http://kunstler.com/clusterfuck-nation/stormy-weather/
Stormy Weather
For those of us who are not admirers of President Trump, it’s even more painful to see the Democratic opposition descend into the stupendous dishonesty of the Russian Collusion story. When the intelligentsia of the nation looses its ability to think — when it becomes a dis-intelligentsia — then there are no stewards of reality left. Trump is crazy enough, but the “resistance” is dragging the country into dangerous madness.
It’s hard not to be impressed by the evidence in the public record that the FBI misbehaved pretty badly around the various election year events of 2016. And who, besides Rachel Maddow, Anderson Cooper, and Dean Baquet of The New York Times, can pretend to be impressed by the so far complete lack of evidence of Russian “meddling” to defeat Hillary Clinton? I must repeat: so far. This story has been playing for a year and a half now, and as the days go by, it seems more and more unlikely that Special Prosecutor Robert Mueller is sitting on any conclusive evidence. During this time, everything and anything has already leaked out of the FBI and its parent agency the Department of Justice, including embarrassing hard evidence of the FBI’s own procedural debauchery, and it’s hard to believe that Mr. Mueller’s office is anymore air-tight than the rest of the joint.
If an attorney from Mars came to Earth and followed the evidence already made public, he would probably suspect that the FBI and DOJ colluded with the Clinton Campaign and the Democratic Party to derail the Trump campaign train, and then engineer an “insurance policy” train wreck of his position in office. Also, in the process, to nullify any potential legal action against Clinton, including the matter of her email server, her actions with the DNC to subvert the Sanders primary campaign, the Steele dossier being used to activate a FISA warrant for surveillance of the Trump campaign, the arrant, long-running grift machine of the Clinton Foundation (in particular, the $150 million from Russian sources following the 2013 Uranium One deal, when she was Secretary of State), and the shady activities of Barack Obama’s inner circle around the post-election transition. There is obviously more there there than in the Resistance’s Russia folder.
I don’t even understand why Robert Mueller ever had credible standing to preside over this special investigation. He is, after all, the close friend and once-mentor of the figure who is very likely the fulcrum in any case against Trump: James Comey, the former FBI director fired by Trump — theoretically to obstruct justice, the keystone in the effort to find an impeachable offense.
I’m not comfortable acting as a supporter or defender of Trump, but I’m even less comfortable with the appearance of a rogue security and law enforcement apparatus gone blatantly political. The so far poorly-explained antics at the FBI and DOJ reflect badly on all vested authority in the country — and especially for any faction that pretends to be on the side of justice. This is a much larger problem than the public debate seems to recognize. We are not far from a point where nobody will be able to believe anything official in this land.
I remain convinced that this circus of scandal and counter-scandal will not necessarily be resolved by the legal machinery, at least not in any meaningful time frame that would allow the political establishment to pull its head out of its ass and actually start paying attention to the public interest. Rather, the circus tent will just blow down in the financial crisis that is spinning toward the US mainland like a superstorm. Mr. Trump now has full, gold-plated ownership of the parabolic stock market, a shuddering bond market, a wobbling currency, and an implacable debt quandary. These are conditions that can blow a society up for real.
Monday, January 29, 2018
Sunday, January 28, 2018
SC158-8
https://www.truthdig.com/articles/useful-idiocy-donald-trump/
The Useful Idiocy of Donald Trump
The problem with Donald Trump is not that he is imbecilic and inept—it is that he has surrendered total power to the oligarchic and military elites. They get what they want. They do what they want. Although the president is a one-man wrecking crew aimed at democratic norms and institutions, although he has turned the United States into a laughingstock around the globe, our national crisis is embodied not in Trump but the corporate state’s now unfettered pillage.
Trump, who has no inclination or ability to govern, has handed the machinery of government over to the bankers, corporate executives, right-wing think tanks, intelligence chiefs and generals. They are eradicating the few regulations and laws that inhibited a naked kleptocracy. They are dynamiting the institutions, including the State Department, that served interests other than corporate profit and are stacking the courts with right-wing, corporate-controlled ideologues. Trump provides the daily entertainment; the elites handle the business of looting, exploiting and destroying.
Once democratic institutions are hollowed out, a process begun before the election of Trump, despotism is inevitable. The press is shackled. Corruption and theft take place on a massive scale. The rights and needs of citizens are irrelevant. Dissent is criminalized. Militarized police monitor, seize and detain Americans without probable cause. The rituals of democracy become farce. This is the road we are traveling. It is a road that leads to internal collapse and tyranny, and we are very far down it.
The elites’ moral and intellectual vacuum produced Trump. They too are con artists. They are slicker than he at selling the lies and more adept at disguising their greed through absurd ideologies such as neoliberalism and globalization, but they belong to the same criminal class and share many of the pathologies that characterize Trump. The grotesque visage of Trump is the true face of politicians such as George W. Bush, Bill and Hillary Clinton and Barack Obama. The Clintons and Obama, unlike Bush and Trump, are self-aware and therefore cynical, but all lack a moral compass. As Michael Wolff writes in “Fire and Fury: Inside the Trump White House,” the president has “no scruples.” He lives “outside the rules” and is “contemptuous of them.” And this makes him identical to those he has replaced, not different. “A close Trump friend who was also a good Bill Clinton friend found them eerily similar—except that Clinton had a respectable front and Trump did not,” Wolff writes.
Trump, backed by the most retrograde elements of corporate capitalism, including Robert and Rebekah Mercer, Sheldon Adelson and Carl Icahn, is the fool who prances at the front of our death march. As natural resources become scarce and the wealth of the empire evaporates, a shackled population will be forced to work harder for less. State revenues will be squandered in grandiose projects and futile wars in an attempt to return the empire to a mythical golden age. The decision to slash corporate tax rates for the rich while increasing an already bloated military budget by $54 billion is typical of decayed civilizations. Empires expand beyond their capacity to sustain themselves and then go bankrupt. The Sumerian, Egyptian, Greek, Roman, Mayan, Khmer, Ottoman and Austro-Hungarian empires all imploded in a similar fashion. The lessons of history are clear. But the illiterate charlatans who seize power in the dying days of empire know nothing of history. They are driven by a primal and inchoate lust for wealth, one that is never satisfied no matter how many billions they possess.
The elites in dying cultures turn everything into a commodity. Human beings are commodities. The natural world is a commodity. Government and democratic institutions are commodities. All are mined and wrecked for profit. Nothing has an intrinsic value. Nothing is sacred. The relentless and suicidal drive to accumulate greater and greater wealth by destroying the systems that sustain life is idolatry. It ignores the biblical injunction that idols always begin by demanding human sacrifice and end by demanding self-sacrifice. The elites are not only building our funeral pyre, they are building their own.
The elites, lacking a vision beyond satiating their own greed, revel in the intoxicating power to destroy. They confuse destruction with creation. They are agents of what Sigmund Freud calls the death instinct. They find in acts of national self-immolation a godlike power. They denigrate empathy, intellectual curiosity, artistic expression and the common good, virtues that sustain life. They celebrate a hyper-individualism embodied in celebrity, wealth, hedonism, manipulation and the ability to dominate others. They know nothing of the past. They do not think about the future. Those around them are temporarily useful to their aims and must be flattered and rewarded but in the end are ruthlessly cast aside. There is no human connection. This emotional numbness lies at the core of Trump’s personality.
“[Stephen] Bannon described Trump as a simple machine,” Wolff writes. “The On switch was full of flattery, the Off switch full of calumny. The flattery was dripping, slavish, cast in ultimate superlatives, and entirely disconnected from reality: so-and-so was the best, the most incredible, the ne plus ultra, the eternal. The calumny was angry, bitter, resentful, ever a casting out and closing of the iron door.”
The elites in a dying culture confuse what the economist Karl Polanyi calls “real” and “fictitious” commodities. A commodity is a product manufactured for sale. The ecosystem, labor and money, therefore, are not commodities. Once these fictitious commodities are treated as real ones for exploitation and manipulation, Polanyi writes, human society devours itself. Workers become dehumanized cogs. Currency and trade are manipulated by speculators, wreaking havoc with the economy and leading to financial collapse. The natural world is turned into a toxic wasteland. The elites, as the society breaks down, retreat into protected enclaves where they have access to security and services denied to the wider population. They last longer than those outside their gates, but the tsunami of destruction they orchestrate does not spare them.
As long as Trump serves the interests of the elites he will remain president. If, for some reason, he is unable to serve these interests he will disappear. Wolff notes in the book that after his election there was “a surprising and sudden business and Wall Street affinity for Trump.” He went on: “An antiregulatory White House and the promise of tax reform outweighed the prospect of disruptive tweeting and other forms of Trump chaos; besides, the market had not stopped climbing since November 9, the day after the election.”
The Russia investigation—launched when Robert Mueller became special counsel in May and which appears to be focused on money laundering, fraud and shady business practices, things that have always characterized Trump’s financial empire—is unlikely to unseat the president. He will not be impeached for mental incompetence, over the emoluments clause or for obstruction of justice, although he is guilty on all these counts. He is useful to those who hold real power in the corporate state, however much they would like to domesticate him.
Trump’s bizarre ramblings and behavior also serve a useful purpose. They are a colorful diversion from the razing of democratic institutions. As cable news networks feed us stories of his trysts with a porn actress and outlandish tweets, the real work of the elites is being carried out largely away from public view. The courts are stacked with Federalist Society judges, the fossil fuel industry is plundering public lands and the coastlines and ripping up regulations that protected us from its poisons, and the Pentagon, given carte blanche, is engaged in an orgy of militarism with a trillion-dollar-a-year budget and about 800 military bases in scores of countries around the world.
Trump, as Wolff describes him in the book, is clueless about what he has unleashed. He is uninterested in and bored by the complexities of governance and policy. The faster Trump finds a member of the oligarchy or the military to take a job off his hands the happier he becomes. This suits his desires. It suits the desires of those who manage the corporate state. For the president there is only one real concern, the tumultuous Trump White House reality show and how it plays out on television. He is a creature solely concerned with image, or more exactly his image. Nothing else matters.
“For each of his enemies—and, actually, for each of his friends—the issue for him came down, in many ways, to their personal press plan,” Wolff writes of the president. “Trump assumed everybody wanted his or her fifteen minutes and that everybody had a press strategy for when they got them. If you couldn’t get press directly for yourself, you became a leaker. There was no happenstance news, in Trump’s view. All news was manipulated and designed, planned and planted. All news was to some extent fake—he understood that very well, because he himself had faked it so many times in his career. This was why he had so naturally cottoned to the ‘fake news’ label. ‘I’ve made stuff up forever, and they always print it,’ he bragged.”
Yes, the elites wish Trump would act more presidential. It would help the brand. But all attempts by the elites to make Trump conform to the outward norms embraced by most public officials have failed. Trump will not be reformed by criticism from the establishment. Republican Sens. Jeff Flake of Arizona and Bob Corker of Tennessee, who denounced Trump, saw their approval ratings plummet and have decided not to run for re-election. Trump may have public approval of only 39 percent overall, but among Republicans the figure is 78 percent. And I don’t think those numbers will decrease.
The inability of the political establishment and the press to moderate or reform Trump’s egregious behavior is rooted in their loss of credibility. The press, along with political and intellectual elites, spent decades championing economic and political policies that solidified corporate power and betrayed and impoverished American workers. The hypocrisy and mendacity of the elites left them despised and distrusted by the victims of deindustrialization and austerity programs. The attempt to restore civility to public discourse and competency to political office is, therefore, fruitless. Liberal and establishment institutions, including the leadership of the two main political parties, academia and the press, squandered their moral authority. And the dogged refusal by the elites to address the engine of discontent—social inequality—ensures that they will remain ineffectual. They lay down the asphalt for the buffoonery of Trump and the coming tyranny.
The Useful Idiocy of Donald Trump
The problem with Donald Trump is not that he is imbecilic and inept—it is that he has surrendered total power to the oligarchic and military elites. They get what they want. They do what they want. Although the president is a one-man wrecking crew aimed at democratic norms and institutions, although he has turned the United States into a laughingstock around the globe, our national crisis is embodied not in Trump but the corporate state’s now unfettered pillage.
Trump, who has no inclination or ability to govern, has handed the machinery of government over to the bankers, corporate executives, right-wing think tanks, intelligence chiefs and generals. They are eradicating the few regulations and laws that inhibited a naked kleptocracy. They are dynamiting the institutions, including the State Department, that served interests other than corporate profit and are stacking the courts with right-wing, corporate-controlled ideologues. Trump provides the daily entertainment; the elites handle the business of looting, exploiting and destroying.
Once democratic institutions are hollowed out, a process begun before the election of Trump, despotism is inevitable. The press is shackled. Corruption and theft take place on a massive scale. The rights and needs of citizens are irrelevant. Dissent is criminalized. Militarized police monitor, seize and detain Americans without probable cause. The rituals of democracy become farce. This is the road we are traveling. It is a road that leads to internal collapse and tyranny, and we are very far down it.
The elites’ moral and intellectual vacuum produced Trump. They too are con artists. They are slicker than he at selling the lies and more adept at disguising their greed through absurd ideologies such as neoliberalism and globalization, but they belong to the same criminal class and share many of the pathologies that characterize Trump. The grotesque visage of Trump is the true face of politicians such as George W. Bush, Bill and Hillary Clinton and Barack Obama. The Clintons and Obama, unlike Bush and Trump, are self-aware and therefore cynical, but all lack a moral compass. As Michael Wolff writes in “Fire and Fury: Inside the Trump White House,” the president has “no scruples.” He lives “outside the rules” and is “contemptuous of them.” And this makes him identical to those he has replaced, not different. “A close Trump friend who was also a good Bill Clinton friend found them eerily similar—except that Clinton had a respectable front and Trump did not,” Wolff writes.
Trump, backed by the most retrograde elements of corporate capitalism, including Robert and Rebekah Mercer, Sheldon Adelson and Carl Icahn, is the fool who prances at the front of our death march. As natural resources become scarce and the wealth of the empire evaporates, a shackled population will be forced to work harder for less. State revenues will be squandered in grandiose projects and futile wars in an attempt to return the empire to a mythical golden age. The decision to slash corporate tax rates for the rich while increasing an already bloated military budget by $54 billion is typical of decayed civilizations. Empires expand beyond their capacity to sustain themselves and then go bankrupt. The Sumerian, Egyptian, Greek, Roman, Mayan, Khmer, Ottoman and Austro-Hungarian empires all imploded in a similar fashion. The lessons of history are clear. But the illiterate charlatans who seize power in the dying days of empire know nothing of history. They are driven by a primal and inchoate lust for wealth, one that is never satisfied no matter how many billions they possess.
The elites in dying cultures turn everything into a commodity. Human beings are commodities. The natural world is a commodity. Government and democratic institutions are commodities. All are mined and wrecked for profit. Nothing has an intrinsic value. Nothing is sacred. The relentless and suicidal drive to accumulate greater and greater wealth by destroying the systems that sustain life is idolatry. It ignores the biblical injunction that idols always begin by demanding human sacrifice and end by demanding self-sacrifice. The elites are not only building our funeral pyre, they are building their own.
The elites, lacking a vision beyond satiating their own greed, revel in the intoxicating power to destroy. They confuse destruction with creation. They are agents of what Sigmund Freud calls the death instinct. They find in acts of national self-immolation a godlike power. They denigrate empathy, intellectual curiosity, artistic expression and the common good, virtues that sustain life. They celebrate a hyper-individualism embodied in celebrity, wealth, hedonism, manipulation and the ability to dominate others. They know nothing of the past. They do not think about the future. Those around them are temporarily useful to their aims and must be flattered and rewarded but in the end are ruthlessly cast aside. There is no human connection. This emotional numbness lies at the core of Trump’s personality.
“[Stephen] Bannon described Trump as a simple machine,” Wolff writes. “The On switch was full of flattery, the Off switch full of calumny. The flattery was dripping, slavish, cast in ultimate superlatives, and entirely disconnected from reality: so-and-so was the best, the most incredible, the ne plus ultra, the eternal. The calumny was angry, bitter, resentful, ever a casting out and closing of the iron door.”
The elites in a dying culture confuse what the economist Karl Polanyi calls “real” and “fictitious” commodities. A commodity is a product manufactured for sale. The ecosystem, labor and money, therefore, are not commodities. Once these fictitious commodities are treated as real ones for exploitation and manipulation, Polanyi writes, human society devours itself. Workers become dehumanized cogs. Currency and trade are manipulated by speculators, wreaking havoc with the economy and leading to financial collapse. The natural world is turned into a toxic wasteland. The elites, as the society breaks down, retreat into protected enclaves where they have access to security and services denied to the wider population. They last longer than those outside their gates, but the tsunami of destruction they orchestrate does not spare them.
As long as Trump serves the interests of the elites he will remain president. If, for some reason, he is unable to serve these interests he will disappear. Wolff notes in the book that after his election there was “a surprising and sudden business and Wall Street affinity for Trump.” He went on: “An antiregulatory White House and the promise of tax reform outweighed the prospect of disruptive tweeting and other forms of Trump chaos; besides, the market had not stopped climbing since November 9, the day after the election.”
The Russia investigation—launched when Robert Mueller became special counsel in May and which appears to be focused on money laundering, fraud and shady business practices, things that have always characterized Trump’s financial empire—is unlikely to unseat the president. He will not be impeached for mental incompetence, over the emoluments clause or for obstruction of justice, although he is guilty on all these counts. He is useful to those who hold real power in the corporate state, however much they would like to domesticate him.
Trump’s bizarre ramblings and behavior also serve a useful purpose. They are a colorful diversion from the razing of democratic institutions. As cable news networks feed us stories of his trysts with a porn actress and outlandish tweets, the real work of the elites is being carried out largely away from public view. The courts are stacked with Federalist Society judges, the fossil fuel industry is plundering public lands and the coastlines and ripping up regulations that protected us from its poisons, and the Pentagon, given carte blanche, is engaged in an orgy of militarism with a trillion-dollar-a-year budget and about 800 military bases in scores of countries around the world.
Trump, as Wolff describes him in the book, is clueless about what he has unleashed. He is uninterested in and bored by the complexities of governance and policy. The faster Trump finds a member of the oligarchy or the military to take a job off his hands the happier he becomes. This suits his desires. It suits the desires of those who manage the corporate state. For the president there is only one real concern, the tumultuous Trump White House reality show and how it plays out on television. He is a creature solely concerned with image, or more exactly his image. Nothing else matters.
“For each of his enemies—and, actually, for each of his friends—the issue for him came down, in many ways, to their personal press plan,” Wolff writes of the president. “Trump assumed everybody wanted his or her fifteen minutes and that everybody had a press strategy for when they got them. If you couldn’t get press directly for yourself, you became a leaker. There was no happenstance news, in Trump’s view. All news was manipulated and designed, planned and planted. All news was to some extent fake—he understood that very well, because he himself had faked it so many times in his career. This was why he had so naturally cottoned to the ‘fake news’ label. ‘I’ve made stuff up forever, and they always print it,’ he bragged.”
Yes, the elites wish Trump would act more presidential. It would help the brand. But all attempts by the elites to make Trump conform to the outward norms embraced by most public officials have failed. Trump will not be reformed by criticism from the establishment. Republican Sens. Jeff Flake of Arizona and Bob Corker of Tennessee, who denounced Trump, saw their approval ratings plummet and have decided not to run for re-election. Trump may have public approval of only 39 percent overall, but among Republicans the figure is 78 percent. And I don’t think those numbers will decrease.
The inability of the political establishment and the press to moderate or reform Trump’s egregious behavior is rooted in their loss of credibility. The press, along with political and intellectual elites, spent decades championing economic and political policies that solidified corporate power and betrayed and impoverished American workers. The hypocrisy and mendacity of the elites left them despised and distrusted by the victims of deindustrialization and austerity programs. The attempt to restore civility to public discourse and competency to political office is, therefore, fruitless. Liberal and establishment institutions, including the leadership of the two main political parties, academia and the press, squandered their moral authority. And the dogged refusal by the elites to address the engine of discontent—social inequality—ensures that they will remain ineffectual. They lay down the asphalt for the buffoonery of Trump and the coming tyranny.
