https://www.counterpunch.org/2018/03/27/insect-decimation-upstages-global-warming/
Insect Decimation Upstages Global Warming
Everybody’s heard about global warming. It is one of the most advertised existential events of all time. Who isn’t aware? However, there’s a new kid on the block. An alarming loss of insects will likely take down humanity before global warming hits maximum velocity.
For the immediate future, the Paris Accord is riding the wrong horse, as global warming is a long-term project compared to the insect catastrophe happening right now! Where else is found 40% to 90% species devastation?
The worldwide loss of insects is simply staggering with some reports of 75% up to 90%, happening much faster than the paleoclimate record rate of the past five major extinction events. It is possible that some insect species may already be close to total extinction!
It’s established that species evolve and then go extinct over thousands and millions of years as part of nature’s course, but the current rate of devastation is simply “off the charts, and downright scary.”
Without any doubt, it is difficult to imagine how humanity survives without insects, which are dropping dead in bunches right before our eyes. For proof, how many insect splats do people clean off windshields nowadays? Not many…. How many fireflies do children chase at night? Not many….
Several naturalists and environmental writers believe the massive loss of insects has everything to do with three generations of industrialized farming and the vast tide of poisons pouring over the landscape year-after-year, especially since the end of WWII. Ours is the first-ever pesticide-based agricultural society. Dreadfully, it’s an experiment that is going dead wrong… all of a sudden!
Insects are basic to thousands of food chains; for example, the disappearance of Britain’s farmland birds by over 50% in 40 years. Additionally, North America and Europe species of birds like larks, swallows, and swifts that feast on flying insects have plummeted.
But, these are only a few of many, many recorded examples of massive numbers of wildlife dropping dead right before our eyes.
Significantly, insects are the primary source for ecosystem creation and support. The world literally crumbles apart without mischievous burrowing, forming new soil, aerating soil, pollinating food crops, etc. Nutrition for humans happens because insects pollinate.
One of the world’s best and oldest entomological resources is Krefeld Entomological Society (est. 1905) tracking insect abundance at more than 100 nature reserves. They first noticed a significant drop off of insects in 2013 when the total mass of catch fell by 80%. Again, in 2014 the numbers were just as low. Subsequently, the society discovered huge declines in several observation sites throughout Western Europe.
For example, Krefeld data for hoverflies, a pollinator often mistaken for a bee, registered 17,291 hoverflies from 143 species trapped in a reserve in 1989. Whereas by 2014 at the same location, 2,737 individuals from 104 species, down 84%. (Source: Gretchen Vogel, Where Have All The Insects Gone? Science Magazine, May 10, 2017)
Down Under in Australia anecdotal evidence similarly shows an unusual falloff of insect populations. For example, Jack Hasenpusch, an entomologist and owner of the Australian Insect Farm collects swarms of wild insects but now says: “I’ve been wondering for the last few years why some of the insects have been dropping off … This year has really taken the cake with the lack of insects, it’s left me dumbfounded, I can’t figure out what’s going on.” (Source: Mark Rigby, Insect Population Decline Leaves Australian Scientists Scratching For Solutions, ABC Far North, Feb. 23, 2018)
Concerned, Mr. Hasenpusch talked to entomologists in Sydney, Brisbane, Perth, New Caledonia, and Italy. All of them related similar experiences.
According to entomologist Dr. Cameron Webb / University of Sydney, researchers around the world widely acknowledge the problem of insect decline but are at a loss to explain the causes.
Obviously, something dreadful is suddenly happening throughout the entire biosphere. The insect catastrophe is a relatively new phenomenon that has caught society unaware, blindsided. Interestingly, 97% of the Animal Kingdom consists of invertebrates such as insects, crabs, lobsters, clams, octopuses, jellyfish, and worms, etc.
Scientists have been noticing the problem for some time now, but widespread public knowledge is simply not there. Jürgen Deckert, insect custodian at the Berlin Natural History Museum is worried that “there’s a risk we will only really take notice once it is too late.” (Source: Christian Schwägerl, What’s Causing the Sharp Decline in Insects, and Why It Matters, YaleEnvironment360, July 6, 2012)
The Senckenberg Entomological Institute/Frankfurt recorded a 40% decline in butterfly and Burnet moth species over a period of decades.
A Stanford University global index developed by Rodlfo Dirzo showed a 45% decline for invertebrates over four decades. Of 3,623 terrestrial invertebrate species on the International Union for Conservation of Nature Red List, 42% are classified as threatened with extinction.
The Zoological Society of London in 2012 published a major survey concluding that many insect populations are in severe decline. And in both the U.S. and Europe researchers have recorded 40% declines in bee populations because of colony collapse disorder and sharp losses of monarch butterflies.
“Of particular concern is the widespread use of pesticides and their impact on non-target species. Many conservationists view a special class of pesticides called neonicotinoids — used over many years in Europe until a partial ban in 2013 — as the prime suspect for insect losses… “There are many indications that what we see is the result of a widespread poisoning of our landscape,” says Leif Miller, director general of the German chapter of Bird Life International,” Ibid.
Widespread poisoning of ecosystems is the norm in modern day society. “Ours is a poisoned planet, … This explosion in chemical use and release has all happened so rapidly that most people are blissfully unaware of its true magnitude and extent, or of the dangers it now poses to us all as well as to future generations for centuries to come.” (Source: Julian Cribb, Surviving the 21st Century, Springer Nature, Switzerland, 2017, page 104)
“Most people are blissfully unaware” may be a blessing in disguise as the angst, dread, and uneasiness that knowledge of this horrendous crisis brings is the root cause of severe bouts of sleeplessness along with difficult spells of deep depression.
Friday, March 30, 2018
SC162-6
https://www.theorganicprepper.com/3-recent-events-that-could-send-the-us-hurtling-toward-wwiii/
3 Recent Events That Could Send the US Hurtling Toward World War III
Recently, the news has been all abuzz with teen activists who want to take away our guns but refuse to use clear backpacks, the Facebook privacy scandal, and how someone bit Beyonce in the face. But there are three recent events that aren’t getting much press which tell us it is entirely possible that we could be headed toward World War III at worst and toward an economic collapse at best.
During the election, it really seemed as though Hillary Clinton as president would be a much more likely path to World War III. She even gloated of the actions she planned to take that would have led directly and immediately to war. Donald Trump as president seemed less likely to get us into a war with Russia, but it appears the tides may have turned back in that direction.
#1) The Trade Tariffs
We’re already at financial war with China due to punitive trade tariffs that our governments are instituting on one another. President Trump wants to rebalance global trade in America’s favor, and China isn’t going to go down without a fight. Here’s more information on the list of tariffs the US wants to charge for Chinese merchandise and the retaliatory list from China.
The last time we were involved in a major trade war, the Great Depression happened, according to an economics expert for CNN.
America’s last trade war exacerbated the Great Depression in the 1930s, when unemployment rose to 25%. Claiming it was protecting American jobs, Congress passed the Smoot-Hawley Act in 1930. The original bill was meant to protect farmers. But to build political support, many lawmakers asked for tariffs — or taxes — on all sorts of goods in exchange for their vote.
Several nations, such as Canada, slapped steep tariffs — or taxes — on US goods shipped and sold abroad. For example, US exports of eggs to Canada fell to 7,900 in 1932 from 919,000 in 1929, according to Doug Irwin, a Dartmouth professor and former trade adviser to President Reagan.
The result: US imports fell 40% in the two years after Smoot-Hawley. Banks shuttered. Unemployment shot up. Surely, there were a litany of factors at play. But economists widely agree Smoot-Hawley made the Great Depression much worse than otherwise. (source)
And what happened at the end of the Great Depression? World War II happened, and this ended the unemployment and resulted in a spending frenzy that pumped up the economy. There’s always an increase in the GDP during wartime due to defense spending. But that is one hell of a bad way to fix the economy, don’t you think?
#2) The PetroYuan
As of Monday, March 26th, the US has lost petrodollar status. The petrodollar now has competition in the form of the petroyuan. What this means is that previously, the only way anyone in the world could buy oil was to use US dollars to do so. This kept the value of our currency high. But now, Russia and China are buying oil using the yuan. Others may soon follow because the United States has ticked off a majority of the planet in the past century.
What does this mean for Americans? Inflation. Major inflation. If our dollar is worth less on the global scale, it means that anything we import is going to cost more. If you want the super-detailed economic explanation, this article and video will provide the in-depth info you want on the history and potential collapse of the petrodollar.
Many articles have been written about the possibility that the United States will go to war to protect the petrodollar status. This one is a good read. For a quick explanation, watch this video.
#3) Kicking Out the Russian Diplomats
We also kicked 60 Russian Diplomats out of the United States because Russia was accused of poisoning their own spy on British soil.
Trump took the action after the US joined the United Kingdom in accusing Russia of attempting earlier this month to murder a former Russian double agent and his daughter using a nerve agent in the town of Salisbury, England. The action comes just 11 days after the Trump administration leveled the first sanctions against Russia for its interference in the 2016 US presidential election.
“The United States takes this action in conjunction with our NATO allies and partners around the world in response to Russia’s use of a military-grade chemical weapon on the soil of the United Kingdom, the latest in its ongoing pattern of destabilizing activities around the world,” White House press secretary Sarah Sanders said in a statement. (source)
Russia, the world’s favorite scapegoat recently, denies responsibility for the poisoning.
“It’s complete drivel, rubbish, nonsense that somebody in Russia would allow themselves to do such a thing ahead of elections and the World Cup,” Putin told supporters after winning a fourth term as president.
“We have destroyed all chemical weapons,” he added, rejecting Britain’s claim that only Moscow could be behind the nerve agent attack on former double agent Sergei Skripal and his daughter Yulia. (source)
As for the dozens of Russian diplomats expelled from countries around the world, Russia has promised a response.
RIA Novosti reports an unnamed foreign ministry official protested the decision by EU, NATO nations to expel envoys, and confirmed that Russia will respond to each country expelling diplomats, warning that the “expulsions won’t go unanswered.”
“Unfriendly” action won’t be left unanswered.
U.K.’s allies are “blindly following” principle of Euro-Atlantic unity at the expense of common sense.
Additionally, Russia’s ambassador to Washington, Anatoly Antonov, said that, with regard to the US response, “US only understand force.“
“I mentioned in my statement in the State Department that I consider these actions counterproductive,” Antonov said.
“I said that the United States took a very bad step by cutting what very little still remains in terms of Russian-American relations.” (source)
Whether Russia was responsible for the poisoning of their former agent or not, this incident and the response could lead to…you guessed it…war.
President Trump Seems to be Building a War Cabinet
If Russia and China decide to team up, it’s a safe bet they won’t just be making passive aggressive comments about the US. We can look for a brutal and decisive attack. Whether the United States strikes first or gets hit first would be the only thing in question.
Whatever the case, it looks like the White House is expecting war.
There was more upheaval in Washington DC last week when President Trump replaced his National Security Advisor. Many people were shocked when Trump booted H.R. McMaster and replaced him with an avid Warhawk, John Bolton.
“I am pleased to announce that, effective 4/9/18, @AmbJohnBolton will be my new National Security Advisor. I am very thankful for the service of General H.R. McMaster who has done an outstanding job & will always remain my friend. There will be an official contact handover on 4/19.”
“The two have been discussing this for some time. The timeline was expedited as they both felt it was important to have the new team in place, instead of constant speculation,” a White House official said. “This was not related to any one moment or incident, rather it was the result of ongoing conversations between the two.” (source)
John Bolton ranks up there on my List of Really Bad Choices along with Jeff Sessions and Mike Pompeo. Bolton served as a U.N. ambassador under President George W. Bush. He has openly been a supporter of aggressive military actions for decades. With former head of the CIA Mike Pompeo, these two are bound to lead us into a bloody and brutal war with…well, just about everyone.
It is no coincidence that next in line for Donald Trump’s secretary of state position is Pompeo himself. Together, Bolton and Pompeo will be able to advise Trump on anti-North Korean and anti-Iranian platforms so hawkish there is no telling what’s to come (though we have a fairly decent idea).
As some of you may know, John Bolton’s hawkishness has already led to some of the most despicable foreign policy agendas of our generation. (source)
Just to give you an idea of Bolton’s thought processes, check out his 2015 op-ed for the New York Times, titled, “To Stop Iran’s Bomb, Bomb Iran” which was followed by a recent op-ed for the Wall Street Journal called, “The Legal Case For Striking North Korea First.” Learn more about the world according to John Bolton in this article, littered with horrifying quotes right from the horse’s mouth.
So, while it seemed as though we were moving forward when Kim Jong Un agreed to talks with President Trump about giving up his nukes, we’ve just moved 10 steps back with this new “war cabinet.” And that’s exactly what Pat Buchanan, advisor to three presidents and syndicated columnist has called it.
President Donald Trump seems to be creating a war cabinet.
Trump himself has pledged to walk away from the Iran nuclear deal — “the worst deal ever” — and reimpose sanctions in May.
His new national security adviser John Bolton, who wrote an op-ed titled “To Stop Iran’s Bomb, Bomb Iran,” has called for preemptive strikes and “regime change.”
Secretary of State-designate Mike Pompeo calls Iran “a thuggish police state,” a “despotic theocracy,” and “the vanguard of a pernicious empire that is expanding its power and influence across the Middle East.”
Trump’s favorite Arab ruler, 32-year-old Saudi Prince Mohammed bin Salman, calls Iran’s Ayatollah Khamenei “the Hitler of the Middle East.”
Bibi Netanyahu is monomaniacal on Iran, calling the nuclear deal a threat to Israel’s survival and Iran “the greatest threat to our world.”
U.N. Ambassador Nikki Haley echoes them all. (source)
Do you want a war? Because this is how you get a war.
Are you nervous yet?
Are we on the cusp of World War III? This has been a question I’ve asked numerous times recently for numerous reasons, but it sure seems like all the game pieces are being moved into place on the chessboard.
We have a cabinet staffed with warmongers.
We have a trade war with China.
We ticked off Russia more than once.
We’ve lost petrodollar status.
In the past, America has “resolved” its economic problems by going to war. Will this time be any different?
3 Recent Events That Could Send the US Hurtling Toward World War III
Recently, the news has been all abuzz with teen activists who want to take away our guns but refuse to use clear backpacks, the Facebook privacy scandal, and how someone bit Beyonce in the face. But there are three recent events that aren’t getting much press which tell us it is entirely possible that we could be headed toward World War III at worst and toward an economic collapse at best.
During the election, it really seemed as though Hillary Clinton as president would be a much more likely path to World War III. She even gloated of the actions she planned to take that would have led directly and immediately to war. Donald Trump as president seemed less likely to get us into a war with Russia, but it appears the tides may have turned back in that direction.
#1) The Trade Tariffs
We’re already at financial war with China due to punitive trade tariffs that our governments are instituting on one another. President Trump wants to rebalance global trade in America’s favor, and China isn’t going to go down without a fight. Here’s more information on the list of tariffs the US wants to charge for Chinese merchandise and the retaliatory list from China.
