have been unable to get comfort as to the grounding and basis of various privilege theories,” Assistant U.S. Attorney Andrew DeFilippis told the judge.

“These issues are unavoidable and we’ve been working for quite some time to get to the bottom of them.” DeFlippis didn’t delve into the details of the dispute during the hearing held by videoconference on Thursday, but he gave one example: He said the Clinton campaign was asserting privilege over communications of Rodney Joffe, a tech executive who compiled the data Sussmann shared with the FBI. The campaign has asserted the privilege even over messages it was not copied on, DeFelippis said. Durham’s team is, to some extent, shooting in the dark. DeFilippis signaled on Thursday that prosecutors didn’t know the details of much of the information they might want to bring up at Sussmann’s trial because those statements are redacted in documents the prosecution team has access to. “We don’t have insight into what’s under the redactions,” DeFilippis said.

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What use is denying at this point?

White House Stands By Biden’s Claim That Hunter Didn’t Profit Off China (WE)

The White House is standing by then-candidate Joe Biden’s October 2020 assertion that his son had not made money in China despite clear evidence that his son had received millions from Chinese businessmen.
When Kristen Welker of NBC News, who moderated the presidential debate in which Biden made the claim, asked White House communications director Kate Bedingfield on Thursday whether the White House stood by Biden’s debate comments that there was nothing unethical about Hunter Biden’s business dealings and that his son had not made any money in China, Bedingfield confirmed the White House would “stand by“ the statement. “We absolutely stand by the president’s comment, and I would point you to the reporting on this, which referenced statements that we made at the time that we gave to the Washington Post who worked on this story,” Bedingfield said.

“But as you know, I don’t speak for Hunter Biden, so there’s not more I can say on that.” But executives from the Chinese Communist Party-linked CEFC energy company “paid $4.8 million to entities controlled by Hunter Biden and his uncle,” James Biden, the Washington Post confirmed earlier this week following reporting by the Washington Examiner and others. New documents, which include “a signed copy of a $1 million legal retainer, emails related to the wire transfers, and $3.8 million in consulting fees that are confirmed in new bank records and agreements signed by Hunter Biden — illustrate the ways in which his family profited from relationships built over Joe Biden’s decades in public service,” the outlet said. Bedingfield was asked whether there had been discussions inside the White House about possible pardons for James or Hunter Biden, a possibility she dismissed as a “hypothetical” she wouldn’t address from the podium.

Welker had asked Joe Biden during the 2020 debate, “There have been questions about the work your son has done in China and for a Ukrainian energy company when you were vice president. In retrospect, was anything about those relationships inappropriate or unethical?” Joe Biden would then falsely deny his son had made money from China. “Nothing was unethical,” Joe Biden replied, arguing at length he had done no wrong during his son’s lucrative time on the board of Ukrainian energy giant Burisma, before adding, “My son has not made money in terms of this thing about — what are you talking about — China. I have not had it. The only guy that made money from China is this guy. He’s the only one. Nobody else has made money from China.”

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A nuclear power.

Pakistan Warns Of Foreign-backed Regime-change Attempt (M/P)

While the world’s attention is understandably focused on the crisis in Ukraine, equally grave developments are taking place elsewhere. Perhaps the most consequential – and underreported – is a regime-change operation underway in Pakistan. This March, opposition lawmakers in Pakistan’s parliament launched a “no-confidence” motion aimed at overthrowing Prime Minister Imran Khan. Khan, who was democratically elected in 2018, has warned that an “effort is being made to topple the government with the help of foreign funds in our country.” “Our people are being used. Mostly unknowingly, but some knowingly are using this money against us,” Khan said at a rally on March 27. He added that the government had proof of these payments. Khan argued that these external interests seek to reverse his independent foreign policy.

He recalled his predecessor Zulfikar Ali Bhutto, a Pakistani prime minister who was overthrown in a US-backed coup in 1977, then executed following a show trial. Bhutto was punished “when he tried to bring in a free foreign policy to the country,” Khan declared. Khan specifically singled out the United States for meddling to try to remove him from power. He said he received a letter from Washington that threatened him for refusing to allow it to establish US military bases in Pakistan. He cautioned that the opposition is collaborating with the United States and other foreign countries in its no-confidence motion against him. These warnings came just over a month after Khan publicly criticized the US government for cynically using Pakistan to advance Washington’s interests. He also simultaneously praised China for always acting as a “friend” of Islamabad.

“Whenever the US needed us, they established relations, and Pakistan became a frontline state [against the Soviet Union], and then abandoned it and slapped sanctions on us,” Khan complained. On the other hand, “China is a friend which has always stood by Pakistan,” he contrasted. The idea that a regime-change plot could even be conceived of, let alone attempted, in a nuclear-armed country of more than 220 million may seem shocking and preposterous. On the surface, it strikes as incredulous considering that Islamabad is a major world capital, arguably the most powerful within the Muslim-majority world. Nevertheless, it is precisely these characteristics that make Pakistan so geopolitically important. The following is an analysis of the principal reasons for why hostile foreign elites have decided that Prime Minister Imran Khan must go

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“..81 separate studies — involving a combined 128,000 participants — that demonstrated an average efficacy of 65% for several different outcomes..”

WSJ Misleads Public on Ivermectin, Ignores Revelations About ‘Hidden Author’ (CHD)

The Wall Street Journal on March 18 published an article with this headline: “Ivermectin Didn’t Reduce Covid-19 Hospitalizations in Largest Trial to Date.” Headline readers will easily reach the seemingly obvious conclusion: Drs. Anthony Fauci and Rochelle Walensky, along with the National Institutes of Health (NIH) and the Centers for Disease Control and Prevention, were right all along. However, for those who read beyond the headline and first few paragraphs, the story begins to morph. The headline clearly states the trial in question was the largest to date. However, this is not the case — as the article’s author, Sarah Toy, explains early in the piece:


“The latest trial, of nearly 1,400 Covid-19 patients at risk of severe disease, is the largest to show that those who received ivermectin as a treatment didn’t fare better than those who received a placebo.” This wasn’t the largest trial to date — it was only the largest trial to date among the subset of trials that have shown no benefit of ivermectin. Was this an oversight? Or was it a deliberate attempt to confuse the 42 million readers of The Wall Street Journal’s digital content? [..] Toy chose not to mention the 81 separate studies — involving a combined 128,000 participants — that demonstrated an average efficacy of 65% for several different outcomes. She also did not mention the 22 studies — involving nearly 40,000 people — around the outcome in question, hospitalization. Those studies showed an average efficacy of 39%.

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Jan 032022
 


Rembrandt van Rijn Bathsheba at her bath 1654

 

The MSM Is Losing The Fight Of Its Life…All Thanks To Joe Rogan (QTR)
Joe Rogan Joins GETTR As Twitter Censorship Intensifies (PM)
Understaffed Hospitals Ease Mandates, Rehire Unvaxxed Employees (JTN)
Vaccines Don’t Stop Covid Hospitalizations Or Deaths (Berenson)
Insurance CEO Says Deaths Up 40% Among Working Age People (JTN)
New York Woman Arrested For Giving Teen Covid-19 Vaccine At Her Home (RT)
Britain Got It Wrong On Covid: Long Lockdown Did More Harm Than Good, (G.)
Bizarre Neurological Illness Plagues Young Canadians
Navy, Air Force Issue Blanket Denials Of Religious Exemptions (JTN)
More Than 2,500 US Flights Canceled Sunday Citing Covid (JTN)
Biden Pick for FDA Chief Holds Millions in Big Pharma Investments (CHD)
US Dollar’s Status as Dominant “Global Reserve Currency” at 25-Year Low (WS)
Adam Schiff Says Russian Invasion Of Ukraine ‘Very Likely’ (JTN)

 

 

 

 

Australian Medical Whistleblowers Speak Out About Horrific Reactions Right After Vaccines

 

 

Rogan’s audience is much bigger than CNN and MSNBC combined. He’s an existential threat.

Quoth the Raven is a finance writer. Who sees this one very well.

The MSM Is Losing The Fight Of Its Life…All Thanks To Joe Rogan (QTR)

[..] after listening to Dr. Robert Malone‘s well reasoned arguments, delivered for three straight hours, concisely and calmly, it became clear to me that the entire mainstream media machine could wind up falling at the hands of content creators like Joe Rogan. It’s an interesting little piece of game theory, when you think about it. Rogan generates so many views and has grown so quickly – strictly because he allows open dialogue, civil discourse and approaches things with honest intent – that there is no financial incentive to de-platform him.

Ever notice how YouTube apparently had no problem taking down Rogan’s interview with Malone, but hasn’t banned Rogan’s channel from the site yet? One issue for media and political elites to consider is the fact that Rogan has supporters on both sides of the aisle. These supporters watch him because he routinely touches on topics that are considered faux pas or irreverent. The question of whether or not Rogan’s legacy and impact are here, and are going to remain here, can be answered with a resounding “yes”. Rogan has thrived, whether intentionally (bringing on people specifically because they are being censored) or unintentionally (shooting the shit with people he finds interesting), from the start, by shining light in the dark areas that the mainstream media refuses to discuss.

In the same way that bitcoin unintentionally became a global phenomenon as a result of the negative consequences of central banking, Joe Rogan has become a global phenomenon at the hands of the negative consequences of how the mainstream media and “big tech” does business. It reminds of me the scene in the 1989 version of Batman where Batman tells the Joker, “I’m going to kill you”, to which the Joker retorts: “You IDIOT! You made me. Remember? You dropped me into that vat of chemicals! That wasn’t easy to get over, and don’t think that I didn’t try!” And so now, as it stands, knob-heads like Brian Stelter and his merry band of buffoons over at CNN – who spent 2021 attacking Rogan – have little choice but to fall in line behind him.

You see, one of the great things about being the leader in an industry (in this case, media), is that you set the pace, you dictate the tone and you become the bar of expectation for integrity, honesty, open-mindedness, truthful dialogue and creating discussion that benefits the greater good, and not just those who you serve. Joe Rogan has raised the bar, whether people on the left, on the right, in the media or in politics care, or not. Not only has Rogan taken the lead by several lengths like Smarty Jones breaking loose around the final turn at the Preakness, he has also inspired and created a whole new crop of content creators that are following his model. In other words, it isn’t just Joe Rogan that the mainstream media is up against, it’s the hundreds, if not thousands, of content creators that are either looking to build media empires themselves, or are simply just inspired by open dialogue, like myself.

Malone Rogan EUA

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Within hours, Rogan had ten million followers on GETTR. Many of whom will also have opened accounts, if only to follow him.

I read some critical views on GETTR too, though. There are many alternatives to Twitter, just a matter of time before people choose.

Joe Rogan Joins GETTR As Twitter Censorship Intensifies (PM)

As Twitter continues to ban users from its platform, podcast superstar Joe Rogan announced on Sunday that he has set up a GETTR account. “Just in case shit over at Twitter gets even dumber, I’m here now as well. Rejoice!” Rogan wrote on his GETTR account Sunday afternoon. Most recently, Twitter has banned Rep. Marjorie Taylor Greene from their platform, citing multiple violations of the social media giant’s COVID-19 policies. One of Rogan’s most recent interviews on his podcast was with Dr. Robert Malone, who was recently banned from the platform as well for his stance on the COVID-19 vaccine.

“They removed you for not going along with whatever the tech narrative is, because tech clearly has a censorship agenda when it comes to COVID in terms of treatment, in terms of the— whether or not you’re promoting what they would call vaccine hesitancy, they can ban you for that, they can ban you for in their eyes, what they think is a justifiable offense,” Rogan told Malone “I try really hard to give people the information and help them to think, not to tell them what to think. Okay? But the point is if I’m not — if it’s not okay for me to be part of the conversation, even though I’m pointing out scientific facts that may be inconvenient, then who is who can be allowed?” Malone said later in the conversation.

Gettr launched earlier this year as a competitor to Twitter. Jason Miller, a former senior adviser to the Trump administration and CEO of Gettr, said in July that the platform will remain open to opinions from any end of the political spectrum. Gettr allows users the option to “import their existing tweets into this new platform,” in addition to longer character count posts, and clearer photos. “GETTR is the marketplace of ideas. We will not cancel people for their political opinions, and GETTR offers far more features and better technology than anything else out there,” Miller said in the statement.

Malone Rogan Pfizer

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Traveling nurses.

Understaffed Hospitals Ease Mandates, Rehire Unvaxxed Employees (JTN)

After unvaccinated healthcare workers were fired for refusing to comply with vaccine mandates, some are being asked to return to work due to staffing shortages amid increasing COVID-19 cases. In Canada, for example, Alberta Health Services announced on Dec. 23 it will allow unvaccinated healthcare workers to resume their jobs starting Jan. 10 if they submit to frequent testing. AHS cited expected increased demands on the health system due to the spread of the Omicron variant for the policy change. As of the date of the announcement, 1,400 healthcare workers who were not fully vaccinated had been placed on unpaid leave. AHS said that unvaccinated workers will be responsible for paying for and coordinating their COVID tests, which they must complete no more than 48 hours prior to their shifts.


Quebec announced on Tuesday that some COVID-positive healthcare workers and other essential employees will be allowed to continue working in order to prevent breakdowns in services, CBC News reported. Healthcare workers who are triple-vaccinated will be prioritized. In Oregon, meanwhile, “30 percent of the nursing staff in some hospitals are made up of traveling nurses,” Matt Calzia, a registered nurse and member of the Oregon Nurses Association, told Fox 12 Oregon in October. “In others, turn over [sic] is high. The majority of a unit might be composed of traveling nurses during some shifts.” That same month, St. Charles Health System in Bend, Ore., having lost more than 100 full-time staff in the previous month, hired 120 traveling nurses and received aid from the state National Guard, OPB News reported. St. Charles had as of then approved a little more than half of all medical and religious exemption requests.

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The myth begins to crumble.

Vaccines Don’t Stop Covid Hospitalizations Or Deaths (Berenson)

Even at the peak of their protection earlier in 2021, Covid vaccines barely reduced the risk of hospitalizations in vaccinated people who had “breakthrough” infections, new data show. Vaccinated people in a study published Tuesday had a nearly 1 in 200 chance of of requiring hospitalization for Covid in the first six months after being “fully vaccinated.” That stunning risk came even though the median age of people in the study was only 51, and most were relatively healthy. Deaths, ventilator use, and other severe outcomes also occurred regularly in vaccinated people. The data comes from a study of about 600,000 vaccinated Americans seen at over 100 academic medical centers.

The study was published online Dec. 28 in the Journal of the American Medical Association – JAMA Internal Medicine. The data in the study also make clear how quickly vaccine protection fades after the second dose – and that the Centers for Disease Control hugely understated the number of vaccinated people hospitalized for Covid earlier this year. Of the 600,000 fully vaccinated people, about 2,800 required inpatient hospitalization for Covid in the first six months after “full vaccination.” That period starts 14 days after the second dose of mRNA vaccines, when vaccine protection should be at peak.

Almost 3 percent of fully vaccinated people, or 1 in 35, were infected over the first six months, with infection rates accelerating sharply at the end of the study. In all, 148 of the 600,000 vaccinated people had what the study’s authors called “serious” outcomes from Covid, including ventilation or death, in the first six months after full vaccination. The study does not reveal how many people were infected or hospitalized for Covid after the first dose or less than two weeks after the second, when rates of infection, hospitalization, and death are known to be even higher.

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“Most of the claims for deaths being filed are not classified as COVID-19 deaths..”

Insurance CEO Says Deaths Up 40% Among Working Age People (JTN)

The head of OneAmerica insurance said the death rate is up a stunning 40% from pre-pandemic levels among working-age people. “We are seeing, right now, the highest death rates we have seen in the history of this business – not just at OneAmerica,” the company’s CEO Scott Davison said during an online news conference this week. “The data is consistent across every player in that business.” OneAmerica is a $100 billion insurance company that has had its headquarters in Indianapolis since 1877. The company has approximately 2,400 employees and sells life insurance, including group life insurance to employers in the state.

Davison said the increase in deaths represents “huge, huge numbers,” and that’s it’s not elderly people who are dying, but “primarily working-age people 18 to 64” who are the employees of companies that have group life insurance plans through OneAmerica. “And what we saw just in third quarter, we’re seeing it continue into fourth quarter, is that death rates are up 40% over what they were pre-pandemic,” he said. “Just to give you an idea of how bad that is, a three-sigma or a one-in-200-year catastrophe would be 10% increase over pre-pandemic,” he said. “So 40% is just unheard of.” Davison was one of several business leaders who spoke during the virtual news conference on Dec. 30 that was organized by the Indiana Chamber of Commerce.

Most of the claims for deaths being filed are not classified as COVID-19 deaths, Davison said. “What the data is showing to us is that the deaths that are being reported as COVID deaths greatly understate the actual death losses among working-age people from the pandemic. It may not all be COVID on their death certificate, but deaths are up just huge, huge numbers.” He said at the same time, the company is seeing an “uptick” in disability claims, saying at first it was short-term disability claims, and now the increase is in long-term disability claims. “For OneAmerica, we expect the costs of this are going to be well over $100 million, and this is our smallest business. So it’s having a huge impact on that,” he said.

[..] The number of hospitalizations in the state is now higher than before the COVID-19 vaccine was introduced a year ago, and in fact is higher than it’s been in the past five years, Dr. Lindsay Weaver, Indiana’s chief medical officer, said at a news conference with Gov. Eric Holcomb on Wednesday. Just 8.9% of ICU beds are available at hospitals in the state, a low for the year, and lower than at any time during the pandemic. But the majority of ICU beds are not taken up by COVID-19 patients – just 37% are, while 54% of the ICU beds are being occupied by people with other illnesses or conditions.

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Bizarre.

New York Woman Arrested For Giving Teen Covid-19 Vaccine At Her Home (RT)

A woman in New York state was arrested after she was accused of administering a Covid-19 vaccine to a teenager while lacking a medical license. The teen’s mother later told the police she was unaware of the injection. Laura Parker Russo, a 54-year-old Long Island woman, allegedly gave the teenager what the investigators believe was a Covid-19 vaccine at her home on Friday, police told local media. It’s unclear what the teenager was doing at Russo’s home and whether they are related. While the boy’s attitude to the procedure is unknown, it did not sit well with his mother, who wasted no time in notifying the police.


The mother told detectives that she had not given Russo permission to inject her son with the substance. However, the lack of parental consent turned out to be only the tip of the iceberg, with police later discovering that Russo had no right to perform medical procedures. The woman was neither a medical professional, nor was she authorized to carry out vaccination. Russo was charged with practicing without a proper qualification, and is set to appear before court on January, 21. Children as young as 5 are eligible for the Covid-19 vaccine in the US. Currently, there is only one vaccine – the Pfizer-BioTech Covid-19 jab – that is available to those aged from 5 to 17. It’s unclear what brand the woman used to vaccinate the teen.