Saturday, January 27, 2018
SC158-7
http://davidstockmanscontracorner.com/the-donalds-davos-delusions/
The Donald's Davos Delusions
Somehow the Donald managed to say less during his 15 minutes of fame at Davos than even the swamp creatures he abhors might have offered up.
But the pity of it is that the whole thrust of what he did say was dead wrong: America is not back; it's fading fast---and mostly on account of the Welfare State/Warfare State/Bubble Finance policies Trump inherited.
Still, while the Donald has managed to do essentially nothing during his first year except emit a fulsome stream of pugnacious tweets, what he has done mostly has made the big problems worse.
We are referring to his $80 billion DOD boondoggle; his $1.5 trillion red-ink funded tax cut; $800 billion of net borrowing since inauguration day; utter silence and inaction on the $2.5 trillion entitlement monster; the seconding of foreign policy to a passel of discredited generals and recycled neocon interventionists; and most especially his relentless attacks on the very immigrant workers that America will desperately need as the 80-million strong Baby Boom ages-out into Welfare State dependency.
But above all else, the Donald has whiffed entirely on what is really killing the American economy. That is, the nation's out-of-control central bank.
Via its massive falsification of financial asset prices, the Fed has turned Wall Street into a gambling casino, the corporate C-suites into financial engineering joints and Washington into a profligate den of debt addicts.
Likewise, its idiotic pursuit of more inflation (2%) through 100 straight months of ZIRP (or near zero interest rates) has savaged retirees and savers, enriched gamblers and leverage artists, eroded the purchasing power of stagnant worker paychecks and unleashed virulent speculation and malinvestment throughout the warp and woof of the financial system.
Of course, we did not really expect the Donald to take on the money printers--notwithstanding his campaign rhetoric about "one big, fat, ugly bubble". After all, Trump has always claimed to be a "low interest man" and he did spend 40 years getting the worst financial education possible.
To wit, he rode the Fed's easy money fueled real estate bubble to a multi-billion net worth, or so he claims, and pronounced himself a business genius----mostly by virtue of piling cheap debt upon his properties and reaping the windfall gains.
Stated differently, the Donald came to office wholly unacquainted with any notion of sound money and free market financial discipline. And now he has spent a year proving he is completely clueless as to why Flyover America has been shafted economically.
Rather than the top-to-bottom housecleaning that the Eccles Building desperately needed, Trump actually appointed a pedigreed Keynesian crony capitalist Washington lifer, Jerome Powell, to chair the Fed.
Then and there, and whether he understood it or not (he didn't), the Donald surrendered to the permanent rulers of the Imperial City. That's because at the end of the day, it was the Fed's serial financial bubbles and massive monetization of the public debt that has enabled Washington's imperial hegemony abroad, welfare state largesse at home and the egregious inflation of financial asset prices for the rich and the bicoastal elites coupled to them.
In short, Donald Trump has no semblance of an agenda that could Make America's Economy Actually Great Again (MAEAGA), but there is no new news in that: The Donald's bombastic, idea-free campaign oratory boiled down to the erroneous claim that the USTR (United States Trade Representative) and bad trade deals were the cause of America's economic slide and that as a deal-maker of epic abilities, he would make it all better again.
Au contraire. America's jobs and worker incomes were not stolen by shifty foreign negotiators and they will not be reclaimed via the trade wars implicit in Trump's threat to mobilize the machinery of state against nefarious foreign practices. As the Donald put it:
“The United States will no longer turn a blind eye to unfair economic practices, including massive intellectual property theft, industrial subsidies and pervasive state-led economic planning,” President Donald Trump said in his speech. “We cannot have free and open trade if some countries exploit the system at the expense of others. We support free trade but it needs to be fair and it needs to be reciprocal because in the end unfair trade undermines us all.”
That's dead wrong. When foreign mercantilist governments are stupid enough to subsidize exports or state owned companies or to drastically suppress their exchange rates, they are transferring economic gifts to America's consumers. Or, as our free-trade comrade Jack Kemp used to say back in the day about Japan's mindless protectionism: If they are foolish enough to fill their harbors with rocks, why is it that we should do the same?
The truth is, there has been massive, uneconomic offshoring of American jobs; and it is also true that domestic wages have been hammered in terms of real purchasing power.
But that was caused by the Fed, not nefarious foreigners or incompetent negotiators at the Commerce Department and USTR.
The Fed has systematically inflated domestic prices, wages and costs for the last 30 years in its misbegotten quest for 2.00% inflation. But that has not helped worker real incomes by an iota as proven by the chart below: Average real median weekly earnings of men in Q4 2017 were actually slightly lower than they were three decades ago!
By contrast, nominal wages have risen by 150%----from $9 per hour to $22.23 at present. Obviously, those gains did not go into rising living standards. Instead, they fueled an ever-widening gap between domestic production costs and the China Price for goods, the India Price for Services and the Technology Price for labor substitution.
Consequently, millions of breadwinner jobs have been off-shored directly or automated, and tens of million of domestic jobs which managed to stay at home have been subjected to withering downward pressure on nominal rates of pay.
And that's the skunk in the woodpile. The Fed's holy grail of 2.00% inflation is not an equal opportunity inflator.
Even as it drives the domestic cost of living higher, it does not uniformly lift wages by commensurate amounts at the bottom and middle of the job ladder where direct and indirect foreign competition is the most intense; and that's especially true after full allowance is given to the relentless increase in out-of-pocket costs for employer medical plans and the cutback of pensions and other traditional benefits.
To be sure, the Keynesian pettifoggers at the Fed and on Wall Street insist their pro-inflation policies do not disadvantage domestic producers vis-a-vis their foreign competitors because foreign exchange rate adjustments allegedly compensate for inflation difference between countries.
Except that's pure academic theory that does not hold up in the real world under the baleful, Fed-driven regime of dirty floats and reciprocating monetary inflation. Indeed, if a bill of indictment was ever needed against the perpetrators of America's wage theft, it is the chart below.
Our monetary central planners---whom Trump has praised and renewed----have crucified American workers on a cruel cross of 2.00% inflation.
The fact that Trump has no economic program was starkly evident in his boastful claims about the purportedly booming US economy, the lowest unemployment rate in decades and the $7 trillion gain in the stock market since November 8, 2016.
Needless to say, our delusional President is staring straight into the jaws of an epic bubble. Upon its imminent collapse, the nation's deeply impaired economic fundamentals will be starkly exposed----especially the monumental $67 trillion of public and private debts, which will be monkey-hammered by the unavoidable normalization of interest rates in the years ahead.
Soaring yields, in fact, will make a lie of virtually everything the Donald bragged about in his speech and will presently turn Wall Street's party hats into veritable crowns of thorns.
The current $14 trillion of household debt will be hammered with soaring service costs, driving real living standards lower; the $13 trillion of outstanding business debt---most of which has financed unproductive financial engineering deals---will slam profits and cash flow; and Uncle Sam debt service costs will quickly escalate from today's sub-economic $300 billion per year to more than $1 trillion annually within a few years.
Meanwhile, even as the Donald spoke, the CNBC crawler below the screen reported a disappointing GDP headline number of 2.6% for Q4, but that wasn't the half of it. Annualized, seasonally-maladjusted, 90-day rates of change, of course, are only one step removed from pure noise.
But right below the report's headline number was the truth that made a mockery of the Donald's boasting about accelerating growth. During his first year in office, as measured by Q4 GDP on a year over year basis, the US economy grew by just 2.5%.
But as the chart makes clear, that's hardly something to write home about. Self-evidently, the 2017 US economy was more inherited than driven by Trump policies----none of which have been enacted except for the tax bill signed on virtually the last day of the year (the minor impact of cancelling a raft of prospective regulations has been vastly exaggerated by the White House)
In fact, however, just a few years back the Y/Y growth rates were higher at 2.7%, 3.2%, 2.7%, 3.8% and 3.3% for Q2 2104 through Q2 2015, respectively. As is also clear from the chart, short-term growth rates have undulated with the ebb and flow of global trade mini-cycles and the yo-yoing of credit impulses emanating from the Red Ponzi which lies beneath them.
Indeed, the real point is that after 103 months of expansion, the US economy has never attained true "escape velocity". Indeed, as the fiscal and monetary headwinds gather force all around and threaten to extinguish what remains of the current recovery cycle, the real GDP level reported this morning is distinguished by the opposite of what the Donald claimed.
To wit, exactly ten years after the pre-crisis peak, real GDP stands at $17.3 trillion (constant 2009 $), thereby representing a punk 1.4% annualized growth rate since Q4 2007. And that is the lowest 10-year peak-to-peak growth rate ever recorded---including during the 1930s.
What we mean is that the US economy does not remotely resemble the picture of rosy health which Trump painted at Davos. Moreover, another crucial element of today's GDP report actually underscores why the massive Trump/GOP additions to the near-term Federal deficits will extinguish what remains of the current expansion.
Rather than the beginning of a boom, in fact, the Donald's triumphalist speech actually came on the cusp of "that's all she wrote".
What we mean is that the 4.6% bulge in personal consumption spending during Q4 was the only thing that held up the GDP growth rate. And that, in turn, resulted from a last-gasp surge in credit card borrowing. As the ever astute David Rosenberg noted:
Some haunting math from the GDP number. The savings rate fell from 3.3% to 2.6%. If it had stayed the same, real PCE would have been 0.8% (annualized) instead of 3.8% and GDP would have been 0.6% instead of 2.6%.
That's right. Had US consumers not gone berserk on their credit cards during Q4, the Donald's delusionary speech would have been punctuated by news of a stalled-out economy.
In fact, the Q4 personal savings rate of just 2.6% was the lowest rate (save for one quarter) in the 30 years since Alan Greenspan inaugurated the modern era of Bubble Finance. With real wages and incomes still stagnant, theref0re, American consumers have turned to the measure of last resort---they are now draining their rainy day funds like never before.
Needless to say, no capitalist economy can thrive without a healthy rate of savings and investment. That imperative, however, has been cheated during the last several decades by the monumental fiat credit emissions of of the Fed and the massive purchases of Uncle Sam's debts by foreign central banks.
Finally, however, the era of QE and massive monetization is over and done. As the US Treasury gets set to issue upwards of $1.2 trillion of new bonds in the fiscal year (2019) starting in October and the Fed ramps its bond dumping rate to $600 billion per year, the question recurs: Who is going to buy $1.8 trillion of bonds within a 12-month period at current rates (2.65%).
We'd lay odds on nobody. And we'd further bet that the Donald's delusional triumphalism at Davos will soon be mocked by the bond market carnage that lies just around the bend.
The Donald's Davos Delusions
Somehow the Donald managed to say less during his 15 minutes of fame at Davos than even the swamp creatures he abhors might have offered up.
But the pity of it is that the whole thrust of what he did say was dead wrong: America is not back; it's fading fast---and mostly on account of the Welfare State/Warfare State/Bubble Finance policies Trump inherited.
Still, while the Donald has managed to do essentially nothing during his first year except emit a fulsome stream of pugnacious tweets, what he has done mostly has made the big problems worse.
We are referring to his $80 billion DOD boondoggle; his $1.5 trillion red-ink funded tax cut; $800 billion of net borrowing since inauguration day; utter silence and inaction on the $2.5 trillion entitlement monster; the seconding of foreign policy to a passel of discredited generals and recycled neocon interventionists; and most especially his relentless attacks on the very immigrant workers that America will desperately need as the 80-million strong Baby Boom ages-out into Welfare State dependency.
But above all else, the Donald has whiffed entirely on what is really killing the American economy. That is, the nation's out-of-control central bank.
Via its massive falsification of financial asset prices, the Fed has turned Wall Street into a gambling casino, the corporate C-suites into financial engineering joints and Washington into a profligate den of debt addicts.
Likewise, its idiotic pursuit of more inflation (2%) through 100 straight months of ZIRP (or near zero interest rates) has savaged retirees and savers, enriched gamblers and leverage artists, eroded the purchasing power of stagnant worker paychecks and unleashed virulent speculation and malinvestment throughout the warp and woof of the financial system.
Of course, we did not really expect the Donald to take on the money printers--notwithstanding his campaign rhetoric about "one big, fat, ugly bubble". After all, Trump has always claimed to be a "low interest man" and he did spend 40 years getting the worst financial education possible.
To wit, he rode the Fed's easy money fueled real estate bubble to a multi-billion net worth, or so he claims, and pronounced himself a business genius----mostly by virtue of piling cheap debt upon his properties and reaping the windfall gains.
Stated differently, the Donald came to office wholly unacquainted with any notion of sound money and free market financial discipline. And now he has spent a year proving he is completely clueless as to why Flyover America has been shafted economically.
Rather than the top-to-bottom housecleaning that the Eccles Building desperately needed, Trump actually appointed a pedigreed Keynesian crony capitalist Washington lifer, Jerome Powell, to chair the Fed.
Then and there, and whether he understood it or not (he didn't), the Donald surrendered to the permanent rulers of the Imperial City. That's because at the end of the day, it was the Fed's serial financial bubbles and massive monetization of the public debt that has enabled Washington's imperial hegemony abroad, welfare state largesse at home and the egregious inflation of financial asset prices for the rich and the bicoastal elites coupled to them.
In short, Donald Trump has no semblance of an agenda that could Make America's Economy Actually Great Again (MAEAGA), but there is no new news in that: The Donald's bombastic, idea-free campaign oratory boiled down to the erroneous claim that the USTR (United States Trade Representative) and bad trade deals were the cause of America's economic slide and that as a deal-maker of epic abilities, he would make it all better again.
Au contraire. America's jobs and worker incomes were not stolen by shifty foreign negotiators and they will not be reclaimed via the trade wars implicit in Trump's threat to mobilize the machinery of state against nefarious foreign practices. As the Donald put it:
“The United States will no longer turn a blind eye to unfair economic practices, including massive intellectual property theft, industrial subsidies and pervasive state-led economic planning,” President Donald Trump said in his speech. “We cannot have free and open trade if some countries exploit the system at the expense of others. We support free trade but it needs to be fair and it needs to be reciprocal because in the end unfair trade undermines us all.”
That's dead wrong. When foreign mercantilist governments are stupid enough to subsidize exports or state owned companies or to drastically suppress their exchange rates, they are transferring economic gifts to America's consumers. Or, as our free-trade comrade Jack Kemp used to say back in the day about Japan's mindless protectionism: If they are foolish enough to fill their harbors with rocks, why is it that we should do the same?
The truth is, there has been massive, uneconomic offshoring of American jobs; and it is also true that domestic wages have been hammered in terms of real purchasing power.
But that was caused by the Fed, not nefarious foreigners or incompetent negotiators at the Commerce Department and USTR.
The Fed has systematically inflated domestic prices, wages and costs for the last 30 years in its misbegotten quest for 2.00% inflation. But that has not helped worker real incomes by an iota as proven by the chart below: Average real median weekly earnings of men in Q4 2017 were actually slightly lower than they were three decades ago!
By contrast, nominal wages have risen by 150%----from $9 per hour to $22.23 at present. Obviously, those gains did not go into rising living standards. Instead, they fueled an ever-widening gap between domestic production costs and the China Price for goods, the India Price for Services and the Technology Price for labor substitution.
Consequently, millions of breadwinner jobs have been off-shored directly or automated, and tens of million of domestic jobs which managed to stay at home have been subjected to withering downward pressure on nominal rates of pay.
And that's the skunk in the woodpile. The Fed's holy grail of 2.00% inflation is not an equal opportunity inflator.
Even as it drives the domestic cost of living higher, it does not uniformly lift wages by commensurate amounts at the bottom and middle of the job ladder where direct and indirect foreign competition is the most intense; and that's especially true after full allowance is given to the relentless increase in out-of-pocket costs for employer medical plans and the cutback of pensions and other traditional benefits.
To be sure, the Keynesian pettifoggers at the Fed and on Wall Street insist their pro-inflation policies do not disadvantage domestic producers vis-a-vis their foreign competitors because foreign exchange rate adjustments allegedly compensate for inflation difference between countries.
Except that's pure academic theory that does not hold up in the real world under the baleful, Fed-driven regime of dirty floats and reciprocating monetary inflation. Indeed, if a bill of indictment was ever needed against the perpetrators of America's wage theft, it is the chart below.
Our monetary central planners---whom Trump has praised and renewed----have crucified American workers on a cruel cross of 2.00% inflation.
The fact that Trump has no economic program was starkly evident in his boastful claims about the purportedly booming US economy, the lowest unemployment rate in decades and the $7 trillion gain in the stock market since November 8, 2016.
Needless to say, our delusional President is staring straight into the jaws of an epic bubble. Upon its imminent collapse, the nation's deeply impaired economic fundamentals will be starkly exposed----especially the monumental $67 trillion of public and private debts, which will be monkey-hammered by the unavoidable normalization of interest rates in the years ahead.
Soaring yields, in fact, will make a lie of virtually everything the Donald bragged about in his speech and will presently turn Wall Street's party hats into veritable crowns of thorns.
The current $14 trillion of household debt will be hammered with soaring service costs, driving real living standards lower; the $13 trillion of outstanding business debt---most of which has financed unproductive financial engineering deals---will slam profits and cash flow; and Uncle Sam debt service costs will quickly escalate from today's sub-economic $300 billion per year to more than $1 trillion annually within a few years.
Meanwhile, even as the Donald spoke, the CNBC crawler below the screen reported a disappointing GDP headline number of 2.6% for Q4, but that wasn't the half of it. Annualized, seasonally-maladjusted, 90-day rates of change, of course, are only one step removed from pure noise.
But right below the report's headline number was the truth that made a mockery of the Donald's boasting about accelerating growth. During his first year in office, as measured by Q4 GDP on a year over year basis, the US economy grew by just 2.5%.
But as the chart makes clear, that's hardly something to write home about. Self-evidently, the 2017 US economy was more inherited than driven by Trump policies----none of which have been enacted except for the tax bill signed on virtually the last day of the year (the minor impact of cancelling a raft of prospective regulations has been vastly exaggerated by the White House)
In fact, however, just a few years back the Y/Y growth rates were higher at 2.7%, 3.2%, 2.7%, 3.8% and 3.3% for Q2 2104 through Q2 2015, respectively. As is also clear from the chart, short-term growth rates have undulated with the ebb and flow of global trade mini-cycles and the yo-yoing of credit impulses emanating from the Red Ponzi which lies beneath them.
Indeed, the real point is that after 103 months of expansion, the US economy has never attained true "escape velocity". Indeed, as the fiscal and monetary headwinds gather force all around and threaten to extinguish what remains of the current recovery cycle, the real GDP level reported this morning is distinguished by the opposite of what the Donald claimed.
To wit, exactly ten years after the pre-crisis peak, real GDP stands at $17.3 trillion (constant 2009 $), thereby representing a punk 1.4% annualized growth rate since Q4 2007. And that is the lowest 10-year peak-to-peak growth rate ever recorded---including during the 1930s.
What we mean is that the US economy does not remotely resemble the picture of rosy health which Trump painted at Davos. Moreover, another crucial element of today's GDP report actually underscores why the massive Trump/GOP additions to the near-term Federal deficits will extinguish what remains of the current expansion.
Rather than the beginning of a boom, in fact, the Donald's triumphalist speech actually came on the cusp of "that's all she wrote".
What we mean is that the 4.6% bulge in personal consumption spending during Q4 was the only thing that held up the GDP growth rate. And that, in turn, resulted from a last-gasp surge in credit card borrowing. As the ever astute David Rosenberg noted:
Some haunting math from the GDP number. The savings rate fell from 3.3% to 2.6%. If it had stayed the same, real PCE would have been 0.8% (annualized) instead of 3.8% and GDP would have been 0.6% instead of 2.6%.