The last time we were involved in a major trade war, the Great Depression happened, according to an economics expert for CNN.
America’s last trade war exacerbated the Great Depression in the 1930s, when unemployment rose to 25%. Claiming it was protecting American jobs, Congress passed the Smoot-Hawley Act in 1930. The original bill was meant to protect farmers. But to build political support, many lawmakers asked for tariffs — or taxes — on all sorts of goods in exchange for their vote.
Several nations, such as Canada, slapped steep tariffs — or taxes — on US goods shipped and sold abroad. For example, US exports of eggs to Canada fell to 7,900 in 1932 from 919,000 in 1929, according to Doug Irwin, a Dartmouth professor and former trade adviser to President Reagan.
The result: US imports fell 40% in the two years after Smoot-Hawley. Banks shuttered. Unemployment shot up. Surely, there were a litany of factors at play. But economists widely agree Smoot-Hawley made the Great Depression much worse than otherwise. (source)
And what happened at the end of the Great Depression? World War II happened, and this ended the unemployment and resulted in a spending frenzy that pumped up the economy. There’s always an increase in the GDP during wartime due to defense spending. But that is one hell of a bad way to fix the economy, don’t you think?
#2) The PetroYuan
As of Monday, March 26th, the US has lost petrodollar status. The petrodollar now has competition in the form of the petroyuan. What this means is that previously, the only way anyone in the world could buy oil was to use US dollars to do so. This kept the value of our currency high. But now, Russia and China are buying oil using the yuan. Others may soon follow because the United States has ticked off a majority of the planet in the past century.
What does this mean for Americans? Inflation. Major inflation. If our dollar is worth less on the global scale, it means that anything we import is going to cost more. If you want the super-detailed economic explanation, this article and video will provide the in-depth info you want on the history and potential collapse of the petrodollar.
Many articles have been written about the possibility that the United States will go to war to protect the petrodollar status. This one is a good read. For a quick explanation, watch this video.
#3) Kicking Out the Russian Diplomats
We also kicked 60 Russian Diplomats out of the United States because Russia was accused of poisoning their own spy on British soil.
Trump took the action after the US joined the United Kingdom in accusing Russia of attempting earlier this month to murder a former Russian double agent and his daughter using a nerve agent in the town of Salisbury, England. The action comes just 11 days after the Trump administration leveled the first sanctions against Russia for its interference in the 2016 US presidential election.
“The United States takes this action in conjunction with our NATO allies and partners around the world in response to Russia’s use of a military-grade chemical weapon on the soil of the United Kingdom, the latest in its ongoing pattern of destabilizing activities around the world,” White House press secretary Sarah Sanders said in a statement. (source)
Russia, the world’s favorite scapegoat recently, denies responsibility for the poisoning.
“It’s complete drivel, rubbish, nonsense that somebody in Russia would allow themselves to do such a thing ahead of elections and the World Cup,” Putin told supporters after winning a fourth term as president.
“We have destroyed all chemical weapons,” he added, rejecting Britain’s claim that only Moscow could be behind the nerve agent attack on former double agent Sergei Skripal and his daughter Yulia. (source)
As for the dozens of Russian diplomats expelled from countries around the world, Russia has promised a response.
RIA Novosti reports an unnamed foreign ministry official protested the decision by EU, NATO nations to expel envoys, and confirmed that Russia will respond to each country expelling diplomats, warning that the “expulsions won’t go unanswered.”
“Unfriendly” action won’t be left unanswered.
U.K.’s allies are “blindly following” principle of Euro-Atlantic unity at the expense of common sense.
Additionally, Russia’s ambassador to Washington, Anatoly Antonov, said that, with regard to the US response, “US only understand force.“
“I mentioned in my statement in the State Department that I consider these actions counterproductive,” Antonov said.
“I said that the United States took a very bad step by cutting what very little still remains in terms of Russian-American relations.” (source)
Whether Russia was responsible for the poisoning of their former agent or not, this incident and the response could lead to…you guessed it…war.
President Trump Seems to be Building a War Cabinet
If Russia and China decide to team up, it’s a safe bet they won’t just be making passive aggressive comments about the US. We can look for a brutal and decisive attack. Whether the United States strikes first or gets hit first would be the only thing in question.
Whatever the case, it looks like the White House is expecting war.
There was more upheaval in Washington DC last week when President Trump replaced his National Security Advisor. Many people were shocked when Trump booted H.R. McMaster and replaced him with an avid Warhawk, John Bolton.
“I am pleased to announce that, effective 4/9/18, @AmbJohnBolton will be my new National Security Advisor. I am very thankful for the service of General H.R. McMaster who has done an outstanding job & will always remain my friend. There will be an official contact handover on 4/19.”
“The two have been discussing this for some time. The timeline was expedited as they both felt it was important to have the new team in place, instead of constant speculation,” a White House official said. “This was not related to any one moment or incident, rather it was the result of ongoing conversations between the two.” (source)
John Bolton ranks up there on my List of Really Bad Choices along with Jeff Sessions and Mike Pompeo. Bolton served as a U.N. ambassador under President George W. Bush. He has openly been a supporter of aggressive military actions for decades. With former head of the CIA Mike Pompeo, these two are bound to lead us into a bloody and brutal war with…well, just about everyone.
It is no coincidence that next in line for Donald Trump’s secretary of state position is Pompeo himself. Together, Bolton and Pompeo will be able to advise Trump on anti-North Korean and anti-Iranian platforms so hawkish there is no telling what’s to come (though we have a fairly decent idea).
As some of you may know, John Bolton’s hawkishness has already led to some of the most despicable foreign policy agendas of our generation. (source)
Just to give you an idea of Bolton’s thought processes, check out his 2015 op-ed for the New York Times, titled, “To Stop Iran’s Bomb, Bomb Iran” which was followed by a recent op-ed for the Wall Street Journal called, “The Legal Case For Striking North Korea First.” Learn more about the world according to John Bolton in this article, littered with horrifying quotes right from the horse’s mouth.
So, while it seemed as though we were moving forward when Kim Jong Un agreed to talks with President Trump about giving up his nukes, we’ve just moved 10 steps back with this new “war cabinet.” And that’s exactly what Pat Buchanan, advisor to three presidents and syndicated columnist has called it.
President Donald Trump seems to be creating a war cabinet.
Trump himself has pledged to walk away from the Iran nuclear deal — “the worst deal ever” — and reimpose sanctions in May.
His new national security adviser John Bolton, who wrote an op-ed titled “To Stop Iran’s Bomb, Bomb Iran,” has called for preemptive strikes and “regime change.”
Secretary of State-designate Mike Pompeo calls Iran “a thuggish police state,” a “despotic theocracy,” and “the vanguard of a pernicious empire that is expanding its power and influence across the Middle East.”
Trump’s favorite Arab ruler, 32-year-old Saudi Prince Mohammed bin Salman, calls Iran’s Ayatollah Khamenei “the Hitler of the Middle East.”
Bibi Netanyahu is monomaniacal on Iran, calling the nuclear deal a threat to Israel’s survival and Iran “the greatest threat to our world.”
U.N. Ambassador Nikki Haley echoes them all. (source)
Do you want a war? Because this is how you get a war.
Are you nervous yet?
Are we on the cusp of World War III? This has been a question I’ve asked numerous times recently for numerous reasons, but it sure seems like all the game pieces are being moved into place on the chessboard.
We have a cabinet staffed with warmongers.
We have a trade war with China.
We ticked off Russia more than once.
We’ve lost petrodollar status.
In the past, America has “resolved” its economic problems by going to war. Will this time be any different?
SC162-5
https://www.peakprosperity.com/blog/113894/future-aint-what-used
The Future Ain't What It Used To Be
Looks like we're in for a much rockier ride than many expect
This marks our our 10th year of doing this. And by “this”, we mean using data, logic and reason to support the very basic conclusion that infinite growth on a finite planet is impossible.
Surprisingly, this simple, rational idea -- despite its huge and fast-growing pile of corroborating evidence -- still encounters tremendous pushback from society. Why? Because it runs afoul of most people's deep-seated belief systems.
Our decade of experience delivering this message has hammered home what behavioral scientists have been telling us for years -- that, with rare exceptions, we humans are not rational. We're rationalizers. We try to force our perception of reality to fit our beliefs; rather than the other way around.
Which is why the vast amount of grief, angst and encroaching dread that most people feel in western cultures today is likely due to the fact that, deep down, whether we're willing to admit it to ourselves or not, everybody already knows the truth: Our way of life is unsustainable.
In our hearts, we fear that someday, possibly soon, our comfy way of life will be ripped away; like a warm blanket snatched off of our sleeping bodies on a cold night.
The simple reality is that society's hopes for a "modern consumer-class lifestyle for all" are incompatible with the accelerating imbalance between the (still growing) human population and the (increasingly depleting) planet's natural resources. Basic math and physics tell us that the Earth's ecosystems can't handle the load for much longer.
The only remaining question concerns how fast the adjustment happens. Will the future be defined by a "slow burn", one that steadily degrades our living standards over generations? Or will we experience a sudden series of sharp shocks that plunge the world into chaos and conflict?
It’s hard to say. As Yogi Berra famously quipped, “It’s tough to make predictions, especially about the future.” So, it's left to us to remain open-minded and flexible as we draw up our plans for how we’ll personally persevere through the coming years of change.
But even while the specifics about the future elude us today, “predicting” the macro trends most likely to influence the coming decades is very doable:
Rising trends:
Populism in politics
Federal debt levels
Geopolitical tensions
Interest rates
Falling trends:
Funding levels for pensions
The numbers of insects world wide
Confidence in the future among the younger generations
Wealth and income equality
These two lists bring to mind another great Yogi Berra quote:
No, the future certainly isn’t what it used to be.
Once it was a place in which you could invest towards your hopes and dreams, confident that conditions would be better for your children than they were for you.
That’s no longer the case. The defining trends in play are all working to degrade, rather than enhance, our future prospects.
Which is why it's little surprise that millennials aren’t saving for retirement. Here's the dim view many of them hold:
“In general, I regard the future as a multitude of possibilities, but most of them don't look good,” Elias Schwartzman, 29, a musician, told me. “When I'm at retirement age, around 2050, I think it's possible we'll have seen a breakdown of modern society.” Schwartzman said that he saw the future as encompassing one of two possibilities: an apocalyptic “total breakdown of industrial society,” or “capitalism morphing into a complete plutocracy.” “I think the argument can be made that we're well on the way to that reality,” he added.
Wood, 32, a political consultant, told me via Twitter that she felt similarly. “I don’t think the world can sustain capitalism for another decade,” she explained. “It’s socialism or bust. We will literally start having resource wars that will kill us all if we don’t accept that the free market will absolutely destroy us within our lifetime [if] we don’t start fighting its hegemony,” she added.
What the older generations don't yet understand is that the economic and social models that rewarded them so richly well are not doing the same for younger folks. In fact, those old models are visibly breaking down. And confidence in them is failing, too.
Younger people are increasingly seeing that the model of extractive, exponential growth (which is often errantly termed “capitalism” when, as practiced, it should be termed “corporate socialism”) has no future.
But regardless of age, anyone with an open mind should be able to identify that something is wrong with the story of "endless growth". The evidence is pretty much everywhere we look:
If we're willing to entertain the possibility that infinite exponential growth is impossible, and we extrapolate from there, what sort of economic trajectory would we expect to see as growth peters out? Exactly the sort we see in the above chart.
Sociologically, we’d expect people to be nervous, anxious, and scared as their dominant cultural narrative is increasingly revealed to be no longer viable. Ask yourself: is the world becoming calmer or more volatile? The rash of mass shootings, anti-establishment election victories, prescription drug epidemics, and returning nuclear war fears make the answer sadly obvious.
Biophysically, we'd expect to see key resources and species populations depleting at alarming rates -- which we are. This is due to diminishing returns: nearly every planetary resource is getting harder and more expensive to obtain. Mars anyone?
In a desperate attempt to mask the costs of of slower and lower growth, the world's central banking cartel has deployed its “one weird trick”: lowering interest rates to historic rock-bottom levels. This has allowed for more debt to be crammed into the system for a few more years, to keep the mirage of the party continuing for just a little bit longer.
Because of that hail Mary, we have ended up in this very bizarre situation where our debt has been growing at twice the rate of our income -- which clearly will end up in a solvency crisis:
Perversely, the central banks are doing everything in their power to defend and propagate this unsustainable status quo, even though fourth grade math tells us it will surely end in ruin. How is it possible that this very simple observation eludes so many of those in positions of power? You’d have to be an intellectual yet idiot to hold that view.
In fact, we find that when we strip out the US government's deficit spending from GDP, there actually hasn’t been any economic growth at all for years:
The US has been going deeper and deeper in debt simply to maintain the appearance of "economic growth". This whole illusion is being limped along for just a little while longer.
For what purpose? And why? Both excellent questions without a good answer.
Presumably smart people in power get this, too, although they'll never admit it publicly so as not to spook the herd. Looking at the number of very well-connected and wealthy elites busily arranging bolt-hole properties to retreat to 'just in case', they're already well ahead of the general public in preparing for the tribulations to come.
All of which brings us to the very real prospect of war, as that has long been the favored path of politicians seeking to deflect public ire from their own policy failures. I worry that a major military conflict is dangerously close at hand. The ridiculous UK government narrative around the Skripal poisonings (which remains utterly illogical from start to finish) used to seriously degrade relationships between Russia and NATO has all the hallmarks of contrived political operation.
Added to the brewing geopolitical risk is the very likely prospect of the bursting of The Mother Of All Bubbles. When (not if, sadly) that happens, it will be truly catastrophic to every financial market in the world, and especially damaging to the western economies.
So the race is on. Will the bubble burst first? Or can the political class engineer a massive military distraction beforehand?
Regardless of who “wins” that race, you need to be physically, emotionally and financially prepared for these outcomes. PeakProsperity.com's (free) What Should I Do? guide is an essential resource for those not yet fully prepped, as well as is our Self-Assessment.
Yes. Things are that serious.
If you're not yet an enrolled subscriber to PeakProsperity.com, please consider becoming one now. 2018 is looking to be the shoo-in candidate for "The Year Everything Changed". Interest rates are finally rising. Volatility is finally returning to the financial markets. Oil prices are threatening to finally return to the critical $70/bbl range. The populace is finally waking up to the extent of the abuse perpetrated on their safety, personal data, and civil liberties. The crypto bubble has finally burst.
So many long-term trends that have defined the (false) sense of 'prosperity' over the past eight years are ending now. What ensues will be fast-paced disruption....
The Future Ain't What It Used To Be
Looks like we're in for a much rockier ride than many expect
This marks our our 10th year of doing this. And by “this”, we mean using data, logic and reason to support the very basic conclusion that infinite growth on a finite planet is impossible.
Surprisingly, this simple, rational idea -- despite its huge and fast-growing pile of corroborating evidence -- still encounters tremendous pushback from society. Why? Because it runs afoul of most people's deep-seated belief systems.