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The Guardian with an alternative view?! Oh my…

Britain Got It Wrong On Covid: Long Lockdown Did More Harm Than Good, (G.)

There was a distinctive moment, at the start of the Covid-19 pandemic, that neatly encapsulated the mistakes and confusion of Britain’s early efforts to tackle the disease, says Mark Woolhouse. At a No 10 briefing in March 2020, cabinet minister Michael Gove warned the virus did not discriminate. “Everyone is at risk,” he announced. And nothing could be further from the truth, argues Professor Woolhouse, an expert on infectious diseases at Edinburgh University. “I am afraid Gove’s statement was simply not true,” he says. “In fact, this is a very discriminatory virus. Some people are much more at risk from it than others. People over 75 are an astonishing 10,000 times more at risk than those who are under 15.”

And it was this failure to understand the wide variations in individual responses to Covid-19 that led to Britain’s flawed responses to the disease’s appearance, he argues – errors that included the imposition of a long-lasting, national lockdown. This is a strategy that Woolhouse – one of the country’s leading epidemiologists – describes as morally wrong and highly damaging in his forthcoming book, The Year the World Went Mad: A Scientific Memoir. “We did serious harm to our children and young adults who were robbed of their education, jobs and normal existence, as well as suffering damage to their future prospects, while they were left to inherit a record-breaking mountain of public debt,” he argues. “All this to protect the NHS from a disease that is a far, far greater threat to the elderly, frail and infirm than to the young and healthy.

“We were mesmerised by the once-in-a-century scale of the emergency and succeeded only in making a crisis even worse. In short, we panicked. This was an epidemic crying out for a precision public health approach and it got the opposite.” Rather than imposing blanket lockdowns across the nation, the government should have adopted measures designed to make contacts safe, Woolhouse maintains. “You can see from the UK data that people were reducing their contacts with each other as cases rose and before lockdown was imposed. That, coupled with Covid-safe measures, such as masks and testing, would have been sufficient to control spread.”

Largely voluntary behaviour change worked in Sweden and it should have been allowed to progress in the UK, argues Woolhouse. Instead, we plumped for an enforced national lockdown, in part because, for the first time in history, we could. Enough business is now done online to allow large parts of society to function fairly well – through video conferences and online shopping. “But it was a lazy solution to a novel coronavirus epidemic, as well as a hugely damaging one,” he adds.

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Not sure what to make of this. Looks like prion disease? But it predates the vaccines.

Bizarre Neurological Illness Plagues Young Canadians

Dozens of young people with no preexisting conditions are developing symptoms of a new disease as activists and families suspect a cover-up on the part of the local government. A whistleblower with Vitalité Health Network in New Brunswick told The Guardian on Sunday that symptoms include hallucinations, difficulty thinking, limited mobility, insomnia, and rapid weight loss. Local government has reportedly struggled to dismiss the growing number of cases as Alzheimer’s or other neurological diseases uncommon outside the elderly. While the official number of cases recorded since the mystery illness was first publicly acknowledged in early spring has not budged upward from 48, multiple sources told The Guardian that as many as 150 people may have contracted the fast-moving illness.

Still more young people require assessment, and several have died. “I’m truly concerned about these cases because they seem to evolve so fast,” the source told the outlet, acknowledging that “we owe them some kind of explanation.” One of the more disturbing elements of the condition is how little is known regarding transmission. In at least nine cases, caretakers and others in close contact with sick individuals have developed similar symptoms to the ailing party, suggesting the illness not only spreads readily between unrelated individuals but that there may be environmental factors involved. Some have compared the illness to Creutzfeldt-Jakob disease, a fatal brain disease caused by misshapen proteins called prions, though screening reportedly produced no confirmed CJD cases.

The province has struggled to keep the cases under wraps – the case cluster only became public last year when a memo was leaked to the media, and the government has insisted the “cluster” itself is merely the result of “misdiagnoses” grouping unrelated illnesses together. Officials declared in October that eight fatal cases were due to “known and unrelated pathologies,” rather than a shared and unknown illness. An epidemiological report released in October supposedly ruled out any food, behavioral, or environmental exposure that could explain the problem.

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Preprinted template.

Navy, Air Force Issue Blanket Denials Of Religious Exemptions (JTN)

The Navy and Air Force are allegedly issuing predetermined blanket denials of requests for religious exemptions from the military’s COVID-19 vaccine mandate, in violation of federal law and regulations. Vice Admiral John Nowell, deputy chief of naval operations for manpower, personnel, training, and education, created a 50-step standard operating procedure streamlining the denials of these requests, known as religious accommodation requests (RARs). The military is required by law to evaluate RARs on an individual basis to ensure due process under the Fifth Amendment and protect service members’ First Amendment right to religious freedom. The 50-step process is separated into six phases. In phase 1, before an individual service member’s RAR is reviewed, a denial template letter is added to the package of documentation included with the request.


The screenshot provided in steps 15 and 27 shows that highlighted portions of the letter to be edited include the service member’s and supervisor’s names and processing dates. But the section that says “your request for religious accommodation through waiver of immunization requirements is disapproved” is already written and not highlighted for editing. There’s no mention of an approval template letter. In phase 4, a reviewing officer is instructed to examine the RAR in step 35. “THIS IS THE MOST CRITICAL STEP IN THE ENTIRE PROCESS AND THE [Chief of Naval Operations] AND [Chief of Naval Personnel] ARE RELYING ON YOU TO ENSURE THAT YOUR REVIEW IS THOUROUGH [sic] AND ACCURATE,” the instructions emphasize in all caps. “DO NOT RUSH THIS PROCESS AND ENSURE THAT YOU UNDERSTAND BEFORE MOVING FORWARD.”

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1000s stuck in an airport is a great way to prevent the spread.

How many unvaccinated pilots, and how many with adverse effects?

More Than 2,500 US Flights Canceled Sunday Citing Covid (JTN)

More than 2,500 United States flights have been canceled as of Sunday afternoon as airlines face inclement weather and increasing numbers of COVID-19 cases. Globally, 4,188 flights have been canceled, 2,510 of them within, into, or out of the United States alone, according to FlightAware. More than 13,700 flights globally are facing delays, affecting 6,202 U.S. flights. Thousands of flights have faced issues during the holiday season in the United States, largely due to COVID-19 cases as the new omicron variant sweeps the nation. Chicago’s O’Hare Airport was ranked highest on FlightAware’s Misery Map Sunday. More than five inches of snow hit some parts of the Chicago area in a New Year’s winter storm, and 47% of all O’Hare flights have been canceled or delayed.


The previous day, 70% of all flights leaving O’Hare were canceled or delayed. Southwest is one of the worst-hit airlines with more than 420 flights canceled as of Sunday afternoon. Over the last 10 days, more than 14,000 flights have been canceled according to a CNN tally of FlightAware data. Allegiant spokeswoman Hilarie Grey told CNN: “As you’ve noted, we continue to have an unusual number of cancellations this week — some have been due to severe weather, and some due to other factors — including the type of unanticipated staff impacts from COVID experienced by other airlines and partners in places where we fly.”

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Sanders should comment on Fauci’s holdings.

Biden Pick for FDA Chief Holds Millions in Big Pharma Investments (CHD)

Sen. Bernie Sanders last week said he would oppose President Joe Biden’s nomination of Dr. Robert Califf to lead the U.S. Food and Drug Administration (FDA) for the second time, citing the cardiologist’s multimillion-dollar ties to Big Pharma. Califf — who served as FDA commissioner during the final 11 months of the Obama administration — mostly skated through a congenial Senate confirmation hearing Tuesday. According to STAT, his only stumble occurred when he was pressed about the FDA’s role and failings in the opioid crisis. The Associated Press reports Senate Health, Education, Labor and Pensions Committee Chair Patty Murray (D-Wash.) and the ranking Republican member, Sen. Richard Burr of North Carolina, both said they would vote to confirm Califf.

Sanders (I-Vt.), however, reprised his 2015 confirmation grilling of Califf over his lucrative ties to Big Pharma. “One of the major reasons the pharmaceutical industry, among many others, is so powerful is its close relationship with the FDA and other regulators in Washington,” the democratic socialist, who twice ran for president on a Medicare for All platform, said during the hearing. “What kind of comfort can you give to the American people when you have been so closely tied to the pharmaceutical industry yourself?” Califf — who has made millions of dollars as a consultant for more than a dozen pharmaceutical corporations and who holds millions more in Big Pharma investments — replied that he was “totally with” Sanders, agreeing that “the price of pharmaceuticals is way too high in this country.”

Sanders said he would once again vote to reject Califf’s nomination. “At a time when the American people pay the highest prices in the world for prescription drugs and as drug companies continue to be the most powerful special interest in Washington, we need leadership at the FDA that is finally willing to stand up to the greed and power of the pharmaceutical industry,” Sanders said in a statement. “Not only have the drug companies spent over $4.5 billion on lobbying and hundreds of millions of dollars in campaign contributions over the past 20 years, they also have created a revolving door between the FDA and the industry,” he continued. “Shockingly, nine out of the last 10 FDA commissioners went on to work for the pharmaceutical industry or to serve on a prescription drug company’s board of directors.”

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Once more, all I can see is how little the USD has come down.

US Dollar’s Status as Dominant “Global Reserve Currency” at 25-Year Low (WS)

The global share of US-dollar-denominated exchange reserves declined to 59.15% in the third quarter, from 59.23% in the second quarter, hobbling along a 26-year low for the past four quarters, according to the IMF’s COFER data released today. Dollar-denominated foreign exchange reserves are Treasury securities, US corporate bonds, US mortgage-backed securities, and other USD-denominated assets that are held by foreign central banks.

In 2001 – the moment just before the euro officially arrived as bank notes and coins – the dollar’s share was 71.5%. Since then, it has dropped by 12.3 percentage points. In 1977, when inflation was raging in the US, the dollar’s share was 85%. And when it looked like the Fed wasn’t doing anything about inflation that was threatening to spiral out of control, foreign central banks began dumping USD-denominated assets, and the dollar’s share collapsed. The plunge of the dollar’s share bottomed out in 1991, after the inflation crackdown in the early 1980s caused inflation to abate. As confidence grew that the Fed would keep inflation more or less under control, the dollar’s share then surged by 25 percentage points until 2000 when the euro arrived. Since then, over those 20 years, other central banks have been gradually diversifying away from US dollar holdings (year-end data, except for 2021 = Q3):

When the euro was formed, local-currency debt and equity instruments, previously issued in local currency, were converted to euro-denominated assets, and coupon interest and dividends were then paid in euros, etc. The currencies that went into the euro, such as the Deutsche mark, had already been reserve currencies. As these assets were converted to euros, so were central-bank holdings of German government bonds and the like. So as a reserve currency, the euro didn’t start from zero. It picked up where the members’ currencies left off. Since the Euro Debt Crisis, the euro’s share of global reserve currencies has been stuck at around 20%, and the dream of “dollar parity” has vanished. But it is the undisputed second largest reserve currency. The rest of the reserve currencies are minor entries at the bottom in the chart, including the Chinese renminbi, the bold red line:

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The lying neocon.

Preparing for the limelight of Jan 6.

Adam Schiff Says Russian Invasion Of Ukraine ‘Very Likely’ (JTN)

Representative Adam Schiff (D-Calif.) on Sunday said he fears that Russia is “very likely” to invade Ukraine – the same day President Joe Biden spoke on the phone with Ukrainian President Volodymyr Zelensky. “I think that it would require enormous sanctions on Russia to deter what appears to be a very likely Russian invasion of Ukraine again,” Schiff, House Intelligence Committee chairman, told Margaret Brennan on CBS’s “Face the Nation.” Russia has already illegally annexed Crimea, a portion of Ukraine, in 2014. Schiff added that if Russia invades Ukraine, “That we will move more NATO’s assets closer to Russia.


“That it will have the opposite impact of what [Russian President Vladimir] Putin is trying to achieve,” as the assets can be deployed against Russia. Schiff’s comments also come just days after Biden had a phone call with Putin. Several times throughout the interview, Schiff emphasized the importance of sanctions. Zelensky said last month that unless sanctions preceded an invasion, they “won’t matter to anyone.” Schiff said he does not understand Putin’s motivations for invasion, but added, “I think nothing other than a level of sanctions that Russia has never seen will deter him, and that’s exactly what we need to do with our allies.”

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Support the Automatic Earth in virustime with Paypal, Bitcoin and Patreon.

 

Apr 162021
 


Dirk de Herder Amstel Bridge, Amsterdam 1946

 

Biden Declares Russia Threat ‘National Emergency’ (Fox)
Kremlin Pledges To Respond In Kind To Any ‘Illegal’ New US Sanctions (R.)
The West’s Sole Prerogative Is Russia Has No Right To Self-Defense (Kovalik)
US Intel Walks Back Claim Russians Put Bounties on American Troops (DB)
Update: Master List Of Official Russia Claims That Proved To Be Bogus (Taibbi)
SecDef Austin Hints at Continued US Military Involvement in Afghanistan (AW)
The Role of Reserve Currencies (Michael Pettis)
The Middle Class Has Finally Been Suckered into the Casino (CHS)
Arts Venue Closures Likely After Long Delay in Federal Grant Program (Dayen)
E-Euro Starts To Take Shape (Dolan)
Twitter Suspends Project Veritas’ James O’keefe After Undercover Scoops (RT)
China’s Economy Grows By A Record 18.3% In Q1; It’s Not Enough (ZH)
Just 3% of World’s Ecosystems Remain Intact (G.)

 

 

Another one of those days where there’s just too much news. So I split it up in this Debt Rattle and this Covid Rattle published before.

Note: I could have called this a Russia Rattle, the US provocations vs Moscow reign supreme. In that vein, it is remarkable (if anything still is at all) that at the exact same moment the “Russian bounties on American soldiers’ lives” narrative is fully debunked, it still serves as the main driver behind the new sanctions on Russia. Facts are just inconvenient details by now, it’s the story that counts.

 

 

Biden court packing

 

 

OPCW

 

 

“Putin So Upset Over Biden’s Killer Comments He Moved 28,222 Russian Troops To Ukraine Border..”

The only thing the Russia sanctions have accomplished is they made Russia stronger, self-sufficient.

Biden Declares Russia Threat ‘National Emergency’ (Fox)

President Biden on Thursday signed an executive order declaring a “national emergency” over the threat from Russia, as his administration slapped new sanctions on the country. The U.S. Department of State said it is expelling 10 officials from Russia’s bilateral mission. “Today, we announced actions to hold the Russian Government to account for the SolarWinds intrusion, reports of bounties on U.S. soldiers in Afghanistan, and attempts to interfere in the 2020 U.S. elections,” Secretary of State Antony Blinken said in a statement. The White House also released a letter to Congress stating that the president has issued “an Executive Order declaring a national emergency with respect to the unusual and extraordinary threat to the national security, foreign policy, and economy of the United States posed by specified harmful foreign activities of the Government of the Russian Federation.”

The letter said that Russia had aimed to “undermine the conduct of free and fair democratic elections,” engaged in “malicious cyber-enabled activities,” targeted journalists and dissenters outside of its borders, and violated international law. This, Biden said in the letter, constitutes “an unusual and extraordinary threat to the national security, foreign policy, and economy of the United States.” Blinken’s statement went into more detail, citing not only the SolarWinds hack that compromised many agencies in the federal government but also the poisoning of top Putin political rival Alexei Navalny. “We remain concerned about Navalny’s health and treatment in prison, and call for his unconditional release,” Blinken said.


Navalny is currently in the custody of the Russian government and reported not to be well. White House Press Secretary Jen Psaki previously said that “[t]he Russian government is responsible for his health and well-being.” Blinken also emphasized Thursday, however, “the United States will also seek opportunities for cooperation with Russia, with the goal of building a more stable and predictable relationship consistent with U.S. interests.” Kremlin Spokesman Dmitry Peskov, according to the Russian state-run media organization TASS, said “[w]e condemn any pursuit of sanctions, we consider them illegal. In any case, the principle of reciprocity in this matter is valid; reciprocity in a way that best serves our interests.”

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Putin called for the summit first, just not one in person. That Biden did it, is also just a narrative. He calls Putin a killer and declares more sanctions, and only then says: let’s talk. Not going to happen now.

Kremlin Pledges To Respond In Kind To Any ‘Illegal’ New US Sanctions (R.)

The Kremlin said on Thursday it would respond in kind to any new “illegal” new U.S. sanctions on Russia and warned any new measures would reduce the chances of a summit between U.S. President Joe Biden and President Vladimir Putin taking place. People familiar with the matter told Reuters on Wednesday that the United States may announce sanctions on Russia as soon as Thursday for alleged interference in U.S. elections and malicious cyber activity, targeting several individuals and entities. The Kremlin has denied U.S. allegations that Russia tried to meddle in the 2020 U.S. presidential election or that it was behind a cybersecurity breach affecting software made by SolarWinds Corp.

Kremlin spokesman Dmitry Peskov said Moscow would wait to see what happened on the sanctions front before commenting in detail. But he said the Kremlin’s stance on sanctions and its response to them remained unchanged. “We condemn any intentions to impose sanctions, consider them illegal, and in any case the principle of reciprocity operates in this area,” said Peskov. “Reciprocity so that our own interests are ensured in the best possible way.” Russia did not want relations with Washington to be a case of “one step forward and two steps back,” he added. Biden, in a phone call on Tuesday, proposed a summit with Putin to tackle a raft of disputes and told Moscow to reduce tensions over Ukraine triggered by a Russian military build-up.


The Kremlin has so far responded coolly to the summit idea making clear it will be contingent upon U.S. behavior towards Russia. Peskov said on Thursday that any new U.S. sanctions would not increase the chances of such a summit taking place, but said it would be up to the two presidents to decide on the matter. Putin’s participation in a Biden-backed climate summit remained under discussion, Peskov said. He said the situation around Ukraine remained tense with NATO and U.S. forces still deployed close to Russia’s own borders. It was therefore premature, he said, to talk about de-escalation, despite reports that the United States had canceled the deployment of two of its warships to the Black Sea.