That's right. Had US consumers not gone berserk on their credit cards during Q4, the Donald's delusionary speech would have been punctuated by news of a stalled-out economy.
In fact, the Q4 personal savings rate of just 2.6% was the lowest rate (save for one quarter) in the 30 years since Alan Greenspan inaugurated the modern era of Bubble Finance. With real wages and incomes still stagnant, theref0re, American consumers have turned to the measure of last resort---they are now draining their rainy day funds like never before.
Needless to say, no capitalist economy can thrive without a healthy rate of savings and investment. That imperative, however, has been cheated during the last several decades by the monumental fiat credit emissions of of the Fed and the massive purchases of Uncle Sam's debts by foreign central banks.
Finally, however, the era of QE and massive monetization is over and done. As the US Treasury gets set to issue upwards of $1.2 trillion of new bonds in the fiscal year (2019) starting in October and the Fed ramps its bond dumping rate to $600 billion per year, the question recurs: Who is going to buy $1.8 trillion of bonds within a 12-month period at current rates (2.65%).
We'd lay odds on nobody. And we'd further bet that the Donald's delusional triumphalism at Davos will soon be mocked by the bond market carnage that lies just around the bend.
Friday, January 26, 2018
SC158-6
https://www.globalresearch.ca/trump-and-the-federal-reserve-us-shadow-bankers-about-to-deepen-control-of-us-economy/5627314
Trump and the Federal Reserve: US Shadow Bankers About to Deepen Control of US Economy
What’s sometime referred to as ‘shadow bankers’ have been running the economy and drafting US domestic economic policy since Trump took office. ‘Shadow’ banks include such financial institutions as investment banks, private equity firms, hedge funds, insurance companies, finance companies, asset management companies, etc. They are outside the traditional commercial banking system (e.g. Chase, Bank of America, Wells, etc.) and virtually unregulated. Shadow banks globally now also control more investible liquid assets than do the world’s commercial banks.
It was the shadow banks–investment banks like Lehman, Bear Stearns, insurance giant AIG, GE credit and others that precipitated the 2008 financial crisis that then froze up the entire credit system and led to the 2008-09 collapse of the real, non-financial economy. None of the CEOs of the shadow bank system went to jail for their roles in the collapse. And now they are back–not only reaping record profits and asserting even greater influence over the US and global economy; but have penetrated the political institutions of control in the US and other advanced economies even more than they did pre-2008.
Shadow Bankers On the Inside
In the US, shadow bankers from Goldman Sachs, the giant investment bank, took over the drafting of US economic policy when Trump took office. (Trump himself, a commercial property speculator, is part of this shadow banker segment of the US capitalist elite). Running the US Treasury is ex-Goldman Sacher, Steve Mnuchin. On the ‘inside’ of the Trump administration is Gary Cohn, chair of Trump’s key advisory, ‘Economic Council’. Together the two are the original drafters (which was done in secret) of the recent Trump Tax cuts that will yield a $5 trillion windfall for US businesses, especially multinationals. (More on this in my forthcoming article, to be posted here subsequently).
Mnuchin is leading the charge for the Trump deregulation offensive, especially financial deregulation. Mnuchin recently took the offensive as well with public statements indicating it was US policy that US dollar exchange rates remain at record low levels. Why? To ensure US multinational corporations’ offshore profits are maximized when they convert their profits in local currencies back to the dollar, before they repatriate those profits back to the US at the new lower Trump tax rates (12% instead of 35% repatriation tax rate) and, even more lucratively, when they pay no taxes on offshore profits virtually at all starting 2019.
Goldman Sachs and the shadow banker crowd’s economic influence extends beyond the US Treasury and Economic Council. The New York Federal Reserve’s district president, Dudley, is also a former Goldman Sach employee. He announced he’ll be resigning this year. The New York Fed is the key district of the Fed responsible for US Treasury securities buying and selling. Watch for another Goldman Sacher to replace him, or some other former high level senior exec from private equity or hedge fund industry.(For my analysis of the rising global shadow banking sector and its destabilizing role, check out my 2016 book, ‘Systemic Fragility in the Global Economy‘, Clarity Press, and specifically chapter 12, ‘Structural Change in Global Financial Markets’).
Shadow Bankers Will Run the Fed
Trump and fellow shadow bankers are about to further solidify their control of US economic policy at the Fed as well. The Fed’s chair will soon be Jerome Powell. But several Fed governor positions have been vacant for some time, as is the vice-chair of the Fed. Watch for appointees from the shadow banks here as well.
Fed governors are officially supposed to serve 14 year terms. (They, along with Fed district presidents constitute the important FOMC, Federal Open Market Committee, that make day to day decisions at the Fed on matters of short term interest rate changes and such). But the Fed governors in recent decades never remain the 14 years. In fact, recently they remain around 3-4 years, if that. They leave early to take senior positions in the banking and shadow banking world. It’s a ‘revolving door’ problem.
Bankers get appointed to Fed governor and Fed district president positions, make decisions beneficial to their former banker buddies, and then leave early to return to their banker roots, with highly remunerative positions once again (often ‘do-nothing’ sinecures). As former governors they also go on the speech circuit, speaking at banker and business conferences, for which they’re paid handsomely, in the tens of thousands of dollars for a 20 minute speech. (Former Fed chairpersons, like Ben Bernanke and soon Janet Yellen get even more generous handouts, paid in the several hundreds of thousands of dollars a speech. They also get nice book contracts as they leave, with prepayments in the millions of dollars upfront, with guaranteed book purchases by corporations, and the best promotional efforts by publishers).
Trump’s appointment, and recent approval by the US House and Senate, of Jerome Powell to head the Fed is only the beginning. The vice-chair and several open Fed governor positions will enable Trump and Mnuchin to stack the deck at the Fed with their appointees. That will solidify Trump’s, and the shadow banker community’s, control of the Fed and ensure its policy direction will reflect Trump’s economic objectives of boosting business incomes, especially multinational corporations.
Central Bank Independence–But from Whom?
Mainstream economists write incessantly about the need to ensure ‘central bank independence’ (Fed) from elected government representatives. But they miss the more fundamental fact that it is the bankers themselves (especially now shadow bankers) that ultimately control the Fed. While mainstream economists talk about independence from government representatives, they ignore the deeper control (often through those representatives) of the Fed, and all central banks, by the bankers themselves.
Are Mnuchin, Cohn, Dudley and others really government ‘representatives’? Or are they shadow bankers first and foremos, who have managed to capture key positions in the government apparatus? Do the ‘revolving door’ former Fed governors act independently? Or do they decide with a keen eye on a lucrative offer from the private banks after a few years in office during which they ‘prove’ their value to the bankers? Do the Fed chairs and vice-chairs make decisions solely in the public interest at all times? Or are they perhaps too aware of the opportunity to become quick multimillionaires themselves once they leave office, recompensed nicely in various ways once they leave? And why is it that at the 12 Fed districts, the district president selection committee of 9 district board directors are almost always ‘stacked’ by 5-6 former regional bankers or banker business friendly former CEOs?
In my just published book, ‘Central Bankers at the End of Their Ropes’, Clarity Press, August 2017, I examine this ‘myth of central bank independence’ in detail, and show how central banks, including the Fed, from their very origins have always been dependent (not independent) on the private banks rather than from elected government representatives. Central banks emerged from the private banks and have always been an appendage of sorts of that private banking system. This fact is supported today more than ever by the fact that Fed and central banks’ policy since 2000, and especially since 2008, has been to ensure the subsidization of financial institutions’ profitability. It’s no longer just serving as ‘lender of last resort’ to bail out the private banks periodically when they get in trouble (which chronically occurs). Now it is permanent subsidization of the private banking system.
A Constitutional Amendment to Democratize the Fed
In the book I also propose in the addendum a constitutional amendment and enabling legislation that will sever the relationship of the central bank, the Fed, from the banking industry (and its government representatives) for good. (see the reviews and information re. the book,’Central Bankers at the End of Their Ropes‘ on this blog, my website, kyklosproductions.com, and at Amazon books. See the book’s addendum for the amendment and enabling legislation).
The trend in banker control of the Fed–and thus US economic policy–is about to deepen as Trump fills the open governor, chair, and vice-chair positions at the Fed in coming months. This will begin immediately after Jerome Powell assumes the chair position from Janet Yellen in early February 2018.
Economic Consequences of a Trump Fed
The shadow bankers, who gave us the last financial crash in 2007-09, will then be in total control–at the Treasury, in the White House, at the New York Fed, and in a majority of the Fed governorships. They will support Treasury Secretary Mnuchin’s policies–keep US rates at levels to ensure that the US dollar’s exchange rate is low versus other key world currencies. That will ensure that US multinational corporations’ profits offshore are not threatened, as they bring back those profits in 2018 at lower tax rates, and then can bring back profits thereafter without paying taxes on offshore profits at all for the next nine years.
The next financial crisis and crash is coming. It is not more than two years away, and could come sooner. The Fed will be totally unprepared and unable to lower interest rates much in response. It will then re-introduce its massive free money injections into the banking system, as it did with ‘QE’ for seven years starting with 2009. The Fed and other central banks provided ‘free money’ in the amount of at least $25 trillion to bail out the private banks over the last 9 years. How much more will they give them next time? And will it be enough to stabilize the US and world financial system? And will the Fed and US government then legitimize and legalize the private banks’ taking the savings of average depositors and converting those savings to worthless bank stocks? UK and US government preparations are already underway for that last draconian measure. For even today, when one deposits one’s money in a bank, that money legally becomes ‘owned’ by the bank.
Trump’s imminent appointments of Fed chairs, vice-chairs, and governors may prove historically to be the first step in the total capture of the US central bank by the shadow banker element in the US economy–by the Goldman Sachers, the private equity firms, the hedge fund vultures, and the commercial real estate speculator that is Trump itself.
We now have government by the bankers unlike ever before in the US. And their policies will inevitably lead to another financial crisis. Only this next time, the rest of US will be even less prepared and able to endure–given the decade of stagnant wages, new record in household debt, collapsing savings rates, greater reliance on part time/temp/gig employment, decline of pensions, loss of social benefits and safety net, higher cost of healthcare, and all the rest of the economic decline that is afflicting more than 100 million households in the US today.
Meanwhile, Trump will soon go to Davos, Switzerland, to party with the rest of the World Economic Forum’s multimillionaire-billionaire class. They will celebrate and pat themselves on the back about how well they’ve done for themselves in 2017: record profits, record stock markets’ price appreciation, record dividend payouts to wealthy shareholders, new tax laws that mean they can keep more of those profits and capital gains, continuing austerity for the rest, further destruction of unions (called ‘labor market reform’), decline and co-optation of remaining social democratic parties, etc. At Davos Trump will bask his ego and give an ‘American First’ speech, largely for public consumption to his base in the US. ‘America First’ means Trump, and his more aggressive wing of US capital, are signalling they plan to squeeze the rest of the world’s capitalists for a US larger share. So they’ll have to take even more out of their workers with austerity, wage compression, social benefits reduction, and even more ‘labor market reform’.
The Davos crowd may think they are sitting on their mountain in Switzerland, but they are really partying on the Titanic, as they steam on oblivious to what’s coming, unable to foresee the approaching economic icebergs below the surface. And as their mainstream economists, asleep on the bridge, almost in unison declare ‘steam on’, all is well and getting better.
Trump and the Federal Reserve: US Shadow Bankers About to Deepen Control of US Economy
What’s sometime referred to as ‘shadow bankers’ have been running the economy and drafting US domestic economic policy since Trump took office. ‘Shadow’ banks include such financial institutions as investment banks, private equity firms, hedge funds, insurance companies, finance companies, asset management companies, etc. They are outside the traditional commercial banking system (e.g. Chase, Bank of America, Wells, etc.) and virtually unregulated. Shadow banks globally now also control more investible liquid assets than do the world’s commercial banks.
It was the shadow banks–investment banks like Lehman, Bear Stearns, insurance giant AIG, GE credit and others that precipitated the 2008 financial crisis that then froze up the entire credit system and led to the 2008-09 collapse of the real, non-financial economy. None of the CEOs of the shadow bank system went to jail for their roles in the collapse. And now they are back–not only reaping record profits and asserting even greater influence over the US and global economy; but have penetrated the political institutions of control in the US and other advanced economies even more than they did pre-2008.
Shadow Bankers On the Inside
In the US, shadow bankers from Goldman Sachs, the giant investment bank, took over the drafting of US economic policy when Trump took office. (Trump himself, a commercial property speculator, is part of this shadow banker segment of the US capitalist elite). Running the US Treasury is ex-Goldman Sacher, Steve Mnuchin. On the ‘inside’ of the Trump administration is Gary Cohn, chair of Trump’s key advisory, ‘Economic Council’. Together the two are the original drafters (which was done in secret) of the recent Trump Tax cuts that will yield a $5 trillion windfall for US businesses, especially multinationals. (More on this in my forthcoming article, to be posted here subsequently).
Mnuchin is leading the charge for the Trump deregulation offensive, especially financial deregulation. Mnuchin recently took the offensive as well with public statements indicating it was US policy that US dollar exchange rates remain at record low levels. Why? To ensure US multinational corporations’ offshore profits are maximized when they convert their profits in local currencies back to the dollar, before they repatriate those profits back to the US at the new lower Trump tax rates (12% instead of 35% repatriation tax rate) and, even more lucratively, when they pay no taxes on offshore profits virtually at all starting 2019.
Goldman Sachs and the shadow banker crowd’s economic influence extends beyond the US Treasury and Economic Council. The New York Federal Reserve’s district president, Dudley, is also a former Goldman Sach employee. He announced he’ll be resigning this year. The New York Fed is the key district of the Fed responsible for US Treasury securities buying and selling. Watch for another Goldman Sacher to replace him, or some other former high level senior exec from private equity or hedge fund industry.(For my analysis of the rising global shadow banking sector and its destabilizing role, check out my 2016 book, ‘Systemic Fragility in the Global Economy‘, Clarity Press, and specifically chapter 12, ‘Structural Change in Global Financial Markets’).
Shadow Bankers Will Run the Fed
Trump and fellow shadow bankers are about to further solidify their control of US economic policy at the Fed as well. The Fed’s chair will soon be Jerome Powell. But several Fed governor positions have been vacant for some time, as is the vice-chair of the Fed. Watch for appointees from the shadow banks here as well.
Fed governors are officially supposed to serve 14 year terms. (They, along with Fed district presidents constitute the important FOMC, Federal Open Market Committee, that make day to day decisions at the Fed on matters of short term interest rate changes and such). But the Fed governors in recent decades never remain the 14 years. In fact, recently they remain around 3-4 years, if that. They leave early to take senior positions in the banking and shadow banking world. It’s a ‘revolving door’ problem.
Bankers get appointed to Fed governor and Fed district president positions, make decisions beneficial to their former banker buddies, and then leave early to return to their banker roots, with highly remunerative positions once again (often ‘do-nothing’ sinecures). As former governors they also go on the speech circuit, speaking at banker and business conferences, for which they’re paid handsomely, in the tens of thousands of dollars for a 20 minute speech. (Former Fed chairpersons, like Ben Bernanke and soon Janet Yellen get even more generous handouts, paid in the several hundreds of thousands of dollars a speech. They also get nice book contracts as they leave, with prepayments in the millions of dollars upfront, with guaranteed book purchases by corporations, and the best promotional efforts by publishers).
Trump’s appointment, and recent approval by the US House and Senate, of Jerome Powell to head the Fed is only the beginning. The vice-chair and several open Fed governor positions will enable Trump and Mnuchin to stack the deck at the Fed with their appointees. That will solidify Trump’s, and the shadow banker community’s, control of the Fed and ensure its policy direction will reflect Trump’s economic objectives of boosting business incomes, especially multinational corporations.
Central Bank Independence–But from Whom?
Mainstream economists write incessantly about the need to ensure ‘central bank independence’ (Fed) from elected government representatives. But they miss the more fundamental fact that it is the bankers themselves (especially now shadow bankers) that ultimately control the Fed. While mainstream economists talk about independence from government representatives, they ignore the deeper control (often through those representatives) of the Fed, and all central banks, by the bankers themselves.
Are Mnuchin, Cohn, Dudley and others really government ‘representatives’? Or are they shadow bankers first and foremos, who have managed to capture key positions in the government apparatus? Do the ‘revolving door’ former Fed governors act independently? Or do they decide with a keen eye on a lucrative offer from the private banks after a few years in office during which they ‘prove’ their value to the bankers? Do the Fed chairs and vice-chairs make decisions solely in the public interest at all times? Or are they perhaps too aware of the opportunity to become quick multimillionaires themselves once they leave office, recompensed nicely in various ways once they leave? And why is it that at the 12 Fed districts, the district president selection committee of 9 district board directors are almost always ‘stacked’ by 5-6 former regional bankers or banker business friendly former CEOs?
In my just published book, ‘Central Bankers at the End of Their Ropes’, Clarity Press, August 2017, I examine this ‘myth of central bank independence’ in detail, and show how central banks, including the Fed, from their very origins have always been dependent (not independent) on the private banks rather than from elected government representatives. Central banks emerged from the private banks and have always been an appendage of sorts of that private banking system. This fact is supported today more than ever by the fact that Fed and central banks’ policy since 2000, and especially since 2008, has been to ensure the subsidization of financial institutions’ profitability. It’s no longer just serving as ‘lender of last resort’ to bail out the private banks periodically when they get in trouble (which chronically occurs). Now it is permanent subsidization of the private banking system.
A Constitutional Amendment to Democratize the Fed
In the book I also propose in the addendum a constitutional amendment and enabling legislation that will sever the relationship of the central bank, the Fed, from the banking industry (and its government representatives) for good. (see the reviews and information re. the book,’Central Bankers at the End of Their Ropes‘ on this blog, my website, kyklosproductions.com, and at Amazon books. See the book’s addendum for the amendment and enabling legislation).
The trend in banker control of the Fed–and thus US economic policy–is about to deepen as Trump fills the open governor, chair, and vice-chair positions at the Fed in coming months. This will begin immediately after Jerome Powell assumes the chair position from Janet Yellen in early February 2018.
Economic Consequences of a Trump Fed
The shadow bankers, who gave us the last financial crash in 2007-09, will then be in total control–at the Treasury, in the White House, at the New York Fed, and in a majority of the Fed governorships. They will support Treasury Secretary Mnuchin’s policies–keep US rates at levels to ensure that the US dollar’s exchange rate is low versus other key world currencies. That will ensure that US multinational corporations’ profits offshore are not threatened, as they bring back those profits in 2018 at lower tax rates, and then can bring back profits thereafter without paying taxes on offshore profits at all for the next nine years.
The next financial crisis and crash is coming. It is not more than two years away, and could come sooner. The Fed will be totally unprepared and unable to lower interest rates much in response. It will then re-introduce its massive free money injections into the banking system, as it did with ‘QE’ for seven years starting with 2009. The Fed and other central banks provided ‘free money’ in the amount of at least $25 trillion to bail out the private banks over the last 9 years. How much more will they give them next time? And will it be enough to stabilize the US and world financial system? And will the Fed and US government then legitimize and legalize the private banks’ taking the savings of average depositors and converting those savings to worthless bank stocks? UK and US government preparations are already underway for that last draconian measure. For even today, when one deposits one’s money in a bank, that money legally becomes ‘owned’ by the bank.
Trump’s imminent appointments of Fed chairs, vice-chairs, and governors may prove historically to be the first step in the total capture of the US central bank by the shadow banker element in the US economy–by the Goldman Sachers, the private equity firms, the hedge fund vultures, and the commercial real estate speculator that is Trump itself.
We now have government by the bankers unlike ever before in the US. And their policies will inevitably lead to another financial crisis. Only this next time, the rest of US will be even less prepared and able to endure–given the decade of stagnant wages, new record in household debt, collapsing savings rates, greater reliance on part time/temp/gig employment, decline of pensions, loss of social benefits and safety net, higher cost of healthcare, and all the rest of the economic decline that is afflicting more than 100 million households in the US today.