Our decade of experience delivering this message has hammered home what behavioral scientists have been telling us for years -- that, with rare exceptions, we humans are not rational. We're rationalizers. We try to force our perception of reality to fit our beliefs; rather than the other way around.
Which is why the vast amount of grief, angst and encroaching dread that most people feel in western cultures today is likely due to the fact that, deep down, whether we're willing to admit it to ourselves or not, everybody already knows the truth: Our way of life is unsustainable.
In our hearts, we fear that someday, possibly soon, our comfy way of life will be ripped away; like a warm blanket snatched off of our sleeping bodies on a cold night.
The simple reality is that society's hopes for a "modern consumer-class lifestyle for all" are incompatible with the accelerating imbalance between the (still growing) human population and the (increasingly depleting) planet's natural resources. Basic math and physics tell us that the Earth's ecosystems can't handle the load for much longer.
The only remaining question concerns how fast the adjustment happens. Will the future be defined by a "slow burn", one that steadily degrades our living standards over generations? Or will we experience a sudden series of sharp shocks that plunge the world into chaos and conflict?
It’s hard to say. As Yogi Berra famously quipped, “It’s tough to make predictions, especially about the future.” So, it's left to us to remain open-minded and flexible as we draw up our plans for how we’ll personally persevere through the coming years of change.
But even while the specifics about the future elude us today, “predicting” the macro trends most likely to influence the coming decades is very doable:
Rising trends:
Populism in politics
Federal debt levels
Geopolitical tensions
Interest rates
Falling trends:
Funding levels for pensions
The numbers of insects world wide
Confidence in the future among the younger generations
Wealth and income equality
These two lists bring to mind another great Yogi Berra quote:
No, the future certainly isn’t what it used to be.
Once it was a place in which you could invest towards your hopes and dreams, confident that conditions would be better for your children than they were for you.
That’s no longer the case. The defining trends in play are all working to degrade, rather than enhance, our future prospects.
Which is why it's little surprise that millennials aren’t saving for retirement. Here's the dim view many of them hold:
“In general, I regard the future as a multitude of possibilities, but most of them don't look good,” Elias Schwartzman, 29, a musician, told me. “When I'm at retirement age, around 2050, I think it's possible we'll have seen a breakdown of modern society.” Schwartzman said that he saw the future as encompassing one of two possibilities: an apocalyptic “total breakdown of industrial society,” or “capitalism morphing into a complete plutocracy.” “I think the argument can be made that we're well on the way to that reality,” he added.
Wood, 32, a political consultant, told me via Twitter that she felt similarly. “I don’t think the world can sustain capitalism for another decade,” she explained. “It’s socialism or bust. We will literally start having resource wars that will kill us all if we don’t accept that the free market will absolutely destroy us within our lifetime [if] we don’t start fighting its hegemony,” she added.
What the older generations don't yet understand is that the economic and social models that rewarded them so richly well are not doing the same for younger folks. In fact, those old models are visibly breaking down. And confidence in them is failing, too.
Younger people are increasingly seeing that the model of extractive, exponential growth (which is often errantly termed “capitalism” when, as practiced, it should be termed “corporate socialism”) has no future.
But regardless of age, anyone with an open mind should be able to identify that something is wrong with the story of "endless growth". The evidence is pretty much everywhere we look:
If we're willing to entertain the possibility that infinite exponential growth is impossible, and we extrapolate from there, what sort of economic trajectory would we expect to see as growth peters out? Exactly the sort we see in the above chart.
Sociologically, we’d expect people to be nervous, anxious, and scared as their dominant cultural narrative is increasingly revealed to be no longer viable. Ask yourself: is the world becoming calmer or more volatile? The rash of mass shootings, anti-establishment election victories, prescription drug epidemics, and returning nuclear war fears make the answer sadly obvious.
Biophysically, we'd expect to see key resources and species populations depleting at alarming rates -- which we are. This is due to diminishing returns: nearly every planetary resource is getting harder and more expensive to obtain. Mars anyone?
In a desperate attempt to mask the costs of of slower and lower growth, the world's central banking cartel has deployed its “one weird trick”: lowering interest rates to historic rock-bottom levels. This has allowed for more debt to be crammed into the system for a few more years, to keep the mirage of the party continuing for just a little bit longer.
Because of that hail Mary, we have ended up in this very bizarre situation where our debt has been growing at twice the rate of our income -- which clearly will end up in a solvency crisis:
Perversely, the central banks are doing everything in their power to defend and propagate this unsustainable status quo, even though fourth grade math tells us it will surely end in ruin. How is it possible that this very simple observation eludes so many of those in positions of power? You’d have to be an intellectual yet idiot to hold that view.
In fact, we find that when we strip out the US government's deficit spending from GDP, there actually hasn’t been any economic growth at all for years:
The US has been going deeper and deeper in debt simply to maintain the appearance of "economic growth". This whole illusion is being limped along for just a little while longer.
For what purpose? And why? Both excellent questions without a good answer.
Presumably smart people in power get this, too, although they'll never admit it publicly so as not to spook the herd. Looking at the number of very well-connected and wealthy elites busily arranging bolt-hole properties to retreat to 'just in case', they're already well ahead of the general public in preparing for the tribulations to come.
All of which brings us to the very real prospect of war, as that has long been the favored path of politicians seeking to deflect public ire from their own policy failures. I worry that a major military conflict is dangerously close at hand. The ridiculous UK government narrative around the Skripal poisonings (which remains utterly illogical from start to finish) used to seriously degrade relationships between Russia and NATO has all the hallmarks of contrived political operation.
Added to the brewing geopolitical risk is the very likely prospect of the bursting of The Mother Of All Bubbles. When (not if, sadly) that happens, it will be truly catastrophic to every financial market in the world, and especially damaging to the western economies.
So the race is on. Will the bubble burst first? Or can the political class engineer a massive military distraction beforehand?
Regardless of who “wins” that race, you need to be physically, emotionally and financially prepared for these outcomes. PeakProsperity.com's (free) What Should I Do? guide is an essential resource for those not yet fully prepped, as well as is our Self-Assessment.
Yes. Things are that serious.
If you're not yet an enrolled subscriber to PeakProsperity.com, please consider becoming one now. 2018 is looking to be the shoo-in candidate for "The Year Everything Changed". Interest rates are finally rising. Volatility is finally returning to the financial markets. Oil prices are threatening to finally return to the critical $70/bbl range. The populace is finally waking up to the extent of the abuse perpetrated on their safety, personal data, and civil liberties. The crypto bubble has finally burst.
So many long-term trends that have defined the (false) sense of 'prosperity' over the past eight years are ending now. What ensues will be fast-paced disruption....
SC162-4
Note the brief comment about autonomous vehicles near the end of this video. They in reality will show themselves to be a pipe dream that will fail, the rest of the info is worth considering too....
https://www.youtube.com/watch?v=zqIt93dDG1M&feature=youtu.be
And this, perhaps a timely fiction movie, with reality in mind? Near the end of the movie as the main character looks down from his plane window and wonders how what he sees below will, end....
https://www.youtube.com/watch?v=UCrBICYM0yM
https://www.youtube.com/watch?v=zqIt93dDG1M&feature=youtu.be
And this, perhaps a timely fiction movie, with reality in mind? Near the end of the movie as the main character looks down from his plane window and wonders how what he sees below will, end....
https://www.youtube.com/watch?v=UCrBICYM0yM
SC162-3
kunstler.com/clusteLFS94387rfuck-nation/not-happy-motoring/
Not So Happy Motoring
It hasn’t been a great month for America’s electric car fantasy. Elon Musk’s Tesla company — the symbolic beating heart of the fantasy — is whirling around the drain with its share price plummeting 22 percent, its bonds downgraded by Moody’s to junk status, a failure to produce its “affordable” ($36,000 — Ha!) Model 3 at commercial scale, a massive recall of earlier S Model sedans for a steering defect, and the spectacular fiery crash in Silicon Valley last week of an X model that may have been operating in automatic mode (the authorities can’t determine that based on what’s left), and which killed the driver.
Oh, and an experimental self-driving Uber car (Volvo brand) ran over and killed a lady crossing the street with her bicycle in Tempe, Arizona, two weeks ago. Don’t blame Elon for that.
There’s a lot to like about electric cars, of course, if, say, you’re a Google executive floating through life in a techno-narcissism bubble, or a Hollywood actor with wooly grandiose notions of saving the planet while simultaneously signaling your wealth and your “green” virtue cred. Teslas supposedly handle beautifully, ride very quietly, have great low-end power, and decent range of over 200 miles. The engine has something like twenty moving parts, is very long-lasting, and is easy to repair or change out if necessary.
Are they actually “green and clean?” Bwaahaaaaa….! Are you kidding? First, there’s the energy embedded in producing the car: mining and smelting the ores, manufacturing the plastics, running the assembly line, etc. That embedded energy amounts to about 22 percent of the energy consumed by the car over a ten-year lifetime. Then there’s the cost of actually powering the car day-by-day. The electricity around the USA is produced mostly by burning coal, natural gas, or by nuclear fission, all of which produce harmful emissions or byproducts. But the illusion that the power just comes out of a plug in the wall (for just pennies a day!) is a powerful one for the credulous public. The cherry-on-top is the fantasy that before much longer all that electric power will come from “renewables,” solar and wind, and we can leave the whole fossil fuel mess behind us. We say that to ourselves as a sort of prayer, and it has exactly that value.
There are at least a couple of other holes in story, big-picture wise. One is that electric mass motoring — switching out the whole liquid fuel fleet for an all-electric fleet — won’t pencil out economically. We probably started the project forty years too late to even be able to test it at scale, because economic events are now moving so quickly in the direction of global austerity that the putative middle-class customer base for electric cars will barely exist in the near future. Americans especially nowadays are so financially stressed that they can’t qualify for car loans — and that is mainly how cars are bought in this land. The industry has strained mightily to bend the rules so that these days it’s even possible to get a seven-year loan for a used car whose collateral value will dissipate long before the loan is paid back. Hard to see how they can take that much further.
The usual answer for that is that you won’t need to own a car because the nation will be served by self-driving electric Uber-style cars-on-demand, which will supposedly require far fewer cars in all. That really doesn’t answer some big questions, such as: how might commuting work in our big metroplex cities? Even if you posit multiple occupancy vehicles, it still represents a whole lot of car trips. Oh, you say, everybody will just work from home. Really? I don’t think so — though I wouldn’t rule out an end to corporate organization of work as we’ve known it, and if that happens, we will be a nation of farmers and artisans again, that is, a World Made By Hand. Also consider, if the car companies only need to make and sell a fraction of the vehicles they sell now, the whole industry will collapse.
Another hole in the story is the universal assumption that the USA must remain a land of mandatory car dependency, hostage to the fiasco of our suburban infrastructure. I understand why we’re attached to it. We spent most of the 20th century building all that shit, and squandered most our wealth on it. It’s comfortably familiar, even if it’s actually a miserable environment for everyday life. But none of those monetary and psychological investments negate the fact that suburbia has outlived its limited and rather perverse usefulness.
We’re so far from having any intelligent public debate about these issues that the events now spooling out will completely blindside the nation.
Not So Happy Motoring
It hasn’t been a great month for America’s electric car fantasy. Elon Musk’s Tesla company — the symbolic beating heart of the fantasy — is whirling around the drain with its share price plummeting 22 percent, its bonds downgraded by Moody’s to junk status, a failure to produce its “affordable” ($36,000 — Ha!) Model 3 at commercial scale, a massive recall of earlier S Model sedans for a steering defect, and the spectacular fiery crash in Silicon Valley last week of an X model that may have been operating in automatic mode (the authorities can’t determine that based on what’s left), and which killed the driver.
Oh, and an experimental self-driving Uber car (Volvo brand) ran over and killed a lady crossing the street with her bicycle in Tempe, Arizona, two weeks ago. Don’t blame Elon for that.
There’s a lot to like about electric cars, of course, if, say, you’re a Google executive floating through life in a techno-narcissism bubble, or a Hollywood actor with wooly grandiose notions of saving the planet while simultaneously signaling your wealth and your “green” virtue cred. Teslas supposedly handle beautifully, ride very quietly, have great low-end power, and decent range of over 200 miles. The engine has something like twenty moving parts, is very long-lasting, and is easy to repair or change out if necessary.
Are they actually “green and clean?” Bwaahaaaaa….! Are you kidding? First, there’s the energy embedded in producing the car: mining and smelting the ores, manufacturing the plastics, running the assembly line, etc. That embedded energy amounts to about 22 percent of the energy consumed by the car over a ten-year lifetime. Then there’s the cost of actually powering the car day-by-day. The electricity around the USA is produced mostly by burning coal, natural gas, or by nuclear fission, all of which produce harmful emissions or byproducts. But the illusion that the power just comes out of a plug in the wall (for just pennies a day!) is a powerful one for the credulous public. The cherry-on-top is the fantasy that before much longer all that electric power will come from “renewables,” solar and wind, and we can leave the whole fossil fuel mess behind us. We say that to ourselves as a sort of prayer, and it has exactly that value.
There are at least a couple of other holes in story, big-picture wise. One is that electric mass motoring — switching out the whole liquid fuel fleet for an all-electric fleet — won’t pencil out economically. We probably started the project forty years too late to even be able to test it at scale, because economic events are now moving so quickly in the direction of global austerity that the putative middle-class customer base for electric cars will barely exist in the near future. Americans especially nowadays are so financially stressed that they can’t qualify for car loans — and that is mainly how cars are bought in this land. The industry has strained mightily to bend the rules so that these days it’s even possible to get a seven-year loan for a used car whose collateral value will dissipate long before the loan is paid back. Hard to see how they can take that much further.
The usual answer for that is that you won’t need to own a car because the nation will be served by self-driving electric Uber-style cars-on-demand, which will supposedly require far fewer cars in all. That really doesn’t answer some big questions, such as: how might commuting work in our big metroplex cities? Even if you posit multiple occupancy vehicles, it still represents a whole lot of car trips. Oh, you say, everybody will just work from home. Really? I don’t think so — though I wouldn’t rule out an end to corporate organization of work as we’ve known it, and if that happens, we will be a nation of farmers and artisans again, that is, a World Made By Hand. Also consider, if the car companies only need to make and sell a fraction of the vehicles they sell now, the whole industry will collapse.
Another hole in the story is the universal assumption that the USA must remain a land of mandatory car dependency, hostage to the fiasco of our suburban infrastructure. I understand why we’re attached to it. We spent most of the 20th century building all that shit, and squandered most our wealth on it. It’s comfortably familiar, even if it’s actually a miserable environment for everyday life. But none of those monetary and psychological investments negate the fact that suburbia has outlived its limited and rather perverse usefulness.
We’re so far from having any intelligent public debate about these issues that the events now spooling out will completely blindside the nation.
Monday, March 26, 2018
SC162-2
http://www.informationclearinghouse.info/49078.htm
What Happened To The West I Was Born In?!