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“I’ve learned to hate the Russians, all through my whole life; if another war comes, it’s them we must fight. To hate them and fear them, to run and to hide…”

The West’s Sole Prerogative Is Russia Has No Right To Self-Defense (Kovalik)

As tensions increase between Moscow and NATO over a buildup of troops near the Donbass, actually initiated by Ukraine, the West’s apparent position is that Russia has no right to self-defense. That’s been the case for decades. Having grown up in middle America during the waning years of the Cold War, I possessed a not-so-healthy fear of an imminent Soviet invasion or attack. Bob Dylan would capture this type of fear and hysteria in his 1964 song ‘With God on Our Side’, which he ripped off from the Clancy Brothers and Dominic Behan. Dylan’s updated version of ‘The Patriot Game’ declared: “I’ve learned to hate the Russians, all through my whole life; if another war comes, it’s them we must fight. To hate them and fear them, to run and to hide…”

It is quite incredible to me that, nearly 60 years later, with the USSR itself having fallen in the meantime, these words still ring true in the West today. However, the truth is, as I came to find out later in life, it is the Russians who have had much more to fear from us than we have from them. And it is this understanding and indeed empathy for Russia which motivates me now to wish my country would stop its aggressive moves towards that country before it is too late; before we find ourselves involved in another great war in Europe. From the point of view of Russia, it is they who have been under constant threat from the West, certainly from the time of the Napoleonic Wars to the present. It is France which invaded Russia in 1812, with the result being the loss of about 200,000 Russian lives.

The Russians were able to survive and emerge victorious only by burning down three quarters of Moscow to the ground, leaving the French stranded and unable to supply themselves. In 1941, Soviet Russia, abandoned by the UK and the US to its own fate, was invaded by Nazi Germany and laid siege to. Ultimately, the Soviets were able to turn Germany back in the great battle of Stalingrad, but the USSR would lose nearly 27 million lives by the end of the war. While 80 to 90 percent of the German casualties were suffered on the Eastern Front at the hands of the Soviets and Communist Partisans, Russia’s incredible sacrifice in WWII has largely been forgotten and even denied in the West, with the US and the UK now taking credit for the Allied victory.

While Ernest Hemingway remarked – quite rightly – that “Every human being who loves freedom owes to the Red Army more than he will be able to pay in a lifetime,” these words, and the sentiment behind them, have been forgotten in a haze of collective amnesia. Incredibly, Russian President Vladimir Putin was not even invited to the commemoration of the liberation of Auschwitz on Holocaust Memorial Day – this despite the fact that it was the a Russian regiment from Gorky (now Nizhny Novgorod) which liberated the captives of the death camp.

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It served its purpose. And the MSM was all too happy to go along.

US Intel Walks Back Claim Russians Put Bounties on American Troops (DB)

It was a blockbuster story about Russia’s return to the imperial “Great Game” in Afghanistan. The Kremlin had spread money around the longtime central Asian battlefield for militants to kill remaining U.S. forces. It sparked a massive outcry from Democrats and their #resistance amplifiers about the treasonous Russian puppet in the White House whose admiration for Vladimir Putin had endangered American troops. But on Thursday, the Biden administration announced that U.S. intelligence only had “low to moderate” confidence in the story after all. Translated from the jargon of spyworld, that means the intelligence agencies have found the story is, at best, unproven—and possibly untrue.

“The United States intelligence community assesses with low to moderate confidence that Russian intelligence officers sought to encourage Taliban attacks on U.S. and coalition personnel in Afghanistan in 2019 and perhaps earlier,” a senior administration official said. “This information puts a burden on the Russian government to explain its actions and take steps to address this disturbing pattern of behavior,” the official said, indicating that Biden is unprepared to walk the story back fully. Significantly, the Biden team announced a raft of sanctions on Thursday. But those sanctions, targeting Russia’s sovereign debt market, are prompted only by Russia’s interference in the 2020 election and its alleged role in the SolarWinds cyber espionage. (In contrast, Biden administration officials said that their assessment attributing the breach of technology company SolarWinds to hackers from Russia’s Foreign Intelligence Service was “high confidence.”)


“We have noted our conclusion of the review that we conducted on the bounties issue and we have conveyed through diplomatic, intelligence, and military channels strong, direct messages on this issue, but we are not specifically tying the actions we are taking today to that matter,” a senior administration official told reporters in reference to the bounty claims. According to the officials on Thursday’s call, the reporting about the alleged “bounties” came from “detainee reporting”–raising the specter that someone told their U.S.-aligned Afghan jailers what they thought was necessary to get out of a cage. Specifically, the official cited “information and evidence of connections to criminal agents in Afghanistan and elements of the Russian government” as sources for the intelligence community’s assessment.

Russian bounties Trump

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Taibbi’s list from last month has been updated with “Bountygate”.

Update: Master List Of Official Russia Claims That Proved To Be Bogus (Taibbi)

Updated 4/15/21 “Bountygate.” In July of 2020, according to “officials briefed on the matter,” the New York Times reported, and the Washington Post “confirmed,” that “a Russian military spy unit offered bounties to Taliban-linked militants to attack coalition forces in Afghanistan.” It’s impossible to overstate how head over heels the politicians and press alike went with this story. It became instantly election-year fodder, with Kamala Harris saying of Trump, “He let Putin get away with placing bounties on the heads of our troops.” Illinois Senator Tammy Duckworth instantly called for hearings into the matter, making the inevitable Russiagate tie-in. “First, Donald Trump encouraged Russia to interfere in our democracy, and they did,” she said. “Now, Russia is secretly paying militants to kill U.S. troops. Trump has known for months but apparently done nothing to stop them.”

The story had a dual impact politically, dealing a blow to Trump throughout the summer of a general election, while also seeming to present a reason not to withdraw from Afghanistan two weeks before Congress voted on the re-authorization of the Authorization to Use Military Force (AUMF) justifying the U.S. troop presence in Afghanistan. In hindsight, it’s incredible to see how easy it is for military or intelligence officials to impact budgetary or policy matters: just leak a hot story before a key vote. The Daily Beast was one of many news outlets to go full click-farm, with banner headlines like, “Russian ‘Bounties’ Mess is all of Trump’s Scandals Rolled into One” and “Russian Bounties Led to U.S. Troops’ Deaths, Intelligence Officials Believe,” with graphics announcing “BOMBSHELL,” “HOSTILE POWER” and “SHOCK VALUE!”


The Washington Post’s official “fact checker” column gave Trump its dreaded “four Pinocchios” rating for saying, “that’s an issue that many people said was fake news.” In fact, many people did say it was fake news, including Colin Powell, who went on MSNBC to describe the coverage of the story as “hysterical,” adding, “What I know is that our military commanders on the ground did not think that it was as serious a problem as the newspapers were reporting and television was reporting.” Two months after the story came out, an on-the-record military official was less certain:

Roughly seven months after that, on April 15, 2021, a senior administration official told reporters on a conference call that the U.S. now assessed with “low to moderate confidence that Russian intelligence officers sought to encourage Taliban attacks against U.S. coalition personnel in Afghanistan in 2019.” The Beast, one of the chief propagators of the original fairy tale, ran a new story over the graphic, TURNAROUND. “U.S. Intel Walks Back Claim Russians Put Bounties on American Troops,” the headline read, adding, without irony, that “there were reasons to doubt the story at the time.” [..] Does this mean the Russians don’t meddle? Of course not. But we have to learn to separate real stories about foreign intelligence operations with posturing used to target domestic actors while suppressing criticism of domestic politicians. It’s only happened about a hundred times in the last five years — maybe it’s time to start asking for proof in these episodes?

Russian bounties

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We are so surprised.

SecDef Austin Hints at Continued US Military Involvement in Afghanistan (AW)

Secretary of Defense Lloyd Austin on Wednesday said the US would continue to support the Afghan government’s military after President Biden withdraws troops from the country and hinted at a possible “counterterrorism” force in the region that could strike targets in Afghanistan. “We will look to continue funding key capabilities such as the Afghan Air Force and Special Mission Wing, and we will seek to continue paying salaries for Afghan Security Forces,” Austin said at a NATO press conference in Brussels. “We will also work closely with them and with our allies to maintain counterterrorism capabilities in the region,” he added. “I think you’ll understand why I won’t get into specific details about where our counterterrorist assets may be positioned,” Austin said when asked where counterterrorism troops could be deployed in the region.


“In terms of our ability to acquire targets and engage them in places where we are not … We have the reach and the ability to in fact do that,” he said, suggesting the US wants to maintain the capability to bomb Afghanistan. The New York Times reported on Thursday on how the US is planning to continue fighting in Afghanistan “from afar.” The report reads: “The Pentagon, American spy agencies and Western allies are refining plans to deploy a less visible but still potent force in the region to prevent the country from again becoming a terrorist base.” Unnamed US officials speaking to the Times floated neighboring Tajikistan, Kazakhstan and Uzbekistan, as possible locations to reposition forces from Afghanistan.

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Great Twitter thread from Pettis. The entire narrative about the e-yuan being a huge threat to the USD makes very little sense. Nobody wants the e-yuan for the same reason they don’t want the yuan. China has total control.

The Role of Reserve Currencies (Michael Pettis)

Apologies in advance for this very long thread, but as regular readers know, I worry greatly about common misunderstandings of the role of reserve currencies. The author seems to assume that what makes a currency a dominant reserve currency is its low frictional trading costs, which is why, he believes, digital currencies, with China in the lead, will dominate international trade. But while a low frictional trading cost is a necessary condition, it is not nearly sufficient. A quick glance at the role of the US dollar over the past 100 years, the period during which it achieved dominant status, makes this clear: when the world was short of savings relative to its investment needs, during the first fifty years of that period (a period characterized by the global need to rebuild economically from 2 world wars) the US was a permanent net provider of savings to the world.

In the next five decades, however, when the global economy was substantially rebuilt and needed to export excess savings, the US automatically became a permanent net absorber of foreign savings. Of course during this time the US shifted from permanent trade surpluses, when the world needed the US to supply it with food, capital goods and consumer goods, to permanent trade deficits, when the world urgently some place in which to dump excess production of consumer goods. This was no mere coincidence. To me it suggests three things. First, that reserve currency status is a function of a lot more than low-cost trading. In fact given that the cost is already so low, and seems to be in permanent decline anyway, I suspect it doesn’t even matter much any more.


What seems to matter a lot more is the willingness of the reserve-currency country to run large imbalances in response not to its own needs but rather to the needs of the rest of the world. As an excellent CFR resource shows, the US typically absorbs 40-50% of global imbalances, and the Anglophone economies — with similar financial markets all of whom, like the US, punch way above their weights as international reserve currencies — collectively absorb 65-75% of global imbalances. Given that China’s currency (and that of other surplus countries, like Japan) punches so far below it’s weight, it is surprising that anyone would argue that there is no relationship between the international status of a currency and its willingness and ability to absorb global imbalances.

Second, the reason these countries are “willing” to accept major reserve-currency status has more to do with ideology than with economic rationality, driven by, and reinforcing, the disproportionate power of the financial sector on domestic decision-making. Like the UK in the 1920s, they are perhaps too willing to sacrifice the needs of the producer side of their economies in order to maintain the overwhelming power of the financial side. The result, as Matthew Klein and I show in our book, is that these reserve-currency countries have constantly to choose between allowing unemployment to rise or allowing debt to rise. They have mostly chosen the latter.

And third, while China has been promising for nearly two decades that its currency will achieve dominant reserve status within five years or so, in fact the RMB is probably the least important of the top ten currencies given China’s status as the second largest economy and largest trader in the world, and by relevant standards its role has barely improved in the past decade and may even have declined. Why? Because for all over-excited talk about achieving major international status, Beijing has always refused to take the economic steps needed to increase its role in absorbing global imbalances. On the contrary, when Covid-19 created a demand shock in a world already suffering from excess savings and insufficient demand, Beijing had an incredible opportunity to boost the role of the RMB by boosting net domestic demand. Instead it implemented a muscular supply-side response that actually worsened its contribution to global demand imbalances.


In the end I do expect the international status of the US dollar eventually to decline, but not because of the rise of the yen (which, we were told in the 1980s and 1990s, was virtually assured) or of the RMB. Either it will decline because the US decides that it is no longer willing to absorb the huge and rising economic cost of dominant reserve-currency status to its producing sectors and its balance sheet in exchange for the declining geopolitical benefits and to maintain the status and dominance of of its financial sector (which may be the same thing), or it will decline when the cost of maintaining the power of the dollar helps sufficiently undermine the US economy, which has always been the real source of American power. The experience of the UK in the 1920s provides an accelerated vision of how that can happen.

Read more …

The middle class got suckered in the moment banks and central banks, Fannie and Freddie, started pumping up housing prices and manipulating mortgage rates. And yeah, now they’re suckered into stocks, because rates are negative, and savings worse than worthless.

The Middle Class Has Finally Been Suckered into the Casino (CHS)

For 12 long years, savers have been eviscerated while gamblers have been ceaselessly backstopped and bailed out by the Fed. In the Fed’s rigged casino, it’s not only rational to make high-risk bets, it’s rational to borrow as much money as you can to increase your stake and leverage your bets–because the Fed has our backs and so every wager on markets lofting higher will pay off. It’s crazy not to max out credit and leverage because the Fed has guaranteed every punter will be a winner. I explained the feedback loop this creates–the more the Fed guarantees markets will never be allowed to decline, the greater the incentives to borrow and leverage ever riskier bets in the Fed’s casino[..]

The middle class has finally surrendered the last of its rational risk-aversion and gone all-in on bets in the Fed’s rigged casino. Big players don’t use margin accounts in brokerages; they have immense lines of credit and tools to leverage their bets. It’s the so-called retail traders who use margin, and so the unprecedented highs in margin debt are evidence that the middle class has gone all-in on bets markets will only loft higher forever. Record inflows into equities adds more evidence that the middle class has been suckered into the Fed’s rigged casino. Why lose money every day in savings and money market accounts when newbie punters are raking in $250,000 a month playing options on Gamestop?

Alas, the majority of this “wealth” is phantom, as revealed by the chart of tangible (real) / intangible (financial) assets. The Fed’s casino prints trillions of dollars and gives them to the biggest gamblers for free, and so the artificial semblance of free money for everyone who gambles is compelling. Unfortunately, the Fed’s casino is only rigged to benefit the Fed’s cronies. Everyone else is suckered in to lose whatever they have. The Fed’s cronies have been impatiently waiting for the suckers to surrender their rational risk aversion and flood into the rigged casino to share in the Fed’s limitless wealth machine: the more you risk, the more you win!

Read more …

This could have been in today’s Covid Rattle, I know.

Arts Venue Closures Likely After Long Delay in Federal Grant Program (Dayen)

A critical $16.25 billion grant program to sustain thousands of small creative venues that haven’t been able to open since the pandemic began has yet to deliver a cent of relief four months after passage, due to delays and faulty technology at the Small Business Administration (SBA). A website constructed to take grant applications closed last week after only four hours online, because of constant crashes and an inability to intake documents. It has not been restored and there’s no timetable for its return. The program, based on the landmark Save Our Stages legislation put into last December’s COVID relief bill, was the largest investment in the arts in U.S. history. But the byzantine application process (often requiring over 100 pages of documents) and stubborn lack of payout has music clubs, small museums and movie theaters, and other venues either closing or looking to sell out to larger firms.

“Understandably, landlords can’t last forever,” said Audrey Fix Schaefer, communications director with the National Independent Venues Association, a lead driver of Save Our Stages. “Eviction notices are coming. People are like, ‘we can’t do this anymore.’” The situation reinforces the importance of policy implementation, the primary responsibility of the executive branch. SBA has been notorious for decades for failing in its mission to support small businesses, and the changeover in administrations to President Biden has not ameliorated this. A critical Inspector General report released a week ago noted that the grants management office where the program is being run from has only one designated official managing the process; the rest of the staff is on “temporary detail.”


SBA Spokesperson Andrea Roebker, said that the program, known as Shuttered Venues Operating Grants (SVOG), has been “built from the ground up,” and that the agency “is committed to delivering this much-needed relief to these venues, many of which have been closed for extended periods of time.” But in the meantime, venue operators must wait agonizingly, living on borrowed time, borrowed money, and the fear of collapse.

Read more …

So far, all the e-currencies look like feeble attemps at suppressing bitcoin. The problem: central banks want full control.

E-Euro Starts To Take Shape (Dolan)

The promised digital euro started to take shape this week and signals from Frankfurt may offer some relief to nervy commercial banks worried about being sidelined by the latest disrupter. With the “hands off” pandemic accelerating the demise of physical cash, and private-sector crypto and stablecoins threatening to invade the space, the pledge last year of a digital euro within five years came before the European Central Bank knew what exactly it would be or how it would function. As nearly every central bank working on digital legal tender suggesting a different model or system, the debate over design has ranged widely over the past 6 months – from digital tokens to a direct central bank accounts or something in between.

But responses from the ECB’s public consultation, released this week, have gone some way to narrowing the options discussed – with the feedback showing a preference for privacy, though not anonymity, and a role for the existing banking system. Although this was just one survey, and the ECB laced it with caveats about how unrepresentative the sample was of euro zone citizens, it may give some clues to the direction of travel. Respondents’ heavy stress on privacy and security appears to be coupled with a preference for the digital euro to exist offline, like a token held in smartphones or digital wallets. What’s more, they seem to want it to exist alongside rather than instead of physical cash and to operate in conjunction with the existing banking system.


That addresses one of the biggest financial stability concerns plaguing plans for digital currencies, already being trialled by the People’s Bank of China and which the U.S. Federal Reserve has called a “high priority project”. Many fear that if a digital currency is effectively a open-ended deposit account directly with the central bank, then its inherent guarantee will see deposits flee commercial banks, especially in a crisis, and undermine the retail banking system. To counter that, ECB board member Fabio Panetta has proposed limiting deposits to households only, and to a maximum of 3,000 euros – effectively penalising holdings in excess of that, and accounts held by companies or investors, with deeply negative interest rates.

Read more …

“Section 230 may have protected them before, but it will not protect them from me. The complaint will be filed Monday.”

How much different would Project Veritas’ situation be if it were sympathetic to the Dems?

Twitter Suspends Project Veritas’ James O’keefe After Undercover Scoops (RT)

Twitter has banned Project Veritas founder James O’Keefe for alleged violation of its policies on “platform manipulation and spam,” silencing his account amid a series of undercover scoops on CNN’s propagandist tactics. The social media giant told O’Keefe on Thursday that his account is permanently suspended and will not be reinstated, citing an allegation that he used fake or multiple accounts to manipulate conversations on the platform. Twitter said in a statement to The Hill and other media outlets that “you can’t artificially amplify or disrupt conversations through the use of multiple accounts.” The shutdown came after O’Keefe posted three straight days of scoops in which CNN technical director Charlie Chester is shown on video, talking to an undercover reporter.