Meanwhile, Trump will soon go to Davos, Switzerland, to party with the rest of the World Economic Forum’s multimillionaire-billionaire class. They will celebrate and pat themselves on the back about how well they’ve done for themselves in 2017: record profits, record stock markets’ price appreciation, record dividend payouts to wealthy shareholders, new tax laws that mean they can keep more of those profits and capital gains, continuing austerity for the rest, further destruction of unions (called ‘labor market reform’), decline and co-optation of remaining social democratic parties, etc. At Davos Trump will bask his ego and give an ‘American First’ speech, largely for public consumption to his base in the US. ‘America First’ means Trump, and his more aggressive wing of US capital, are signalling they plan to squeeze the rest of the world’s capitalists for a US larger share. So they’ll have to take even more out of their workers with austerity, wage compression, social benefits reduction, and even more ‘labor market reform’.
The Davos crowd may think they are sitting on their mountain in Switzerland, but they are really partying on the Titanic, as they steam on oblivious to what’s coming, unable to foresee the approaching economic icebergs below the surface. And as their mainstream economists, asleep on the bridge, almost in unison declare ‘steam on’, all is well and getting better.
SC158-5
https://www.peakprosperity.com/blog/113693/pie-shrinking-so-much-99-beginning-starve
The Pie Is Shrinking So Much The 99% Are Beginning To Starve
How much longer until the pitchforks come out?
Social movements arise to solve problems of inequality, injustice, exploitation and oppression. In other words, they are solutions to society-wide problems plaguing the many but not the few (i.e. the elites at the top of the wealth-power pyramid).
The basic assumption of social movements is that Utopia is within reach, if only the sources of the problems can be identified and remedied. Since inequality, injustice, exploitation and oppression arise from the asymmetry of power between the few (the financial and political elites) and the many, the solution is a reduction of the asymmetry; that is a tectonic realignment of the social structure that shifts some power—economic and/or political—from the few to the many.
In some instances, the power asymmetry is between ethnic or gender classes, or economic classes (for example, labor and the owners of capital).
Social movements are characterized by profound conflict because the beneficiaries of the power asymmetry resist the demands for a fairer share of the power and privileges, while those who’ve held the short end of the stick have tired of the asymmetry and refuse to back down.
Two dynamics assist a social, political and economic resolution that transfers power from those with too much power to those with too little power: 1) the engines of the economy have shifted productive capacity definitively in favor of those demanding their fair share of power, and 2) the elites recognize that their resistance to power-sharing invites a less predictable and thus far more dangerous open conflict with forces that have much less to lose and much more to gain.
In other words, ceding 40% of their wealth-power still conserves 60%, while stubborn resistance might trigger a revolution that takes 100% of their wealth-power.
History provides numerous examples of these dynamics. Once the primary sources of wealth-generation shifted from elite feudal landowners to merchants and industrialists, the wealth (and thus the political power) of the landed elites declined. As the industrialists hired vast numbers of laborers drawn from small farms and workshops, this mass industrialized labor became the source of the wealth generation; after decades of conflict, this labor class gained a significant share of the wealth and political power.
The civil rights and women’s liberation movements realigned the political and economic power of minorities and females more in line with their productive output, reducing the asymmetries of ethnic and gender privileges.
In broad-brush, progressive social movements seek to broaden opportunities and level the playing field by reducing the asymmetric privileges of dominant classes defined by power and privilege. The core mechanism of this transition is the recognition and granting of universal human rights: the right to vote, the right to equal opportunity, and rights to economic security, i.e. entitlements that are extended universally to all citizens for education, healthcare, old-age pensions and income security.
Again in broad-brush, these movements have largely been categorized as politically Left, though many institutions deemed conservative (for example, various churches) have often provided bedrock support for progressive movements.
Social movements which seek to limit the excesses of state power tend to be categorized as conservative or politically Right, as they seek to realign the asymmetry of power held by the state in favor of the individual, family and the traditional social order.
The Expanding Pie Fueled Expanding Entitlements
Writer Ugo Bardi recently drew another distinction between Left and Right social movements: “Traditionally, the Left has emphasized rights while the Right has emphasized duties.”
As rights manifested as economic entitlements rather than political (civil liberty) entitlements, rights accrue economic costs. As Bardi observes: “Having rights is nicer than having duties, but the problem is that human rights have a cost and that this cost was paid, so far, by fossil fuels. Now that fossil fuels are on their way out, who's going to pay?”
I would argue that the cost was also paid by higher productivity enabled by the technological, financial and social innovations of the Third Industrial Revolution, roughly speaking the interconnected advances of the second half of the 20th century.
These advances can be characterized as expanding the economic pie; that is, generating more energy, credit, technological tools, opportunities, security and capital (which includes financial, infrastructural, intellectual and social capital) for all to share in a socio-political-financial allocation broad enough to make everyone feel like they were making some forward progress.
This long-term, secular expansion of the pie naturally generated more demands for additional entitlements and rights, as the economy could clearly support the extra costs of allocating additional wealth and resources to the many. From the point of view of the few (the elites), their own wealth continued expanding, so there was little resistance to expanding retirement, education and healthcare entitlements.
But in the 21st century, the expansion of the pie stagnated, and for many, it reversed. Adjusted for real-world inflation many households have seen their net incomes and wealth decline in the past decade.
Despite the endless media rah-rah about “growth” and “recovery,” it is self-evident to anyone who bothers to look beneath the surface of this facile PR that the pie is now shrinking. This dynamic is increasing inequality rather than reducing it.
The Shrinking Pie And Stagnant Productivity
It is a truism of economics that widespread increases in productivity are required to generate equally widespread increases in income and capital, i.e. productive wealth. To the consternation of many, productivity has stagnated since 2010; no wonder household income for all but the upper crust has gone nowhere.
If we glance at a chart of productivity, we see a strong correlation with speculative investment bubbles (the dot-com and housing bubbles 1995-2005) and speculative spikes fueled by central bank monetary stimulus (2009-10). Absent bubbles and monumental excesses of central bank stimulus, productivity quickly sinks to its secular trend line: downwards.
This next chart depicts the long-term trend line of productivity through all four industrial revolutions. Note the decline concurrent with the 4th Industrial Revolution (mobile telephony, the Internet, AI, robotics, peer-to-peer networks, etc.) and the depletion of cheap-to-access-and-refine oil:
The unwelcome reality is that the economy is changing in fundamental ways that cannot be reversed with policy tweaks, protests or wishful thinking.
Consider the percentage of the gross domestic product (GDP) that goes to employee compensation (wages and salaried). Labor’s share of the GDP has been in a downtrend since 1970, which not coincidentally was the peak of secular productivity:
In this below chart of the distribution of wealth in the U.S., we find the same correlation to the downtrends in productivity and labor’s share of the economy. The income growth of the bottom 90% of households (the many) topped out in the early 1980s and has declined precipitously since, while the wealth of the top 0.1% (the few) has more than tripled since the late 1970s:
The increase in wealth and income inequality and the decline of productivity and labor’s share of GDP are the result of structural changes in the economy, changes with far-reaching consequences.
While it’s appealing to identify policies endorsed by self-serving insiders and elites as the source of these changes, that is far from the whole story. Much of this growing asymmetry stems from profound changes in the global economy that depreciate labor (as conventional labor is no longer scarce) and increase the gains of the top few in a “winner take most” allocation that benefits speculation, leverage and new ways of organizing labor and capital that reward the organizers far more than the users/participants.
In this new era of a steadily shrinking pie, the sources of inequality and related social problems have also shifted. As a result, the social movements that were effective in the past are no longer effective today. Attempts to address rising inequality with the old tools are fueling frustration rather than actual solutions.
In Part 2 — Social Unrest: The Boiling-Over Point, we examine why our existing models for social change have slipped into ineffectual symbolic gestures that fuel fragmentation and frustration -- and why that will lead to a dangerous boiling over of the 99% against the elites controlling the system.
When that happens (and it seems inevitable at our current trajectory), the rending of our social fabric will happen stunningly fast. The ensuing social disunity and disruption will be of the sort many alive today have never seen.
The Pie Is Shrinking So Much The 99% Are Beginning To Starve
How much longer until the pitchforks come out?
Social movements arise to solve problems of inequality, injustice, exploitation and oppression. In other words, they are solutions to society-wide problems plaguing the many but not the few (i.e. the elites at the top of the wealth-power pyramid).
The basic assumption of social movements is that Utopia is within reach, if only the sources of the problems can be identified and remedied. Since inequality, injustice, exploitation and oppression arise from the asymmetry of power between the few (the financial and political elites) and the many, the solution is a reduction of the asymmetry; that is a tectonic realignment of the social structure that shifts some power—economic and/or political—from the few to the many.
In some instances, the power asymmetry is between ethnic or gender classes, or economic classes (for example, labor and the owners of capital).
Social movements are characterized by profound conflict because the beneficiaries of the power asymmetry resist the demands for a fairer share of the power and privileges, while those who’ve held the short end of the stick have tired of the asymmetry and refuse to back down.
Two dynamics assist a social, political and economic resolution that transfers power from those with too much power to those with too little power: 1) the engines of the economy have shifted productive capacity definitively in favor of those demanding their fair share of power, and 2) the elites recognize that their resistance to power-sharing invites a less predictable and thus far more dangerous open conflict with forces that have much less to lose and much more to gain.
In other words, ceding 40% of their wealth-power still conserves 60%, while stubborn resistance might trigger a revolution that takes 100% of their wealth-power.
History provides numerous examples of these dynamics. Once the primary sources of wealth-generation shifted from elite feudal landowners to merchants and industrialists, the wealth (and thus the political power) of the landed elites declined. As the industrialists hired vast numbers of laborers drawn from small farms and workshops, this mass industrialized labor became the source of the wealth generation; after decades of conflict, this labor class gained a significant share of the wealth and political power.
The civil rights and women’s liberation movements realigned the political and economic power of minorities and females more in line with their productive output, reducing the asymmetries of ethnic and gender privileges.
In broad-brush, progressive social movements seek to broaden opportunities and level the playing field by reducing the asymmetric privileges of dominant classes defined by power and privilege. The core mechanism of this transition is the recognition and granting of universal human rights: the right to vote, the right to equal opportunity, and rights to economic security, i.e. entitlements that are extended universally to all citizens for education, healthcare, old-age pensions and income security.
Again in broad-brush, these movements have largely been categorized as politically Left, though many institutions deemed conservative (for example, various churches) have often provided bedrock support for progressive movements.
Social movements which seek to limit the excesses of state power tend to be categorized as conservative or politically Right, as they seek to realign the asymmetry of power held by the state in favor of the individual, family and the traditional social order.
The Expanding Pie Fueled Expanding Entitlements
Writer Ugo Bardi recently drew another distinction between Left and Right social movements: “Traditionally, the Left has emphasized rights while the Right has emphasized duties.”
As rights manifested as economic entitlements rather than political (civil liberty) entitlements, rights accrue economic costs. As Bardi observes: “Having rights is nicer than having duties, but the problem is that human rights have a cost and that this cost was paid, so far, by fossil fuels. Now that fossil fuels are on their way out, who's going to pay?”
I would argue that the cost was also paid by higher productivity enabled by the technological, financial and social innovations of the Third Industrial Revolution, roughly speaking the interconnected advances of the second half of the 20th century.
These advances can be characterized as expanding the economic pie; that is, generating more energy, credit, technological tools, opportunities, security and capital (which includes financial, infrastructural, intellectual and social capital) for all to share in a socio-political-financial allocation broad enough to make everyone feel like they were making some forward progress.
This long-term, secular expansion of the pie naturally generated more demands for additional entitlements and rights, as the economy could clearly support the extra costs of allocating additional wealth and resources to the many. From the point of view of the few (the elites), their own wealth continued expanding, so there was little resistance to expanding retirement, education and healthcare entitlements.
But in the 21st century, the expansion of the pie stagnated, and for many, it reversed. Adjusted for real-world inflation many households have seen their net incomes and wealth decline in the past decade.
Despite the endless media rah-rah about “growth” and “recovery,” it is self-evident to anyone who bothers to look beneath the surface of this facile PR that the pie is now shrinking. This dynamic is increasing inequality rather than reducing it.
The Shrinking Pie And Stagnant Productivity
It is a truism of economics that widespread increases in productivity are required to generate equally widespread increases in income and capital, i.e. productive wealth. To the consternation of many, productivity has stagnated since 2010; no wonder household income for all but the upper crust has gone nowhere.
If we glance at a chart of productivity, we see a strong correlation with speculative investment bubbles (the dot-com and housing bubbles 1995-2005) and speculative spikes fueled by central bank monetary stimulus (2009-10). Absent bubbles and monumental excesses of central bank stimulus, productivity quickly sinks to its secular trend line: downwards.
This next chart depicts the long-term trend line of productivity through all four industrial revolutions. Note the decline concurrent with the 4th Industrial Revolution (mobile telephony, the Internet, AI, robotics, peer-to-peer networks, etc.) and the depletion of cheap-to-access-and-refine oil:
The unwelcome reality is that the economy is changing in fundamental ways that cannot be reversed with policy tweaks, protests or wishful thinking.
Consider the percentage of the gross domestic product (GDP) that goes to employee compensation (wages and salaried). Labor’s share of the GDP has been in a downtrend since 1970, which not coincidentally was the peak of secular productivity:
In this below chart of the distribution of wealth in the U.S., we find the same correlation to the downtrends in productivity and labor’s share of the economy. The income growth of the bottom 90% of households (the many) topped out in the early 1980s and has declined precipitously since, while the wealth of the top 0.1% (the few) has more than tripled since the late 1970s:
The increase in wealth and income inequality and the decline of productivity and labor’s share of GDP are the result of structural changes in the economy, changes with far-reaching consequences.
While it’s appealing to identify policies endorsed by self-serving insiders and elites as the source of these changes, that is far from the whole story. Much of this growing asymmetry stems from profound changes in the global economy that depreciate labor (as conventional labor is no longer scarce) and increase the gains of the top few in a “winner take most” allocation that benefits speculation, leverage and new ways of organizing labor and capital that reward the organizers far more than the users/participants.
In this new era of a steadily shrinking pie, the sources of inequality and related social problems have also shifted. As a result, the social movements that were effective in the past are no longer effective today. Attempts to address rising inequality with the old tools are fueling frustration rather than actual solutions.
In Part 2 — Social Unrest: The Boiling-Over Point, we examine why our existing models for social change have slipped into ineffectual symbolic gestures that fuel fragmentation and frustration -- and why that will lead to a dangerous boiling over of the 99% against the elites controlling the system.
When that happens (and it seems inevitable at our current trajectory), the rending of our social fabric will happen stunningly fast. The ensuing social disunity and disruption will be of the sort many alive today have never seen.
SC158-4
http://kunstler.com/clusterfuck-nation/happy-landings/
Happy Landings
The blow-off orgy in the stock markets is supposedly America’s consolation prize for what many regard as the electoral bad acid trip of the Trump presidency. Sorry to tell you, it’s just another hallucination, something you’re going to have to come down from. Happy landings!
While the markets have roared parabolically up, in Technicolor, with sugar-on-top, that ole rascal, Reality, is working some hoodoo in the other rings of this psychedelic circus: namely the dollar and the bond market. The idiots on NPR’s Marketplace and the Cable TV financial shows haven’t noticed the dollar tanking the past several months or the interest rates creeping up in the bond markets. Well, isn’t that the point of living as if anything goes and nothing matters, the mantra of the age?
Alas , things are connected and consequences await. It would be rich if a flash crash ripped the Dow, S & P, and the Nasdaq to shreds twenty minutes after the Golden Golem of Greatness finished schooling the weenies of Davos on the bigly wonderfulness of his year in office. In fact, it would be a crowning comic moment in human history. I can imagine Trump surrounded by the fawning Beta Boys of Banking as the news comes in. Poof! Suddenly, he is alone in the antechamber backstage, nothing left of his admirers but the lingering scent of aftershave. The world has changed. The dream is over. In the mirror he sees something that looks dimly like Herbert Hoover in a polka-dot clown suit, with funny orange wig….
A financial smash-up is really the only thing that will break the awful spell this country is in: the belief that everyday life can go on when nothing really adds up. It seems to me that the moment is close at hand. Treasury Secretary Mnuchin told the Davos crowd that the US has “a weak dollar” policy. Is that so? Just as his department is getting ready to borrow another $1.2 trillion to cover government operations in the year to come. I’m sure the world wants nothing more than to buy bucket-loads of sovereign bonds backed by a falling currency — at the same time that the Treasury’s partner-in-crime, the Federal Reserve, is getting ready to dump an additional $600 billion bonds on the market out of its over-stuffed balance sheet. I’d sooner try to sell snow-cones in a polar bomb-cyclone.
When folks don’t want to buy bonds, the interest rates naturally have to go higher. The problem with that is your country’s treasury has to pay the bond-holders more money, but the only thing that has allowed the Treasury to keep borrowing lo these recent decades is the long-term drop of interest rates to the near-zero range. And the Fed’s timid 25-basis-point hikes in the overnight Fed Fund rate have not moved the needle quite far enough so far. But with benchmark ten-year bond rate nosing upward like a mole under the garden toward the 3.00 percent mark, something is going to give.
How long do you think the equity indexes will levitate once the bond market implodes? What vaporizes with it is a lot of the collateral backing up the unprecedented margin (extra borrowed money) that this rickety tower of financial Babel is tottering on. A black hole is opening up in some sub-basement of a tower on Wall Street, and it will suck the remaining value from this asset-stripped nation into the vacuum of history like so much silage.
Thus will begin the harsh era of America screwing its head back on and commencing the salvage operation. We’ll stop ricocheting from hashtag to hashtag and entertain a few coherent thoughts, such as, “…Gee, it turns out you really can’t get something for nothing….” That’s an important thought to have when you turn around and suddenly discover you’ve got nothing left.
Happy Landings
The blow-off orgy in the stock markets is supposedly America’s consolation prize for what many regard as the electoral bad acid trip of the Trump presidency. Sorry to tell you, it’s just another hallucination, something you’re going to have to come down from. Happy landings!
While the markets have roared parabolically up, in Technicolor, with sugar-on-top, that ole rascal, Reality, is working some hoodoo in the other rings of this psychedelic circus: namely the dollar and the bond market. The idiots on NPR’s Marketplace and the Cable TV financial shows haven’t noticed the dollar tanking the past several months or the interest rates creeping up in the bond markets. Well, isn’t that the point of living as if anything goes and nothing matters, the mantra of the age?
Alas , things are connected and consequences await. It would be rich if a flash crash ripped the Dow, S & P, and the Nasdaq to shreds twenty minutes after the Golden Golem of Greatness finished schooling the weenies of Davos on the bigly wonderfulness of his year in office. In fact, it would be a crowning comic moment in human history. I can imagine Trump surrounded by the fawning Beta Boys of Banking as the news comes in. Poof! Suddenly, he is alone in the antechamber backstage, nothing left of his admirers but the lingering scent of aftershave. The world has changed. The dream is over. In the mirror he sees something that looks dimly like Herbert Hoover in a polka-dot clown suit, with funny orange wig….
A financial smash-up is really the only thing that will break the awful spell this country is in: the belief that everyday life can go on when nothing really adds up. It seems to me that the moment is close at hand. Treasury Secretary Mnuchin told the Davos crowd that the US has “a weak dollar” policy. Is that so? Just as his department is getting ready to borrow another $1.2 trillion to cover government operations in the year to come. I’m sure the world wants nothing more than to buy bucket-loads of sovereign bonds backed by a falling currency — at the same time that the Treasury’s partner-in-crime, the Federal Reserve, is getting ready to dump an additional $600 billion bonds on the market out of its over-stuffed balance sheet. I’d sooner try to sell snow-cones in a polar bomb-cyclone.