Frankly, I am awed, amazed and even embarrassed. I was born in Switzerland, lived most of my life there, I also visited most of Europe, and I lived in the USA for over 20 years. Yet in my worst nightmares I could not have imagined the West sinking as low as it does now. I mean, yes, I know about the false flags, the corruption, the colonial wars, the NATO lies, the abject subservience of East Europeans, etc. I wrote about all that many times. But imperfect as they were, and that is putting it mildly, I remember Helmut Schmidt, Maggie Thatcher, Reagan, Mitterrand, even Chirac! And I remember what the Canard Enchaîné used to be, or even the BBC. During the Cold War the West was hardly a knight in white shining armor, but still – rule of law did matter, as did at least some degree of critical thinking.
I am now deeply embarrassed for the West. And very, very afraid.
All I see today is a submissive herd lead by true, bona fide, psychopaths (in a clinical sense of the word)
And that is not the worst thing.
The worst thing is the deafening silence, the way everybody just looks away, pretends like “ain’t my business” or, worse, actually takes all this grotesque spectacle seriously. What the fuck is wrong with you people?! Have you all been turned into zombies?! WAKE UP!!!!!!!
Let me carefully measure my words here and tell you the blunt truth.
Since the Neocon coup against Trump the West is now on exactly the same course as Nazi Germany was in, roughly, the mid 1930s.
Oh sure, the ideology is different, the designated scapegoat also. But the mindset is *exactly* the same.
Same causes produce the same effects. But this time around, there are weapons on both sides which make the Dresden Holocaust looks like a minor spark.
So now we have this touching display of “western solidarity” not with UK or the British people, but with the City of London. Now ain’t that touching?!
Let me ask you this: what has been the central feature of Britain’s policies towards Europe, oh, let’s say since the Middle-Ages?
That’s right: starting wars in Europe.
And this time around you think it’s different?
Does: “the best predictor of future behavior is past behavior” somehow not apply to the UK?!
Let me also tell you this: when Napoleon and Hitler attacked Russia she was undergoing deep crises and was objectively weak (really! research it for yourself!). In both cases Russian society was deeply torn by internal contradictions and the time for attack as ideal.
Not today.
So I ask this simple question: do you really want to go to war against a fully united nuclear Russia?
You think that this is hyperbole?
Think again.
The truth is that the situation today is infinitely worse than the Cuban missile crisis. First, during the Cuban missile crisis there were rational people on both side. Today there is NOT ONE SINGLE RATIONAL PERSON LEFT IN A POSITION OF POWER IN THE USA. Not ONE! Second, during the Cuban missile crisis all the new was reporting on was the crisis, the entire planet felt like we were standing at the edge of the abyss.
Today nobody seems to be aware that we are about to go to war, possibly a thermonuclear war, where casualties will be counted in the hundreds of millions.
All because of what?
Because the people of the West have accepted, or don’t even know, that they are ruled by an ugly gang of ignorant, arrogant psychopaths.
At the very least this situation shows this:
Representative democracy does not work.
The rule of law only applies to the weak and poor.
Western values have now been reduced to a sad joke.
Capitalism needs war and a world hegemony to survive.
The AngloZionist Empire is about to collapse, the only open question is how and at what cost.
Right now they are expelling Russian diplomats en masse and they are feeling very strong and manly. Polish and Ukrainian politicians are undergoing a truly historical surge in courage and self-confidence! (hiding, as they do, behind Anglo firepower)
The truth is that this is only the tip of a much bigger iceberg. In reality, crucial expert-level consultations, which are so vitally important between nuclear superpowers, have all but stopped a long time ago. We are down to top level telephone calls. That kind of stuff happens when two sides are about to go to war. For many months now Russia and NATO have made preparations for war in Europe. And Russia is ready. NATO sure ain’t! Oh, they have the numbers and they think they are strong. The truth is that these NATO midgets have no idea of what is about to hit them, when the Russians go to war these NATO statelets won’t even understand what is happening to them. Very rapidly the real action will be left to the USA and Russia. Thus any conflict will go nuclear very fast. And, for the first time in history, the USA will be hit very, very hard, not only in Europe, the Middle-East or Asia, but also on the continental US.
I was born in a Russian military family and I studied Russian and Soviet military affairs all my life. I can absolutely promise you this, please don’t doubt it for one second: Russia will not back down and, if cornered, she will wipe out your entire civilization. The Russians really don’t want war, they fear it (as they should!) and they will do everything to avoid it. But if attacked then expect a response of absolutely devastating violence. Don’t take it from me, take it from Putin who clearly said so himself and who, at least on that issue, is supported by about 95% of the population. From the Eastern Crusades to the Nazi invasion of the Soviet Union, enough is enough, and the Russians will not take one more western attack, especially not one backed by nuclear firepower. Again, please ponder Putin’s words very, very carefully: “what need would we have a world if there is no Russia?“
All that for what? The USA and Russia have NO objective reasons to do anything but to collaborate (the Russians are absolutely baffled the fact the leaders of the USA seem to be completely oblivious to this simple fact). Okay, the City of London does have a lot of reasons to want Russia gone and silent. As Gavin Williamson, the little soy-boy in charge of UK “defense”, so elegantly put it, Russia should “go away and shut up”. Right. Let me tell you – it ain’t happening! Britannia will be turned into a heap of radioactive ashes long before Russian goes away or shuts up. That is simply a fact.
What baffles me is this: do American leaders really want to lose their country in behalf of a small nasty clique of arrogant British pompous asses who think that they still are an Empire? Did you even take a look at Boris Johnson, Theresa May and Gavin Williamson? Are you really ready to die in defense of the interest of these degenerates?!
I don’t get it and nobody in Russia does.
Yeah, I know, all they did is expel some diplomats. And the Russians will do the same. So what? But that’s missing the point!
LOOK NOT WHERE WE ARE BUT WHERE WE ARE HEADING!!
You can get 200,000 anti–gun (sigh, rolleyes) protesters in DC but NOBODY AT ALL ABOUT NUCLEAR WAR?!
What is wrong with you people?!
What happened to the West where I was born in in 1963?
My God, is this really the end of it all?
Am I the only one who sees this slow-motion train-wreck taking us all over the precipice?
If you can, please give a reason to still hope.
Right now I don’t see many....
What Happened To The West I Was Born In?!
Frankly, I am awed, amazed and even embarrassed. I was born in Switzerland, lived most of my life there, I also visited most of Europe, and I lived in the USA for over 20 years. Yet in my worst nightmares I could not have imagined the West sinking as low as it does now. I mean, yes, I know about the false flags, the corruption, the colonial wars, the NATO lies, the abject subservience of East Europeans, etc. I wrote about all that many times. But imperfect as they were, and that is putting it mildly, I remember Helmut Schmidt, Maggie Thatcher, Reagan, Mitterrand, even Chirac! And I remember what the Canard Enchaîné used to be, or even the BBC. During the Cold War the West was hardly a knight in white shining armor, but still – rule of law did matter, as did at least some degree of critical thinking.
I am now deeply embarrassed for the West. And very, very afraid.
All I see today is a submissive herd lead by true, bona fide, psychopaths (in a clinical sense of the word)
And that is not the worst thing.
The worst thing is the deafening silence, the way everybody just looks away, pretends like “ain’t my business” or, worse, actually takes all this grotesque spectacle seriously. What the fuck is wrong with you people?! Have you all been turned into zombies?! WAKE UP!!!!!!!
Let me carefully measure my words here and tell you the blunt truth.
Since the Neocon coup against Trump the West is now on exactly the same course as Nazi Germany was in, roughly, the mid 1930s.
Oh sure, the ideology is different, the designated scapegoat also. But the mindset is *exactly* the same.
Same causes produce the same effects. But this time around, there are weapons on both sides which make the Dresden Holocaust looks like a minor spark.
So now we have this touching display of “western solidarity” not with UK or the British people, but with the City of London. Now ain’t that touching?!
Let me ask you this: what has been the central feature of Britain’s policies towards Europe, oh, let’s say since the Middle-Ages?
That’s right: starting wars in Europe.
And this time around you think it’s different?
Does: “the best predictor of future behavior is past behavior” somehow not apply to the UK?!
Let me also tell you this: when Napoleon and Hitler attacked Russia she was undergoing deep crises and was objectively weak (really! research it for yourself!). In both cases Russian society was deeply torn by internal contradictions and the time for attack as ideal.
Not today.
So I ask this simple question: do you really want to go to war against a fully united nuclear Russia?
You think that this is hyperbole?
Think again.
The truth is that the situation today is infinitely worse than the Cuban missile crisis. First, during the Cuban missile crisis there were rational people on both side. Today there is NOT ONE SINGLE RATIONAL PERSON LEFT IN A POSITION OF POWER IN THE USA. Not ONE! Second, during the Cuban missile crisis all the new was reporting on was the crisis, the entire planet felt like we were standing at the edge of the abyss.
Today nobody seems to be aware that we are about to go to war, possibly a thermonuclear war, where casualties will be counted in the hundreds of millions.
All because of what?
Because the people of the West have accepted, or don’t even know, that they are ruled by an ugly gang of ignorant, arrogant psychopaths.
At the very least this situation shows this:
Representative democracy does not work.
The rule of law only applies to the weak and poor.
Western values have now been reduced to a sad joke.
Capitalism needs war and a world hegemony to survive.
The AngloZionist Empire is about to collapse, the only open question is how and at what cost.
Right now they are expelling Russian diplomats en masse and they are feeling very strong and manly. Polish and Ukrainian politicians are undergoing a truly historical surge in courage and self-confidence! (hiding, as they do, behind Anglo firepower)
The truth is that this is only the tip of a much bigger iceberg. In reality, crucial expert-level consultations, which are so vitally important between nuclear superpowers, have all but stopped a long time ago. We are down to top level telephone calls. That kind of stuff happens when two sides are about to go to war. For many months now Russia and NATO have made preparations for war in Europe. And Russia is ready. NATO sure ain’t! Oh, they have the numbers and they think they are strong. The truth is that these NATO midgets have no idea of what is about to hit them, when the Russians go to war these NATO statelets won’t even understand what is happening to them. Very rapidly the real action will be left to the USA and Russia. Thus any conflict will go nuclear very fast. And, for the first time in history, the USA will be hit very, very hard, not only in Europe, the Middle-East or Asia, but also on the continental US.
I was born in a Russian military family and I studied Russian and Soviet military affairs all my life. I can absolutely promise you this, please don’t doubt it for one second: Russia will not back down and, if cornered, she will wipe out your entire civilization. The Russians really don’t want war, they fear it (as they should!) and they will do everything to avoid it. But if attacked then expect a response of absolutely devastating violence. Don’t take it from me, take it from Putin who clearly said so himself and who, at least on that issue, is supported by about 95% of the population. From the Eastern Crusades to the Nazi invasion of the Soviet Union, enough is enough, and the Russians will not take one more western attack, especially not one backed by nuclear firepower. Again, please ponder Putin’s words very, very carefully: “what need would we have a world if there is no Russia?“
All that for what? The USA and Russia have NO objective reasons to do anything but to collaborate (the Russians are absolutely baffled the fact the leaders of the USA seem to be completely oblivious to this simple fact). Okay, the City of London does have a lot of reasons to want Russia gone and silent. As Gavin Williamson, the little soy-boy in charge of UK “defense”, so elegantly put it, Russia should “go away and shut up”. Right. Let me tell you – it ain’t happening! Britannia will be turned into a heap of radioactive ashes long before Russian goes away or shuts up. That is simply a fact.
What baffles me is this: do American leaders really want to lose their country in behalf of a small nasty clique of arrogant British pompous asses who think that they still are an Empire? Did you even take a look at Boris Johnson, Theresa May and Gavin Williamson? Are you really ready to die in defense of the interest of these degenerates?!
I don’t get it and nobody in Russia does.
Yeah, I know, all they did is expel some diplomats. And the Russians will do the same. So what? But that’s missing the point!
LOOK NOT WHERE WE ARE BUT WHERE WE ARE HEADING!!
You can get 200,000 anti–gun (sigh, rolleyes) protesters in DC but NOBODY AT ALL ABOUT NUCLEAR WAR?!
What is wrong with you people?!
What happened to the West where I was born in in 1963?
My God, is this really the end of it all?
Am I the only one who sees this slow-motion train-wreck taking us all over the precipice?
If you can, please give a reason to still hope.
Right now I don’t see many....
SC162-1
http://www.informationclearinghouse.info/49077.htm
Integrity Has Vanished From The West
Among Western political leaders there is not an ounce of integrity or morality. The Western print and TV media is dishonest and corrupt beyond repair. Yet the Russian government persists in its fantasy of “working with Russia’s Western partners.” The only way Russia can work with crooks is to become a crook. Is that what the Russian government wants?
Finian Cunningham notes the absurdity in the political and media uproar over Trump (belatedly) telephoning Putin to congratulate him on his reelection with 77 percent of the vote, a show of public approval that no Western political leader could possibly attain. The crazed US senator from Arizona called the person with the largest majority vote of our time “a dictator.” Yet a real blood-soaked dictator from Saudi Arabia is feted at the White House and fawned over by the president of the United States.
The Western politicians and presstitutes are morally outraged over an alleged poisoning, unsupported by any evidence, of a former spy of no consequence on orders by the president of Russia himself. These kind of insane insults thrown at the leader of the world’s most powerful military nation—and Russia is a nation, unlike the mongrel Western countries—raise the chances of nuclear Armageddon beyond the risks during the 20th century’s Cold War. The insane fools making these unsupported accusations show total disregard for all life on earth. Yet they regard themselves as the salt of the earth and as “exceptional, indispensable” people.
Think about the alleged poisoning of Skirpal by Russia. What can this be other than an orchestrated effort to demonize the president of Russia? How can the West be so outraged over the death of a former double-agent, that is, a deceptive person, and completely indifferent to the millions of peoples destroyed by the West in the 21st century alone. Where is the outrage among Western peoples over the massive deaths for which the West, acting through its Saudi agent, is responsible in Yemen? Where is the Western outrage among Western peoples over the deaths in Syria? The deaths in Libya, in Somalia, Pakistan, Ukraine, Afghanistan? Where is the outrage in the West over the constant Western interference in the internal affairs of other countries? How many times has Washington overthrown a democratically-elected government in Honduras and reinstalled a Washington puppet?
The corruption in the West extends beyond politicians, presstitutes, and an insouciant public to experts. When the ridiculous Condi Rice, national security adviser to president George W. Bush, spoke of Saddam Hussein’s non-existent weapons of mass destruction sending up a nuclear cloud over an American city, experts did not laugh her out of court. The chance of any such event was precisely zero and every expert knew it, but the corrupt experts held their tongues. If they spoke the truth, they knew that they would not get on TV, would not get a government grant, would be out of the running for a government appointment. So they accepted the absurd lie designed to justify an American invasion that destroyed a country.
This is the West. There is nothing but lies and indifference to the deaths of others. The only outrage is orchestrated and directed against a target: the Taliban, Saddam Hussein, Gaddafi, Iran, Assad, Russia and Putin, and against reformist leaders in Latin America. The targets for Western outrage are always those who act independently of Washington or who are no longer useful to Washington’s purposes.