Chester, who reportedly thought he was talking to a Tinder date, told the reporter about CNN’s propagandist efforts to oust President Donald Trump, its fearmongering about Covid-19 to boost ratings and its efforts to make Black Lives Matter look good. O’Keefe’s suspension from Twitter will likely come as good news to CNN, which hasn’t responded to the latest round of Project Veritas stories about the network and has lobbied for competing news outlets to be censored for reporting “misinformation.” O’Keefe issued a statement on Thursday, vowing to sue Twitter for defamation and denying that he operated fake accounts. “This is false, this is defamatory, and they will pay,” he said. “Section 230 may have protected them before, but it will not protect them from me. The complaint will be filed Monday.” He invited supporters to follow him on Telegram.

Veritas
https://twitter.com/i/status/1382848287506583552

Read more …

“Guo Shuqing, China’s top banking regulator, said in March that the country was exposed to “bubbles” in international markets and its own real estate sector.”

China’s Economy Grows By A Record 18.3% In Q1; It’s Not Enough (ZH)

China’s economy grew by a record 18.3% in the first three months of 2021, its fastest annual growth rate in history reflecting the weak comparison to the lockdown period in early 2020. However, in keeping with the recent theme of China’s slowing credit impulse, the GDP print wasn’t nearly enough and disappointed markets which were expecting an 18.5% number.

The Chinese slowdown was even more visible in the quarter-on-quarter growth which slowed to just 0.6% from 2.6% in the previous three months – the second lowest quarterly growth rate since the financial crisis with the sole exception of the covid crash quarter a year ago, while the picture in the monthly data dump was mixed at best.

China’s expansion was supported by household consumption, which had previously lagged behind the wider recovery but is expected to play a greater role in driving growth this year. Retail sales beat expectations to add 34.2% in March, rebounding from a period of lockdowns a year earlier. Industrial production also boosted growth, with the metric adding 24.5% in the first quarter and alongside booming exports has helped prop up growth over the past year, it did, however, miss expectations in March and only rose 14.1% year-on-year. The Chinese recovery from the pandemic also helped it dominate global trade, with exports rising every month since June last year. In March, exports added 30% in dollar terms compared with the same month a year earlier.


In light of China’s recent aggressive deleveraging which has pushed China’s CSI300 just shy of dipping below the 200DMA, focus has shifted to the prospect of rate rises, with signs of overheating across parts of the economy despite persistently low consumer price inflation. The government is trying to curb leverage across its property sector, as well as rein in record rates of steel production following a construction boom. Several high-ranking officials have warned about the risks of high asset prices in recent months. Guo Shuqing, China’s top banking regulator, said in March that the country was exposed to “bubbles” in international markets and its own real estate sector.

Read more …

Setting your own home on fire after using it as a garbage dump and toilet bowl. Smartest species ever.

Despite 100s of years of science and warnings, we still appear unable to understand our planet is not infinite.

Just 3% of World’s Ecosystems Remain Intact (G.)

Just 3% of the world’s land remains ecologically intact with healthy populations of all its original animals and undisturbed habitat, a study suggests. These fragments of wilderness undamaged by human activities are mainly in parts of the Amazon and Congo tropical forests, east Siberian and northern Canadian forests and tundra, and the Sahara. Invasive alien species including cats, foxes, rabbits, goats and camels have had a major impact on native species in Australia, with the study finding no intact areas left. The researchers suggest reintroducing a small number of important species to some damaged areas, such as elephants or wolves – a move that could restore up to 20% of the world’s land to ecological intactness.

Previous analyses have identified wilderness areas based largely on satellite images and estimated that 20-40% of the Earth’s surface is little affected by humans. However, the scientists behind the new study argue that forests, savannah and tundra can appear intact from above but that, on the ground, vital species are missing. Elephants, for example, spread seeds and create important clearings in forests, while wolves can control populations of deer and elk. The new assessment combines maps of human damage to habitat with maps showing where animals have disappeared from their original ranges or are too few in number to maintain a healthy ecosystem. Some scientists said the new analysis underestimates the intact areas, because the ranges of animals centuries ago are poorly known and the new maps do not take account of the impacts of the climate crisis, which is changing the ranges of species.


It is widely accepted that the world is in a biodiversity crisis, with many wildlife populations – from lions to insects – plunging, mainly due to the destruction of habitat for farming and building. Some scientists think a sixth mass extinction of life on Earth is beginning, with serious consequences for the food, and clean water and air that humanity depends upon. “Much of what we consider as intact habitat is missing species that have been hunted [and poached] by people, or lost because of invasive species or disease,” said Dr Andrew Plumptre, the lead author of the study, from the Key Biodiversity Areas Secretariat in Cambridge, UK. “It’s fairly scary, because it shows how unique places like the Serengeti are, which actually have functioning and fully intact ecosystems. “We’re in the UN decade of ecosystem restoration now, but it is focusing on degraded habitat,” he said. “Let’s also think about restoring species so that we can try and build up these areas where we’ve got ecologically intact ecosystems.”

Read more …

 

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Jul 262020
 


Elaine de Kooning Fairfield Porter #1 1954

 

 

It won’t come as a surprise to anyone that the first half of 2020 has brought, among many other things, renewed calls for the demise of the US dollar. It’s been pretty much a non-stop call for over a decade now, and longer. But this time, like all previous ones, I’m thinking: I don’t see it. I guess my first question is always: please explain why the dollar would collapse before the euro does.

For one thing, the dollar would have to collapse/default against one or more “entities”. The dollar is not like one of those highrises that collapse upon themselves. It will have to default or collapse against something(s) else. Since it is the world reserve currency, that means there would have to be a replacement reserve currency. Yes, that could also be for example gold or SDR’s, or even a basket of currencies, and something like that may happen eventually, but it doesn’t appear in the cards in the short run.

There are really only two candidates for the role, and neither looks at all fit to play it. The euro may have some ambitions in that direction, but it has far too many problems still. The yuan/renminbi certainly has such ambitions, but the Communist party refuses to let it get on stage to show what it’s got. As I recently wrote:

 

The main sticking point for Beijing is a conundrum it cannot solve. The CCP wants to have BOTH a global currency AND total control over that currency. It will have to choose between the two, and cannot make up its mind. So it pretends it doesn’t have to choose. Sure, there has been some advancement for the yuan, but I bet most of that is on the back of the Belt and Road (BRI), and that will turn out to be one of the main victims of the coronavirus. The BRI is China’s very clever way of exporting its overproduction, but potential buyers have other things on their mind today.


Meanwhile, even with that, the yuan is used in only 1.8% of cross-currency payments. [..] The sudden, and rushed, take-over of Hong Kong with the new security law will not help China’s plans to be accepted internationally. [..] The world’s large investors will not put their money into something that Xi Jinping can declare devalued by 50% on a rainy morning when he sees fit. He will have to cede that kind of control.

The euro has made some gains vs the USD recently, going from 1.07 to 1.16 or so, but that means very little once you look at the broader picture. Moreover, the reason the financial press provides for -much of- those gains, which is that the EU supposedly showed “unity” in its recent Recovery Fund talks, is bollocks.

If it showed one thing, it was a lack of unity. That’s why these were the longest talks they ever had. And if this had not been Angela Merkel’s last hurrah, they might not have agreed at all. They paid off the Frugal Four to the tune of hundreds of millions, and that’s how they got a deal. Horse traders.

A simple screenshot from Bloomberg of the USD vs EUR over the last five years makes clear why the recent changes are no big deal. (All BBG screenshots are from July 24 just before 10 AM EDT and all cover a 5 year period.)

 

 

A reserve currency has two roles: being the currency that most international trade is conducted in, and -closely related- being the currency that countries hold most as foreign exchange (FX) reserves. After WWII, the US dollar became the most important currency for trade more or less by default, a position that it greatly strengthened with the petrodollar.

A 2015 SWIFT paper provides details about the US dollar’s share of international trade:

The US dollar prevails as the dominant international trade currency, with a 51.9% share of the value of international currency usage in 2014. The euro is second, with a 30.5% share of the total value. The British pound is third, with a 5.4% share of the total value, followed by Asian currencies such as the Japanese yen and the Chinese yuan.

That’s from five years ago, but things won’t have changed much. The system is complex and inert, it has a very strong resistance against large and sudden changes. (Do note that the euro’s share of international trade is substantially skewed because it includes payments between countries that use the euro as their currency, plus those EU countries that don’t -yet-). Single market, international trade.

And then there’s the dollar’s FX role.

In September 2019, Eswar Prasad at Brookings reported that the dollar’s share of global FX reserves remains around 65%.

The drop from 66 percent in 2015 to 62 percent in 2018, is probably a statistical artifact related to changes in the reporting of reserves. Compared with 2007, however, the dollar’s share of global FX reserves has declined by 2 percentage points while the euro’s share is down 6 percentage points. Over this period, the Japanese yen’s share has risen by 2 percentage points, while other less prominent reserve currencies have increased their total share by 4 percentage points. The renminbi, which was not an official reserve currency in 2007, now accounts for 2 percent of global FX reserves. [..] .. the euro has stumbled, the renminbi has stalled, and dollar supremacy remains unchallenged.

[..] In July 2019, China’s total official reserve assets amounted to just over $3.2 trillion, of which $3.1 trillion (97 percent of the total) was held in the form of FX reserves. Gold holdings amounted to about $89 billion [..] Coming amid rising trade tensions with the U.S., the 5 percent increase in China’s gold stock and the 24 percent increase in the value of its official gold holdings during 2019 have been interpreted as a sign of China’s attempting to diversify its reserve holdings away from U.S. dollars.

If this interpretation was indeed correct, China has a long way to go. Gold now accounts for 3 percent of China’s gross international reserves. From a global financial market perspective, and especially relative to its overall international reserves, the $18 billion increase in the value of China’s gold reserves during 2019 is trivial; it barely registers as a shift in the composition of China’s overall reserves.

Assuming that China still holds 58 percent of its FX reserves in dollar-denominated assets, the value of those assets in July 2019 was $1.8 trillion. So, the value of its gold reserves, $94 billion, is a mere one twentieth of that of China’s dollar-denominated reserves.

With the euro and yuan out of the way as potential reserve currency candidates, we can take a look at gold. Senior commenter Dr.D at the Automatic Earth recently wrote: “As advertised, the US$ is defaulting. What? Where? US$ has been cut in half compared to Silver in 3 months. US$ has been cut in half compared to BTC in 3 months. US$ has been cut in half compared to Gold in 4 years.

Like many people talking about a USD demise, perhaps that’s too much of a dollar-centric view and conclusion. Surely gold and silver can rise vs the USD without announcing an imminent collapse of the latter. And since precious metals tend to go up in times of uncertainty, and COVID has brought shovels full of just that, you would expect them to rise.

Therefore you would have to also look at how they do vs for example the euro, before concluding anything. Note: I didn’t include Bitcoin because it’s too new and volatile. Makes me think of the Lindy Effect, often cited by Nassim Taleb, the idea that the older something is, the longer it’s likely to be around in the future.

Here are a few more Bloomberg screenshots. And yes, gold has done well vs the USD in, say, the past two years, no doubt.

 

 

But gold has pretty much followed the exact same pattern vs the euro:

 

 

Silver has done even better, more recently, vs the USD, though compared to where it was in 2016 it’s not that big a step (barely more than 10%):

 

 

And the pattern of silver vs the euro is so similar it’s almost eery.

 

 

I don’t see anything there that would make me think the dollar is collapsing, no more than the euro is. What I see is gold and silver rising. People move into precious metals, perceived as safe havens; they always do when the world is in turmoil. And don’t forget there are trillions in additional recent central bank money sloshing around that have to move somewhere.

As for the changes of the USD vs the euro: we’ve already seen that they are not exceptional. Losing a few percent vs the euro will not collapse the dollar.

Also, there’s something missing in the discussion as far as I’ve seen: the option that it’s the US itself that wants a lower dollar at this point in time, and actively works to get it lower. A strong dollar works for a strong economy, but not for one weakened by a pandemic and an acrimonious political climate.

But the US has borrowed so much money!, you say. Yes, but so have Europe, and Japan, and China, everyone has who could.

 

A little more about gold, since some are clamoring for a return to the gold standard. Which is not likely, because too many parties would resist, either for ideological or practical reasons. But say you would consider it, then you would as one of the first things you do, look at gold reserves. Here are the top ten gold holding countries per March 2020, as assembled by TradingEconomics.com:

 

 

Note: Britain is not there, because “Between 1999 and 2002 the Treasury sold 401 tonnes of gold – out of its 715-tonne holding – at an average price of $275 an ounce, generating about $3.5bn during the period.” (BBC). Gold is at $1,900 today. Nuff said.

The US gold reserves are so large it would appear to give them an unfair advantage if a gold standard were considered. Same as they have in the current set-up. Then again, if you insert population numbers into the equation, Germany, Italy, Switzerland, even the Netherlands, have more in relative terms. Question is: where does that leave all the others?

Long story short: I don’t see a US dollar default or collapse in the near future. But by all means enlighten me.

 

 

 

 

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Oct 012019
 


Paul Gauguin Sunken lane 1884

 

Dear America, Civil War Is Not A Joke – Or A Picnic (RT)
Civil War On (Kunstler)
Impeachment…or CIA Coup? (Ron Paul)
Hillary Clinton’s Big Comeback Begins Tuesday (WT)
US Dollar Status as Global Reserve Currency Slides (WS)
No End In Sight For ECB’s Inflation Problem (MW)
Twitter Executive For Middle East Is British Army ‘Psyops’ Soldier (MEE)
Johnson Planning To Bypass Brussels In Bid For New Brexit Deal (Ind.)
UK Proposes Customs Posts On Both Sides Of Irish Border (RTE)
France’s Overtures Toward Russia (Moisi)
Assange’s Lawyers Were Under Surveillance. That’s Not The Whole Story (Canary)

 

 

Nebojsa Malic, senior writer at RT, lived through the Yugoslavia civil war.

Dear America, Civil War Is Not A Joke – Or A Picnic (RT)

Critics have reacted to President Donald Trump’s Twitter warning about his impeachment causing a civil war with both shrieks of outrage and jokes. Notably absent: any self-awareness of what such a war would be like or how to avoid it. “If the Democrats are successful in removing the president from office, I’m afraid it will cause a Civil War-like fracture in this nation from which this country will never heal,” Texas televangelist Robert Jeffress said Sunday night on Fox News. Trump quoted him in a tweet the next morning, and Twitter lost its collective mind. The typical response was to accuse Trump of calling for a new civil war, mind-reading what he must have really meant by the quote. He was “priming his base” to think of war, according to unnamed “experts of fascism,”a liberal comedian argued in just one example.

Others dismissed the very notion of a civil war as crazy, joking about bringing the potato salad and biodegradable forks – or hamberders and covfefe – to the fight, as soon as they get out of yoga class, using the hashtag #CivilWarSignup. There were also scornful takes about Americans being too fat to fight, or rural Americans being too scared to “take the subway in New York or drive in Los Angeles,” much less take a rifle and “take their country back from elite urbanites.” It’s unclear whether the people joking about bringing food to the fight were deliberately channeling the spirit of Washingtonians who turned out to the first Battle of Manassas/Bull Run, in June 1861, as if it were a picnic, bringing baskets and blankets to enjoy the show.

As anyone who’s studied that era of US history knows, their glee quickly turned to horror and panic, when the Union army lost – and they found themselves shoved aside on crowded roads leading back to Washington by the routed troops in blue. Wars never go as planned. No plan survives first contact with the enemy, who also gets a vote. If there is one ironclad rule of war through the ages, no matter the level of technology, that is it. Yet the corollary is that civilians always forget about it, and it comes back to bite them.

Read more …

“Does this sound a little like part of the origin story of RussiaGate? Is that not exactly the potential criminal matter that the current attorney general, Mr. Barr, is officially investigating?”

Civil War On (Kunstler)

Someone in Impeachmentville is not paying attention. Of course, diverting the rubes is exactly the point of the latest CIA operation to negate the 2016 election. Has nobody noticed that there is treaty between Ukraine and the USA, signed at Kiev in 1998 and ratified by the US Senate in 2000. It’s an agreement on “Mutual Legal Assistance in Criminal Matters.” Here, read the cover letter for yourself:

What part of the following do Nancy Pelosi and the news media not understand? “The Treaty is self-executing. It provides for a broad range of cooperation in criminal matters. Mutual assistance available under the Treaty includes: taking of testimony or statements of persons; providing documents, records, and articles of evidence; serving documents; locating or identifying persons; transferring persons in custody for testimony or other purposes; executing requests for searches and seizures; assisting in proceedings related to restraint, confiscation, forfeiture of assets, restitution, and collection of fines; and any other form of assistance not prohibited by the laws of the requested state… ([etc].”


How does this not permit Mr. Trump asking the president of Ukraine for “assistance” in criminal matters arising out of “collusion with Russia,” as specified within the scope of Robert Mueller’s special prosecutor activities? For instance, the matter of CrowdStrike. The cybersecurity firm was co-founded by Russian ex-pat Dmitri Alperovitch, who also happens to be a senior fellow at the Atlantic Council, an anti-Russian think tank funded by Ukrainian billionaire, Viktor Pinchuk, who donated at least $25 million to the Clinton Foundation before the 2016 election. Crowdstrike was the company that “examined” the supposedly hacked DNC servers, while somebody in the Obama administration prevented the FBI from ever seeing them. Does this sound a little like part of the origin story of RussiaGate? Is that not exactly the potential criminal matter that the current attorney general, Mr. Barr, is officially investigating?

Read more …

Obvious nonsense though it may be, people will continue to accuse me of supporting Trump. But you can’t accuse Ron Paul of that.

Impeachment…or CIA Coup? (Ron Paul)

You don’t need to be a supporter of President Trump to be concerned about the efforts to remove him from office. Last week House Speaker Nancy Pelosi announced impeachment proceedings against the President over a phone call made to the President of Ukraine. According to the White House record of the call, the President asked his Ukrainian counterpart to look into whether there is any evidence of Ukrainian meddling in the 2016 election and then mentioned that a lot of people were talking about how former US Vice President Joe Biden stopped the prosecution of his son who was under investigation for corruption in Ukraine.

Democrats, who spent more than two years convinced that “Russiagate” would enable them to remove Trump from office only to have their hopes dashed by the Mueller Report, now believe they have their smoking gun in this phone call. It this about politics? Yes. But there may be more to it than that. It may appear that the Democratic Party, furious over Hillary Clinton’s 2016 loss, is the driving force behind this ongoing attempt to remove Donald Trump from office, but at every turn we see the fingerprints of the CIA and its allies in the US deep state. In August 2016, a former acting director of the CIA, Mike Morell, wrote an extraordinary article in the New York Times accusing Donald Trump of being an “agent of the Russian Federation.”