When folks don’t want to buy bonds, the interest rates naturally have to go higher. The problem with that is your country’s treasury has to pay the bond-holders more money, but the only thing that has allowed the Treasury to keep borrowing lo these recent decades is the long-term drop of interest rates to the near-zero range. And the Fed’s timid 25-basis-point hikes in the overnight Fed Fund rate have not moved the needle quite far enough so far. But with benchmark ten-year bond rate nosing upward like a mole under the garden toward the 3.00 percent mark, something is going to give.
How long do you think the equity indexes will levitate once the bond market implodes? What vaporizes with it is a lot of the collateral backing up the unprecedented margin (extra borrowed money) that this rickety tower of financial Babel is tottering on. A black hole is opening up in some sub-basement of a tower on Wall Street, and it will suck the remaining value from this asset-stripped nation into the vacuum of history like so much silage.
Thus will begin the harsh era of America screwing its head back on and commencing the salvage operation. We’ll stop ricocheting from hashtag to hashtag and entertain a few coherent thoughts, such as, “…Gee, it turns out you really can’t get something for nothing….” That’s an important thought to have when you turn around and suddenly discover you’ve got nothing left.
Thursday, January 25, 2018
SC158-3
http://www.informationclearinghouse.info/48660.htm
Creating an Empire of Graveyards?
Recently, a memory of my son as a small boy came back to me. He was, in those days, terrified of clowns. Something about their strange, mask-like, painted faces unnerved him utterly, chilled him to the bone. To the rest of us, they were comic, but to him -- or so I came to imagine anyway -- they were emanations from hell.
Those circus memories of long ago seem relevant to me today because, in November 2016, the American electorate, or a near majority of them anyway, chose to send in the clowns. They voted willingly, knowingly, for the man with that strange orange thing on his head, the result -- we now know, thanks to his daughter -- of voluntary “scalp reduction surgery.” They voted for the man with the eerily red face, an unearthly shade seldom seen since the perfection of Technicolor. They voted for the overweight man who reputedly ate little but Big Macs (for fear of being poisoned), while swinging one-handed from a political trapeze with fingers of a particularly contestable size. They voted for the man who never came across a superlative he couldn’t apply to himself. Of his first presidential moment, he claimed “the largest audience ever to witness an inauguration, period, both in person and around the globe”; he declared himself “the greatest jobs president that God ever created”; he swore to reporters that he was “the least racist person you have ever interviewed”; he offered his version of modesty by insisting that, “with the exception of the late, great Abraham Lincoln, I can be more presidential than any president that’s ever held this office”; and when his mental state was challenged, he responded that his “two greatest assets have been mental stability and being, like, really smart,” adding, “I think that [I] would qualify as not smart, but genius... and a very stable genius at that!”
Of course, none of this is news to you, not if you have a screen in your life (or more likely your hand) -- the very definition of twenty-first-century modernity. In fact, by the time this piece comes out, you’ll undoubtedly have a new set of examples to cite. After all, these days that essentially is the news: him and any outrageous thing he wants to say and not much else, which means that he is indisputably the greatest, possibly in the history of the universe, when it comes to yanking just about anybody’s chain.
And you certainly don’t need me to go on about that strange skill of his, since every time he says or tweets anything over the top or grotesque beyond belief, the media’s all over it 24/7. No one, for instance, could doubt that never in our history has the word “shithole” (or, in some cases, “s--hole”) or even “shithouse” been used more frequently than in the wake of the president’s recent wielding of it (or them or one or the other) for unnamed African countries and Haiti in a White House meeting on immigration. That meeting proved an ambush and a half, only spiraling further out of control when, in its wake, the president denied ever using the word “shithole” and was backed by Republican attendees evidently so desperate to curry favor that they pretended they hadn’t heard the word, which, by now, just about everyone on Earth has heard or seen in English or some translation thereof.
Since he rode down that Trump Tower escalator into our political lives in June 2015, this sort of thing and more or less nothing else has largely been “the news.” It goes without saying -- which won’t stop me from saying it -- that not since Nebuchadnezzar’s words were first scratched onto a cuneiform tablet has more focus been put on the passing words, gestures, and expressions of a single human being. And that's the truest news about the news of this era. It’s been consumed by a single news hog. Which means that Donald Trump has already won, no matter what happens, since he continues to be treated as if he were the only three-ring circus in town, as if he were in himself that classic big-top Volkswagen filled to the brim with clowns.
The Imperial Presidency Exposed
Who could deny that much of the attention he’s received has been based on the absurdity, exaggeration, unsettling clownishness of it all, right down to the zany crew of subsidiary clowns who have helped keep him pumped up and cable newsed in the Oval Office?
In early October 2016, I suggested that a certain segment of voters in the white heartland, feeling their backs against the economic wall and the nation in decline -- Donald Trump being our first true declinist candidate (hence that “again” in MAGA) -- was prepared to send a “suicide bomber” into the White House. And I suggested as well that they were willing to do so even if the ceiling collapsed on them. (Had I thought of it at the time, I would have added that much of the mainstream media also had its back to the wall with its status and finances in decline, staffs shrinking, and fears rising that it might be eaten alive by social media. As a result, some of its key players were similarly inclined to escort that suicide bomber Washington-wards, no matter what fell or whom it hit.)
In retrospect, that has, I think, proven an accurate assessment, but like all authors I reserve the right to change my imagery in midstream, which brings me back to my son’s childhood fear of clowns. At least for me, that now catches the most essential aspect of the age of Trump: its clownishness. And despite the fact that The Donald is often treated by his opponents as a laughing matter, an absurdity, a jokester (and a joke) in the Oval Office, I don’t mean those clowns, the ones that leave you rolling in the aisles. I mean my son’s clowns, the death’s-head ones whose absurd versions of the gestures of everyday life leave you chilled to the bone, genuinely afraid.
Donald Trump fits that image exactly because -- though you wouldn’t know it from the usual coverage of him -- he isn’t at all unique (except in the details, except in the exaggeration of it all). What makes him so clownish, in the sense I’m describing, is that he offers a chillingly exaggerated, wildly fiery-and-furious version of the very imperial American presidency we’ve come to know over these last seven decades: the one that has long ridden herd on a nuclear apocalypse; that killed millions on its journey to nowhere in Southeast Asia in the previous century; that hasn’t been able to stop itself from overseeing more than a quarter-century of war-making -- two wars, to be exact -- in Afghanistan of all places; that, in its pursuit of its never-ending “war” on terror, has made war on so much else as well, turning significant parts of the planet into zones of increasing chaos, failed states, fleeing populations, and wholesale destruction; the one whose “precision” military -- the battle against ISIS in Iraq and Syria has been termed the “most precise campaign in history” -- has helped transform cities from Ramadi and Fallujah to Mosul and Raqqa into landscapes that, in their indiscriminate wreckage, look like Stalingrad after the battle in World War II (and that now is threatening to develop a “precision” version of nuclear war as well); and that has, in this century, overseen the creation of “Saudi America” on a planet in which it was already easy enough to grasp that fossil fuels were doing the kinds of damage to the human environment that nothing short of a giant asteroid or nuclear war might otherwise do.
From his America First policies to his reported desire to see (and make use of) terrorist attacks on this country, the man who has declared climate change a Chinese hoax, threatened to loose “fire and fury like the world has never seen,” described other countries in language once considered unpresidential by presidents who nonetheless treated the very same countries like “shitholes,” and given “his” generals a remarkably free hand to “win” the war on terror is but an eerily clownish version of all that has gone before. He has, in a sense, ripped away the façade of dignity from the imperial presidency and let us glimpse just what is truly imperial (and imperious) about it. He continues to show us in new ways quite an old reality: how terrifying a force for destruction, possibly even on a planetary level, U.S. power can be.
And just in case you don’t think that Volkswagen of Trump’s (or maybe I mean that private plane with the golden bathroom fixtures) is filled with other clowns whose acts should similarly chill you to the bone, let’s skip Scott Pruitt as he secretly dismantles the Environmental Protection Agency and so many protections for our health, the Energy Department’s Rick Perry as he embraces the CEOs of Big Energy, that future oil-spill king, the Interior Department’s Ryan Zinke, and the rest of the domestic wrecking crew, and turn instead to “his” generals -- the ones from America’s losing wars -- that President Trump has made ascendant in Washington.
And even then, let’s skip their urge to create smaller, more “usable” nuclear weapons (a process started in the Obama years), or hike the nuclear budget, or redefine ever more situations, including cyber attacks on the U.S., as potential nuclear ones; and let’s skip as well their eagerness, from Niger to Yemen, Libya to Somalia, to expand and heighten the war on terror in an exaggerated version of exactly what we’ve been living through these past 16 years. Let’s concentrate instead on just one place, the ur-location for that war, the country about which those in the Pentagon are no longer speaking of war at all but of “generational struggle”: Afghanistan.
The Graveyard of Empires
Think of it: 28 years after the Soviet army limped out of that infamous “graveyard of empires” at the end of a decade-long struggle in which the U.S. had backed the most extreme groups of Islamic fundamentalists (including a rich young Saudi by the name of Osama bin Laden), 16 years after the U.S. returned to invade and “liberate” Afghanistan, they’re still at it. In December, with Donald Trump lifting various constraints on U.S. military commanders there, the generals were, for instance, sending in the planes. That month there were more U.S. air strikes -- 455 in a winter period of minimal fighting -- than not just the previous December (65) but December 2012 (about 200) when 100,000 U.S. troops were still in-country. The phrase of this moment among U.S. military officers in Afghanistan, according to Max Bearak of the Washington Post: “We’re at a turning point.” Another: “The gloves are off.” (Admittedly, no U.S. commander has as yet reported seeing “the light at the end of the tunnel,” but don’t rule it out.)
In the meantime, drones of both the armed and unarmed surveillance variety are being reassigned to Afghanistan in rising numbers (as well as more helicopters, ground vehicles, and artillery). With the recent announcement that 1,000 more personnel will soon head for that country, U.S. troop strength continues to grow, bringing the numbers of American advisers, trainers, and Special Operations forces there up to perhaps 15,000 or more (as opposed to the 11,000 or so when Donald Trump entered the Oval Office).
In addition, the military has plans to double the size of Afghanistan’s own special ops forces and triple the size of its air force, while the head of U.S. Central Command, General Joseph Votel, is calling for far more aggressive actions by those American-advised Afghan security forces in the upcoming spring fighting season. (To put this in perspective, a 2008 U.S. military plan to spend billions of dollars ensuring that the Afghan air force was fully staffed, supplied, trained, and “self-sufficient” by 2015 ended seven years later with it in a “woeful state” of disrepair and near ruin.) Meanwhile, as part of this ramp-up of operations, the Navy is planning to hire drone-maker General Atomics to fly that company's surveillance drones in Afghanistan in what’s being termed “a ‘surge’ of intelligence, reconnaissance, and surveillance capabilities.”
If all of this sounds faintly familiar to you, I’m not surprised. In fact, if you’ve already stopped paying attention -- as most Americans on the nonexistent “home front” seem to have done when it comes to most of America’s wars of this era -- I just want you to know that I completely understand. Sixteen repetitive years later, with the Taliban again in control of something close to half of Afghanistan, your response couldn’t be more all-American. Surges, turning points, more aggressive actions, you’ve heard it all before -- and when it comes to Afghanistan, the odds are that you’ll hear it all again.
And don’t for a moment think that this doesn’t add up to another version of sending in the clowns.
If you don’t believe that retired General James Mattis, Lieutenant General H.R. McMaster, and retired General James Kelly, aka the secretary of defense, the national security adviser, and the White House chief of staff, respectively, are clowns, if you’re still convinced that they’re the “adults” in the Trumpian playroom, check out Afghanistan and think again. But don’t blame them either. What else can a clown do, once those giant floppy shoes are on their feet, their faces are painted, and the bulbous red nose is in place, but act the part? So many years later, they simply can’t imagine another way to think about the world of American war. They only know what they know. Give them a horn and they’ll honk it; give them Hamlet’s “to be or not to be” soliloquy and they’ll still honk that horn.
For the last decade and a half, through invasions and occupations, surges and counterinsurgency operations, bombing runs and drone strikes, commando raids and training missions, they and their colleagues in the U.S. high command have helped spread terror movements across significant parts of the planet, while playing a major role in creating a series of failing or failed states across the Greater Middle East and Africa. They’ve helped uproot whole populations and transform major cities into spectacles of ruin. Think of this as their twenty-first-century destiny. They’ve proven to be key actors in what has become an American empire of chaos or perhaps simply an empire of graveyards.
They can’t help themselves. Forgive them, Father, for they are clowns led by the greatest clownster-in-chief in the history of this country. Yes, he makes even them uncomfortable because no one can pull the curtains back from the reality of the imperial presidency in quite the way he can. No one can showcase our grim American world, tweet by outrageous tweet, in quite his fashion.
And yes, it can all look ludicrous as hell, but don’t laugh. Don’t even think about it. Not now, not when we’re all at the circus watching those emanations from hell perform. Instead, be chilled -- chilled to the bone. Absurd as every pratfall may be, it’s distinctly a vision from hell, an all-American vision for the ages.
Creating an Empire of Graveyards?
Recently, a memory of my son as a small boy came back to me. He was, in those days, terrified of clowns. Something about their strange, mask-like, painted faces unnerved him utterly, chilled him to the bone. To the rest of us, they were comic, but to him -- or so I came to imagine anyway -- they were emanations from hell.
Those circus memories of long ago seem relevant to me today because, in November 2016, the American electorate, or a near majority of them anyway, chose to send in the clowns. They voted willingly, knowingly, for the man with that strange orange thing on his head, the result -- we now know, thanks to his daughter -- of voluntary “scalp reduction surgery.” They voted for the man with the eerily red face, an unearthly shade seldom seen since the perfection of Technicolor. They voted for the overweight man who reputedly ate little but Big Macs (for fear of being poisoned), while swinging one-handed from a political trapeze with fingers of a particularly contestable size. They voted for the man who never came across a superlative he couldn’t apply to himself. Of his first presidential moment, he claimed “the largest audience ever to witness an inauguration, period, both in person and around the globe”; he declared himself “the greatest jobs president that God ever created”; he swore to reporters that he was “the least racist person you have ever interviewed”; he offered his version of modesty by insisting that, “with the exception of the late, great Abraham Lincoln, I can be more presidential than any president that’s ever held this office”; and when his mental state was challenged, he responded that his “two greatest assets have been mental stability and being, like, really smart,” adding, “I think that [I] would qualify as not smart, but genius... and a very stable genius at that!”
Of course, none of this is news to you, not if you have a screen in your life (or more likely your hand) -- the very definition of twenty-first-century modernity. In fact, by the time this piece comes out, you’ll undoubtedly have a new set of examples to cite. After all, these days that essentially is the news: him and any outrageous thing he wants to say and not much else, which means that he is indisputably the greatest, possibly in the history of the universe, when it comes to yanking just about anybody’s chain.
And you certainly don’t need me to go on about that strange skill of his, since every time he says or tweets anything over the top or grotesque beyond belief, the media’s all over it 24/7. No one, for instance, could doubt that never in our history has the word “shithole” (or, in some cases, “s--hole”) or even “shithouse” been used more frequently than in the wake of the president’s recent wielding of it (or them or one or the other) for unnamed African countries and Haiti in a White House meeting on immigration. That meeting proved an ambush and a half, only spiraling further out of control when, in its wake, the president denied ever using the word “shithole” and was backed by Republican attendees evidently so desperate to curry favor that they pretended they hadn’t heard the word, which, by now, just about everyone on Earth has heard or seen in English or some translation thereof.
Since he rode down that Trump Tower escalator into our political lives in June 2015, this sort of thing and more or less nothing else has largely been “the news.” It goes without saying -- which won’t stop me from saying it -- that not since Nebuchadnezzar’s words were first scratched onto a cuneiform tablet has more focus been put on the passing words, gestures, and expressions of a single human being. And that's the truest news about the news of this era. It’s been consumed by a single news hog. Which means that Donald Trump has already won, no matter what happens, since he continues to be treated as if he were the only three-ring circus in town, as if he were in himself that classic big-top Volkswagen filled to the brim with clowns.
The Imperial Presidency Exposed
Who could deny that much of the attention he’s received has been based on the absurdity, exaggeration, unsettling clownishness of it all, right down to the zany crew of subsidiary clowns who have helped keep him pumped up and cable newsed in the Oval Office?
In early October 2016, I suggested that a certain segment of voters in the white heartland, feeling their backs against the economic wall and the nation in decline -- Donald Trump being our first true declinist candidate (hence that “again” in MAGA) -- was prepared to send a “suicide bomber” into the White House. And I suggested as well that they were willing to do so even if the ceiling collapsed on them. (Had I thought of it at the time, I would have added that much of the mainstream media also had its back to the wall with its status and finances in decline, staffs shrinking, and fears rising that it might be eaten alive by social media. As a result, some of its key players were similarly inclined to escort that suicide bomber Washington-wards, no matter what fell or whom it hit.)
In retrospect, that has, I think, proven an accurate assessment, but like all authors I reserve the right to change my imagery in midstream, which brings me back to my son’s childhood fear of clowns. At least for me, that now catches the most essential aspect of the age of Trump: its clownishness. And despite the fact that The Donald is often treated by his opponents as a laughing matter, an absurdity, a jokester (and a joke) in the Oval Office, I don’t mean those clowns, the ones that leave you rolling in the aisles. I mean my son’s clowns, the death’s-head ones whose absurd versions of the gestures of everyday life leave you chilled to the bone, genuinely afraid.
Donald Trump fits that image exactly because -- though you wouldn’t know it from the usual coverage of him -- he isn’t at all unique (except in the details, except in the exaggeration of it all). What makes him so clownish, in the sense I’m describing, is that he offers a chillingly exaggerated, wildly fiery-and-furious version of the very imperial American presidency we’ve come to know over these last seven decades: the one that has long ridden herd on a nuclear apocalypse; that killed millions on its journey to nowhere in Southeast Asia in the previous century; that hasn’t been able to stop itself from overseeing more than a quarter-century of war-making -- two wars, to be exact -- in Afghanistan of all places; that, in its pursuit of its never-ending “war” on terror, has made war on so much else as well, turning significant parts of the planet into zones of increasing chaos, failed states, fleeing populations, and wholesale destruction; the one whose “precision” military -- the battle against ISIS in Iraq and Syria has been termed the “most precise campaign in history” -- has helped transform cities from Ramadi and Fallujah to Mosul and Raqqa into landscapes that, in their indiscriminate wreckage, look like Stalingrad after the battle in World War II (and that now is threatening to develop a “precision” version of nuclear war as well); and that has, in this century, overseen the creation of “Saudi America” on a planet in which it was already easy enough to grasp that fossil fuels were doing the kinds of damage to the human environment that nothing short of a giant asteroid or nuclear war might otherwise do.
From his America First policies to his reported desire to see (and make use of) terrorist attacks on this country, the man who has declared climate change a Chinese hoax, threatened to loose “fire and fury like the world has never seen,” described other countries in language once considered unpresidential by presidents who nonetheless treated the very same countries like “shitholes,” and given “his” generals a remarkably free hand to “win” the war on terror is but an eerily clownish version of all that has gone before. He has, in a sense, ripped away the façade of dignity from the imperial presidency and let us glimpse just what is truly imperial (and imperious) about it. He continues to show us in new ways quite an old reality: how terrifying a force for destruction, possibly even on a planetary level, U.S. power can be.
And just in case you don’t think that Volkswagen of Trump’s (or maybe I mean that private plane with the golden bathroom fixtures) is filled with other clowns whose acts should similarly chill you to the bone, let’s skip Scott Pruitt as he secretly dismantles the Environmental Protection Agency and so many protections for our health, the Energy Department’s Rick Perry as he embraces the CEOs of Big Energy, that future oil-spill king, the Interior Department’s Ryan Zinke, and the rest of the domestic wrecking crew, and turn instead to “his” generals -- the ones from America’s losing wars -- that President Trump has made ascendant in Washington.