The quality of people in Western governments has collapsed to the very bottom of the barrel. The British actually have a person, Boris Johnson, as Foreign Secretary, who is so low-down that a former British ambassador has no compunction in calling him a categorical liar. The British lab Porton Down, contrary to Johnson’s claim, has not identified the agent associated with the attack on Skirpal as a Russian novichok agent. Note also that if the British lab is able to identify a novichok agent, it also has the capability of producing it, a capability that many countries have as the formulas were published years ago in a book.
That the novichok poisoning of Skirpal is an orchestration is obvious. The minute the event occured the story was ready. With no evidence in hand, the British government and presstitute media were screaming “the Russians did it.” Not content with that, Boris Johnson screamed “Putin did it.” In order to institutionalize fear and hatred of Russia into British consciousness, British school children are being taught that Putin is like Hitler
Orchestrations this blatant demonstrate that Western governments have no respect for the intelligence of their peoples. That Western governments get away with these fantastic lies indicates that the governments are immune to accountability. Even if accountability were possible, there is no sign that Western peoples are capable of holding their governments accountable. As Washington drives the world to nuclear war, where are the protests? The only protest is brainwashed school children protesting the National Rifle Association and the Second Amendment.
Western democracy is a hoax. Consider Catalonia. The people voted for independence and were denounced for doing so by European politicians. The Spanish government invaded Catalonia alleging that the popular referendum, in which people expressed their opinion about their own future, was illegal. Catalonian leaders are in prison awaiting trial, except for Carles Puigdemont who escaped to Belgium. Now Germany has captured him on his return to Belgium from Finland where he lectured at the University of Hesinki and is holding him in jail for a Spanish government that bears more resembance to Francisco Franco than to democracy. The European Union itself is a conspiracy against democracy.
The success of Western propaganda in creating non-existent virtues for itself is the greatest public relations success in history.
Integrity Has Vanished From The West
Among Western political leaders there is not an ounce of integrity or morality. The Western print and TV media is dishonest and corrupt beyond repair. Yet the Russian government persists in its fantasy of “working with Russia’s Western partners.” The only way Russia can work with crooks is to become a crook. Is that what the Russian government wants?
Finian Cunningham notes the absurdity in the political and media uproar over Trump (belatedly) telephoning Putin to congratulate him on his reelection with 77 percent of the vote, a show of public approval that no Western political leader could possibly attain. The crazed US senator from Arizona called the person with the largest majority vote of our time “a dictator.” Yet a real blood-soaked dictator from Saudi Arabia is feted at the White House and fawned over by the president of the United States.
The Western politicians and presstitutes are morally outraged over an alleged poisoning, unsupported by any evidence, of a former spy of no consequence on orders by the president of Russia himself. These kind of insane insults thrown at the leader of the world’s most powerful military nation—and Russia is a nation, unlike the mongrel Western countries—raise the chances of nuclear Armageddon beyond the risks during the 20th century’s Cold War. The insane fools making these unsupported accusations show total disregard for all life on earth. Yet they regard themselves as the salt of the earth and as “exceptional, indispensable” people.
Think about the alleged poisoning of Skirpal by Russia. What can this be other than an orchestrated effort to demonize the president of Russia? How can the West be so outraged over the death of a former double-agent, that is, a deceptive person, and completely indifferent to the millions of peoples destroyed by the West in the 21st century alone. Where is the outrage among Western peoples over the massive deaths for which the West, acting through its Saudi agent, is responsible in Yemen? Where is the Western outrage among Western peoples over the deaths in Syria? The deaths in Libya, in Somalia, Pakistan, Ukraine, Afghanistan? Where is the outrage in the West over the constant Western interference in the internal affairs of other countries? How many times has Washington overthrown a democratically-elected government in Honduras and reinstalled a Washington puppet?
The corruption in the West extends beyond politicians, presstitutes, and an insouciant public to experts. When the ridiculous Condi Rice, national security adviser to president George W. Bush, spoke of Saddam Hussein’s non-existent weapons of mass destruction sending up a nuclear cloud over an American city, experts did not laugh her out of court. The chance of any such event was precisely zero and every expert knew it, but the corrupt experts held their tongues. If they spoke the truth, they knew that they would not get on TV, would not get a government grant, would be out of the running for a government appointment. So they accepted the absurd lie designed to justify an American invasion that destroyed a country.
This is the West. There is nothing but lies and indifference to the deaths of others. The only outrage is orchestrated and directed against a target: the Taliban, Saddam Hussein, Gaddafi, Iran, Assad, Russia and Putin, and against reformist leaders in Latin America. The targets for Western outrage are always those who act independently of Washington or who are no longer useful to Washington’s purposes.
The quality of people in Western governments has collapsed to the very bottom of the barrel. The British actually have a person, Boris Johnson, as Foreign Secretary, who is so low-down that a former British ambassador has no compunction in calling him a categorical liar. The British lab Porton Down, contrary to Johnson’s claim, has not identified the agent associated with the attack on Skirpal as a Russian novichok agent. Note also that if the British lab is able to identify a novichok agent, it also has the capability of producing it, a capability that many countries have as the formulas were published years ago in a book.
That the novichok poisoning of Skirpal is an orchestration is obvious. The minute the event occured the story was ready. With no evidence in hand, the British government and presstitute media were screaming “the Russians did it.” Not content with that, Boris Johnson screamed “Putin did it.” In order to institutionalize fear and hatred of Russia into British consciousness, British school children are being taught that Putin is like Hitler
Orchestrations this blatant demonstrate that Western governments have no respect for the intelligence of their peoples. That Western governments get away with these fantastic lies indicates that the governments are immune to accountability. Even if accountability were possible, there is no sign that Western peoples are capable of holding their governments accountable. As Washington drives the world to nuclear war, where are the protests? The only protest is brainwashed school children protesting the National Rifle Association and the Second Amendment.
Western democracy is a hoax. Consider Catalonia. The people voted for independence and were denounced for doing so by European politicians. The Spanish government invaded Catalonia alleging that the popular referendum, in which people expressed their opinion about their own future, was illegal. Catalonian leaders are in prison awaiting trial, except for Carles Puigdemont who escaped to Belgium. Now Germany has captured him on his return to Belgium from Finland where he lectured at the University of Hesinki and is holding him in jail for a Spanish government that bears more resembance to Francisco Franco than to democracy. The European Union itself is a conspiracy against democracy.
The success of Western propaganda in creating non-existent virtues for itself is the greatest public relations success in history.
SC161-15
http://davidstockmanscontracorner.com/americas-state-wreck-gathers-steam-the-donalds-war-cabinet-and-the-fiscal-doom-loop-part-2/
America's State Wreck Gathers Steam: The Donald's War Cabinet And The Fiscal Doom Loop, Part 2
Last week the Donald's incipient trade war got Wall Street's nerves jangling, but that wasn't the half of what's coming.
To wit, Trump has now essentially formed a War Cabinet and signed a Horribus spending bill that is a warrant for fiscal meltdown. Indeed, the two essentially comprise a self-fueling doom loop which means Washington’s descent into fiscal catastrophe is well-nigh unstoppable; it’s all over except for the screaming in the bond pits.
That is, Trump's new War Cabinet of John Bolton, Mike Pompeo, Gina Haspel and Mad Dog Mattis is arguably the most interventionist, militarist, confrontationist and bellicose national security team ever assembled by a sitting President. We cannot think of a single country that has even looked cross-eyed at Washington in recent years where one or all four of them has not threatened to drone, bomb, invade or decapitate its current ruling regime.
That means Imperial Washington's rampant War Fever owing to the Dem-left declaration of war on Russia and Putin is now about to be drastically intensified by the complete victory of the neocon-right in the Trump Administration. The result will be sharpened confrontation, if not actual outbreak of hostilities, across the full spectrum of adversaries---Iran, Russia, China, Syria and North Korea----and an escalating tempo of military operations and procurement to implement the policy.
At the same time, the Donald's pathetic Fake Veto maneuver on Friday cemented the special interest lobbies' absolute control over domestic appropriations. Of course, Chuckles Schumer and Nancy Pelosi crowed loudly about the $63 billion annual domestic spending increase they got in return for the Donald's $80 billion defense add-on, but the victory was not partisan; it belonged to the Swamp creatures who suckle the politicians of both parties and own the appropriations committees lock, stock and barrel.
To be sure, upon folding at mid-day from his four-hour’s earlier veto tweet, the Donald promised "never again", but his reason for signing the most wasteful, pork-ridden appropriations bill of this century tells you all you need to know. To wit,
"There are a lot of things I'm unhappy about in this bill. There are a lot of things that we shouldn't have had in this bill, but we were in a sense forced if we want to build our military," Trump said. "I said to Congress, I will never sign another bill like this again."
Au contraire. As long as he lasts in office, the Donald will be signing budget busters far worse than this one because the aggressive foreign policies of his War Cabinet will drive the pace of national security spending dramatically higher than the record $695 billion he signed into law last week; and these "must have" increases for pay, operations, ammo, spare parts, training, readiness and weapons replacement/augmentation will not get through the Congress until the bipartisan porkers have had their fill on the domestic side.
Your editor experienced long ago the toxic fiscal equation which arises when hawks and militarists take control of foreign policy and the defense budget. What you get is a “guns and butter” log-rolling dynamic as defense advocates on the spending committees buy the votes of colleagues whose snouts have penetrated deeply into the domestic pork barrel or whose paymasters inhabit the vast expanse of the health, education and social welfare complex.
That’s what stopped cold the Gipper’s short-lived attack on Big Government after 1981, and why the hawk-dominated GOP has been such a dismal failure on the fiscal front ever since.
But the Trumpite/GOP has brought guns and butter log-rolling to a whole new level of fiscal profligacy. And the overwhelming share of the blame for the resulting Horribus appropriations bill---which will raise spending by $143 billion this year and $2.4 trillion over the next decade---rests squarely with the incumbent member of Trump's new War Cabinet, SecDef James Mattis.
Not only does his brazen bellicosity and demented militarism rival that of the other three members of Trump's new War Cabinet, but Mattis also spent a 40 year career sucking the hind teats of the Warfare State, where he apparently never met a military budget that was big enough.
That is to say, Mattis is not remotely the “warrior monk” or “military intellectual” the fawning mainstream press makes him out to be. He’s actually a gung-ho bull-in-the-china-shop who defines his mission as complete obliteration of any foe who comes along; and which is to be accomplished by the assembly of overwhelming military capabilities and firepower.
Stated differently, the quotes below are not the expressions of a subtle mind. They reflect the mindset of the bombastic militarist who should have never, ever been let near the top post at the Pentagon, and who is the architect of the Donald’s hideously bloated defense budget and new long-term strategic plan for unaffordable, insensible global military dominance:
“The first time you blow someone away is not an insignificant event. That said, there are some assholes in the world that just need to be shot…..I come in peace. I didn’t bring artillery. But I’m pleading with you, with tears in my eyes: If you fuck with me, I’ll kill you all.’
Unlike most of the American generals who have been waging and loosing pointless wars over the last half century while cheerfully checking the boxes on the way to their post-retirement bonanzas, Mattis never got over it. He blitzed the enemy as an assault battalion commander in the first Gulf War, brought carnage to the Pashtun villages of southern Afghanistan and obliterated Fallujah (Iraq) twice---without ever noticing that he was not winning any wars, but just dispensing random high-tech violence at huge cost in blood (theirs), treasure (ours) and blowback (throughout the Muslim world).
Indeed, Mattis' apparent lesson was that America needed massive military dominance to pacify an uncooperative world, and the Donald fell for it hook, line and sinker.
Yet in today's world, America has no industrial state enemies remotely capable of and/or motivated to threaten the homeland. Indeed, the only real homeland defense we need is our nuclear retaliatory force of land-based ICBMs, sea-based Trident missiles and DOD’s 5,000 active and standby nuclear warheads---all of which were bought and paid for long ago.
That is, America doesn’t need no stinkin’ defense build-up, and could slash what it’s already spending by $250 billion per year without harming national security in the slightest.
That is also to say, neither Russia nor China is about to invade the American homeland with conventional forces because neither has even 5% of the necessary air-lift, sea-lift and power projection capacity that would be needed—even if they were ruled by lunatics, which they most assuredly are not.
Likewise, Russia and China are not suicidal enough to launch a first nuclear strike or attempt nuclear blackmail.
And beyond that, the even more dispositive point is that the very thought of hostile action against the American homeland would amount to an economic death warrant for either power.
That’s because in the case of the Red Ponzi, the Donald is absolutely right about its massive trade imbalance. China’s $510 billion per year of exports to the US do not represent free and fair trade in the historic sense: They are an absolute freak of economic nature stemming from the massive central bank money printing spree of the last 25-years and the egregious mercantilism that Beijing has instituted to exploit it and to build the greatest credit-fueled house of cards in human history.
Accordingly, if China were to threaten the US militarily, the resulting embargo on Chinese goods would cause its economy to plunge into a thundering collapse within six months: To wit, America’s spacious closets are already stuffed full of enough junk from China---including every variety of Apple device---to last for years, while China’s debt-ridden production chain on the margin survives hand-to-mouth on export orders.
And as for Russia, pulleese!
Its entire GDP of $1.5 trillion is less than that of the New York metro area, and only 8% of the US economy as a whole. The very idea that it’s a military threat to America is just flat out ludicrous; and that is in no way changed by Putin’s recent hints that Russia has developed a new class of non-ballistic strategic weapons that are not vulnerable to US ABM defenses.
But of course!
It was the US and John Bolton specifically during his stint as head of arms control at the Bush State Department that caused the expiration of Nixon’s ABM treaty. And in light of the subsequent drive toward a US missile defense system, what does another power that wishes to preserve the credibility and efficacy of its nuclear deterrent or retaliatory strike capability do?
Why, it finds a way around the ABMs to insure that no adversary is tempted to launch a pre-emptive first strike while secure from retaliation in a protective ABM cocoon. That’s exactly what the old MAD playbooks recommend, and what Russia, apparently, actually did.
So why does Mattis want $700 billion per year of force structure, readiness and massive weapons upgrades this year, which is just a down payment on an embedded defense bow-wave that will quickly rise towards $1 trillion annually?
A good part of the answer is sheer economic ignorance. Mattis along with the career national security apparatchiks who now comprise the Donald’s new War Cabinet are making the same mistake as their cold war forebears did about the old Soviet Union.
The latter was always destined to collapse under the weight of command and control centralization and ersatz socialism; it was only a matter of funding a strategic deterrent and waiting out the collapse that finally came, and swiftly, too.
There was never any need for the massive conventional forces that were kept in being during the Cold War, and especially not the huge Reagan build-up. The latter essentially funded an expeditionary armada designed for invasion and occupation---an unneeded capability that eventually led to the follies of Washington’s serial military interventions in the Middle East.
That is even truer today. ISIS was a short-lived menace that arose from Washington’s interventions in Iraq and Syria, and has now been largely extinguished by its mortal 13-century old Shiite enemy: That is, the Shiite coalition of the Iraqi government in Baghdad, Iran, the Assad regime in Syria and the Hezbollah fighters of Lebanon.