Morell was clearly using his intelligence career as a way of bolstering his claim that Trump was a Russian spy – after all, the CIA should know such a thing! But the claim was a lie. Former CIA director John Brennan accused President Trump of “treason” and of “being in the pocket of Putin” for meeting with the Russian president in Helsinki and accepting his word that Russia did not meddle in the US election. To this day there has yet to be any evidence presented that the Russian government did interfere. Brennan openly called on “patriotic” Republicans to act against this “traitor.” Brennan and his deep state counterparts James Comey at the FBI and former Director of National Intelligence James Clapper launched an operation, using what we now know is the fake Steele dossier, to spy on the Trump presidential campaign and even attempt to entrap Trump campaign employees. Notice a pattern here?

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Too predictable to be newsworthy.

Hillary Clinton’s Big Comeback Begins Tuesday (WT)

Media attention will intensify on Hillary Clinton on Tuesday. The former first lady, senator, secretary of state and Democratic presidential candidate is ready for another round in the public arena. She has a new book arriving, written with the help of a very close relative. Behold. Here comes “The Book of Gutsy Women: Favorite Stories of Courage and Resilience” — all 464 pages of it. Indeed, the new book of essays now landing on the shelves is written by Mrs. Clinton and her daughter Chelsea Clinton, is published by Simon & Schuster. Some informed observers speculate the book could be yet another indicator — along with increased public appearances and commentary — that Mrs. Clinton pines for a political comeback.


What kind of comeback? Oh, maybe the bumper stickers will read BIDEN/CLINTON 2020, WARREN/CLINTON 2020 — or even CLINTON/CLINTON 2020. Who the heck knows? “Word on the political street now is the rumbling that the impeachment probe launched by House Speaker Nancy Pelosi may be the crack that opens the door for another presidential run by Hillary Clinton. This time, the thinking goes, Hillary would be running with vindication that the 2016 election was ‘stolen’ from her and she can ascend in 2020 to reclaim the mantle for her party and the majority of the country that voted for her,” writes Nate Ashworth, editor in chief of Election Central.

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Wolf Richter mostly manages to deny his own headline.

US Dollar Status as Global Reserve Currency Slides (WS)

If the US dollar loses its hegemony as a global reserve currency, it would be a sea change globally, and specifically for the US economy. Today, we got the next installment in that saga, via the IMF’s quarterly COFER data on foreign exchange reserves. Total global foreign exchange reserves in all currencies ticked up 1.1% from the first quarter, to $11.7 trillion. US-dollar-denominated exchange reserves rose only 0.7% to $6.79 trillion, and their share of total global foreign exchange reserves fell to 61.63%, down from 61.86% in the prior quarter. And this has been going on for years in baby steps:

The US dollar’s share of global reserve currency declines when central banks other than the Fed proportionately reduce their dollar-denominated assets and add assets denominated in other currencies. Compared to the mega-moves in the 1970s, the recent moves have been muted. Nevertheless, the current share of USD-denominated foreign exchange reserves of 61.63% is the lowest since the year-end in 2013. The bump in 2014, 2015, and 2016 has now been unwound:

These US-dollar-denominated exchange reserves are US Treasury securities, US corporate bonds, and other financial assets that central banks other than the Fed are holding in their foreign exchange reserves. The Fed’s own holdings of Treasury securities and Mortgage-Backed Securities are not included in “foreign exchange reserves.” However, the Fed’s holdings of foreign-currency denominated assets are included in the other currencies. Unlike some other central banks, the Fed holds just a smidgen in foreign currency assets – currently $20.6 billion worth, compared to, for example, China’s $3.1 trillion in foreign exchange reserves.


[..] The chart below shows the dollar’s slowly declining but still hegemonic share of foreign exchange reserves, the euro’s essentially flat share, and the other reserve currencies’ comparatively tiny share. The renminbi (RMB) is the short red line near the very bottom:

To shed some light on the tangle of currencies at the bottom of the chart above, it’s useful to look at them without the US dollar and the euro overshadowing the neighborhood:

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Inflation is not Europe’s problem. The ECB is.

No End In Sight For ECB’s Inflation Problem (MW)

Unemployment in the eurozone declined to 7.4% in September, its lowest level since August, 2008, the EU’s statistics institute Eurostat said Monday. But this good news about the European economy helps underline the predicament the European Central Bank has long struggled with: the persistent low level of inflation. The ECB has undershot its official price stability target, set at “below but close to 2%”, every year since 2013. Keeping the eurozone on that steady inflation path is the only official remit of the ECB. It hasn’t been tasked with other economic policy objectives, like the U.S. Federal Reserve on employment, or the Bank of England on supporting the government’s economic objectives.


Inflation in the eurozone stood at an annual 1% in August, according to Eurostat. The closest the ECB was to its target was last year, when inflation reached 1.8%. That was up from 1.5% in 2017, and 0.2% in both preceding years. The risk of debilitating deflation – falling prices – was the rationale behind the ECB’s first massive quantitative easing program, launched in 2015. The central bank is now citing the financial markets’ declining inflation expectations for 2021 as the main reason for its latest monetary easing package, announced on September 12: They have fallen from 1.8% to 1.5% since the beginning of this year, according to ECB chief economist Philip Lane.

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“..the 77th Brigade is giving the British military “the capability to compete in the war of narratives at the tactical level..”

Twitter Executive For Middle East Is British Army ‘Psyops’ Soldier (MEE)

The senior Twitter executive with editorial responsibility for the Middle East is also a part-time officer in the British Army’s psychological warfare unit, Middle East Eye has established. Gordon MacMillan, who joined the social media company’s UK office six years ago, has for several years also served with the 77th Brigade, a unit formed in 2015 in order to develop “non-lethal” ways of waging war. The 77th Brigade uses social media platforms such as Twitter, Instagram and Facebook, as well as podcasts, data analysis and audience research to wage what the head of the UK military, General Nick Carter, describes as “information warfare”.

Carter says the 77th Brigade is giving the British military “the capability to compete in the war of narratives at the tactical level”; to shape perceptions of conflict. Some soldiers who have served with the unit say they have been engaged in operations intended to change the behaviour of target audiences. What exactly MacMillan is doing with the unit is difficult to determine, however: he has declined to answer any questions about his role, as has Twitter and the UK’s Ministry of Defence (MoD). Twitter would say only that “we actively encourage all our employees to pursue external interests”, while the MoD said that the 77th Brigade had no relationship with Twitter, other than using it for communication.

The 77th Brigade’s headquarters is located west of London. It brought together a number of existing military units such as the Media Operations Group and the 15 Psychological Operations Group. At its launch, the UK media was told that the new unit of “Facebook warriors” would be around 1,500 strong, and made up of both regular soldiers and reservists. In recent months, the army has been approaching British journalists and asking them to join the unit as reservists.

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In reality, he’s preparing to blame everyone else for his own failures. And Dominic Cummings will blame Boris.

Johnson Planning To Bypass Brussels In Bid For New Brexit Deal (Ind.)

Boris Johnson is to attempt a last-ditch charm offensive on EU leaders to get a Brexit deal over the line, after delivering his proposals for a new withdrawal agreement to Brussels as early as the end of this week. With EU chief negotiator Michel Barnier viewed in Downing Street as a stickler for rules who will be hard to shift from the deal struck with Theresa May, Mr Johnson is keen to speak with key European leaders who may be ready to show flexibility ahead of the crunch Brussels summit on 17 October. Plans were made to fly the prime minister to the funeral of ex-president Jacques Chirac for talks in the margins with sympathetic leaders, but it was decided the opportunity did not justify breaking off his attendance at the Conservative conference in Manchester.


London believes a key to any deal will be securing the acceptance of Irish premier Leo Varadkar and German chancellor Angela Merkel. News that negotiator David Frost has finalised a legal text of the UK proposals – said by a senior government source to be “game changing” – emerged as ministers attending cabinet admitted that they were not absolutely sure what the PM plans to do if his hopes of a deal fall flat. With speculation that the plan is known only to a tiny circle around Mr Johnson and his chief adviser Dominic Cummings, housing minister Esther McVey said she did not “know what is necessarily going on in Boris’s head”, while even chancellor Sajid Javid when asked if he knew what the PM would do could say only that “I think I do”.

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And you thought they’d steer clear of hammering Good Friday…

UK Proposes Customs Posts On Both Sides Of Irish Border (RTE)

The UK has proposed the creation of a string of customs posts along both sides of the Irish border as part of its effort to replace the backstop, RTÉ News understands. The ideas, which would be highly controversial, are contained in proposals sent from London to the European Union – extracts of which have been seen by RTÉ News. The proposals would effectively mean customs posts being erected on both sides of the border, but located perhaps five to ten miles ‘back’ from the actual land frontier. This is because under British Prime Minister Boris Johnson, the UK is insisting that Northern Ireland remain completely outside the EU’s customs union for industrial goods and agri-food products.

Even more controversial is a proposal that the goods moving from a so-called “customs clearance site” on the northern side of the border to a similar site on the southern side would be monitored in real time using GPS via mobile phone data, or tracking devices placed on trucks or vans. The ideas are contained in one of four so-called ‘non-papers’ submitted by UK officials during recent technical discussions in Brussels. Under the British proposals, both the UK and EU would create what are believed to be called “customs clearance sites”, but to all intents and purposes a customs post. Traders would have a choice of either a straightforward customs declaration which would have to be lodged and cleared on either side of the border, or the so-called ‘transit’ system.

Under a transit scheme, the exporter becomes a registered ‘consigner’ at base, and the importer becomes a registered ‘consignee’. The method requires a bond from a financial institution to guarantee that the relevant customs duty, excise and VAT have been paid and that the goods do not go illegally off the beaten track en route. The UK proposals have been discussed in technical talks with the European Commission’s Brexit Task Force under Michel Barnier. However, the details of the four non-papers have not been disclosed to EU member states.

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Macron playing Napoleon again. He can’t stop himself.

France’s Overtures Toward Russia (Moisi)

French President Emmanuel Macron is convinced that now is the right time to reset relations with Russia. He has therefore made it a diplomatic priority to restore a climate of trust between Paris and Moscow. Three compelling reasons underlie this move… First and foremost, the international strategic context has changed dramatically. China is rising, while the United States, although still the world’s dominant power, is distancing itself from its global responsibilities. And Russia, with an aging, shrinking population and a huge, largely uninhabited landmass, is a natural prey for China’s long-term ambitions. European leaders should not resign themselves passively to seeing Russia, lacking any other alternative, align with China.

Instead, they should try to convince Russians that their future is with Europe, and not as China’s junior partner in a deeply unbalanced relationship. Russia’s destiny lies in the West, not the East. Moreover, although Russia is no match for China, it has returned as a serious global actor. Many current conflicts, from Eastern Europe to the Middle East, simply cannot be addressed without involving Russia. This represents a triumph of sorts for Russian President Vladimir Putin, who first came to power nearly 20 years ago pledging to restore his country’s geopolitical clout. In particular, Putin wanted the US to treat Russia not as a mere object of history, as it had done under his predecessor Boris Yeltsin, but as a real interlocutor.

And while it might be impossible to restore the bipolar world of the Cold War years, at least the US would be forced to recognize the importance of a modernized and operational Russian army that could intervene in the former Soviet sphere and beyond. This represents a triumph of sorts for Russian President Vladimir Putin, who first came to power nearly 20 years ago pledging to restore his country’s geopolitical clout. In particular, Putin wanted the US to treat Russia not as a mere object of history, as it had done under his predecessor Boris Yeltsin, but as a real interlocutor.

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If these revelations don’t stop Assange’s extradition, nothing will. And Britain will be nothing but a deep black hole.

Assange’s Lawyers Were Under Surveillance. That’s Not The Whole Story (Canary)

A private security company organised 24/7 surveillance of WikiLeaks founder Julian Assange during his stay at the Ecuadorian embassy in London. This included confidential meetings between Assange and members of his legal team. The surveillance was provided directly to the CIA. These revelations could possibly jeopardise the viability of the US extradition case. But within this story there lies another that raises serious questions about the establishment media and allegiances. According to El Pais, Spanish security firm UC Global was responsible for the surveillance of Assange when he was a guest of the Ecuadorian government at their London embassy. UC Global, a firm with an address in Jerez de la Frontera (Cádiz), was hired by Senain, the former Ecuadorian intelligence service, ostensibly to provide protection for Assange.


However, it’s now been revealed that the company’s owner David Morales passed on the results of the operations to the CIA. He even installed a video streaming service direct to the US. Also monitored were meetings between Assange and his lawyers, including Melynda Taylor, Jennifer Robinson, and Baltasar Garzón. After Rafael Correa was replaced by the right-wing Lenín Moreno as president of Ecuador in May 2017, the latter cancelled the UC Global contract. Moreno then issued a new contract to Ecuadorian company Promsecurity. Video recordings and photos taken by that firm were subsequently used in an extortion attempt.

Read more …

 

 

 

 

 

Jun 252019
 


Caravaggio Conversion on the way to Damascus 1600-01

 

Something’s been nagging me for the past few days, and I’m not sure I’ve figured out why yet. It started when Donald Trump first called off the alleged planned strikes on targets in Iran because they would have cost 150 lives, and then the next day said the US would do sanctions instead. As they did on Monday, even directly targeting Trump’s equal, the “Supreme Leader Khameini”.

When Trump announced the sanctions, I thought: wait a minute, by presenting this the way you did, you effectively turned economic sanctions into a military tool: we chose not to do bombs but sanctions. Sounds the same as not doing a naval invasion but going for air attacks instead. The kind of decisions that were made in Vietnam a thousand times.

However, Vietnam was all out war (well, invasion is a better term). Which shamed the US, killed and maimed the sweet Lord only knows how many promising young Americans as well as millions of Vietnamese, and ended in humiliating defeat. But the US is not in an all out war in Iran, at least not yet. And if they would ever try to be, the outcome would be Vietnam squared.

Still, that’s not really my point here. It’s simply about the use of having the world reserve currency as a military weapon instead of an economic one. And I think that is highly significant. As well as an enormous threat to the US. The issue at hand is overreach.

While you could still argue that economic sanctions on North Korea, Venezuela and Russia are just that, economic and/or political ones, the way Trump phrased it, comparing sanctions one on one with military strikes, no longer leaves that opening when it comes to Iran. The new Iran sanctions are a preliminary act of war. Simply because of how he presented them. He explicitly stated that he swapped one for the other.

 

There are quite a few people who have been harping on the demise of the USD as reserve currency for a long time, and I always think: look, nobody wants the yuan, let alone the ruble. There’s no trade being executed in these currencies. So taking over from the USD is a pipe dream.

But that may very well change, and perhaps very fast too, if the US uses the dollar not as an economic weapon (and there are plenty issues with that already), but as a military one. That would potentially hugely speed up any efforts to move away from the buck in international trade.

For the simple reason that it becomes unreliable. Traders hate that, they can’t have that. A reserve currency must be neutral -to a point-. The world of trade doesn’t want the yuan because Beijing controls it and can therefore change conditions and values overnight. But if and when the US uses the USD as a military tool, it essentially risks doing exactly the same: it deneutralizes the USD.

Using the USD as an economic weapon is ugly, but something global trade can deal with. A military weapon, though, is something else altogether. And I see no sign that Trump understands this. The thing is, using your currency, which also happens to be the world reserve currency, as a military tool, means you’ve become a threat to everyone, the entire globe, overnight.

And people don’t want to live that way. Not Iran, not Russia, not China, not Europe, no-one. It’s one thing to use the USD for sanctions. But it’s a real different thing to use it as just a military alternative to “bombing a country into obliteration”.

 

What Trump did comes awfully close to signing the death warrant for the USD as the global reserve currency. And it’s really only because he and his people weren’t paying attention. He could have phrased the entire thing differently, and it would have been business as usual, a business that Moscow and Beijing are actively trying to undermine, but they could have waited a bit longer reacting.

Now, however, their plans have to be sped up. They’re going to be buying a lot of gold, as they’ve already been doing, they’ll try to do their mutual business in their own currencies backed by this gold, and they’ll speed up alternatives-to-USD plans with other countries in their neighborhood. Because they have no choice anymore.

I see Tyler Durden reporting that the US threatens to throw a Chinese state-owned bank out of the SWIFT system, and I think: great idea. Why not force China to quit the reserve currency system, the petrodollar, outright?! Why not force it to hasten the Asian/Russian alternative trade model into existence? What a great and lovely idea.

The US should today make friends. It should preserve the reserve currency status of the USD for as long as it can, by convincing allies and foes alike that it will protect its neutrality in global trade. But Trump and his people are doing the exact opposite, they’re playing all-on-red.

The US no longer has the economic, political or military might to dictate to the entire world any terms it wants to. Those days are long gone. That ended in Vietnam. Trump’s living in the last century, while Bolton and Pompeo, they live in their own time and world.

 

But yeah, sure, perhaps this is what the dying days of an empire MUST look like. Maybe there’s a model to follow and there’s no escape, maybe it’s all written in the stars. Like Rome and Greece and Genghis Khan. Maybe things simply just have to play out. Still, looking at that Trump statement about the new Iran sanctions that started me off, it doesn’t feel all that smart.

 

 

 

 

Aug 032018
 
 August 3, 2018  Posted by at 12:31 pm Finance Tagged with: , , , , , , , , , ,  16 Responses »


George Caleb Bingham The verdict of the people 1854

 

 

It’s been a while since we last heard from Dr. D, but here he’s back explaining why neither gold nor the yuan nor cryptocurrencies can or will replace the dollar as the reserve currency, but together they just might:

 

 

Dr. D: “Some debts are fun when you are acquiring them, but none are fun when you set about retiring them.” –Ogden Nash

Over the last year or two there’s been discussion about the U.S. Federal spending moving beyond $4 TRILLION dollars, and whether a $1+ trillion dollar annual deficit, on top of a $20 Trillion national debt – Federal only – is sustainable. It isn’t.

“What can’t go on, doesn’t” is the famous quote of economist Herbert Stein. Since a spiraling deficit of $1 trillion deficit on a $20 trillion debt can’t go on, what will we replace it with when it very soon doesn’t? Historically gold. Whatever gold exists in the nation’s coffers, whether one coin or 8,000 tons, is used to as the national wealth, and fronted by paper to re-boot the currency. With some additions such as oil and real estate, this was the solution in Spain, France, Germany, and the Soviet Union among hundreds of fiat defaults. Why? Because at a time of broken promises — real goods, commodities that can be seen, touched, and used – are the tangible proof of wealth, requiring no trust, and from which the human trust system of paper and letters of credit can be rebuilt.