And even then, let’s skip their urge to create smaller, more “usable” nuclear weapons (a process started in the Obama years), or hike the nuclear budget, or redefine ever more situations, including cyber attacks on the U.S., as potential nuclear ones; and let’s skip as well their eagerness, from Niger to Yemen, Libya to Somalia, to expand and heighten the war on terror in an exaggerated version of exactly what we’ve been living through these past 16 years. Let’s concentrate instead on just one place, the ur-location for that war, the country about which those in the Pentagon are no longer speaking of war at all but of “generational struggle”: Afghanistan.
The Graveyard of Empires
Think of it: 28 years after the Soviet army limped out of that infamous “graveyard of empires” at the end of a decade-long struggle in which the U.S. had backed the most extreme groups of Islamic fundamentalists (including a rich young Saudi by the name of Osama bin Laden), 16 years after the U.S. returned to invade and “liberate” Afghanistan, they’re still at it. In December, with Donald Trump lifting various constraints on U.S. military commanders there, the generals were, for instance, sending in the planes. That month there were more U.S. air strikes -- 455 in a winter period of minimal fighting -- than not just the previous December (65) but December 2012 (about 200) when 100,000 U.S. troops were still in-country. The phrase of this moment among U.S. military officers in Afghanistan, according to Max Bearak of the Washington Post: “We’re at a turning point.” Another: “The gloves are off.” (Admittedly, no U.S. commander has as yet reported seeing “the light at the end of the tunnel,” but don’t rule it out.)
In the meantime, drones of both the armed and unarmed surveillance variety are being reassigned to Afghanistan in rising numbers (as well as more helicopters, ground vehicles, and artillery). With the recent announcement that 1,000 more personnel will soon head for that country, U.S. troop strength continues to grow, bringing the numbers of American advisers, trainers, and Special Operations forces there up to perhaps 15,000 or more (as opposed to the 11,000 or so when Donald Trump entered the Oval Office).
In addition, the military has plans to double the size of Afghanistan’s own special ops forces and triple the size of its air force, while the head of U.S. Central Command, General Joseph Votel, is calling for far more aggressive actions by those American-advised Afghan security forces in the upcoming spring fighting season. (To put this in perspective, a 2008 U.S. military plan to spend billions of dollars ensuring that the Afghan air force was fully staffed, supplied, trained, and “self-sufficient” by 2015 ended seven years later with it in a “woeful state” of disrepair and near ruin.) Meanwhile, as part of this ramp-up of operations, the Navy is planning to hire drone-maker General Atomics to fly that company's surveillance drones in Afghanistan in what’s being termed “a ‘surge’ of intelligence, reconnaissance, and surveillance capabilities.”
If all of this sounds faintly familiar to you, I’m not surprised. In fact, if you’ve already stopped paying attention -- as most Americans on the nonexistent “home front” seem to have done when it comes to most of America’s wars of this era -- I just want you to know that I completely understand. Sixteen repetitive years later, with the Taliban again in control of something close to half of Afghanistan, your response couldn’t be more all-American. Surges, turning points, more aggressive actions, you’ve heard it all before -- and when it comes to Afghanistan, the odds are that you’ll hear it all again.
And don’t for a moment think that this doesn’t add up to another version of sending in the clowns.
If you don’t believe that retired General James Mattis, Lieutenant General H.R. McMaster, and retired General James Kelly, aka the secretary of defense, the national security adviser, and the White House chief of staff, respectively, are clowns, if you’re still convinced that they’re the “adults” in the Trumpian playroom, check out Afghanistan and think again. But don’t blame them either. What else can a clown do, once those giant floppy shoes are on their feet, their faces are painted, and the bulbous red nose is in place, but act the part? So many years later, they simply can’t imagine another way to think about the world of American war. They only know what they know. Give them a horn and they’ll honk it; give them Hamlet’s “to be or not to be” soliloquy and they’ll still honk that horn.
For the last decade and a half, through invasions and occupations, surges and counterinsurgency operations, bombing runs and drone strikes, commando raids and training missions, they and their colleagues in the U.S. high command have helped spread terror movements across significant parts of the planet, while playing a major role in creating a series of failing or failed states across the Greater Middle East and Africa. They’ve helped uproot whole populations and transform major cities into spectacles of ruin. Think of this as their twenty-first-century destiny. They’ve proven to be key actors in what has become an American empire of chaos or perhaps simply an empire of graveyards.
They can’t help themselves. Forgive them, Father, for they are clowns led by the greatest clownster-in-chief in the history of this country. Yes, he makes even them uncomfortable because no one can pull the curtains back from the reality of the imperial presidency in quite the way he can. No one can showcase our grim American world, tweet by outrageous tweet, in quite his fashion.
And yes, it can all look ludicrous as hell, but don’t laugh. Don’t even think about it. Not now, not when we’re all at the circus watching those emanations from hell perform. Instead, be chilled -- chilled to the bone. Absurd as every pratfall may be, it’s distinctly a vision from hell, an all-American vision for the ages.
Wednesday, January 24, 2018
SC158-2
http://www.informationclearinghouse.info/48652.htm
Russia is a Threat to Western Societies?
West’s Fatal Intellectual Poverty
The United States and its NATO allies are facing an existential threat. But the threat has nothing to do with Russia, China, or any other external “enemy” for that matter.
The West’s own worst enemy is itself. Or more precisely, the intellectual bankruptcy of its political and military leaders and their dominant public discourse.
This week Nobel literature laureate Mario Vargas Llosa reportedly condemned the US for descending into "political and intellectual poverty." He said: "The consequences are predictable: China and Russia are taking the positions that the US is withdrawing from, gaining political and economic influence."
Perhaps the clearest expression of Western intellectual impoverishment and dishonesty is the relentless Russophobia touted by American and European politicians, military leaders, think-tanks and mainstream corporate news media.
Hardly a week goes by without repetition of this tired old trope alleging that Russia is a threat to Western societies. Russian President Vladimir Putin is portrayed as some kind of "evil genius" hellbent on undermining the West – without a plausible explanation ever being given for why the Russian leader would harbor such alleged dastardly designs.
And if it’s not Russia, it is some other supposed malevolent foreign force, such as China, Iran or North Korea. Yes, the latter has a nuclear weapons program. But the Western public rarely hears that North Korea has embarked on developing these weapons due to decades of warmongering threats from Washington and its allies.
Arguably, though, it is Russophobia that most preoccupies official discourse in the US and Europe.
For the past year and more, Russia is accused of "interfering" in US and European elections, "subverting" democratic processes, and "sowing divisions" among allies with "fake news."
Even President Donald Trump, who has at times dismissed claims of Russian meddling in the US elections, has at other times jumped on the Russophobia bandwagon. He signed off the US National Security Strategy last month in which it is asserted that "Russia aims to weaken US influence in the world and divide us from our allies… Through modernized forms of subversive tactics, Russia interferes in the domestic political affairs of countries around the world… The United States and Europe will work together to counter Russian subversion and aggression.”
The relentless Russophobia – an irrational, morbid fear of Russia – is now worse than at any time during the former Cold War, says Moscow’s Foreign Minister Sergei Lavrov.
British Prime Minister Theresa May glibly accuses Russia of "sowing division”; French President Emmanuel Macron alleges that Russian news media interfered in his country’s elections last year. The EU’s Commissioner on Security Sir Julian King last week casually smeared Russian news media outlets RT and Sputnik as "Kremlin-orchestrated disinformation."
All these claims are never substantiated with hard evidence or credible analysis. They are simply asserted in the realm of speculation and fantasy.
Surely, if there were any standard of intellectual and journalistic integrity, the claims made against Russia should be tested for objective credibility. But they never are tested or challenged. They are simply mouthed, echoed and amplified by politicians, think-tanks and media.
Of course, that’s not to say the West is devoid of intelligent thinkers. Russian scholars like Stephen Cohen, media analysts like Ed Herman and journalists like John Pilger are indeed there and admirably outspoken in their dissent. But their voices of sanity are drowned out by the cacophony of nonsense that dominates public discourse.
US-based political analyst Randy Martin says that Washington’s political class is especially bankrupt in intelligence.
He says the American narrative of accusing Russia "has become exhausted" from lack of credibility. "It has become so tired from lack of facts and credibility, ordinary common-sense citizens have become weary of it. The official Washington description of the world has no longer any relevant application to international relations."
Martin asks: "How can any country chart a viable direction when its strategic thinking is so fundamentally false and, in effect, based on paranoid delusion?" He adds: "It is inevitable that if a nation or group of nations construct policies and allocate resources based on a fundamentally erroneous assessment of the world then such a direction is bound to result in disastrous failure and collapse."
We have already noted the US National Security Strategy signed off by Trump. Another example is seen with the latest US National Defense Strategy unveiled by Pentagon chief James Mattis last week.
The Pentagon is claiming that Russia (and China) is now a greater security threat to the US than non-state terror groups. To counter Russia, the US is planning to increase its annual military spending to even more astronomical levels – some $700 billion a year. Such expenditure will inevitably lead to fatally crippling national debt and decay of social conditions from the cutbacks necessary to pay for it.
Also, this week, the head of Britain’s armed forces General Sir Nick Carter made the same pitch as Mattis. In a telling repetition of narrative, Carter reportedly claimed too that Russia presents a greater threat to Britain’s national security than terrorism.
Again, the bottom line is for Britain, as with the US, to allocate more resources to military spending to "confront" the alleged Russian threat.
A core problem, says analyst Randy Martin, is that Western public discourse is dominated by think-tanks which are closely tied to the military-industrial complex and the US-led NATO alliance.
These think-tanks, such as the Atlantic Council, the American Enterprise Institute and Royal United Services Institute, set the parameters for public discussion, which is, in turn, adopted by politicians, military chiefs and news media.
However, because of the intellectual bankruptcy in official Western discourse, there is no rigorous interrogation of the false premises and claims.
"There is no intelligent self-reflection," says Martin. "Without honest self-reflection the result is eventually a form of collective paranoid delusion."
It is as blatant as this: Western capitalism is so dependent on military industry and financing, the ideology must be constructed to shore up this warped economy. That, in turn, requires casting a world of enemies and threats. For that purpose, countries like Russia must be demonized and slandered, otherwise, the whole charade would fall apart.
The function of think-tanks, politicians, military chiefs and the corporate media is to maintain the fiction of “enemies and threats” to justify what is otherwise an obscene waste of economic and social resources. This travesty of discourse can only be maintained because of intellectual dishonesty and bankruptcy in the US and its NATO allies.
Why is that deplorable? Because such systematic deception is endangering the entire world by fueling tensions and risking all-out war. It is also literally killing societies in the West from poverty and social deprivation. Just think of how much more humane and civilized this world would be if economies were directed away from militarism towards improving life for the mass of ordinary citizens.
The deception is so outrageous, it can only be achieved through massive intellectual corruption in the West. The enemy to these societies is not some foreign entity. Ironically, Western elites who claim to defend their nations from foreign threats are the ones who are actually inflicting the fatal damage.
Russia is a Threat to Western Societies?
West’s Fatal Intellectual Poverty
The United States and its NATO allies are facing an existential threat. But the threat has nothing to do with Russia, China, or any other external “enemy” for that matter.
The West’s own worst enemy is itself. Or more precisely, the intellectual bankruptcy of its political and military leaders and their dominant public discourse.
This week Nobel literature laureate Mario Vargas Llosa reportedly condemned the US for descending into "political and intellectual poverty." He said: "The consequences are predictable: China and Russia are taking the positions that the US is withdrawing from, gaining political and economic influence."
Perhaps the clearest expression of Western intellectual impoverishment and dishonesty is the relentless Russophobia touted by American and European politicians, military leaders, think-tanks and mainstream corporate news media.
Hardly a week goes by without repetition of this tired old trope alleging that Russia is a threat to Western societies. Russian President Vladimir Putin is portrayed as some kind of "evil genius" hellbent on undermining the West – without a plausible explanation ever being given for why the Russian leader would harbor such alleged dastardly designs.
And if it’s not Russia, it is some other supposed malevolent foreign force, such as China, Iran or North Korea. Yes, the latter has a nuclear weapons program. But the Western public rarely hears that North Korea has embarked on developing these weapons due to decades of warmongering threats from Washington and its allies.
Arguably, though, it is Russophobia that most preoccupies official discourse in the US and Europe.
For the past year and more, Russia is accused of "interfering" in US and European elections, "subverting" democratic processes, and "sowing divisions" among allies with "fake news."
Even President Donald Trump, who has at times dismissed claims of Russian meddling in the US elections, has at other times jumped on the Russophobia bandwagon. He signed off the US National Security Strategy last month in which it is asserted that "Russia aims to weaken US influence in the world and divide us from our allies… Through modernized forms of subversive tactics, Russia interferes in the domestic political affairs of countries around the world… The United States and Europe will work together to counter Russian subversion and aggression.”
The relentless Russophobia – an irrational, morbid fear of Russia – is now worse than at any time during the former Cold War, says Moscow’s Foreign Minister Sergei Lavrov.
British Prime Minister Theresa May glibly accuses Russia of "sowing division”; French President Emmanuel Macron alleges that Russian news media interfered in his country’s elections last year. The EU’s Commissioner on Security Sir Julian King last week casually smeared Russian news media outlets RT and Sputnik as "Kremlin-orchestrated disinformation."
All these claims are never substantiated with hard evidence or credible analysis. They are simply asserted in the realm of speculation and fantasy.
Surely, if there were any standard of intellectual and journalistic integrity, the claims made against Russia should be tested for objective credibility. But they never are tested or challenged. They are simply mouthed, echoed and amplified by politicians, think-tanks and media.
Of course, that’s not to say the West is devoid of intelligent thinkers. Russian scholars like Stephen Cohen, media analysts like Ed Herman and journalists like John Pilger are indeed there and admirably outspoken in their dissent. But their voices of sanity are drowned out by the cacophony of nonsense that dominates public discourse.
US-based political analyst Randy Martin says that Washington’s political class is especially bankrupt in intelligence.
He says the American narrative of accusing Russia "has become exhausted" from lack of credibility. "It has become so tired from lack of facts and credibility, ordinary common-sense citizens have become weary of it. The official Washington description of the world has no longer any relevant application to international relations."
Martin asks: "How can any country chart a viable direction when its strategic thinking is so fundamentally false and, in effect, based on paranoid delusion?" He adds: "It is inevitable that if a nation or group of nations construct policies and allocate resources based on a fundamentally erroneous assessment of the world then such a direction is bound to result in disastrous failure and collapse."
We have already noted the US National Security Strategy signed off by Trump. Another example is seen with the latest US National Defense Strategy unveiled by Pentagon chief James Mattis last week.
The Pentagon is claiming that Russia (and China) is now a greater security threat to the US than non-state terror groups. To counter Russia, the US is planning to increase its annual military spending to even more astronomical levels – some $700 billion a year. Such expenditure will inevitably lead to fatally crippling national debt and decay of social conditions from the cutbacks necessary to pay for it.
Also, this week, the head of Britain’s armed forces General Sir Nick Carter made the same pitch as Mattis. In a telling repetition of narrative, Carter reportedly claimed too that Russia presents a greater threat to Britain’s national security than terrorism.
Again, the bottom line is for Britain, as with the US, to allocate more resources to military spending to "confront" the alleged Russian threat.
A core problem, says analyst Randy Martin, is that Western public discourse is dominated by think-tanks which are closely tied to the military-industrial complex and the US-led NATO alliance.
These think-tanks, such as the Atlantic Council, the American Enterprise Institute and Royal United Services Institute, set the parameters for public discussion, which is, in turn, adopted by politicians, military chiefs and news media.
However, because of the intellectual bankruptcy in official Western discourse, there is no rigorous interrogation of the false premises and claims.
"There is no intelligent self-reflection," says Martin. "Without honest self-reflection the result is eventually a form of collective paranoid delusion."
It is as blatant as this: Western capitalism is so dependent on military industry and financing, the ideology must be constructed to shore up this warped economy. That, in turn, requires casting a world of enemies and threats. For that purpose, countries like Russia must be demonized and slandered, otherwise, the whole charade would fall apart.
The function of think-tanks, politicians, military chiefs and the corporate media is to maintain the fiction of “enemies and threats” to justify what is otherwise an obscene waste of economic and social resources. This travesty of discourse can only be maintained because of intellectual dishonesty and bankruptcy in the US and its NATO allies.
Why is that deplorable? Because such systematic deception is endangering the entire world by fueling tensions and risking all-out war. It is also literally killing societies in the West from poverty and social deprivation. Just think of how much more humane and civilized this world would be if economies were directed away from militarism towards improving life for the mass of ordinary citizens.
The deception is so outrageous, it can only be achieved through massive intellectual corruption in the West. The enemy to these societies is not some foreign entity. Ironically, Western elites who claim to defend their nations from foreign threats are the ones who are actually inflicting the fatal damage.
Monday, January 22, 2018
SC158-1
https://srsroccoreport.com/warning-markets-reaching-extreme-leverage/
WARNING: Markets Reaching Extreme Leverage
As investors’ bullish sentiment moves up to euphoric levels, the markets are reaching extreme leverage. This is terrible news because a lot of people are going to lose one heck of a lot of money. According to CNN Money’s Fear & Greed Index, the market is now at the “extreme greed” level and if we go by Yardeni Research on “Investor Intelligence Bull-Bear Ratio,” it’s also at the highest ratio in 30 years.
But, of course… this time is different. Or is it? I continue to receive emails and comments on my blog that the Fed will continue to prop up the markets forever. Unfortunately, there is only so much the Fed can do to rig the markets. Furthermore, the Fed can’t do much to mitigate investor insanity in record NYSE margin debt or the massive $2 trillion in the global short volatility trade.
The $600 billion in NYSE margin debt suggests traders have racked up a record amount of margin debt (33% more since 2007) and the largest short volatility trade in history. By shorting volatility, investors are betting that the VIX Index (Volatility Index) will continue to move lower. A falling volatility index suggests more calm and complacency in the markets.
So, the market will likely continue higher and higher, until it finally POPS. And when it does, watch out.
I’ve put together some charts showing the extreme amount of leverage in the markets. While this leverage may increase for a while, at some point the insanity will end in one hell of a market correction-crash.
The Commercial Banks Are Betting On Much Lower Oil Prices
As I mentioned in previous articles and my Youtube video, Coming Big Oil Price Drop & Market Crash, the Commercial banks have the highest net short positions in the oil market in over 20 years. In the video, I explained how the Commercial net short position in oil increased from 648,000 to 678,000 contracts in just one week. Well, according to the most recent COT Report (Commitment of Traders), the Commercials outdid themselves this week by adding an even larger amount of short contracts.
The Commercial net short position in the oil increased by a stunning 58,0000 contracts to another record high of 732,000:
If we look at the “Commercial” long and short positions at the bottom of the chart, we can see that the total short contracts increased to 1,486,922 while their longs fell to 755,208. So, the Commercials added a 46,000 more shorts and reduced their longs by roughly 12,000 contracts. Furthermore, the Commercials are only 34% Bullish about the current oil price while the Large Speculators are 85% Bullish.
When the Commercials hold a very large net short position in commodity, metal or asset, that normally indicates a correction will shortly take place. Especially, when the Commercials hold the largest short position in oil, going back for more than 20 years:
The BLACK line represents the oil price, and the BLUE line is the Commercial net short positions. Right before the oil price fell from $105 in mid-2014 to a low of $30 at the beginning of 2016, the Commercials held nearly 500,000 net short positions. However, as the oil price increased from $42 at the end of September to $64 currently, the Commercials net short position increased from 350,000 to a massive 732,000 contracts:
In my video linked above, I mentioned that the technical analysis indicator of a shooting star suggested that the oil price may have peaked. Well, it looks as if this may be true, but time will tell. However, we can clearly see that the Commercials record net short positions provide us with evidence of extreme leverage against the oil price. I would not be surprised to see a $20+ decline in the oil price as the Commercials liquidate their short positions back toward more normal levels.