There is nothing else from that region that threatens the safety and security of the citizens of Lincoln NE or Springfield MA, and most especially not the Iranians and their Shiite allies. The Iranians never had a nuclear weapons program, even by the lights of the 17-agency NIEs (national intelligence estimates) from 2007 onwards, and they have now precluded the possibility by agreeing to the Obama nuke deal.
The fact is, Iran is not a terrorist state---even if its theocracy falls far short of democratic ideals, and even if its leaders do fulminate against the Great Satan in Washington.
After all, during the past 65 years Washington has attacked the Iranian people by installing a brutal, larcenous puppet regime under the Shah from 1953-1979; siding with Iraq when the latter invaded Iran during the 1980s; and by demonizing and attempting to destabilize it ever since.
The entire case against Iran has been concocted by Israeli Prime Minister Netanyahu and the coalition of right-wing parties upon which his rule depends. They claim the Tehran regime is an existential threat to Israel’s survival, but that’s ridiculous when they have upwards of 100 nukes and the Iranians have none, and when the Israeli air force has the capacity to turn Iran’s limited attack forces into a smoldering heap of twisted metal on a moment’s notice.
The Israeli claim that Hezbollah is a lethal Iranian dagger pointed at its survival is equally upside down. In fact, Israel’s repeated brutal occupations of the Shiite regions of southern Lebanon is what brought Hezbollah into existence, and at length has made it the largest political party in this religiously fractured country.
In that context, the main reason Iran supplies Hezbollah with arms is to deter a US/Israel attack; and also because like any other sovereign nation it is allowed to have a foreign policy, including one based on shared confessional ties.
We remonstrate on these matters because when it comes to Iran the Donald’s new War Cabinet is a wholly owned subsidiary of Bebe Netanyahu. Bolton and Pompeo are absolutely rabid in their desire to make war on Iran, and Mad Dog Mattis is not far behind.
Yet it cannot be stated strongly enough: Iran proposes no military threat to the American homeland whatsoever; it has never been involved in a terrorist incident or even plot against America or Europe for that matter; and its religious and political quarrel with the Saudis is absolutely none of Washington’s business.
As we have frequently observed, it really doesn’t matter who controls the vast hydrocarbon deposits surrounding the Persian Gulf----Sunni or Shiite, dictators or democrats, Arabs or Persians. That’s because they all desperately need the revenue. And if oil prices should temporarily spike due to local wars or political upheaval, the cure for high prices is the global free market, not the US fifth fleet.
The truth of the matter is that a unilateral US military attack on Iran would be tantamount to a war crime---as the Nuremberg trials defined "wars of aggression". And that is why the Donald’s mindless and groundless conviction that the Iran nuclear accord is the worst deal ever made by the US government is so pregnant with danger.
To a person, his new War Cabinet will be in the business of scratching and clawing the Donald's itch. Their modus operandi will be to sabotage the greatest breakthrough for world peace in decades on May 12 when the next certification of Iranian compliance arrives.
Once the nuclear deal is ash-canned, in turn, the War Cabinet will revive their historically false claims that the Iranian's are on the verge of gaining nuclear weapons. That's even if they merely restart their enrichment plant at Natanz, which they would have every right to do in the event of Washington's unilateral abrogation.
From there the war drums would start beating loudly in Imperial Washington for a pre-emptive attack to stop them---a speciously Nuremburg compliant attack, as it were.
Regardless of how this scenario plays out in concrete detail and time frame, one thing is certain. A rising crescendo of tensions and confrontations with all of the War Cabinet's targets----Iran, Syria, Russia, China and North Korea---is fast coming down the pike. And that means an even larger burst in defense spending is not far behind.
All the while, of course, the Freedom Caucus stumbles around helping to slash tax revenues to 16.6% of GDP---the lowest level since the late 1940s---even as it welcomes the Donald's War Cabinet and kvetches about soaring entitlements and the Horribus appropriations bill that a good portion of its membership acquiesced to.
And they are the purported fiscal good guys!
Yes, it is a doom loop and there is not a chance in the hot place of avoiding the fast arriving bond market "yield shock" that will make mincemeat out of today's incorrigible dip buyers.
America's State Wreck Gathers Steam: The Donald's War Cabinet And The Fiscal Doom Loop, Part 2
Last week the Donald's incipient trade war got Wall Street's nerves jangling, but that wasn't the half of what's coming.
To wit, Trump has now essentially formed a War Cabinet and signed a Horribus spending bill that is a warrant for fiscal meltdown. Indeed, the two essentially comprise a self-fueling doom loop which means Washington’s descent into fiscal catastrophe is well-nigh unstoppable; it’s all over except for the screaming in the bond pits.
That is, Trump's new War Cabinet of John Bolton, Mike Pompeo, Gina Haspel and Mad Dog Mattis is arguably the most interventionist, militarist, confrontationist and bellicose national security team ever assembled by a sitting President. We cannot think of a single country that has even looked cross-eyed at Washington in recent years where one or all four of them has not threatened to drone, bomb, invade or decapitate its current ruling regime.
That means Imperial Washington's rampant War Fever owing to the Dem-left declaration of war on Russia and Putin is now about to be drastically intensified by the complete victory of the neocon-right in the Trump Administration. The result will be sharpened confrontation, if not actual outbreak of hostilities, across the full spectrum of adversaries---Iran, Russia, China, Syria and North Korea----and an escalating tempo of military operations and procurement to implement the policy.
At the same time, the Donald's pathetic Fake Veto maneuver on Friday cemented the special interest lobbies' absolute control over domestic appropriations. Of course, Chuckles Schumer and Nancy Pelosi crowed loudly about the $63 billion annual domestic spending increase they got in return for the Donald's $80 billion defense add-on, but the victory was not partisan; it belonged to the Swamp creatures who suckle the politicians of both parties and own the appropriations committees lock, stock and barrel.
To be sure, upon folding at mid-day from his four-hour’s earlier veto tweet, the Donald promised "never again", but his reason for signing the most wasteful, pork-ridden appropriations bill of this century tells you all you need to know. To wit,
"There are a lot of things I'm unhappy about in this bill. There are a lot of things that we shouldn't have had in this bill, but we were in a sense forced if we want to build our military," Trump said. "I said to Congress, I will never sign another bill like this again."
Au contraire. As long as he lasts in office, the Donald will be signing budget busters far worse than this one because the aggressive foreign policies of his War Cabinet will drive the pace of national security spending dramatically higher than the record $695 billion he signed into law last week; and these "must have" increases for pay, operations, ammo, spare parts, training, readiness and weapons replacement/augmentation will not get through the Congress until the bipartisan porkers have had their fill on the domestic side.
Your editor experienced long ago the toxic fiscal equation which arises when hawks and militarists take control of foreign policy and the defense budget. What you get is a “guns and butter” log-rolling dynamic as defense advocates on the spending committees buy the votes of colleagues whose snouts have penetrated deeply into the domestic pork barrel or whose paymasters inhabit the vast expanse of the health, education and social welfare complex.
That’s what stopped cold the Gipper’s short-lived attack on Big Government after 1981, and why the hawk-dominated GOP has been such a dismal failure on the fiscal front ever since.
But the Trumpite/GOP has brought guns and butter log-rolling to a whole new level of fiscal profligacy. And the overwhelming share of the blame for the resulting Horribus appropriations bill---which will raise spending by $143 billion this year and $2.4 trillion over the next decade---rests squarely with the incumbent member of Trump's new War Cabinet, SecDef James Mattis.
Not only does his brazen bellicosity and demented militarism rival that of the other three members of Trump's new War Cabinet, but Mattis also spent a 40 year career sucking the hind teats of the Warfare State, where he apparently never met a military budget that was big enough.
That is to say, Mattis is not remotely the “warrior monk” or “military intellectual” the fawning mainstream press makes him out to be. He’s actually a gung-ho bull-in-the-china-shop who defines his mission as complete obliteration of any foe who comes along; and which is to be accomplished by the assembly of overwhelming military capabilities and firepower.
Stated differently, the quotes below are not the expressions of a subtle mind. They reflect the mindset of the bombastic militarist who should have never, ever been let near the top post at the Pentagon, and who is the architect of the Donald’s hideously bloated defense budget and new long-term strategic plan for unaffordable, insensible global military dominance:
“The first time you blow someone away is not an insignificant event. That said, there are some assholes in the world that just need to be shot…..I come in peace. I didn’t bring artillery. But I’m pleading with you, with tears in my eyes: If you fuck with me, I’ll kill you all.’
Unlike most of the American generals who have been waging and loosing pointless wars over the last half century while cheerfully checking the boxes on the way to their post-retirement bonanzas, Mattis never got over it. He blitzed the enemy as an assault battalion commander in the first Gulf War, brought carnage to the Pashtun villages of southern Afghanistan and obliterated Fallujah (Iraq) twice---without ever noticing that he was not winning any wars, but just dispensing random high-tech violence at huge cost in blood (theirs), treasure (ours) and blowback (throughout the Muslim world).
Indeed, Mattis' apparent lesson was that America needed massive military dominance to pacify an uncooperative world, and the Donald fell for it hook, line and sinker.
Yet in today's world, America has no industrial state enemies remotely capable of and/or motivated to threaten the homeland. Indeed, the only real homeland defense we need is our nuclear retaliatory force of land-based ICBMs, sea-based Trident missiles and DOD’s 5,000 active and standby nuclear warheads---all of which were bought and paid for long ago.
That is, America doesn’t need no stinkin’ defense build-up, and could slash what it’s already spending by $250 billion per year without harming national security in the slightest.
That is also to say, neither Russia nor China is about to invade the American homeland with conventional forces because neither has even 5% of the necessary air-lift, sea-lift and power projection capacity that would be needed—even if they were ruled by lunatics, which they most assuredly are not.
Likewise, Russia and China are not suicidal enough to launch a first nuclear strike or attempt nuclear blackmail.
And beyond that, the even more dispositive point is that the very thought of hostile action against the American homeland would amount to an economic death warrant for either power.
That’s because in the case of the Red Ponzi, the Donald is absolutely right about its massive trade imbalance. China’s $510 billion per year of exports to the US do not represent free and fair trade in the historic sense: They are an absolute freak of economic nature stemming from the massive central bank money printing spree of the last 25-years and the egregious mercantilism that Beijing has instituted to exploit it and to build the greatest credit-fueled house of cards in human history.
Accordingly, if China were to threaten the US militarily, the resulting embargo on Chinese goods would cause its economy to plunge into a thundering collapse within six months: To wit, America’s spacious closets are already stuffed full of enough junk from China---including every variety of Apple device---to last for years, while China’s debt-ridden production chain on the margin survives hand-to-mouth on export orders.
And as for Russia, pulleese!
Its entire GDP of $1.5 trillion is less than that of the New York metro area, and only 8% of the US economy as a whole. The very idea that it’s a military threat to America is just flat out ludicrous; and that is in no way changed by Putin’s recent hints that Russia has developed a new class of non-ballistic strategic weapons that are not vulnerable to US ABM defenses.
But of course!
It was the US and John Bolton specifically during his stint as head of arms control at the Bush State Department that caused the expiration of Nixon’s ABM treaty. And in light of the subsequent drive toward a US missile defense system, what does another power that wishes to preserve the credibility and efficacy of its nuclear deterrent or retaliatory strike capability do?
Why, it finds a way around the ABMs to insure that no adversary is tempted to launch a pre-emptive first strike while secure from retaliation in a protective ABM cocoon. That’s exactly what the old MAD playbooks recommend, and what Russia, apparently, actually did.
So why does Mattis want $700 billion per year of force structure, readiness and massive weapons upgrades this year, which is just a down payment on an embedded defense bow-wave that will quickly rise towards $1 trillion annually?
A good part of the answer is sheer economic ignorance. Mattis along with the career national security apparatchiks who now comprise the Donald’s new War Cabinet are making the same mistake as their cold war forebears did about the old Soviet Union.
The latter was always destined to collapse under the weight of command and control centralization and ersatz socialism; it was only a matter of funding a strategic deterrent and waiting out the collapse that finally came, and swiftly, too.
There was never any need for the massive conventional forces that were kept in being during the Cold War, and especially not the huge Reagan build-up. The latter essentially funded an expeditionary armada designed for invasion and occupation---an unneeded capability that eventually led to the follies of Washington’s serial military interventions in the Middle East.
That is even truer today. ISIS was a short-lived menace that arose from Washington’s interventions in Iraq and Syria, and has now been largely extinguished by its mortal 13-century old Shiite enemy: That is, the Shiite coalition of the Iraqi government in Baghdad, Iran, the Assad regime in Syria and the Hezbollah fighters of Lebanon.
There is nothing else from that region that threatens the safety and security of the citizens of Lincoln NE or Springfield MA, and most especially not the Iranians and their Shiite allies. The Iranians never had a nuclear weapons program, even by the lights of the 17-agency NIEs (national intelligence estimates) from 2007 onwards, and they have now precluded the possibility by agreeing to the Obama nuke deal.
The fact is, Iran is not a terrorist state---even if its theocracy falls far short of democratic ideals, and even if its leaders do fulminate against the Great Satan in Washington.
After all, during the past 65 years Washington has attacked the Iranian people by installing a brutal, larcenous puppet regime under the Shah from 1953-1979; siding with Iraq when the latter invaded Iran during the 1980s; and by demonizing and attempting to destabilize it ever since.
The entire case against Iran has been concocted by Israeli Prime Minister Netanyahu and the coalition of right-wing parties upon which his rule depends. They claim the Tehran regime is an existential threat to Israel’s survival, but that’s ridiculous when they have upwards of 100 nukes and the Iranians have none, and when the Israeli air force has the capacity to turn Iran’s limited attack forces into a smoldering heap of twisted metal on a moment’s notice.
The Israeli claim that Hezbollah is a lethal Iranian dagger pointed at its survival is equally upside down. In fact, Israel’s repeated brutal occupations of the Shiite regions of southern Lebanon is what brought Hezbollah into existence, and at length has made it the largest political party in this religiously fractured country.
In that context, the main reason Iran supplies Hezbollah with arms is to deter a US/Israel attack; and also because like any other sovereign nation it is allowed to have a foreign policy, including one based on shared confessional ties.
We remonstrate on these matters because when it comes to Iran the Donald’s new War Cabinet is a wholly owned subsidiary of Bebe Netanyahu. Bolton and Pompeo are absolutely rabid in their desire to make war on Iran, and Mad Dog Mattis is not far behind.
Yet it cannot be stated strongly enough: Iran proposes no military threat to the American homeland whatsoever; it has never been involved in a terrorist incident or even plot against America or Europe for that matter; and its religious and political quarrel with the Saudis is absolutely none of Washington’s business.
As we have frequently observed, it really doesn’t matter who controls the vast hydrocarbon deposits surrounding the Persian Gulf----Sunni or Shiite, dictators or democrats, Arabs or Persians. That’s because they all desperately need the revenue. And if oil prices should temporarily spike due to local wars or political upheaval, the cure for high prices is the global free market, not the US fifth fleet.