But in these complicated, digital times perhaps that’s too simplistic. Perhaps we have grown smarter than all our fathers and this time it will be different. Will it really be the same? Let’s look at how the system works now.

Before WWI, the world was on the gold standard. This had variations, exceptions, corruptions, but on the whole there was gold in the back that was fronted by paper promises issued by private banks. The paper moved, the promises were delivered by telegraph and telephone, and the gold remained in the vaults. It was only when men felt unsure of the truth of the promise they could and did demand delivery, called the bluff, and the bank did – or ominously didn’t – deliver the gold, and thereby keep the paper system in line with reality, with real wealth, and with the economy. This method kept men and nations honest, mostly.

The main part is that the gold didn’t move: it stayed in the same vaults and its ownership changed, just like today. It didn’t matter how much gold existed: it simply changed price, just like today.

All this changed after WWI. The nations had so impoverished themselves that they could no longer repay their real debts and restore their currencies following a 1,000 year tradition of inflating during wars and deflating after. The deflation was too high for Britain and France even while removing the total wealth of Germany, and they began to cheat, double-counting the gold on their books to relieve the pressure. And so the non-gold system began. With other causes, the inflation of this change began to be felt through the Roaring 20’s, until when the phantom money was called on – as was tradition when people began to suspect that the paper they owned was no longer backed with adequate real goods – the illusion popped.

The inflation was shown to be a fraud supported by the highest powers in government and finance, and the real economy withdrew their lack of trust until the matter was fixed. It wasn’t. As the system was fundamentally unchanged and no trust was restored, the rich were protected and law and property rights were trampled in a decade of Tom Joads, the economy never recovered. Although destroying half the nations on earth restored the real balance between paper fantasy and real production, the unemployment that never existed before WWI was never cured and has continued, ever worsening to this day. But note: before, during, and after the Depression, there was the same amount of gold. The gold did nothing, it was meaningless, only the paper promises over it expanded and contracted.

With the systemic dishonesty still in place preventing the books from matching the real wealth and production, the economy soon returned to a diseased state. While gold was illegal for men to own, the rich do as they please and as tradition, removed the gold of the United States to hold them to truth and honesty from printing too much fake money for guns and butter. They withstood the 12 year bank run until, in 1971, they folded, having lost 2/3s of the national savings, gold.

 

The world was now in uncharted territory. Much more than they never returned to honesty and a gold standard after WWI, they never attempted it after WWII, going to the -Bretton Woods” standard: the world would use the US$ as the standard, and the US$ would be backed with their 20,000 tonnes of gold. Now there was no gold, no gold standard, only unbacked US$ paper, a debt you could neither call on nor prove. As Nixon’s Treasury Secretary Connally said: “the dollar may be our currency, but it’s your problem.’

Inflation started immediately, and as the U.S. still resisted re-establishing physical trust, the connection between the books and reality, they quickly spiraled into South American malaise and high inflation, as seen in the gold price. From $20/oz, or rather a dollar value of 0.029, the dollar ran to 0.0011 – 1/26th of its former price — and looked to disappear altogether. This was not unexpected as fiat currencies on average live 40 years before collapsing. If you take 1941 as the start date, the unbacked US$ would have collapsed in 1981, exactly when it did. What to do? How to re-start the system without having to actually reform, give up war, be honest, and return to trust?

Henry Kissinger had the plan. As no one on earth was on the gold standard – not really – the US$ had only two legs, its worldwide use and military force. He made use of them both by demanding the Saudis accept only US$ for oil transactions. Although U.S. production was diminishing, the U.S. and Saudi Arabia were still the two largest oil producers at that time. Most other nations imported oil, especially Europe.

To have assurity of access to that oil — and not run afoul of the U.S. military – they needed to keep a substantial portion of their national accounts in US$, or more technically U.S. Treasury debt, sparking not just the ability, but the REQUIREMENT of a massive U.S. deficit. Kissinger just discovered social media: the truth that virtual things have value simply because other people use them. This was for all practical purposes the first virtual currency, existing only in room-sized mainframes in central banks worldwide. The world’s currency now looked like this:

 


(Courtesy of Dr. Willie)

A virtual currency backed by nothing, based on the usage in trade. But that isn’t a full chart and isn’t meant to be. On the side, back in the corners, the US$ was still convertible to gold for the “right kind of people”, using delivery in NY and London to banks in Switzerland. The volumes of US$ grew to trillions while the gold component withered to billions, yet still the Saudis banked billions in gold before it was recently stolen from their Swiss accounts, lawsuits pending. Why? Because there is still no trust between nations and billionaires who have a long history of cheating each other. The gold-in-hand safety valve existed to retain some trust, however distant, in the now-digital system.

 

“Gold is a currency. It is still, by all evidence, a premier currency, where no fiat currency, including the dollar, can match it.” –Alan Greenspan, 2014 interview of the Council on Foreign Relations.

So is the system still gold backed with gold as the “premier”, that is, first, real, and primary currency as Greenspan said? You tell me:


Apart from the Iraq war, the price of oil has been stable for 50 years. In 1950, two silver dimes would buy a gallon of gas. In 2018 two silver dimes are worth $2.22, or the price of a gallon of gas, minus the new taxes. Meanwhile the US$ value has dropped steadily:


Doesn’t that mean that it’s still gold and not the dollar that is the standard, the “store of value”, and the “reserve currency”, however unspoken? If not and it’s a relic, a rounding error we cannot return to, why, as Ben Bernanke was asked, do all the banks and nations still own it?

 

Back to the $20,000,000,000,000 debt the U.S. as reserve currency was REQUIRED to issue, it’s now been 40 years since 1978: what happens when the U.S. Dollar disappears as all fiat currencies do? Because it seems we would have to do something. It may be that even before 1988, people already knew this conversion, this transfer, must happen roundabout 2018:

If the old currency burns as predicted 30 years ago, what next? Will it be replaced by a gold coin or a “zero” coin, chained under the fleur-de-lis? It would seem the new currency must be trusted, which is the original problem, must be a replacement in trade, and must be large enough to handle what are now multi-billion trade and multi-trillion Forex flows. Is the answer gold? Well yes…and no. Certainly China thinks so:

And Russia:


And for that matter Germany and Holland and even Texas, who have repatriated their gold back home. But there’s one little problem:

These are the official western gold reserves; however, while the gold base remained stable, the overall financial system has expanded. This can be seen in all paper assets, but a good example can be found here:

That’s what? A 20,000-fold rise? And this is only marking “credit”, not equities or cash. We are indeed in an inflationary period: inflation in assets owned by the 1%. How out of line is this? Here’s the kindred chart in productive terms, GDP:

A 9-fold increase in ability versus 20,000-fold increase in promises. Sounds like someone won’t get paid. And you know what bankers and economists call that?

Default. Massive, system ending default, the size of WWI or the Great Depression. That’s how fiat standards end.

How big would that be? Here are some relative sizes:

Actually, that’s pretty understated. Derivatives in 2018 may be as much as $2 QUADRILLION. No one knows. Compare to this:

$3 Trillion in gold. Now that’s “official” gold and we already showed that “official” Chinese gold is 4,000 tonnes when it may be as high as 30,000 tonnes, but the principle is the same: gold is wildly smaller than the needs of the financial system. Or is it? In previous financial inflations…which I just showed we have had since 1971, in 20,000x scale…gold simply rose until it became the right size.

It’s perfectly simple. Gold rises 20,000 times or however much it must to re-back the system. It always has before, even in 1979 when the price rocketed from $35 to $880 where US debt to gold holdings ratio stabilized at a very reasonable 10:1…the classic level of fractional reserve trust. If China officially owns 5,000 tonnes, and Russia 2,000, with the west also 15,000 collectively, we have 22,000 tonnes over what BusinessInsider says is $160 Trillion in assets, and you get $7.27B/tonne or $226,000/oz.

That’s a 188x increase. 1979 was a 25x increase on an awful lot less trouble, inflation, and fraud. That’s only 7x larger. Is that unreasonable? With 40 years of inflation and very little comparative rise in gold, why shouldn’t it catch up as it did in 1979? So gold will rise and we’ll have a $200,000 gold standard? That’s what will happen?

Not so fast. We COULD have a gold standard, and China, Russia and other major nations appear ready to do so if necessary, but remember we didn’t return to the gold standard last time either. Instead, we cheated and moved to a digital standard stored in ancient mainframes. Why wouldn’t we just cheat again? Back to this:

The two problems in the original chart are trust and price. The price must restore a connection between reality -real value and real production- and price; and the “reserve currency”, the medium of exchange, must be a trusted agent or method. Why would we need coins in our pockets to make that happen? For that matter, why would we need banks, who have widely proven to be the most corrupt, untrustworthy element in the whole system? We can’t go to a new system if it’s the same as the old: that’s WHY the system failed and cycles from gold to silver, silver to paper, paper to gold. We can’t go from paper to paper, that won’t work; but we also can’t so easily go to gold, asking an 800-fold increase since 2000. It would have the same disruptions Weimar had that brought Hitler, or the Jacobins had that brought Napoleon, or that Venezuela has today. And why should we? There’s no need.

The chart above has the US/Saudi oil as the critical mass of trade that allows the US$ reserve. But that isn’t necessarily true today. Today the mass of trade is in goods to and from China. But China isn’t large enough, deep enough, or trusted enough to be the new world currency. And why should they? The reserve currency is what just hollowed out and bankrupted the United States: they would just be imitating our faults. We’d also be moving from one untrusted, unbacked currency to another, and history says that doesn’t happen. So why don’t we do this:


(Courtesy Dr. Willie)

China demands not US Treasuries in NY as collateral to ship goods as presently, and not Yuan bonds, but gold bullion posted in their hot new Shanghai market, which allows physical delivery on demand. This bullion never moves as collateral, but is simply posted by one party then released on delivery. Shanghai is already larger than London, and the largest banks are already in China, which probably has the largest economy. The West and their banks are a has-been: we’re only admitting to a reality that happened years ago.

This solves our two problems: how do we know we’re returning to fair trade, like-for-like? Real goods on container ships are trading for real goods in vaults. How do we know it’s fair, mostly? You can convert the Yuan-sponsored, gold trade note to physical delivery from Shanghai, a thing which is no longer truly possible in London and NY. Will this reversion increase the gold price? Probably. How much? Every number is a state secret, but assuming the 10:1 ratio the United States showed in 1980, let’s say it’s 1:10 of our $226,000 number above or $22,600/oz. That’s reasonable, practicable, and neither stops business nor starts wars. We can do it today, and given China, Russia, Japan, Asia, Australia, and even London appear to be joining China’s AIIB front bank, I would say it already IS happening.

Which leads to one more problem. Certainly TODAY you can take gold delivery in Shanghai, but as London, NY, and the Saudis discovered, the first thing that happens once you build a system of trust is to close the doors and cheat on it. How do we know the gold is there? Even though Shanghai is a “third party” allowing delivery, who’s to say they will be tomorrow? The banks are notorious for “hypothecating”, doubling, tripling the gold on their books with accounting fraud backed by the full faith and credibility of governments, and no one’s in the mood for trusting the Chinese any more than Wells Fargo or DeutscheBank. That would drop us back to a hard gold standard, a $220,000 price, a halt to world trade, and possible world war we were trying to avoid. We need an accounting method that is better trusted and can’t be gamed. How to fix it?

 

The gold in Shanghai has a chain of custody, no different from “London Deliverable” standards we have today. An original audit, adjusted for receipts and deliveries is all we need. Which is where we add the blockchain. With it, Shanghai cannot double the gold on their books like Europe did in 1922 or the CME does today, marking it both received and loaned, because the blockchain only allows one position, one state at a time. Gold assayed and entered by refiner is tagged to a kilo, and you can follow that kilo bar through the system, not with double counts and vanishing, ever-changing serial numbers as the Federal Reserve and the GLD ETF showed.

Can it be cheated? All systems can be cheated, that’s the nature of men. But it makes it much harder, hard enough to establish adequate trust in banks and governments that otherwise would go to war. Will it be tied to Bitcoin? Yes, but no differently than it will be tradable to the Thai bhat or the ruble. With near-zero cost conversions, all currencies, crypto or otherwise, will be far more interchangeable and thus to some extent identical. They may even disappear, as happened when Jackson closed the 2nd central bank 182 years ago and the nation essentially moved to private currencies.

What will happen to the Dollar? It will still exist, but in some new, revised form. But the US$ today is transferring 3% of the nation’s wealth from the poor to the rich via inflation. Do we really want to keep it? And if it’s not a store of value and it’s already not the reserve currency — we just showed it’s a diluted proxy for gold and oil — why should the reformed US$ be any different? The dollar will be our national currency, still diluted and still referring to the real currency: gold, the attached Trade Note, and its crypto accounting. Until the next fraud and next crisis, perhaps in 2058.

 

And that’s the long story of how we leave the present debt-backed U.S. paper dollar and move to a Yuan-sponsored gold trade note that is a gold-backed cryptocurrency. In some ways we already have. Watch and see as they have the public opening of a structure planned and established years ago.

 

 

Jan 012018
 


Happy New Year Bill Watterson

 

Happy New Year to you and yours!

 

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US Dollar Refuses to Die as Top Global Reserve Currency (WS)
The Rise And Fall Of The Eurodollar (ZH)
Behind Korea, Iran & Russia Tensions: The Lurking Financial War (Crooke)
Polanyi Best Explains Trump, Brexit And The Failure Of Neoliberalism (Prime)
UK Government Relies On Rising Household Debt To Hit Targets – Labour (G.)
‘Desperate Times’ For Overcrowded British Hospitals (PA)
China’s Growth Engine Stutters As Factories Slow Down (G.)
Greece Dismisses Turkey’s Threats Over Asylum Row (GR)
Greece: Turkish Soldiers Won’t Be Extradited Regardless Of Asylum Process (K.)
UK ‘Faces Build-Up Of Plastic Waste’ (BBC)

 

 

The graphs seem to say it all: the demise of the dollar (and petrodollar, eurodollar -dollars held outside US-) has been greatly exaggerated.

US Dollar Refuses to Die as Top Global Reserve Currency (WS)

Over the decades, there have been a number of efforts to deflate the dollar’s hegemony as a global reserve currency, which it has maintained since World War II. Some of these efforts – such as the creation of the euro – have made a visible dent into the dollar’s status. Other efforts have essentially passed unnoticed. Now there’s a new contender: the Chinese yuan. On December 31, the IMF released its report on the Currency Composition of Official Foreign Exchange Reserves (COFER) for Q3 2017. So how has the US dollar fared as the top world reserve currency, now that the Chinese yuan has also been anointed as one, and that the euro has emerged from its debt crisis? First things, first. The IMF doesn’t really disclose all that much. The COFER data for the individual countries – the level of their reserve currencies and how they allocate them – is “strictly confidential,” it says.

So what we get to look at is the global allocation by currency. Total global foreign exchange reserves rose to $11.3 billion in Q3 2017, within the range of the past three years, between $10.7 trillion (Q4 2016) and $11.8 trillion (Q3, 2014). But something is happening to “allocated reserves.” Not all central banks disclose to the IMF how their foreign exchange reserves are allocated. In Q3 2017, 14.6% of the reserves hadn’t been allocated. But this number is plunging. In Q3 2014, just three years ago, it was still 41.2%. This means that more and more central banks report to the IMF their allocation of foreign exchange reserves, and the COFER is getting broader.

So of the 85.4% of the officially “allocated” reserve currencies in Q3 2017: • US dollar: 63.5% share, down from 64.6% in Q3 2014. • Euro: 20% share, down from 22.6% in Q3 2014. • Yen: 4.5% share, up from 3.6% in Q3 2014. • Pound Sterling: 4.5% share, up from 3.75% in Q3 2014. The Australian and Canadian dollars had a share of 1.8% and 2.0% respectively. • The Chinese yuan – that thin red sliver in the chart below – had a share of 1.1%, up from 1.08% in the prior three quarters, and up from zero before then. • The Swiss franc, the hair-fine black line in the chart below, has a share of 0.2%. • And a number of “other” currencies have a combined share of 2.4%.

The Chinese yuan made its entry after IMF boss Christine Lagarde and the IMF staff declared in mid-November 2015 that they were gung-ho about adding it to the IMF’s currency basket, the Special Drawing Rights (SDR), which is an important step toward becoming a major global reserve currency. At the end of November 2015, it was approved by the board. And it took effect in October 2016. Sure enough, in Q4 2016, the Chinese yuan started showing up in the COFER data as a global reserve currency with a share of 1.08%. But rather than soaring, it didn’t move at all over the first two quarters in 2017. And in Q3, it ticked up to a still minuscule 1.1%. Central banks do not appear to be overeager to hold this currency in large amounts. The chart below shows the changes since Q3 2014. The black line at the top is the US dollar – its hegemony unbroken.

Read more …

Russia experienced dollar shortages with oil prices still at $95 a barrel. It can’t do without dollars. Maybe sometime in the future, but that may well be a long time away.

The Rise And Fall Of The Eurodollar (ZH)

Gromen, who largely sat out this segment, offers a few thoughts toward the end that add to the picture of weakness defining the contemporary eurodollar system. Looking back to the summer of 2014, Gromen posits that the largest oil exporters were able to maintain current account surpluses because they’d already started settling an increasing percentage of their oil sales in dollars.

“It’s interesting, Jeff and Mark (this is Luke of course) when you look back to September – and we put this in our slide deck (which we can touch on later) – but if you look back at the actual timing of events it’s kind of interesting. And it’s, to me it hints to motive. So I’d love to get your thought on it, Jeff or Mark, of – if you go back to August of 2014, actually back even to May of ‘14, you had the Holy Grail gas and energy deal signed between China and Russia. It was rumored that that deal was going to be done in non-dollars, but no proof of that. It was later proven to be the case. In August of 2014, Putin announced that they wanted to start moving away from the dollar in oil trade, because the dollar’s monopoly in the global energy trade was damaging their economy.

And, what’s kind of interesting – and we wrote about this at the time – at this point oil is still $100 a barrel. And then, all of a sudden, by late September, with oil still $96 a barrel, $95 a barrel, Russia’s having dollar shortages. Russia was still – and they weren’t the only ones – Venezuela, Ecuador, a couple of others – you have three major oil exporters that are running still current account surpluses in the low- to mid-single digits at this point, starting to run into dollar shortages. And it was, I think, an underappreciated point at the time that, basically, if you’re an oil exporter you’re only selling in dollars, you’re running a current account surplus.