A $40 oil price is not good for the U.S. Shale Oil Industry. I will be publishing a new video shortly on the ongoing U.S. Shale Energy Ponzi Scheme and the financial disaster taking place in the U.S. shale oil and gas industry.
Regardless, if the leverage in the oil market is reaching record levels, you should see what is taking place in some of the Dow Jones Industrial stocks.
WARNING: EXTREME MARKET LEVERAGE, Dow Jones Stocks Are Well Beyond Bubble Territory
I get a laugh when I receive emails from individuals who write me stating, “This time is different” in the stock market. They let me know that my calls for a bubble market and a crash have been overblown, severely overdue or simply, not true. While I am quite surprised at the longevity of this present bull market, my warning remains the same… THE HIGHER IT GOES, THE BIGGER THE CRASH.
Let’s take a look at some of the Dow Jones Industrial stocks and their price changes in just the past two weeks. As the overall market increased significantly since the beginning of the year, Caterpillar’s stock price increased from $161 to $170:
And if we remember my chart on Caterpillar from my first video, Stock Market Bubble vs. Gold & Silver, Caterpillar’s price was $137 on Nov 5th. So, in just two and a half months, Caterpillar’s stock price is up a staggering 24%:
You will notice that Caterpillar’s stock price experienced several short-term peaks, but nothing quite like what is taking place now. Another impressive mover in the Dow Jones Index is Home Depot. While Home Depot’s stock price chart isn’t as remarkable as Caterpillar, it is also moving beyond bubble territory:
From 2000 to 2012, Home Depot’s share price averaged approximately $25 a share. However, on Jan 5th it was trading nearly eight times higher at $192. But, if we look at its current price, it is NOW trading more than eight times higher at $201:
Now, could have Home Depot’s revenues and profits increased tremendously since 2012 to suggest a price of $201? According to Home Depot’s financial reports, their revenues grew from $70 billion in 2012 to over $100 billion in 2017. Furthermore, Home Depot’s net income has increased from $3.8 billion in 2012 to $6.8 billion in the first three quarters of 2017. But does a $30 billion increase in revenues and $6 billion increase in profits translate to a 700% increase in Home Depot’s stock price over the past five years?
Okay, let’s look at Boeing Airlines. What’s going on with Boeing’s share price? On Jan 5th, Boeing was trading at $308… nearly three times higher than what it was trading at $112 at the beginning of 2016:
As we can see, Boeing’s share price is up 9,200+% over the past 34 years. If we go by Boeing’s 2007 peak of $80, it’s up nearly four times. However, if we check the trading activity over the past two weeks, Boeing’s stock price is moving well beyond bubble territory to a new record high of $337:
Gosh, Boeing’s severely pointy price chart resembles the antenna on the Empire State Building in New York City. Good heavens, Boeing’s stock has gone up 10% in just two weeks. If investors don’t see anything wrong with this chart, you probably have been hanging around too many “Cryptocurrency Aficionados.” People, if you think the only direction is UP with stocks or cryptocurrencies, you need to get your head examined.
Here’s another chart worthy to compete with the tremendous gains in Bitcoin, Ethereum, and Ripple. However, this is one those industries that should NOT BEHAVE like a high-flying tech stock or cryptocurrency. Why, because it’s a healthcare stock. United HealthCare’s stock has surged from $53 in 2012 to $223 on Jan 5th:
If you were clever and started buying United HealthCare’s stock in 1990, you would be enjoying cryptocurrency type gains of nearly 43,000%. But that is all history now. United HealthCare’s price is up another 6% to $243 in just the past two weeks. If you look at the chart below carefully, you will see that its current two-week trend is virtually a STRAIGHT LINE higher:
United HealthCare and Boeing’s stocks represent a market that has gone completely insane. Unfortunately, the leverage in the market will likely increase from the current extreme levels to “outrageously” extreme… if there is such a term… LOL.
Investors need to understand that the Fed and Central Banks realize by rigging the market higher, it can only go in that direction. Ever since the 2008 U.S. Housing and Banking Market collapse, the world has been living on borrowed time, money and a massive amount of debt. By increasing the value of Stocks, Bonds, and Real Estate, the Fed and Central Banks not only give investors the impression that they are wealthier, so they spend more, it also allows governments to collect more taxes.
While inflated asset values allow governments to collect more taxes, they still aren’t enough to keep the economic and financial systems from collapsing. Yes, I know I am a broken record, but the FUNDAMENTALS DON’T LIE…. only humans do. So, a lie or a Ponzi Scheme can continue for quite a while. A perfect example is the Bernie Madoff 20-year Ponzi Scheme that defrauded investors by $65 billion.
If the Fed and Central Banks lose control over the markets (Yes, they will), then the ensuing collapse will make 1930’s Depression and the 2008 economic meltdown look quite tame indeed. As I have mentioned in several interviews, when the markets were crashing in 2008, the U.S. Oil Industry was still in relatively good shape. However, today the shale energy industry has debt up to its eyeballs and two-thirds to three-quarters of the shale energy companies are losing money:
The chart above by energy analyst, Art Berman, shows that the majority of U.S. shale energy companies lost money in the first three quarters of 2017. While Chevron, ConocoPhillips, and Statoil made money, they are not heavily invested in shale oil or gas as are the companies are shown in the RED.
Lastly, the oil price is getting ready to experience one hell of a correction-crash as the Commercials hold the largest number of net short positions in history. Furthermore, the NYSE margin debt and the Volatility Index are at extreme levels. This has allowed the stock prices of many companies to surge to completely insane prices.
While the leverage in the market will move from extreme to outrageously extreme before it crashes, the timing of this event is not years or decades away as some more WISHFULL thinking investors have deluded themselves into believing....
WARNING: Markets Reaching Extreme Leverage
As investors’ bullish sentiment moves up to euphoric levels, the markets are reaching extreme leverage. This is terrible news because a lot of people are going to lose one heck of a lot of money. According to CNN Money’s Fear & Greed Index, the market is now at the “extreme greed” level and if we go by Yardeni Research on “Investor Intelligence Bull-Bear Ratio,” it’s also at the highest ratio in 30 years.
But, of course… this time is different. Or is it? I continue to receive emails and comments on my blog that the Fed will continue to prop up the markets forever. Unfortunately, there is only so much the Fed can do to rig the markets. Furthermore, the Fed can’t do much to mitigate investor insanity in record NYSE margin debt or the massive $2 trillion in the global short volatility trade.
The $600 billion in NYSE margin debt suggests traders have racked up a record amount of margin debt (33% more since 2007) and the largest short volatility trade in history. By shorting volatility, investors are betting that the VIX Index (Volatility Index) will continue to move lower. A falling volatility index suggests more calm and complacency in the markets.
So, the market will likely continue higher and higher, until it finally POPS. And when it does, watch out.
I’ve put together some charts showing the extreme amount of leverage in the markets. While this leverage may increase for a while, at some point the insanity will end in one hell of a market correction-crash.
The Commercial Banks Are Betting On Much Lower Oil Prices
As I mentioned in previous articles and my Youtube video, Coming Big Oil Price Drop & Market Crash, the Commercial banks have the highest net short positions in the oil market in over 20 years. In the video, I explained how the Commercial net short position in oil increased from 648,000 to 678,000 contracts in just one week. Well, according to the most recent COT Report (Commitment of Traders), the Commercials outdid themselves this week by adding an even larger amount of short contracts.
The Commercial net short position in the oil increased by a stunning 58,0000 contracts to another record high of 732,000:
If we look at the “Commercial” long and short positions at the bottom of the chart, we can see that the total short contracts increased to 1,486,922 while their longs fell to 755,208. So, the Commercials added a 46,000 more shorts and reduced their longs by roughly 12,000 contracts. Furthermore, the Commercials are only 34% Bullish about the current oil price while the Large Speculators are 85% Bullish.
When the Commercials hold a very large net short position in commodity, metal or asset, that normally indicates a correction will shortly take place. Especially, when the Commercials hold the largest short position in oil, going back for more than 20 years:
The BLACK line represents the oil price, and the BLUE line is the Commercial net short positions. Right before the oil price fell from $105 in mid-2014 to a low of $30 at the beginning of 2016, the Commercials held nearly 500,000 net short positions. However, as the oil price increased from $42 at the end of September to $64 currently, the Commercials net short position increased from 350,000 to a massive 732,000 contracts:
In my video linked above, I mentioned that the technical analysis indicator of a shooting star suggested that the oil price may have peaked. Well, it looks as if this may be true, but time will tell. However, we can clearly see that the Commercials record net short positions provide us with evidence of extreme leverage against the oil price. I would not be surprised to see a $20+ decline in the oil price as the Commercials liquidate their short positions back toward more normal levels.
A $40 oil price is not good for the U.S. Shale Oil Industry. I will be publishing a new video shortly on the ongoing U.S. Shale Energy Ponzi Scheme and the financial disaster taking place in the U.S. shale oil and gas industry.
Regardless, if the leverage in the oil market is reaching record levels, you should see what is taking place in some of the Dow Jones Industrial stocks.
WARNING: EXTREME MARKET LEVERAGE, Dow Jones Stocks Are Well Beyond Bubble Territory
I get a laugh when I receive emails from individuals who write me stating, “This time is different” in the stock market. They let me know that my calls for a bubble market and a crash have been overblown, severely overdue or simply, not true. While I am quite surprised at the longevity of this present bull market, my warning remains the same… THE HIGHER IT GOES, THE BIGGER THE CRASH.
Let’s take a look at some of the Dow Jones Industrial stocks and their price changes in just the past two weeks. As the overall market increased significantly since the beginning of the year, Caterpillar’s stock price increased from $161 to $170:
And if we remember my chart on Caterpillar from my first video, Stock Market Bubble vs. Gold & Silver, Caterpillar’s price was $137 on Nov 5th. So, in just two and a half months, Caterpillar’s stock price is up a staggering 24%:
You will notice that Caterpillar’s stock price experienced several short-term peaks, but nothing quite like what is taking place now. Another impressive mover in the Dow Jones Index is Home Depot. While Home Depot’s stock price chart isn’t as remarkable as Caterpillar, it is also moving beyond bubble territory:
From 2000 to 2012, Home Depot’s share price averaged approximately $25 a share. However, on Jan 5th it was trading nearly eight times higher at $192. But, if we look at its current price, it is NOW trading more than eight times higher at $201:
Now, could have Home Depot’s revenues and profits increased tremendously since 2012 to suggest a price of $201? According to Home Depot’s financial reports, their revenues grew from $70 billion in 2012 to over $100 billion in 2017. Furthermore, Home Depot’s net income has increased from $3.8 billion in 2012 to $6.8 billion in the first three quarters of 2017. But does a $30 billion increase in revenues and $6 billion increase in profits translate to a 700% increase in Home Depot’s stock price over the past five years?
Okay, let’s look at Boeing Airlines. What’s going on with Boeing’s share price? On Jan 5th, Boeing was trading at $308… nearly three times higher than what it was trading at $112 at the beginning of 2016:
As we can see, Boeing’s share price is up 9,200+% over the past 34 years. If we go by Boeing’s 2007 peak of $80, it’s up nearly four times. However, if we check the trading activity over the past two weeks, Boeing’s stock price is moving well beyond bubble territory to a new record high of $337:
Gosh, Boeing’s severely pointy price chart resembles the antenna on the Empire State Building in New York City. Good heavens, Boeing’s stock has gone up 10% in just two weeks. If investors don’t see anything wrong with this chart, you probably have been hanging around too many “Cryptocurrency Aficionados.” People, if you think the only direction is UP with stocks or cryptocurrencies, you need to get your head examined.
Here’s another chart worthy to compete with the tremendous gains in Bitcoin, Ethereum, and Ripple. However, this is one those industries that should NOT BEHAVE like a high-flying tech stock or cryptocurrency. Why, because it’s a healthcare stock. United HealthCare’s stock has surged from $53 in 2012 to $223 on Jan 5th:
If you were clever and started buying United HealthCare’s stock in 1990, you would be enjoying cryptocurrency type gains of nearly 43,000%. But that is all history now. United HealthCare’s price is up another 6% to $243 in just the past two weeks. If you look at the chart below carefully, you will see that its current two-week trend is virtually a STRAIGHT LINE higher:
United HealthCare and Boeing’s stocks represent a market that has gone completely insane. Unfortunately, the leverage in the market will likely increase from the current extreme levels to “outrageously” extreme… if there is such a term… LOL.
Investors need to understand that the Fed and Central Banks realize by rigging the market higher, it can only go in that direction. Ever since the 2008 U.S. Housing and Banking Market collapse, the world has been living on borrowed time, money and a massive amount of debt. By increasing the value of Stocks, Bonds, and Real Estate, the Fed and Central Banks not only give investors the impression that they are wealthier, so they spend more, it also allows governments to collect more taxes.
While inflated asset values allow governments to collect more taxes, they still aren’t enough to keep the economic and financial systems from collapsing. Yes, I know I am a broken record, but the FUNDAMENTALS DON’T LIE…. only humans do. So, a lie or a Ponzi Scheme can continue for quite a while. A perfect example is the Bernie Madoff 20-year Ponzi Scheme that defrauded investors by $65 billion.
If the Fed and Central Banks lose control over the markets (Yes, they will), then the ensuing collapse will make 1930’s Depression and the 2008 economic meltdown look quite tame indeed. As I have mentioned in several interviews, when the markets were crashing in 2008, the U.S. Oil Industry was still in relatively good shape. However, today the shale energy industry has debt up to its eyeballs and two-thirds to three-quarters of the shale energy companies are losing money:
The chart above by energy analyst, Art Berman, shows that the majority of U.S. shale energy companies lost money in the first three quarters of 2017. While Chevron, ConocoPhillips, and Statoil made money, they are not heavily invested in shale oil or gas as are the companies are shown in the RED.
Lastly, the oil price is getting ready to experience one hell of a correction-crash as the Commercials hold the largest number of net short positions in history. Furthermore, the NYSE margin debt and the Volatility Index are at extreme levels. This has allowed the stock prices of many companies to surge to completely insane prices.
While the leverage in the market will move from extreme to outrageously extreme before it crashes, the timing of this event is not years or decades away as some more WISHFULL thinking investors have deluded themselves into believing....
SC157-15
https://www.globalresearch.ca/trumps-national-defense-strategy/5626792
Trump’s National Defense Strategy
On Friday at Johns Hopkins School of Advanced International Studies, Defense Secretary Mattis explained the Trump administration’s imperial project – its aim for global dominance.
America’s phony war on terrorism will continue, cover for its global war OF terrorism on humanity at home and abroad.
“(G)reat power competition – not terrorism – is now the primary focus of US national security,” said Mattis – at a time when the nation’s only threats are invented ones.
“This strategy is fit for our time, providing the American people the military required to protect our way of life, stand with our allies and live up to our responsibility to pass intact to the next generation those freedoms we enjoy today,” he roared.
US militarism, belligerence and permanent war agenda threaten world peace, stability and security. That’s what “our way of life” is all about, along with serving America’s privileged class exclusively at the expense of peace, equity and justice.
Post-9/11, the nation’s “freedoms” eroded greatly on the fabricated pretext of protecting national security, including waging phony war on terrorism America created and supports.
Its reckless agenda is humanity’s greatest threat. Its National Defense Strategy is all about offense, waging endless wars of aggression, targeting all sovereign independent countries for regime change, wanting US control over planet earth, its resources and populations.
Washington seeks imposition of authoritarian rule over all nations, partnering with NATO, Israel and other rogue allies – not Russia and China, as Mattis falsely claimed.
Trump’s National Defense Strategy calls for greater military spending than already. Mattis explained it, saying
“(o)ur competitive edge in every domain of warfare – air, land, sea, space, and cyberspace – is eroding,” adding:
“To those who would threaten America’s experiment in democracy: if you challenge us, it will be your longest and worst day.”
No nations can challenge what doesn’t exist. America is a plutocracy, not a democracy, run by and for its corporate interests and super-rich – presidents, Congress and the courts serving them, media scoundrels supporting them.
Mattis lied claiming North Korea and Iran “threaten regional and even global stability” – a US imperial threat, its agenda risking catastrophic nuclear war, threatening life on earth if launched.
Russia and China aren’t “revisionist” powers. They don’t threaten their neighbors or any other countries. Nor do they wage wars of aggression like America.
US economic policies are “predatory,” not China’s. Like Russia, it seeks cooperative relations with other nations. America’s agenda seeks dominance, naked aggression its favored strategy.
No Russian adventurism exists, a US specialty. Moscow isn’t “undermining the international order from within the system by exploiting its benefits while simultaneously undercutting its principles and ‘rules of the road.’ “
Washington wants the exclusive right to stipulate rules it demands all other nations obey.
“We are going to build a more lethal force…We will strengthen traditional alliances while building new partnerships with other nations,” Mattis roared, part of Washington’s rage for endless wars.
“We will develop enduring coalitions to consolidate gains we have made in Afghanistan, Iraq, Syria and elsewhere, to support the lasting defeat of terrorists as we sever their sources of strength and counterbalance Iran,” the defense strategy document said.
Washington created and supports ISIS and likeminded terrorist groups, using them as imperial foot soldiers in current US war theaters and others to come.
Trump’s National Defense Strategy, his National Security Strategy, and Nuclear Posture Review are all about advancing America’s imperium – the greatest ever threat to life on earth.
Trump’s National Defense Strategy
On Friday at Johns Hopkins School of Advanced International Studies, Defense Secretary Mattis explained the Trump administration’s imperial project – its aim for global dominance.
America’s phony war on terrorism will continue, cover for its global war OF terrorism on humanity at home and abroad.
“(G)reat power competition – not terrorism – is now the primary focus of US national security,” said Mattis – at a time when the nation’s only threats are invented ones.
“This strategy is fit for our time, providing the American people the military required to protect our way of life, stand with our allies and live up to our responsibility to pass intact to the next generation those freedoms we enjoy today,” he roared.
US militarism, belligerence and permanent war agenda threaten world peace, stability and security. That’s what “our way of life” is all about, along with serving America’s privileged class exclusively at the expense of peace, equity and justice.
Post-9/11, the nation’s “freedoms” eroded greatly on the fabricated pretext of protecting national security, including waging phony war on terrorism America created and supports.
Its reckless agenda is humanity’s greatest threat. Its National Defense Strategy is all about offense, waging endless wars of aggression, targeting all sovereign independent countries for regime change, wanting US control over planet earth, its resources and populations.
Washington seeks imposition of authoritarian rule over all nations, partnering with NATO, Israel and other rogue allies – not Russia and China, as Mattis falsely claimed.
Trump’s National Defense Strategy calls for greater military spending than already. Mattis explained it, saying
“(o)ur competitive edge in every domain of warfare – air, land, sea, space, and cyberspace – is eroding,” adding:
“To those who would threaten America’s experiment in democracy: if you challenge us, it will be your longest and worst day.”
No nations can challenge what doesn’t exist. America is a plutocracy, not a democracy, run by and for its corporate interests and super-rich – presidents, Congress and the courts serving them, media scoundrels supporting them.
Mattis lied claiming North Korea and Iran “threaten regional and even global stability” – a US imperial threat, its agenda risking catastrophic nuclear war, threatening life on earth if launched.
Russia and China aren’t “revisionist” powers. They don’t threaten their neighbors or any other countries. Nor do they wage wars of aggression like America.
US economic policies are “predatory,” not China’s. Like Russia, it seeks cooperative relations with other nations. America’s agenda seeks dominance, naked aggression its favored strategy.
No Russian adventurism exists, a US specialty. Moscow isn’t “undermining the international order from within the system by exploiting its benefits while simultaneously undercutting its principles and ‘rules of the road.’ “
Washington wants the exclusive right to stipulate rules it demands all other nations obey.