The truth of the matter is that a unilateral US military attack on Iran would be tantamount to a war crime---as the Nuremberg trials defined "wars of aggression". And that is why the Donald’s mindless and groundless conviction that the Iran nuclear accord is the worst deal ever made by the US government is so pregnant with danger.
To a person, his new War Cabinet will be in the business of scratching and clawing the Donald's itch. Their modus operandi will be to sabotage the greatest breakthrough for world peace in decades on May 12 when the next certification of Iranian compliance arrives.
Once the nuclear deal is ash-canned, in turn, the War Cabinet will revive their historically false claims that the Iranian's are on the verge of gaining nuclear weapons. That's even if they merely restart their enrichment plant at Natanz, which they would have every right to do in the event of Washington's unilateral abrogation.
From there the war drums would start beating loudly in Imperial Washington for a pre-emptive attack to stop them---a speciously Nuremburg compliant attack, as it were.
Regardless of how this scenario plays out in concrete detail and time frame, one thing is certain. A rising crescendo of tensions and confrontations with all of the War Cabinet's targets----Iran, Syria, Russia, China and North Korea---is fast coming down the pike. And that means an even larger burst in defense spending is not far behind.
All the while, of course, the Freedom Caucus stumbles around helping to slash tax revenues to 16.6% of GDP---the lowest level since the late 1940s---even as it welcomes the Donald's War Cabinet and kvetches about soaring entitlements and the Horribus appropriations bill that a good portion of its membership acquiesced to.
And they are the purported fiscal good guys!
Yes, it is a doom loop and there is not a chance in the hot place of avoiding the fast arriving bond market "yield shock" that will make mincemeat out of today's incorrigible dip buyers.
SC161-14
http://www.informationclearinghouse.info/49081.htm
A Bolton From the Blue… Trump’s Scary War-hawk Advisor is so Yesterday’s Man
Since US President Donald Trump announced John Bolton as his new top national security advisor last week, the world has been reeling from multiple predictions of wars breaking out.
The following is not meant to sound complacent, but the inclusion of arch war-hawk Bolton in Trump’s inner circle may actually turn out to be a good thing. For it will hasten America’s reckless foreign policies and its decline as a world power.
Admittedly, such an outlook is proffered against a very grim background.
John Bolton has been described not so much as “America First” as “Military First”. He is credited as being the chief architect of the Iraq War under the GW Bush administration. He remains bumptiously unapologetic about promoting that war, which was based on lies and resulted in as many as one million deaths.
Bolton relishes in open contempt for the United Nations and international law, viewing both as hampering the United States from using military force whenever and wherever it wants, in pursuit of its geopolitical objectives.
He has stridently called for US military attacks on North Korea and Iran, to instigate regime change.
So, for “mad hatter” Bolton to have the ear of the president in matters of international security is indeed a cause for a foreboding apprehension. Especially given also that President Trump already seems riven with a confused foreign policy and a worrying impetuousness in dealing with the rest of the world.
It says a lot whenever US media are rattled by the bellicose prospect of John Bolton guiding Trump on precarious issues.
“The return of John Bolton paves the way for more war,” warned the Washington Post.
The New York Times cautioned: “The whole world should be concerned”.
Both news outlets had previously acted as cheerleaders for the overseas wars which Bolton promulgated when he was serving in the Bush State Department some 15 years ago. Evidently, the return of war-hawk Bolton to White House policy-making is just too much to bear.
As already noted, Bolton is gung-ho for regime-change wars against North Korea and Iran. He is also hawkish towards China and what he views as the latter’s military expansion in the Asia-Pacific region. Bolton has accused Russia of “an act of war” by allegedly meddling in US politics. He also berated Trump last year for not being tougher towards President Vladimir Putin when the two leaders met at the G20 summit in Hamburg. Bolton claimed Putin blatantly lied to Trump when he assured him that Russia had not interfered in US elections.
On any number of international tensions, the Trump administration is liable to take an even more aggressive turn with John Bolton in the wheelhouse of foreign policy. With more aggression, the odds are significantly shortened on the danger of an armed confrontation erupting.
Nevertheless, there are also sound reasons why war will not break out. Far from portending a more dominant United States, the Trump administration is leading the presumptuous “uni-power” into greater international isolation.
One reassurance: Russia and China’s formidable military strength would give pause to even a warmonger like Bolton. This is especially true after President Putin earlier this month unveiled a new arsenal of hypersonic missiles that are invulnerable to American ballistic defense systems.
Secondly, the world has changed dramatically from 15 years ago, when people like Bolton and other Neoconservatives in Washington and Europe pushed their agenda for wars and regime change. The Western public is in no mood for such warmongering, given the experience of lies and immense suffering.
A case in point is Syria. In Bolton’s heyday, it might have been possible for Washington and its NATO allies to pull off a regime-change intervention by stealth. That is not likely today. Simply because the Western public has become much more informed and disdainful about their governments’ propaganda and murderous mendacity.
Trump’s foreign policy chaos, augmented by the unilateralism of Bolton (and the hawkish former CIA chief Mike Pompeo, nominated to become Secretary of State), will hasten the degeneration of American world power.
Let’s look at two imminent collision points. On Iran, the Trump administration is calling for a drastic renegotiation of the 2015 international nuclear accord – or it will walk away from the deal. Bolton and Pompeo are zealous for ripping up the Iran accord. Therefore, they can be expected to hold sway over Trump following through on his threats to axe the deal in the next two months.
In such a case, the Trump administration will set itself on a collision course with European allies who have invested much economic development in Iran. The Europeans are not going to sacrifice multi-billion-euro commitments in Iran just because of Trump’s recklessness. Out of necessity, the main EU states like Germany and France will adopt a more challenging attitude towards Washington’s bullying.
Walking away from the Iran deal may embolden Israel and Saudi Arabia to ramp up hostilities towards Tehran. Of course, such hostility will be fomented by Bolton and Pompeo. But Iran is no pushover. It also has the backing of Russia and China as military allies, which may serve as a guarantor against Washington and its clients pushing their war agenda towards Iran.
North Korea is the other immediate collision point. The prospect of meaningful dialogue between Trump and Kim Jong-un – tentatively set for May after Trump’s surprise acceptance of an invitation to talk – is not promising.
With the appointment of Bolton as national security advisor and the nomination of Pompeo at the State Department (Congress still has to confirm the latter), it seems clear that any engagement with North Korea will be all about imposing an ultimatum for denuclearization. Bolton is openly disparaging towards North Korea. He rejects any proposal for a mutual settlement involving, for example, economic aid to Pyongyang.
But, again, this precipitous unilateral American approach impelled by John Bolton as Trump’s right-hand man will serve to alienate US power still further.
China and Russia have both ruled out any American military option on North Korea.
Trump’s slapping of China’s with severe export tariffs, and his administration’s provocative undermining of the One China policy towards Taiwan, will ensure Beijing taking a tough line on any American aggression towards North Korea.
The European Union and United Nations have also warned Washington that diplomacy is the only acceptable option to resolving the Korean conflict. So, too, has South Korean President Moon Jae-in, who has consistently said that no war will be permitted on the Korean Peninsula.
Trump and his war cabinet are certainly an ominous danger for conflict in several world regions. But the one abiding cause for sobriety is the military power of Russia and China, to act as the bucket of ice-cold water to reality-check any American delusions.
That, however, will not stop Washington heading into its own oblivion from the combined chaos and hubris of Trump and his deluded aides.
Washington is alienating and isolating itself from the world. John Bolton is a powerful catalyst to this process.
A Bolton From the Blue… Trump’s Scary War-hawk Advisor is so Yesterday’s Man
Since US President Donald Trump announced John Bolton as his new top national security advisor last week, the world has been reeling from multiple predictions of wars breaking out.
The following is not meant to sound complacent, but the inclusion of arch war-hawk Bolton in Trump’s inner circle may actually turn out to be a good thing. For it will hasten America’s reckless foreign policies and its decline as a world power.
Admittedly, such an outlook is proffered against a very grim background.
John Bolton has been described not so much as “America First” as “Military First”. He is credited as being the chief architect of the Iraq War under the GW Bush administration. He remains bumptiously unapologetic about promoting that war, which was based on lies and resulted in as many as one million deaths.
Bolton relishes in open contempt for the United Nations and international law, viewing both as hampering the United States from using military force whenever and wherever it wants, in pursuit of its geopolitical objectives.
He has stridently called for US military attacks on North Korea and Iran, to instigate regime change.
So, for “mad hatter” Bolton to have the ear of the president in matters of international security is indeed a cause for a foreboding apprehension. Especially given also that President Trump already seems riven with a confused foreign policy and a worrying impetuousness in dealing with the rest of the world.
It says a lot whenever US media are rattled by the bellicose prospect of John Bolton guiding Trump on precarious issues.
“The return of John Bolton paves the way for more war,” warned the Washington Post.
The New York Times cautioned: “The whole world should be concerned”.
Both news outlets had previously acted as cheerleaders for the overseas wars which Bolton promulgated when he was serving in the Bush State Department some 15 years ago. Evidently, the return of war-hawk Bolton to White House policy-making is just too much to bear.
As already noted, Bolton is gung-ho for regime-change wars against North Korea and Iran. He is also hawkish towards China and what he views as the latter’s military expansion in the Asia-Pacific region. Bolton has accused Russia of “an act of war” by allegedly meddling in US politics. He also berated Trump last year for not being tougher towards President Vladimir Putin when the two leaders met at the G20 summit in Hamburg. Bolton claimed Putin blatantly lied to Trump when he assured him that Russia had not interfered in US elections.
On any number of international tensions, the Trump administration is liable to take an even more aggressive turn with John Bolton in the wheelhouse of foreign policy. With more aggression, the odds are significantly shortened on the danger of an armed confrontation erupting.
Nevertheless, there are also sound reasons why war will not break out. Far from portending a more dominant United States, the Trump administration is leading the presumptuous “uni-power” into greater international isolation.
One reassurance: Russia and China’s formidable military strength would give pause to even a warmonger like Bolton. This is especially true after President Putin earlier this month unveiled a new arsenal of hypersonic missiles that are invulnerable to American ballistic defense systems.
Secondly, the world has changed dramatically from 15 years ago, when people like Bolton and other Neoconservatives in Washington and Europe pushed their agenda for wars and regime change. The Western public is in no mood for such warmongering, given the experience of lies and immense suffering.
A case in point is Syria. In Bolton’s heyday, it might have been possible for Washington and its NATO allies to pull off a regime-change intervention by stealth. That is not likely today. Simply because the Western public has become much more informed and disdainful about their governments’ propaganda and murderous mendacity.
Trump’s foreign policy chaos, augmented by the unilateralism of Bolton (and the hawkish former CIA chief Mike Pompeo, nominated to become Secretary of State), will hasten the degeneration of American world power.
Let’s look at two imminent collision points. On Iran, the Trump administration is calling for a drastic renegotiation of the 2015 international nuclear accord – or it will walk away from the deal. Bolton and Pompeo are zealous for ripping up the Iran accord. Therefore, they can be expected to hold sway over Trump following through on his threats to axe the deal in the next two months.
In such a case, the Trump administration will set itself on a collision course with European allies who have invested much economic development in Iran. The Europeans are not going to sacrifice multi-billion-euro commitments in Iran just because of Trump’s recklessness. Out of necessity, the main EU states like Germany and France will adopt a more challenging attitude towards Washington’s bullying.
Walking away from the Iran deal may embolden Israel and Saudi Arabia to ramp up hostilities towards Tehran. Of course, such hostility will be fomented by Bolton and Pompeo. But Iran is no pushover. It also has the backing of Russia and China as military allies, which may serve as a guarantor against Washington and its clients pushing their war agenda towards Iran.
North Korea is the other immediate collision point. The prospect of meaningful dialogue between Trump and Kim Jong-un – tentatively set for May after Trump’s surprise acceptance of an invitation to talk – is not promising.
With the appointment of Bolton as national security advisor and the nomination of Pompeo at the State Department (Congress still has to confirm the latter), it seems clear that any engagement with North Korea will be all about imposing an ultimatum for denuclearization. Bolton is openly disparaging towards North Korea. He rejects any proposal for a mutual settlement involving, for example, economic aid to Pyongyang.
But, again, this precipitous unilateral American approach impelled by John Bolton as Trump’s right-hand man will serve to alienate US power still further.
China and Russia have both ruled out any American military option on North Korea.
Trump’s slapping of China’s with severe export tariffs, and his administration’s provocative undermining of the One China policy towards Taiwan, will ensure Beijing taking a tough line on any American aggression towards North Korea.
The European Union and United Nations have also warned Washington that diplomacy is the only acceptable option to resolving the Korean conflict. So, too, has South Korean President Moon Jae-in, who has consistently said that no war will be permitted on the Korean Peninsula.
Trump and his war cabinet are certainly an ominous danger for conflict in several world regions. But the one abiding cause for sobriety is the military power of Russia and China, to act as the bucket of ice-cold water to reality-check any American delusions.
That, however, will not stop Washington heading into its own oblivion from the combined chaos and hubris of Trump and his deluded aides.
Washington is alienating and isolating itself from the world. John Bolton is a powerful catalyst to this process.
Saturday, March 24, 2018
SC161-13
http://davidstockmanscontracorner.com/now-it-begins-americas-state-wreck-gathers-steam-part-1/
Now It Begins---America's State Wreck Gathers Steam, Part 1
Now it begins. They bought the February 8th dip just like the previous 40 odd plungelets in the stock averages since the March 2009 bottom, expecting another ka-ching in the easy money lane of the casino.
But this time it didn't work. The market had been retreating for days and then tumbled 724 Dow points yesterday allegedly on the Donald's $50 billion tariff assault on the China trade. Not surprisingly, the overnight follow-through in Asia was downright bloody with Shanghai down 3.4%, the Nikkei lower by 4.5% and China's NASDAQ equivalent off by more than 5%.
But this isn't just a case of nerves in the trading pits about a potential trade war, nor is it one of those pauses that refresh from the Wall Street bromide cabinet. And it's most definitely not the shaking out of "weak hands" that the talking heads of bubblevision trot out when all else fails to explain a swoon in the averages.
Instead, we'd say it marks the rise of the Trembling Hands. And notwithstanding another dead cat bounce or two, they will soon populate the remnant still in the casino.
That's because there is a lot more bad stuff going on than the Donald's reality show version of a trade war. In fact, the better word for the latter would be a "Trade Bazar" based on yesterday's announcements of extensive interim exemptions from the steel tariffs.
After you set aside all of the Western hemisphere producers, the entire EU, South Korea, Australia and sundry others, you have exempted upwards of 28 million tons of the 36 million tons of US steel imports. Except that each and every one of these steel suppliers have been invited to hire the beltway's best lobbyists, lawyers and influence peddlers to bargain with the Donald's henchman for the next 60 days on trade concessions in lieu of the 25% tariff.
Oh, and then there will be extensions and extensions of the extensions whenever the bargainers appear to be making "progress".