And so, if you’re only selling in dollars, in theory, there’s only two explanations for that, for those dollar shortages that began to pop up well before the price of oil crashed. Which was (#1) Russia and other places got dramatically more corrupt in the three months versus the three months before. Or they were starting to sell energy at an accelerating rate in non-dollar terms. And, as a result, you were seeing – where you were getting $100 before, now you were getting whatever, $90, $80, whatever the mix was. And at that point, then you started to see some of the devaluations etc. I guess I’d love to hear your thoughts on that.”

Read more …

Alastair Crooke also looks at the dollar demise.

Behind Korea, Iran & Russia Tensions: The Lurking Financial War (Crooke)

What have the tensions between the US and North Korea, Iran and Russia in common? Answer: It is that they are components to a wider financial war. Russia and Iran (together with China) happen to be the three key players shaping a huge (almost half the global population) alternative currency zone. The North Korean issue is important as it potentially may precipitate the US – depending on events – towards a more aggressive policy toward China (whether out of anger at Chinese hesitations over Korea, or as part and parcel of the US Administration’s desire to clip China’s trading wings). The US has embarked on a project to restore America’s economic primacy through suppressing its main trade competitors (through quasi-protectionism), and in the military context to ensure America’s continued political dominance.

The US ‘America First’ National Security Strategy made it plain: China and Russia are America’s ‘revisionist’ adversaries, and the US must and intends to win in this competition. The sub-text is that potential main rivals must be reminded of their ‘place’ in the global order. This part is clear and quite explicit, but what is left unsaid is that America is staking all on the dollar’s global, reserve currency status being maintained, for without it, President Trump’s aims are unlikely to be delivered. The dollar status is crucial – precisely because of what has occurred in the wake of the Great Financial crisis – the explosion of further debt. But here is a paradox: how is it that a Presidential Candidate who promised less military belligerence, less foreign intervention, and no western cultural-identity imposition, has, in the space of one year, become, as President, a hawk in respect to Korea and Iran.

What changed in his thinking? The course being pursued by both states was well-known, and has offered no sudden surprise (though North Korea’s progress may have proved quantitatively more rapid than, perhaps, US Intelligence was expecting: i.e. instead of 2020 – 2021, North Korea may have achieved its weapons objective in 2018 – some two years or so earlier that estimated)? But essentially Korea’s desire to be accepted as a nuclear weapon state is nothing new. It is ‘the Federal debt’, and a pending ‘debt ceiling’ that is crucial. There is little doubt that the US military is not what it used to be, and the Republican Party possesses a wing that is quite fundamentalist about limiting debt (Freedom Caucus). A serious military crisis is possibly the only way Trump is likely to get a huge ramp-up of military expenditure past Congress’ fiscal hawks.

President Trump – the Tax Bill saga tells us — is going to be a big spender as part of MAGA (Make America Great Again). The increase in proposed US defence spending alone, more or less equates to the whole annual Russian defence spending. US Federal debt is already above $20 Trillion, and accelerating fast: the borrowing requirement is ballooning and interest payments to service this additional borrowing, normally would be expected to rise. But Trump is also explicitly a low interest rate, expanding balance-sheet, sort of guy. So, how does one finance a truly ballooning budget deficit, whilst keeping interest rates low, or at zero? Well a fear-driven rush by foreigners into ‘risk free’ US Treasuries (i.e. military crisis again), historically serves to keep rates low – and dollars plentiful — as ‘overseas dollars’ return ‘home’ to Wall Street.

Read more …

No sure why economists et al have such a hard time understanding why limitless liberalization must by definition backfire.

Polanyi Best Explains Trump, Brexit And The Failure Of Neoliberalism (Prime)

It’s good to see the latest (21 December) New York Review of Books give space to a review – by Robert Kuttner of American Prospect– of a biography of “Karl Polanyi: a Life on the Left” by Gareth Dale. For as we have been arguing for a long time, it was Polanyi who better than any other historian/analyst got to the heart of the contradictions of free market globalised liberalism, and saw that it was such economic liberalism, pushed too far, that is likely to lead to authoritarian, or even fascist, outcomes. As Kuttner puts it, “Global capitalism has escaped the bounds of the postwar mixed economy that had reconciled dynamism with security through the regulation of finance, the empowerment of labor, a welfare state, and elements of public ownership”.

The outcome is extreme inequality and instability. However, as Kuttner reminds, “We have been here before. During the period between the two world wars, free-market liberals governing Britain, France, and the US tried to restore the pre–World War I laissez-faire system. They resurrected the gold standard and put war debts and reparations ahead of economic recovery. It was an era of free trade and rampant speculation, with no controls on private capital. The result was a decade of economic insecurity ending in depression, a weakening of parliamentary democracy, and fascist backlash. Right up until the German election of July 1932, when the Nazis became the largest party in the Reichstag, the pre-Hitler governing coalition was practicing the economic austerity commended by Germany’s creditors.”

It was these extremist policies of free market liberalism that Polanyi dissected in his most famous work, “The Great Transformation”, published in 1944. The worst consequences were in Germany and other continental European states, but declining imperial Britain was still the heart of ultra-liberal ideology. I am currently reading David Kynaston’s rambling History of the Bank of England, which sets out the disgraceful pressure that Governor Montagu Norman and the City of London put on elected governments to return to the Gold Standard (at the pre-war rate) and impose harsh austerity, with terrible economic consequences. [..] “[T]he simple proposition that all factors of production must have free markets implies in practice that the whole of society must be subordinated to the needs of the market system.” We see Polanyi’s key insight – in the essays and in the later book – as encapsulated in these passages:

“The real nature of the dangers thus become apparent which are inseparable from the market-utopia. For the sake of society the market mechanism must be restricted. But this cannot be done without grave peril to economic life and therefore to society as a whole. We are caught up on the horns of a dilemma: – either to continue on the paths of a utopia bound for destruction, or to halt on this path and risk the throwing out of gear of this marvellous but extremely artificial system.” “A self-regulating market-system is a utopia. No society could stand its devastating effects once it got really going. Hardly had laissez-faire started when the State and voluntary organizations intervened to protect society through factory laws, Trade Union and Church action from the mechanism of the market.”

Read more …

All western countries do. It’s why interest rates are so low.

UK Government Relies On Rising Household Debt To Hit Targets – Labour (G.)

John McDonnell has accused the government of relying on millions of British families going further into debt in order to meet Treasury targets. The shadow chancellor said families were set to borrow £445bn by the end of the parliament. He also highlighted official figures showing the ratio between household debt and income had reached a five-year high, with forecasts suggesting it will hit 150% by 2022. That means families will have amassed debts worth a year and a half’s income – which Labour warned could result in people falling into financial difficulties. McDonnell is planning for the Labour party to focus heavily on the question of household debt as part of its new year strategy. “The alarming increase in household debt at a time when wages are not keeping up with prices is creating the perfect storm for our economy,” McDonnell told the Guardian.

“There needs to be more done to protect working households from extortionate rates of interest, and also ensure that their earnings are not being squeezed just so Philip Hammond can pretend to meet his own targets, which he has so far failed to meet.” The Labour frontbencher said his party had already promised to cap interest on insecure lending, but would be unveiling a string of further interventions in 2018 about how to protect households from burgeoning debt. He has described the situation as a “personal debt crisis” with levels of unsecured borrowing predicted to hit a record of £19,000 per household by the end of this parliament. Analysis from Labour shows unsecured debt is on course to exceed £15,000 per household next year and could go on to exceed £19,000 per household by 2022 if it follows the current trajectory.

Read more …

They had an excellent health care service. Those days are gone. The poor have become expendable.

‘Desperate Times’ For Overcrowded British Hospitals (PA)

Pressures on the NHS have “escalated rapidly” over the festive period, with hospitals experiencing significant bed shortages, a leading doctor has warned. Dr Nick Scriven, president of the Society for Acute Medicine (SAM), said many hospitals reported more than 99% capacity in the week before Christmas. He said services are being placed under significant strain as they enter the new year and called for non-urgent operations to be postponed until at least the end of January. Doctors have described corridors overflowing with patients and used social media in a bid to find extra staff to cope with demand. Portsmouth hospitals NHS trust, in Hampshire, tweeted on Sunday: “The hospital is extremely busy at the moment and we are asking any medical or nursing staff available for a shift tonight or tomorrow to make contact.”

Epsom and St Helier University hospitals trust, in London, also appealed for staff to work on New Year’s Eve “due to sickness and high volumes of patients”. Dr Richard Fawcett, from the Royal Stoke University hospital, wrote on Saturday that it had run out corridor space in A&E after ambulances were diverted from County hospital, Stafford. NHS England said hospitals were “generally coping”, with overall bed occupancy levels down from 95% in the lead-up to Christmas to about 93%. Scriven said: “Since the bank holiday, things have escalated rapidly and we are on the cusp of a major issue at least as bad as last year when it was described by the Red Cross as a humanitarian crisis. “There is an awful lot of respiratory illness causing a lot of severe symptoms in the old and young and 10- to 12-hour delays in emergency departments are now not uncommon – along with patients being placed on inappropriate wards.”

Read more …

Good story for 2018.

China’s Growth Engine Stutters As Factories Slow Down (G.)

Growth in China’s manufacturing sector slowed in December as a punishing crackdown on air pollution and a cooling property market start to weigh on the world’s second-largest economy. The data supports the view that the Chinese economy is beginning to gradually lose steam after growing by a forecast-beating 6.9% in the first nine months of the year. However, signs of a sharper slowdown – a major fear among global investors – have yet to materialise. The official Purchasing Managers’ Index (PMI) released on Sunday dipped to 51.6 in December, down from 51.8 in November and in line with forecasts from economists in a Reuters poll. The 50-point level divides growth from contraction on a monthly basis. The figures showed that China’s full-year 2017 economic growth would be at about 6.9% and 6.5% for 2018, according to the China Federation of Logistics and Purchasing, which compiles the data.

Boosted by hefty government infrastructure spending, a resilient property market and unexpected strength in exports, China’s manufacturing and industrial firms have driven solid economic growth this year, with their strong appetite for raw materials boosting global commodity prices. However, a slowdown has started to take hold in the last few months due to a wide-ranging combination of government measures, from a crackdown on smog in some heavily industrialised provinces to continued curbs on the housing market, which are weighing on property investment. Chinese steelmakers in 28 cities have been ordered to curb output between mid-November and mid-March, while a campaign to promote cleaner energy by converting coal to natural gas has also hampered manufacturing activity in some cities, leading to shortages and price rises.

Read more …

Any politician seen as giving in to Turkish strong-arming faces a huge problem at home. Long history and all that.

Greece Dismisses Turkey’s Threats Over Asylum Row (GR)

Greece dismissed Turkish angry threats on Sunday over its decision to grant asylum to a soldier who Ankara accuses of involvement in the abortive coup against President Tayyip Erdogan in July 2016. Turkey said on Saturday the decision by a Greek asylum board undermined relations between the two countries. The soldier was one of eight who fled after the July 15 coup attempt. It also accused Athens of harbouring “coup plotters”, a charge Greece denies. Turkey also threatened that the incident would affect bilateral relations over a host of issues from ethnically split Cyprus to sovereignty over airspace. The asylum board rejected the applications by the other seven soldiers, and the Greek government has appealed the decision to grant the soldier asylum and sought its annulment.

The government announcement that it will appeal the decision has caused a minor political storm, with opposition parties accusing the PM of hypocrisy and of bowing to Turkish threats. the row began when the government added to its appeal release that the country’s judiciary is independent. “Our faith in democratic principles and practices is not a weakness, but a source of strength,” the Greek foreign ministry said in a statement on Sunday. “Democracies do not threaten, or can be threatened,” the foreign ministry said. “On the contrary, they work responsibly and methodically to promote understanding and entrench stability and good neighbourly relations. Greece will continue this path and hopes its neighbours will do the same.” The eight soldiers had flown by helicopter to Greece in the early hours of July 16, 2016, as the attempted coup against Erdogan crumbled. They have denied any involvement in the attempt.

Read more …

Erdogan is not going to like this one.

Greece: Turkish Soldiers Won’t Be Extradited Regardless Of Asylum Process (K.)

Greek government spokesman Dimitris Tzanakopoulos has said the eight Turkish soldiers wanted by Ankara in connection with a failed coup attempt in 2016 “will not be extradited regardless of the outcome of their asylum applications.” In a message posted on social media late Sunday, Tzanakopoulos said the asylum claims submitted by the soldiers concerns their granting of refugee status. “This is a completely different from their non-extradition,” he said. Turkey said on Saturday the decision by a Greek asylum board to grant asylum to one of the eight soldiers undermined relations between the two countries. It also accused Athens of harboring “coup plotters.”

On Sunday, Tzanakopoulos said it was up to the Greek justice system to decide if the suspect in question is entitled to refugee protection, “in light of the enormous political significance of the issue which directly impacts on relations with the neighboring country.” “The political position of the Greek government is nevertheless clear,” Tzanakopoulos said. “Those suspected of being involved in Turkey’s coup are not welcome.”

Read more …

It’s not as if this is a British issue. Just refuse to use all the packaging etc.

UK ‘Faces Build-Up Of Plastic Waste’ (BBC)

The UK’s recycling industry says it doesn’t know how to cope with a Chinese ban on imports of plastic waste. Britain has been shipping up to 500,000 tonnes of plastic for recycling in China every year, but now the trade has been stopped. At the moment the UK cannot deal with much of that waste, says the UK Recycling Association. Its chief executive, Simon Ellin, told the BBC he had no idea how the problem would be solved in the short term. “It’s a huge blow for us… a game-changer for our industry,” he said. “We’ve relied on China so long for our waste… 55% of paper, 25% plus of plastics. “We simply don’t have the markets in the UK. It’s going to mean big changes in our industry.”

China has introduced the ban from this month on “foreign garbage” as part of a move to upgrade its industries. Other Asian nations will take some of the plastic, but there will still be a lot left. Environment Secretary Michael Gove has admitted that he was slow to spot the problem coming. The UK organisation Recoup, which recycles plastics, said the imports ban would lead to stock-piling of plastic waste and a move towards incineration and landfill. Peter Fleming, from the Local Government Association, told the BBC: “Clearly there’s a part to play for incineration but not all parts of the country have incinerators.

Read more …

Oct 142016
 
 October 14, 2016  Posted by at 9:20 am Finance Tagged with: , , , , , , , , , ,  Comments Off on Debt Rattle October 14 2016


Lewis Wickes Hine Newsies in St. Louis, N. Broadway and De Soto. 1910

Fed Creates Junk Bond And Stock Market Bubble (SA)
Draghi Sends Corporate Yields So Negative the ECB Can’t Buy Them (BBG)
There’s No Plateau in a Housing Bubble, Not Even in Canada (WS)
30% Junk Rally Gives Traders Heartburn (BBG)
China’s Tough Choice: Supporting Growth Or Controlling Debt (CNBC)
China Export Dip Tempts Policy Makers to Keep Weakening Yuan (BBG)
Shanghai Banks Told To Limit Loans To Property Developers (R.)
Standard & Poor’s Warns On UK Reserve Currency Status As Brexit Hardens (AEP)
Hundreds Of Properties Could Be Seized In UK Corruption Crackdown (G.)
Some of Donald Trump’s Economic Team Diverge From Candidate (WSJ)
Renzi Gambles All on Referendum Haunted by Weak Italian Economy (BBG)
Walloon Revolt Against Canada Deal Torpedoes EU Trade Policy (Pol.)
Germany Proposes North Africa Centers For Rescued Migrants (AFP)

 

 

“..this borrowing to fund buybacks and dividends doesn’t last this long and it has never lasted three years..”

Fed Creates Junk Bond And Stock Market Bubble (SA)

The chart below emphasizes the point that real business investment has declined while commercial and industrial loans are increasing. The leverage in the system is the highest ever as cheap money is not going to the right places. Businesses will only invest in new initiatives if they see sales growth in the future. Low interest rates will not cause a manager to invest in a new initiative. However, managers are still tempted to take the free money, so they pile it into the easiest place: dividends and buybacks.

As you can see, the total payout ratio of dividends and buybacks has exceeded 100% for the past two years. Usually, this borrowing to fund buybacks and dividends doesn’t last this long and it has never lasted three years, so leverage is near its brink.

The chart below shows how levered the balance sheets of corporations are. The leverage on investment-grade balance sheets is at a record high. The three bubbles that you can see in the chart below have all been created by the Federal Reserve’s easy money policies.

Read more …

Super Clueless Mario surprises himself.

Draghi Sends Corporate Yields So Negative the ECB Can’t Buy Them (BBG)

The European Central Bank is starting to price itself out of the corporate-bond market as yields plumb such lows that some notes are no longer eligible for its purchase program. ECB President Mario Draghi’s unprecedented buying of corporate debt has sent borrowing costs tumbling to a record and now yields on some securities are so low they fall outside the ECB’s own criteria. Yields on bonds from Paris’s public transport network have already dropped below the threshold of minus 0.4%, while those from Siemens, Europe’s biggest engineering company, France’s train operator SNCF and Sagess, which manages the nation’s strategic oil reserves, are also approaching the cut-off point.

The increasingly negative yields are raising questions about how much more the ECB can do in credit markets to stimulate growth. Yields on €2.6 trillion ($2.9 trillion) of government bonds in Europe have already turned negative after the central bank bought €1.3 trillion of fixed-income assets, including €32 billion of corporate bonds. “This is a sign of how much impact corporate bond buying has had on the credit market,” said Barnaby Martin at Bank of America. “If corporate yields continue to fall, then conceivably it could impact the ECB’s ability to buy bonds. It’s surprising how quickly we’ve reached this situation.”

Read more …

“When a bubble pops, the first thing that stops is transactions..”

There’s No Plateau in a Housing Bubble, Not Even in Canada (WS)

Once enough people are priced out of the housing market, demand collapses. This would normally be where housing bubbles deflate in a very painful manner for lenders, homeowners, and everyone getting their cut, including governments and the real estate industry. But there has been a strong influx of mostly Chinese investors that need to get their money, however they obtained it, out of harm’s way at home, and they pile into the market, and they don’t care what a property costs as long as they think they can sell it for more later. But British Columbia threw a monkey wrench in to the calculus this summer when it adopted a 15% real estate transfer tax and other measures aimed squarely at non-resident investors. It hit home, so to speak.

Total sales in Vancouver plunged 32.5% in September from a year ago, with sales of detached homes falling off a cliff – down 47%. Home sales have fallen every month since their all-time crazy peak in February on a seasonally adjusted basis, for a cumulative decline of 44%, according to Marc Pinsonneault, Senior Economist at Economics and Strategy at the National Bank of Canada. But home prices have not yet fallen, he wrote in the note, “because market conditions have just started to loosen from the tightest conditions on records. We see home price deflation starting soon (10% expected over twelve months).” His chart shows the plunge in sales (red line, left scale, in thousands of units) even as active listings have started to rise (blue line, right scale):

In Toronto, the opposite is happening, with sales spiking on a seasonally adjusted basis way past prior record levels, even as new listings have plunged.