“We are going to build a more lethal force…We will strengthen traditional alliances while building new partnerships with other nations,” Mattis roared, part of Washington’s rage for endless wars.
“We will develop enduring coalitions to consolidate gains we have made in Afghanistan, Iraq, Syria and elsewhere, to support the lasting defeat of terrorists as we sever their sources of strength and counterbalance Iran,” the defense strategy document said.
Washington created and supports ISIS and likeminded terrorist groups, using them as imperial foot soldiers in current US war theaters and others to come.
Trump’s National Defense Strategy, his National Security Strategy, and Nuclear Posture Review are all about advancing America’s imperium – the greatest ever threat to life on earth.
Sunday, January 21, 2018
SC157-14
https://www.truthdig.com/articles/thought-police-21st-century/
Thought Police for the 21st Century
DETROIT—The abolition of net neutrality and the use of algorithms by Facebook, Google, YouTube and Twitter to divert readers and viewers from progressive, left-wing and anti-war sites, along with demonizing as foreign agents the journalists who expose the crimes of corporate capitalism and imperialism, have given the corporate state the power to destroy freedom of speech. Any state that accrues this kind of power will use it. And for that reason I traveled last week to Detroit to join David North, the chairperson of the international editorial board of the World Socialist Web Site, in a live-stream event calling for the formation of a broad front to block an escalating censorship while we still have a voice.
“The future of humanity is the struggle between humans that control machines and machines that control humans,” Julian Assange, the founder of WikiLeaks, said in a statement issued in support of the event. “Between the democratization of communication and usurpation of communication by artificial intelligence. While the Internet has brought about a revolution in people’s ability to educate themselves and others, the resulting democratic phenomena has shaken existing establishments to their core. Google, Facebook and their Chinese equivalents, who are socially, logistically and financially integrated with existing elites, have moved to re-establish discourse control. This is not simply a corrective action. Undetectable mass social influence powered by artificial intelligence is an existential threat to humanity. While still in its infancy, the trends are clear and of a geometric nature. The phenomena differs in traditional attempts to shape cultural and political phenomena by operating at scale, speed and increasingly at a subtlety that eclipses human capacities.”
In late April and early May the World Socialist Web Site, which identifies itself as a Trotskyite group that focuses on the crimes of capitalism, the plight of the working class and imperialism, began to see a steep decline in readership. The decline persisted into June. Search traffic to the World Socialist Web Site has been reduced by 75 percent overall. And the site is not alone. AlterNet’s search traffic is down 71 percent, Consortium News’ traffic is down 72 percent. And the situation appears to be growing worse.
The reductions coincided with the introduction of algorithms imposed by Google to fight “fake news.” Google said the algorithms are designed to elevate “more authoritative content” and marginalize “blatantly misleading, low quality, offensive or downright false information.” It soon became apparent, however, that in the name of combating “fake news,” Google, Facebook, YouTube and Twitter are censoring left-wing, progressive and anti-war sites. The 150 most popular search terms that brought readers to the World Socialist Web Site, including “socialism,” “Russian Revolution” and “inequality,” today elicit little or no traffic.
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Monika Bickert, head of global policy management at Facebook, told the U.S. Senate Committee on Commerce, Science, and Transportation in a hearing Wednesday that Facebook employs a security team of 10,000—7,500 of whom “assess potentially violating content”—and that “by the end of 2018 we will more than double” it to over 20,000. Social media companies are intertwined with and often work for U.S. intelligence agencies. This army of censors is our Thought Police.
The group, Bickert said, includes “a dedicated counterterrorism team” of “former intelligence and law-enforcement officials and prosecutors who worked in the area of counterterrorism.” She testified that artificial intelligence automatically flags questionable content. Facebook, she said, does not “wait for these … bad actors to upload content to Facebook before placing it into our detection systems.” The “propaganda” that Facebook blocks, she said, “is content that we identify ourselves before anybody” else can see it. Facebook, she said, along with over a dozen other social media companies has created a blacklist of 50,000 “unique digital fingerprints” that can prevent content from being posted.
“We believe that a key part of combating extremism is preventing recruitment by disrupting the underlying ideologies that drive people to commit acts of violence,” she told the committee. “That’s why we support a variety of counterspeech efforts.”
“Counterspeech” is a word that could have been lifted from the pages of George Orwell’s dystopian novel “1984.”
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Chris Hedges and Robert Scheer Discuss the Silencing of the Left (Video)
by Chris Hedges
Chris Hedges, Socialist David North Discuss Internet Freedom
by Eric Ortiz
Eric Schmidt, who is stepping down this month as the executive chairman of Google’s parent company, Alphabet, has acknowledged that Google is creating algorithms to “de-rank” Russian-based news websites RT and Sputnik from its Google News services, effectively blocking them. The U.S. Department of Justice forced RT America, on which I host a show, “On Contact,” that gives a voice to anti-imperialist and anti-capitalist voices, to register as a “foreign agent.” Google removed RT from its “preferred” channels on YouTube. Twitter has blocked the Russian news service agencies RT and Sputnik from advertising.
This censorship is global. The German government’s Network Enforcement Act fines social media companies for allegedly objectionable content. French President Emmanuel Macron has vowed to remove “fake news” from the internet. Facebook and Instagram erased the accounts of Ramzan Kadyrov, the dictator of the Chechen Republic, because he is on a U.S. sanctions list. Kadyrov is certainly repugnant, but this ban, as the American Civil Liberties Union points out, empowers the U.S. government to effectively censor content. Facebook, working with the Israeli government, has removed over 100 accounts of Palestinian activists. This is an ominous march to an Orwellian world of Thought Police, “Newspeak” and “thought-crime” or, as Facebook likes to call it, “de-ranking” and “counterspeech.”
The censorship, justified in the name of combating terrorism by blocking the content of extremist groups, is also designed to prevent a distressed public from accessing the language and ideas needed to understand corporate oppression, imperialism and socialism.
“Don’t you see that the whole aim of Newspeak is to narrow the range of thought?” Orwell wrote in “1984.” “In the end we shall make thought-crime literally impossible, because there will be no words in which to express it. Every concept that can ever be needed will be expressed by exactly one word, with its meaning rigidly defined and all its subsidiary meanings rubbed out and forgotten. … Every year fewer and fewer words, and the range of consciousness always a little smaller. …”
Corporate capitalism, and the ideology that justifies it—neoliberalism, the free market, globalization—no longer has any credibility. All of the utopian promises of globalization have been exposed as lies. Allowing banks and corporations to determine how we should order human society and govern ourselves did not spread global wealth, raise the living standards of workers or implant democracy across the globe. The ideology, preached in business schools and by pliant politicians, was a thin cover for the rapacious greed of the elites, elites who now control most of the world’s wealth.
The ruling elites know they are in trouble. The Republican and Democratic parties’ abject subservience to corporate power is transparent. The insurgencies in the two parties that saw Bernie Sanders nearly defeat the seemingly preordained Democratic nominee, Hillary Clinton, and the election of Donald Trump terrify the elites. The elites, by attacking critics and dissidents as foreign agents for Russia, are seeking to deflect attention from the cause of these insurgencies—massive social inequality. Critics of the corporate state and imperialism, already pushed to the margins, are now dangerous because the elites no longer have a viable counterargument. And so these dissidents must be silenced.
“What’s so specifically important about this is that in a period of growing political radicalization among young people, among workers, they start to look for oppositional information, they become interested in socialism, revolution, terms like ‘equality,’ those terms which previously would bring thousands of readers to the World Socialist Web Site, now were bringing no readers to the World Socialist Web Site,” North said. “In other words, they were setting up a quarantine between those who may be interested in our site and the WSWS. From being a bridge, Google was becoming a barrier, a guard preventing access to our site.”
The internet, with its ability to reach across international boundaries, is a potent tool for connecting workers across the earth who are fighting the same enemy—corporate capitalism. And control of the internet, the elites know, is vital to suppress information and consciousness.
“There is no national solution to the problems of American capitalism,” North said. “The effort of the United States is to overcome this through a policy of war. Because what, ultimately, is imperialism? The inability to solve the problems of the nation-state within national borders drives the policy of war and conquest. That is what is emerging. Under conditions of war, the threat of war, conditions of growing and immeasurable inequality, democracy cannot survive. The tendency now is the suppression of democracy. And just as there is no national solution for capitalism, there is no national solution for the working class.”
“War is not an expression of the strength of the system,” North said. “It is an expression of profound and deep crisis. Trotsky said in the Transitional Program: ‘The ruling elites toboggan with eyes closed toward catastrophe.’ In 1939, they went to war, as in 1914, aware of the potentially disastrous consequences. Certainly, in 1939, they knew what the consequences of war were: War brings revolution. But they could not see a way out. The global problems which exist can only be solved in one of two ways: the capitalist, imperialist solution is war and […] fascism. The working-class solution is socialist revolution. This is, I think, the alternative we’re confronted with. So, the question that has come up, in the broadest sense, [is] what is the answer to the problems we face? Building a revolutionary party.”
“There is going to be, and there is already unfolding, massive social struggles,” North said. “The question of social revolution is not utopian. It is a process that emerges objectively out of the contradictions of capitalism. I think the argument can be made—and I think we made this argument—that really, since 2008, we have been witnessing an acceleration of crisis. It has never been solved, and, indeed, the massive levels of social inequality are themselves not the expression of a healthy but [instead] a deeply diseased socioeconomic order. It is fueling, at every level, social opposition. Of course, the great problem, then, is overcoming the legacy of political confusion, produced, as a matter of fact, by the defeats and the betrayals of the 20th century: the betrayal of the Russian Revolution by Stalinism; the betrayals of the working class by social democracy; the subordination of the working class in the United States to the Democratic Party. These are the critical issues and lessons that have to be learned. The education of the working class in these issues, and the development of perspective, is the most critical point … the basic problem is not an absence of courage. It is not an absence of the desire to fight. It is an absence of understanding.”
“Socialist consciousness must be brought into the working class,” North said. “There is a working class. That working class is open now and receptive to revolutionary ideas. Our challenge is to create the conditions. The workers will not learn this in the universities. The Marxist movement, the Trotskyist movement, must provide the working class with the intellectual, cultural tools that it requires, so that it understands what must be done. It will provide the force, it will provide the determination, the emotional and passionate fuel of every revolutionary movement is present. But what it requires is understanding. And we will, and we are seeking to defend internet freedom because we want to make use of this medium, along with others, to create the conditions for this education and revival of revolutionary consciousness to take place.”
Thought Police for the 21st Century
DETROIT—The abolition of net neutrality and the use of algorithms by Facebook, Google, YouTube and Twitter to divert readers and viewers from progressive, left-wing and anti-war sites, along with demonizing as foreign agents the journalists who expose the crimes of corporate capitalism and imperialism, have given the corporate state the power to destroy freedom of speech. Any state that accrues this kind of power will use it. And for that reason I traveled last week to Detroit to join David North, the chairperson of the international editorial board of the World Socialist Web Site, in a live-stream event calling for the formation of a broad front to block an escalating censorship while we still have a voice.
“The future of humanity is the struggle between humans that control machines and machines that control humans,” Julian Assange, the founder of WikiLeaks, said in a statement issued in support of the event. “Between the democratization of communication and usurpation of communication by artificial intelligence. While the Internet has brought about a revolution in people’s ability to educate themselves and others, the resulting democratic phenomena has shaken existing establishments to their core. Google, Facebook and their Chinese equivalents, who are socially, logistically and financially integrated with existing elites, have moved to re-establish discourse control. This is not simply a corrective action. Undetectable mass social influence powered by artificial intelligence is an existential threat to humanity. While still in its infancy, the trends are clear and of a geometric nature. The phenomena differs in traditional attempts to shape cultural and political phenomena by operating at scale, speed and increasingly at a subtlety that eclipses human capacities.”
In late April and early May the World Socialist Web Site, which identifies itself as a Trotskyite group that focuses on the crimes of capitalism, the plight of the working class and imperialism, began to see a steep decline in readership. The decline persisted into June. Search traffic to the World Socialist Web Site has been reduced by 75 percent overall. And the site is not alone. AlterNet’s search traffic is down 71 percent, Consortium News’ traffic is down 72 percent. And the situation appears to be growing worse.
The reductions coincided with the introduction of algorithms imposed by Google to fight “fake news.” Google said the algorithms are designed to elevate “more authoritative content” and marginalize “blatantly misleading, low quality, offensive or downright false information.” It soon became apparent, however, that in the name of combating “fake news,” Google, Facebook, YouTube and Twitter are censoring left-wing, progressive and anti-war sites. The 150 most popular search terms that brought readers to the World Socialist Web Site, including “socialism,” “Russian Revolution” and “inequality,” today elicit little or no traffic.
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Monika Bickert, head of global policy management at Facebook, told the U.S. Senate Committee on Commerce, Science, and Transportation in a hearing Wednesday that Facebook employs a security team of 10,000—7,500 of whom “assess potentially violating content”—and that “by the end of 2018 we will more than double” it to over 20,000. Social media companies are intertwined with and often work for U.S. intelligence agencies. This army of censors is our Thought Police.
The group, Bickert said, includes “a dedicated counterterrorism team” of “former intelligence and law-enforcement officials and prosecutors who worked in the area of counterterrorism.” She testified that artificial intelligence automatically flags questionable content. Facebook, she said, does not “wait for these … bad actors to upload content to Facebook before placing it into our detection systems.” The “propaganda” that Facebook blocks, she said, “is content that we identify ourselves before anybody” else can see it. Facebook, she said, along with over a dozen other social media companies has created a blacklist of 50,000 “unique digital fingerprints” that can prevent content from being posted.
“We believe that a key part of combating extremism is preventing recruitment by disrupting the underlying ideologies that drive people to commit acts of violence,” she told the committee. “That’s why we support a variety of counterspeech efforts.”
“Counterspeech” is a word that could have been lifted from the pages of George Orwell’s dystopian novel “1984.”
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by Eric Ortiz
Eric Schmidt, who is stepping down this month as the executive chairman of Google’s parent company, Alphabet, has acknowledged that Google is creating algorithms to “de-rank” Russian-based news websites RT and Sputnik from its Google News services, effectively blocking them. The U.S. Department of Justice forced RT America, on which I host a show, “On Contact,” that gives a voice to anti-imperialist and anti-capitalist voices, to register as a “foreign agent.” Google removed RT from its “preferred” channels on YouTube. Twitter has blocked the Russian news service agencies RT and Sputnik from advertising.
This censorship is global. The German government’s Network Enforcement Act fines social media companies for allegedly objectionable content. French President Emmanuel Macron has vowed to remove “fake news” from the internet. Facebook and Instagram erased the accounts of Ramzan Kadyrov, the dictator of the Chechen Republic, because he is on a U.S. sanctions list. Kadyrov is certainly repugnant, but this ban, as the American Civil Liberties Union points out, empowers the U.S. government to effectively censor content. Facebook, working with the Israeli government, has removed over 100 accounts of Palestinian activists. This is an ominous march to an Orwellian world of Thought Police, “Newspeak” and “thought-crime” or, as Facebook likes to call it, “de-ranking” and “counterspeech.”
The censorship, justified in the name of combating terrorism by blocking the content of extremist groups, is also designed to prevent a distressed public from accessing the language and ideas needed to understand corporate oppression, imperialism and socialism.
“Don’t you see that the whole aim of Newspeak is to narrow the range of thought?” Orwell wrote in “1984.” “In the end we shall make thought-crime literally impossible, because there will be no words in which to express it. Every concept that can ever be needed will be expressed by exactly one word, with its meaning rigidly defined and all its subsidiary meanings rubbed out and forgotten. … Every year fewer and fewer words, and the range of consciousness always a little smaller. …”
Corporate capitalism, and the ideology that justifies it—neoliberalism, the free market, globalization—no longer has any credibility. All of the utopian promises of globalization have been exposed as lies. Allowing banks and corporations to determine how we should order human society and govern ourselves did not spread global wealth, raise the living standards of workers or implant democracy across the globe. The ideology, preached in business schools and by pliant politicians, was a thin cover for the rapacious greed of the elites, elites who now control most of the world’s wealth.
The ruling elites know they are in trouble. The Republican and Democratic parties’ abject subservience to corporate power is transparent. The insurgencies in the two parties that saw Bernie Sanders nearly defeat the seemingly preordained Democratic nominee, Hillary Clinton, and the election of Donald Trump terrify the elites. The elites, by attacking critics and dissidents as foreign agents for Russia, are seeking to deflect attention from the cause of these insurgencies—massive social inequality. Critics of the corporate state and imperialism, already pushed to the margins, are now dangerous because the elites no longer have a viable counterargument. And so these dissidents must be silenced.
“What’s so specifically important about this is that in a period of growing political radicalization among young people, among workers, they start to look for oppositional information, they become interested in socialism, revolution, terms like ‘equality,’ those terms which previously would bring thousands of readers to the World Socialist Web Site, now were bringing no readers to the World Socialist Web Site,” North said. “In other words, they were setting up a quarantine between those who may be interested in our site and the WSWS. From being a bridge, Google was becoming a barrier, a guard preventing access to our site.”
The internet, with its ability to reach across international boundaries, is a potent tool for connecting workers across the earth who are fighting the same enemy—corporate capitalism. And control of the internet, the elites know, is vital to suppress information and consciousness.
“There is no national solution to the problems of American capitalism,” North said. “The effort of the United States is to overcome this through a policy of war. Because what, ultimately, is imperialism? The inability to solve the problems of the nation-state within national borders drives the policy of war and conquest. That is what is emerging. Under conditions of war, the threat of war, conditions of growing and immeasurable inequality, democracy cannot survive. The tendency now is the suppression of democracy. And just as there is no national solution for capitalism, there is no national solution for the working class.”
“War is not an expression of the strength of the system,” North said. “It is an expression of profound and deep crisis. Trotsky said in the Transitional Program: ‘The ruling elites toboggan with eyes closed toward catastrophe.’ In 1939, they went to war, as in 1914, aware of the potentially disastrous consequences. Certainly, in 1939, they knew what the consequences of war were: War brings revolution. But they could not see a way out. The global problems which exist can only be solved in one of two ways: the capitalist, imperialist solution is war and […] fascism. The working-class solution is socialist revolution. This is, I think, the alternative we’re confronted with. So, the question that has come up, in the broadest sense, [is] what is the answer to the problems we face? Building a revolutionary party.”
“There is going to be, and there is already unfolding, massive social struggles,” North said. “The question of social revolution is not utopian. It is a process that emerges objectively out of the contradictions of capitalism. I think the argument can be made—and I think we made this argument—that really, since 2008, we have been witnessing an acceleration of crisis. It has never been solved, and, indeed, the massive levels of social inequality are themselves not the expression of a healthy but [instead] a deeply diseased socioeconomic order. It is fueling, at every level, social opposition. Of course, the great problem, then, is overcoming the legacy of political confusion, produced, as a matter of fact, by the defeats and the betrayals of the 20th century: the betrayal of the Russian Revolution by Stalinism; the betrayals of the working class by social democracy; the subordination of the working class in the United States to the Democratic Party. These are the critical issues and lessons that have to be learned. The education of the working class in these issues, and the development of perspective, is the most critical point … the basic problem is not an absence of courage. It is not an absence of the desire to fight. It is an absence of understanding.”
“Socialist consciousness must be brought into the working class,” North said. “There is a working class. That working class is open now and receptive to revolutionary ideas. Our challenge is to create the conditions. The workers will not learn this in the universities. The Marxist movement, the Trotskyist movement, must provide the working class with the intellectual, cultural tools that it requires, so that it understands what must be done. It will provide the force, it will provide the determination, the emotional and passionate fuel of every revolutionary movement is present. But what it requires is understanding. And we will, and we are seeking to defend internet freedom because we want to make use of this medium, along with others, to create the conditions for this education and revival of revolutionary consciousness to take place.”
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