For now, “Toronto is now the red hot market,” explains Pinsonneault: “Home sales broke records in each of the last three months. But the historically low supply (in terms of the number of homes listed for sale) is also contributing to market conditions that are the tightest on records.” But the situation can turn on a dime, as Vancouver demonstrated. When a bubble pops, the first thing that stops is transactions. This happens suddenly. Sellers refuse to cut their prices, while buyers refuse to step up to the plate. Things grind to a halt.

Once sellers are forced to relent on price, transactions start rolling again, at lower prices, and each lower price, due to the metrics of comparable sales, pressures down future prices of other transactions. Once Chinese investors figure out that they’re likely to lose a ton of money in Canadian real estate, because their compatriots who’ve piled into the market before them have already lost a ton of money, they’re going to lose their appetite. This is the hot money. It evaporates suddenly and without a trace. As Vancouver shows, bubbles don’t end in a plateau.

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Chasing yield doesn’t look like the best way forward.

30% Junk Rally Gives Traders Heartburn (BBG)

It’s becoming difficult to see how the lowest-rated U.S. junk bonds can continue to rally. They’ve posted their best performance since 2009, with more than a 30% return so far this year. And now investors from Goldman Sachs Asset Management to Highland Capital are starting to become nervous about this debt, and with good reason: If there’s any sort of economic shock at all, these notes are poised to lose a lot. And some sort of shock is entirely possible in the near future. These notes have benefited from two overwhelming factors this year:

1) New stimulus efforts in Japan and Europe have pushed investors into the most-speculative notes, especially those in the U.S.

2) Oil prices have rallied from the lows reached earlier this year, giving some highly indebted energy companies more time to survive after seeing their corporate lives flash before their eyes last year.There are signs that both dynamics are reaching their limits.Central bankers in Europe and Japan are running out of ways to stimulate their economies after deploying negative-rate policies that are eroding the stability of their financial systems. Instead of trying to add stimulus, policy makers in both regions are being forced to tweak existing bond-buying programs to keep them viable. And oil prices have rallied, but not as much as energy junk bonds, which have gained more than 49% since the end of February. This has propelled gains on the broader high-yield market.

[..] current prices aren’t high enough to sustain the current momentum in these bonds. That’s because a “significant amount” of the lowest-rated unsecured bonds of energy companies are pricing in oil at $70 a barrel over the longer term, Jefferies analyst Michael Carley said. Taking a step back, why should the lowest, most-leveraged junk bonds continue to do well? This debt should do best when an economy is steadily growing, interest rates are low and companies have bright futures. But U.S. companies are facing an earnings recession, the Federal Reserve is poised to raise rates again within the next few months and companies are borrowing at a faster pace than they’re increasing their incomes.

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The choice China refuses to make; they do both and run only to move backwards.

China’s Tough Choice: Supporting Growth Or Controlling Debt (CNBC)

China’s economic transition has caused a problem for the government—how to avert a sharp slowdown while keeping a lid on ballooning debt. In a report Thursday, rating agency Standard and Poor’s highlighted the “tough choice between supporting growth and controlling debt sustainability” as China tries to find new ways to fund public investments. “Although aggregate and provincial GDP growth stabilized in the first two quarters of 2016, we believe the fiscal conditions of Chinese local governments are under more pressure given the weakened economy,” S&P analysts wrote in a report. The rising debt pile of local government financing vehicles (LGFV) raised questions on credit risks, said S&P.

“As long as investments remain a growth impetus, it is very hard to shift away from the old public financing model to weaken the LGFVs’ role in public investment,” said S&P credit analyst, Xin Liu. “The growing pile of LGFV debt will add to the fiscal vulnerability of local governments, which already rely on these financing vehicles to execute public investment mandates,” she added. S&P’s warning on local government debt comes amid concerns about overall debt levels in the country as the world’s second-largest economy begins to slow after years of boisterous growth. Corporate debt is also under focus. In another report released on Tuesday, S&P warned that the “unabated growth” of China’s corporate debt could cost the country’s bank “dearly”.

It said the current growth rate of China’s debt “is not sustainable for long”. S&P said if the growth in debt doesn’t slow, the ratio of problem credit to total credit facing China’s banks could triple to 17% by 2020. The banks may then need to raise fresh capital of up to 11.3 trillion Chinese yuan ($1.7 trillion), which is equivalent to 16% of China’s 2015 nominal GDP. The Bank of International Settlements warned recently excessive credit growth in China will increase the country’s risk of a banking crisis in the next three years.

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A plunging reserve currency. What’s not to like?

China Export Dip Tempts Policy Makers to Keep Weakening Yuan (BBG)

China’s renewed export weakness is coinciding with a clampdown on surging home prices and corporate debt, stoking expectations policy makers will allow further yuan depreciation to buffer the economy. Exports in September dropped the most since February amid anemic global demand (-10%), while imports declined 1.9%, leaving a $42 billion trade surplus. Analysts at Bank of America, RBC and Capital Economics estimate further depreciation for the yuan, already near a six-year low. With S&P Global Ratings and the International Monetary Fund among those warning about the threats from rapid credit expansion, policy makers risk cooling the economy with new property restrictions. But their plan for economic growth of at least 6.5% this year leaves little room for maneuver.

The upshot: a weaker yuan is needed to support an industrial sector that’s returning to profitability as it emerges from four years of deflation. “China is running out of options and letting the yuan go is the lowest-cost option for them,” said Sue Trinh, head of Asia FX strategy at RBC Capital Markets in Hong Kong. “We’ve seen them move in this direction. There’s more work to do.” The yuan is headed for the biggest weekly decline since January as mainland markets returned from holiday to face intensified depreciation pressures from a rising dollar. The yuan has dropped 3.4% against the dollar this year, the biggest decline in Asia. While depreciation’s not helping exporters in dollar terms, it cushions the blow when their shipments are counted in local currency terms, underpinning a recovery in industrial profits.

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What’s Chinese for whack-a-mole?

Shanghai Banks Told To Limit Loans To Property Developers (R.)

Banks in China’s financial hub Shanghai have been asked by authorities to limit loans to property developers for land purchases and to scrutinize would-be borrowers suspected of trying to access mortgages by getting divorced, the Shanghai Daily reported on Friday. The steps were the latest in a string of measures around the country to try to cool a property market seen at risk of overheating. Quoting unidentified commercial bankers, the newspaper said banks were told that housing developers should pay at least 30% down on residential projects instead of relying on bank loans.

It said some developers had put only 10% down on projects and raised the remaining funds through bank and gray-market loans. Banks were also asked to reject mortgage applications of people who had divorced within three months, it quoted an internal filing from a Shanghai-based rural commercial bank as saying. A property price rally has prompted a home buying frenzy in parts of China, in some cases prompting couples to get divorced to circumvent buying restrictions and invest in multiple homes. Police last month detained seven property agents in Shanghai for spreading rumours of plans for a new government regulation that caused a rash of divorces and a rush to buy new homes.

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More cause for finger pointing.

Standard & Poor’s Warns On UK Reserve Currency Status As Brexit Hardens (AEP)

Britain is in danger of misreading the political landscape in Europe and faces the possible loss of its reserve currency status if it fails to secure full access to the European single market, Standard & Poor’s has warned. The powerful US rating agency said the British government is treading into hazardous waters in negotiations with the EU and is risks serious damage to economy’s future growth trajectory, with long-term implications for the debt profile and the country’s credit-worthiness. S&P fears that loss of unfettered access to the single market would have incalculable consequences for business, yet the Government so far appears almost insouciant about this.

“There seems to be this view that ‘we’re a big important economy, the Europeans export a lot to us, so they have got to give us what we want’, but is that really true?” said Ravi Bhatia, the director of sovereign ratings in charge of Britain. “Individually most of these countries don’t export that much to the UK, and were seeing a hardening of attitudes,” he said. Mr Ravi said Britain has limited scope for a spree on infrastructure projects and is walking a fine line on budget policy. “Before Brexit, the trajectory was planned fiscal consolidation, but we’re no longer certain we’re going to see that,” he said. “If they ramp up fiscal spending they’ll get a stimulus and that is good in one way as it will help boost growth, but they have to finance that spending; it will raise the deficit, and the debt stock is already high,” he told the Daily Telegraph.

Standard & Poor’s stripped Britain of its AAA status immediately after the Brexit vote in June, slashing the rating by two notches to AA, although the move was well-flagged in advance. It described the vote as seminal event that would lead to a “less predictable, stable, and effective policy framework in the UK”. The agency will issue its next verdict at the end of this month. Any further downgrade at this delicate juncture would be more serious, amounting to a red card on the Government’s hard-nosed rhetoric and negotiating tactics It is unprecedented for a AAA state to lose three notches in a matter on months.

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First they invite them in…

Hundreds Of Properties Could Be Seized In UK Corruption Crackdown (G.)

Hundreds of British properties suspected of belonging to corrupt politicians, tax evaders and criminals could be seized by enforcement agencies under tough new laws designed to tackle London’s reputation as a haven for dirty money. Huge amounts of corrupt wealth is laundered through the capital’s banks. The National Crime Agency believes up to £100bn of tainted cash could be passing through the UK each year. Much of it ends up in real estate, and in other assets such as luxury cars, art and jewellery. The criminal finances bill, published on Thursday, is designed to close a loophole which has left the authorities powerless to seize property from overseas criminals unless the individuals are first convicted in their country of origin.

It will introduce the concept of “unexplained wealth orders”. The Serious Fraud Office, HM Revenue and Customs and other agencies will be able to apply to the high court for an order forcing the owner of an asset to explain how they obtained the funds to purchase it. The orders will apply to property and other assets worth more than £100,000. If the owner fails to demonstrate that a home or piece of jewellery was acquired using legal sources of income, agencies will be able to seize it. The law targets not just criminals, but politicians and public officials, known as “politically exposed persons”. Depending on how quickly it passes through parliament, the bill could come into force as early as spring 2017.

“There are some hundreds of properties in the UK strongly suspected to have been acquired with the proceeds of corruption,” said the campaign group Transparency International, which has been pressing for the new measures. “This will provide low-hanging fruit for immediate action by law enforcement agencies, if those agencies are properly resourced.”

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Whaddayaknow? The WSJ has a Trump story that’s not about genitals. Surrounding yourself with people who don’t agree with you is often not a bad sign.

Some of Donald Trump’s Economic Team Diverge From Candidate (WSJ)

Advisers concede there is a tug-of-war between the supply-siders and the protectionists, but Mr. Kudlow said he saw similar disagreements in the White House as a budget official for President Ronald Reagan. And Mr. Navarro, whose trade skepticism closely reflects Mr. Trump’s public views, said the campaign is “very much united” on trade. When Mr. Navarro ran for Congress two decades ago, Hillary Clinton, then the first lady, campaigned at one of his San Diego rallies. “Pure serendipity—sweet manna from heaven,” he wrote in a book recounting the campaign. He sought to oust the Republican incumbent by making the race a referendum on then-GOP House Speaker Newt Gingrich. Last month, Mr. Navarro flew with Messrs. Trump and Gingrich to a rally in Fort Myers, Fla. He now says he was “seduced” by the Clintons and “over time, that seduction has turned into betrayal and ultimately disbelief.”

Other top advisers include David Malpass, a Reagan administration official, who as chief economist of Bear Stearns in 2007 dismissed concerns that the housing sector would take the economy into a recession, let alone cause the financial crisis that brought down his bank. When he first met Mr. Trump before a rally in an airplane hangar at Dallas’ Love Field last year, conservative economist Stephen Moore pushed back against Mr. Trump’s invitation to join the campaign. “I can’t work for you because I’m free trade, and I know you’re more of a protectionist,” Mr. Moore recalled saying. Mr. Trump said they could “agree to disagree on that issue,” Mr. Moore said. Advisers say Mr. Trump’s decision to hire people he doesn’t fully agree with shows maturity. “Hillary is more like the red army, with everyone marching in lockstep,” said Mr. Kudlow.

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No. 1 concern in Berlin and Brussels.

Renzi Gambles All on Referendum Haunted by Weak Italian Economy (BBG)

Italians are about to have their say on Prime Minister Matteo Renzi and the economy isn’t doing him any favors. When the country holds a referendum on a key constitutional change Dec. 4, many voters will have more than “Yes” or “No” on their mind. They’ll probably take the opportunity to vent their frustration over the snail’s pace of growth after the latest recession. [..] All but one of Italy’s main polling firms signaled this month that “No” will prevail in the referendum, with surveys saying on average that the reform will be rejected by 52.2% of voters, up from 50.4% in September. To make things potentially worse for Renzi, just three days before the vote, Italians will learn whether the recovery resumed after stalling in the three months through June, when the national statistics office publishes its final reading of third quarter GDP.

“We might go to the polling stations in the wake of a negative GDP figure,” said Alberto Bagnai, who teaches economics at Gabriele d’Annunzio University in Pescara. “That could have a direct impact on the vote.” While recent industrial data have exceeded expectations, confidence among households and executives about the outlook is not very optimistic. Renzi himself acknowledged that economic concerns might influence voters and has tried to reassure them. Last week, the premier and his Finance Minister Pier Carlo Padoan repeatedly defended the government’s above-consensus target of 1% growth next year. The central bank called the goal “very optimistic” – a code phrase signaling difficulties ahead.

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A sorrowful bunch.

Walloon Revolt Against Canada Deal Torpedoes EU Trade Policy (Pol.)

The EU’s once-mighty trade negotiators never dreamed that their powers would be stripped from them so unceremoniously – and possibly for good. The Francophone parliament of the Federation of Wallonia-Brussels – only 10 minutes’ walk from EU headquarters — stands to win a place in history for sinking the EU’s landmark trade deal with Canada and potentially for scuppering the European Commission’s ability to lead the world’s biggest trade bloc for many years. Failure to conclude the Comprehensive Economic and Trade Agreement (CETA) by this month’s deadline would be a devastating blow to the EU, which has spent seven years working on the tariff-slicing agreement with Ottawa.

“It’s crazy. If we allow a regional parliament to block a trade deal that will benefit the whole EU, where does this lead us to?” said Christoph Leitl, president of the Global Chamber Platform, a worldwide alliance of business chambers. “CETA is not just a deal with Canada, it has model character for Europe’s future trade relations.” The Federation of Wallonia-Brussels parliament, which focuses on the cultural and educational concerns of 4.5 million French speakers in Belgium, voted Wednesday evening to reject CETA because of worries about public services and agriculture. [..] Unless the Belgian central government can find an imaginative compromise quickly, the EU will be unable to corral the signatures of all 28 EU countries before an EU-Canada summit on October 27.

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German efficiency. Send them where you can’t see them.

Germany Proposes North Africa Centers For Rescued Migrants (AFP)

Migrants rescued at sea should be taken to centers in north Africa where their claims for asylum in EU countries can be studied, German interior minister Thomas de Maiziere proposed Thursday. De Maiziere made the suggestion as he arrived for a Luxembourg meeting of EU interior ministers who are trying to slow the migrant flow from Libya to Italy after a March deal with Turkey sharply reduced the influx to Greece, the main entry point for Europe last year. “People who are rescued in the Mediterranean should be brought back to safe accommodation facilities in northern Africa,” de Maiziere told reporters. “Their need for protection would be verified and we would put into place a resettlement to Europe with generous quotas, fairly divided between the European countries,” the minister said.

“The others have to go back to their home countries,” he added. EU countries, confronting populist opposition to refugees, have long feuded over quotas for relocating asylum seekers from Greece and Italy as well as for resettling people from refugee camps. De Maiziere did not mention a specific country in north Africa but EU officials have been discussing efforts to curb the migrant flow with Libya, the main transit point for African migrants heading to Europe. However, Libya’s new national unity government last week rejected calls from some EU countries to build refugee camps on its shores, saying the bloc could not “shirk its responsibility” while it struggled to restore peace and stability.

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Encore.

There’s No Plateau in a Housing Bubble, Not Even in Canada (WS)

Canadian house prices jumped 11.7% in September from a year ago, according to The Teranet–National Bank National Composite House Price Index released today. But the index papers beautifully over the dynamics in each metro. In six of the 11 metro markets of the index, prices have been languishing or even declining over the past couple of years, as they’ve hit the wall of reality after often stupendous price gains in the prior decade: Montreal, Calgary, Edmonton, Quebec City, Halifax, and Ottawa-Gatineau. In the two largest markets – Toronto and Vancouver, which combined account for 54% of the index – prices have blown through the roof. Both markets are among the hottest, most over-priced housing bubbles in the world.

UBS recently ranked Vancouver Number 1 globally on that honor roll. But suddenly the dynamics have changed. Vancouver’s housing market is in turmoil, to use a mild word, as sales have crashed, after the implementation of a real-estate transfer tax this summer by British Columbia, aimed squarely at non-resident investors. In Vancouver, those investors are mostly Chinese. And where do these folks now go to inflate prices? Toronto. Still, the national house price index (red line, right scale), after the 11.7% jump over the past 12 months (blue columns, left scale), has doubled since 2005!

The index, similar to the Case-Shiller Home Price index in the US, is based on repeat sales. It looks at properties that sold at least twice over the years to establish “sales pairs.” It then uses a proprietary formula to deduct price changes from these transactions and extrapolate them into an index for each of the 11 markets and nationally. It’s not perfect, but it offers an alternative view to median prices or Canada’s “benchmark” prices. Prices in Toronto have been spiking (red line, right scale), with double-digit year-over-year%age gains (blue columns, left scale) so far this year, including a breath-taking 16% in September.

Vancouver makes Toronto look practically tame. Vancouver went completely crazy, with year-year-over price gains reaching 26% in the summer. Now a new reality went into effect. Market activity has collapsed, as no one knows what anything is worth, with buyers and sellers jockeying for position. And on a monthly basis, the index was essentially flat (+0.2%):

Most Canadians have not seen their incomes rise anywhere near the rate of the house price inflation of the past many years, if their incomes rose at all. Thus, many of them have been priced out of the housing market, or have access to it only via highly risky financing schemes that put both lenders and borrowers at risk, despite historically low interest rates. Once enough people are priced out of the housing market, demand collapses. This would normally be where housing bubbles deflate in a very painful manner for lenders, homeowners, and everyone getting their cut, including governments and the real estate industry. But there has been a strong influx of mostly Chinese investors that need to get their money, however they obtained it, out of harm’s way at home, and they pile into the market, and they don’t care what a property costs as long as they think they can sell it for more later.

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