Needless to say, this emerging "art of the deal" version of protectionism will make the existing Swamp look tame by comparison.
That's because steel is just for starters. There are apparently more than 1,000 products on the list to be hit by the $50 billion China tariff, and the importers of each item will be hiring-up their own beltway bargaining squads. And we are talking about big hitters like Wal-Mart and Apple with virtual armies of beltway bandits at their beck and call.
And the same goes for the US exporters who are about to get slammed by targeted foreign retaliation such as the wine, fruits, nuts and seamless steel pipe exporters already named by China---to say nothing of the aircraft parts/module suppliers and the soybean farmers, among numerous beefier others, next in the line of fire.
It would seem that at a minimum, Barnum & Bailey retired their 3-ring circus a tad too soon. But there is surely no doubt that the 15,000 or so Washington hands working the foreign representation circuit, whether registered as lobbyists or not, will soon be thinking they died and went to racketeers heaven. It will be a war fought in the trenches of K-street based on bullets bulging with green stuff.
We mention the emergence of the Donald's Trade Bazaar because the usual suspects are already sounding the "all clear" down on Wall Street. It will be a "pleasant little war" of no special moment---so its time to buy the dips yet again.
Or as veteran Wall Street hand, Marc Chandler of Brown Brothers Harriman, noted:
"People are presenting this as it’s a trade war. I don’t think this is a trade war.....We have been to this dance before."
“Countries will respond with some symbolic retaliation on a small number of goods that make a little more than a rounding error in bilateral trade, take some measures to ensure that the defection of the U.S. does not lead to an import surge, and appeal to the conflict resolution mechanism at the WTO.”
Next?
Well, yes, next is exactly our point. The Imperial City is becoming swamped in conflict, dysfunction, distraction, distemper and massive decision circuit overload.
We call it State-Wreck and its been heading this way for a long-time. But the Donald is the coup d' grace in flesh and blood. He will soon have the Imperial City tied in knots, and that's even if he doesn't fire Robert Mueller, which most surely he should and might.
Either way, there is a massive partisan blood-letting coming and the ordinarily trans-partisan Deep State will be right in the middle of the brawl. That's because partisan Democratic hacks----led by the detestable former CIA director John Brennan---- got way beyond their skis, and baldly high-jacked the tools of the Deep State in a desperate effort to prevent the election and inauguration of Donald Trump.
But the unveiling of what lies in its vasty deep is now beyond recall. The very real attempt by the Obama/Clinton leadership of the CIA/FBI/NSC/NSA/DNI/State/Homeland Security complex to meddle in the 2016 election against the Donald will all come out----even as the Dems and their legal trolls on Mueller's witch-hunting squad become ever more shrill in their McCarthyite hysteria about the Russians.
Moreover, the coming quasi-civil war will potentially bring both indictments of Obama's election meddlers and a counter-reaction from a Mueller based campaign to oust the Donald. Indeed, what portends in the months ahead is more incendiary than anything to rock the Imperial City during the last century, at least.
But here's the thing. This is not happening in a splendid vacuum with no import for the other end of the Acela Corridor. In fact, the entire state-driven economic and financial fantasy that has been building for more than 30 years is now squarely in harm's way.
The former always depended upon Washington based stimulus, subventions, bailouts and booty. But now having attained an asymptotic high, the Great Bubble is stranded with no Washington fixers to keep it going; instead, it is fixing to slide into a long night of deflation, disorder and decay.
That is to say, we printed 2870 on the S&P 500, $19.7 trillion of GDP and $97 trillion of household net worth, but those stats weren't the embodiment of sustainable capitalist prosperity; they were the fruit of a $68 trillion national LBO, a central bank-driven financial asset bubble that has no historical antecedent and the rise of an Imperial Deep State in Washington that is a mortal threat to both democracy and national solvency.
We ruminate on these large matters because in the last day or two signs of a new phase of crisis have proliferated.
Not the least of these is last night's unseemly passage of a $1.3 trillion omnibus appropriations bill which encompassed 2,232 pages of fiscal largesse. While it funded every single agency of government at startlingly higher levels, not a single member of Congress had actually read it during the 24 hours between when it was printed and when it was enacted.
More on the measure's mountains of domestic pork in next weeks postings---except to note that the Tea Party fiscal opposition has now been crushed once and for all. In fact, the action last night elevated the entire appropriated side of the Federal budget to a level that will add $4.2 trillion to the national debt over the next decade.
Still, the heart of the bill---a $695 billion defense appropriation for the current fiscal year---is the real tell. That represents a staggering $80 billion annual increase over the previous DOD spending caps---meaning that the Warfare State has busted loose from any vestige of restraint and rationality.
And it comes at the very moment that Imperial Washington has descended into outright bellicosity on all points of the political spectrum. Trump has taken himself hostage to the neocon interventionist establishment he campaigned against, while the Dems and progressive left have descended so deep into anti-Russian hysteria that they have become nothing less than handmaidens of the Warfare State.
Indeed, whatever impulse the Donald may have had toward curtailment of the America's imperial interventions was obliterated on Thursday when he announced that his war-hawk general at the national security advisor post, H.R. McMaster, would be replaced by a downright horror show.
We refer to former UN Ambassador John Bolton. You really can't say anything bad enough about him except that he is one war-loving sicko, who has rarely meet an unfriendly country he didn't want to bomb or a un-compliant regime he didn't want to change. That includes North Korea, Iran, Syria and Russia for starters.
But it's worse. Now that he has installed Mike Pompeo at the State Department, Bloody Gina Haspel at the CIA and Bolton next door to the Oval Office, the Donald has surrounded himself with the neocon war department. It would literally be impossible to find a worse trio of militaristic interventionists, nor is it possible to ignore the immediate implications of their appointments.
As we shall lay out in Part 2, the trio and the Donald will soon be ending the one constructive thing Obama did during his eight years----the nuke agreement with Iran. And that foolish action, in turn, will bust the middle east and the wider world wide open. It may even lead to military confrontation with Russia.
It also means that the impending fiscal carnage is now beyond recall, and that the mother of all "yield shocks" in the bond pits will soon shake Wall Street to the rafters.
Stay tuned, but also consider the State Wreck introduction below. We posted this in the New York Times exactly 5-years ago at what turns out to be the half-way point to the calamity now at hand.
From the New York Times, March 30, 2013 by David Stockman
The Dow Jones and Standard & Poor’s 500 indexes reached record highs on Thursday, having completely erased the losses since the stock market’s last peak, in 2007. But instead of cheering, we should be very afraid.
Over the last 13 years, the stock market has twice crashed and touched off a recession: American households lost $5 trillion in the 2000 dot-com bust and more than $7 trillion in the 2007 housing crash. Sooner or later — within a few years, I predict — this latest Wall Street bubble, inflated by an egregious flood of phony money from the Federal Reserve rather than real economic gains, will explode, too.
Since the S.&P. 500 first reached its current level, in March 2000, the mad money printers at the Federal Reserve have expanded their balance sheet sixfold (to $3.2 trillion from $500 billion). Yet during that stretch, economic output has grown by an average of 1.7 percent a year (the slowest since the Civil War); real business investment has crawled forward at only 0.8 percent per year; and the payroll job count has crept up at a negligible 0.1 percent annually. Real median family income growth has dropped 8 percent, and the number of full-time middle class jobs, 6 percent. The real net worth of the “bottom” 90 percent has dropped by one-fourth. The number of food stamp and disability aid recipients has more than doubled, to 59 million, about one in five Americans.
So the Main Street economy is failing while Washington is piling a soaring debt burden on our descendants, unable to rein in either the warfare state or the welfare state or raise the taxes needed to pay the nation’s bills. By default, the Fed has resorted to a radical, uncharted spree of money printing. But the flood of liquidity, instead of spurring banks to lend and corporations to spend, has stayed trapped in the canyons of Wall Street, where it is inflating yet another unsustainable bubble.
When it bursts, there will be no new round of bailouts like the ones the banks got in 2008. Instead, America will descend into an era of zero-sum austerity and virulent political conflict, extinguishing even today’s feeble remnants of economic growth.
THIS dyspeptic prospect results from the fact that we are now state-wrecked. With only brief interruptions, we’ve had eight decades of increasingly frenetic fiscal and monetary policy activism intended to counter the cyclical bumps and grinds of the free market and its purported tendency to underproduce jobs and economic output. The toll has been heavy.
As the federal government and its central-bank sidekick, the Fed, have groped for one goal after another — smoothing out the business cycle, minimizing inflation and unemployment at the same time, rolling out a giant social insurance blanket, promoting homeownership, subsidizing medical care, propping up old industries (agriculture, automobiles) and fostering new ones (“clean” energy, biotechnology) and, above all, bailing out Wall Street — they have now succumbed to overload, overreach and outside capture by powerful interests. The modern Keynesian state is broke, paralyzed and mired in empty ritual incantations about stimulating “demand,” even as it fosters a mutant crony capitalism that periodically lavishes the top 1 percent with speculative windfalls.
The culprits are bipartisan, though you’d never guess that from the blather that passes for political discourse these days. The state-wreck originated in 1933, when Franklin D. Roosevelt opted for fiat money (currency not fundamentally backed by gold), economic nationalism and capitalist cartels in agriculture and industry.
Under the exigencies of World War II (which did far more to end the Depression than the New Deal did), the state got hugely bloated, but remarkably, the bloat was put into brief remission during a midcentury golden era of sound money and fiscal rectitude with Dwight D. Eisenhower in the White House and William McChesney Martin Jr. at the Fed.
Then came Lyndon B. Johnson’s “guns and butter” excesses, which were intensified over one perfidious weekend at Camp David, Md., in 1971, when Richard M. Nixon essentially defaulted on the nation’s debt obligations by finally ending the convertibility of gold to the dollar. That one act — arguably a sin graver than Watergate — meant the end of national financial discipline and the start of a four-decade spree during which we have lived high on the hog, running a cumulative $8 trillion current-account deficit. In effect, America underwent an internal leveraged buyout, raising our ratio of total debt (public and private) to economic output to about 3.6 from its historic level of about 1.6. Hence the $30 trillion in excess debt (more than half the total debt, $56 trillion) that hangs over the American economy today.
This explosion of borrowing was the stepchild of the floating-money contraption deposited in the Nixon White House by Milton Friedman, the supposed hero of free-market economics who in fact sowed the seed for a never-ending expansion of the money supply. The Fed, which celebrates its centenary this year, fueled a roaring inflation in goods and commodities during the 1970s that was brought under control only by the iron resolve of Paul A. Volcker, its chairman from 1979 to 1987.
Under his successor, the lapsed hero Alan Greenspan, the Fed dropped Friedman’s penurious rules for monetary expansion, keeping interest rates too low for too long and flooding Wall Street with freshly minted cash. What became known as the “Greenspan put” — the implicit assumption that the Fed would step in if asset prices dropped, as they did after the 1987 stock-market crash — was reinforced by the Fed’s unforgivable 1998 bailout of the hedge fund Long-Term Capital Management.
That Mr. Greenspan’s loose monetary policies didn’t set off inflation was only because domestic prices for goods and labor were crushed by the huge flow of imports from the factories of Asia. By offshoring America’s tradable-goods sector, the Fed kept the Consumer Price Index contained, but also permitted the excess liquidity to foster a roaring inflation in financial assets. Mr. Greenspan’s pandering incited the greatest equity boom in history, with the stock market rising fivefold between the 1987 crash and the 2000 dot-com bust.
Soon Americans stopped saving and consumed everything they earned and all they could borrow. The Asians, burned by their own 1997 financial crisis, were happy to oblige us. They — China and Japan above all — accumulated huge dollar reserves, transforming their central banks into a string of monetary roach motels where sovereign debt goes in but never comes out. We’ve been living on borrowed time — and spending Asians’ borrowed dimes.
This dynamic reinforced the Reaganite shibboleth that “deficits don’t matter” and the fact that nearly $5 trillion of the nation’s $12 trillion in “publicly held” debt is actually sequestered in the vaults of central banks. The destruction of fiscal rectitude under Ronald Reagan — one reason I resigned as his budget chief in 1985 — was the greatest of his many dramatic acts. It created a template for the Republicans’ utter abandonment of the balanced-budget policies of Calvin Coolidge and allowed George W. Bush to dive into the deep end, bankrupting the nation through two misbegotten and unfinanced wars, a giant expansion of Medicare and a tax-cutting spree for the wealthy that turned K Street lobbyists into the de facto office of national tax policy. In effect, the G.O.P. embraced Keynesianism — for the wealthy.
The explosion of the housing market, abetted by phony credit ratings, securitization shenanigans and willful malpractice by mortgage lenders, originators and brokers, has been well documented. Less known is the balance-sheet explosion among the top 10 Wall Street banks during the eight years ending in 2008. Though their tiny sliver of equity capital hardly grew, their dependence on unstable “hot money” soared as the regulatory harness the Glass-Steagall Act had wisely imposed during the Depression was totally dismantled.
Within weeks of the Lehman Brothers bankruptcy in September 2008, Washington, with Wall Street’s gun to its head, propped up the remnants of this financial mess in a panic-stricken melee of bailouts and money-printing that is the single most shameful chapter in American financial history.
There was never a remote threat of a Great Depression 2.0 or of a financial nuclear winter, contrary to the dire warnings of Ben S. Bernanke, the Fed chairman since 2006. The Great Fear — manifested by the stock market plunge when the House voted down the TARP bailout before caving and passing it — was purely another Wall Street concoction. Had President Bush and his Goldman Sachs adviser (a k a Treasury Secretary) Henry M. Paulson Jr. stood firm, the crisis would have burned out on its own and meted out to speculators the losses they so richly deserved. The Main Street banking system was never in serious jeopardy, ATMs were not going dark and the money market industry was not imploding.
Instead, the White House, Congress and the Fed, under Mr. Bush and then President Obama, made a series of desperate, reckless maneuvers that were not only unnecessary but ruinous. The auto bailouts, for example, simply shifted jobs around — particularly to the aging, electorally vital Rust Belt — rather than saving them. The “green energy” component of Mr. Obama’s stimulus was mainly a nearly $1 billion giveaway to crony capitalists, like the venture capitalist John Doerr and the self-proclaimed outer-space visionary Elon Musk, to make new toys for the affluent.
Less than 5 percent of the $800 billion Obama stimulus went to the truly needy for food stamps, earned-income tax credits and other forms of poverty relief. The preponderant share ended up in money dumps to state and local governments, pork-barrel infrastructure projects, business tax loopholes and indiscriminate middle-class tax cuts. The Democratic Keynesians, as intellectually bankrupt as their Republican counterparts (though less hypocritical), had no solution beyond handing out borrowed money to consumers, hoping they would buy a lawn mower, a flat-screen TV or, at least, dinner at Red Lobster.
But even Mr. Obama’s hopelessly glib policies could not match the audacity of the Fed, which dropped interest rates to zero and then digitally printed new money at the astounding rate of $600 million per hour. Fast-money speculators have been “purchasing” giant piles of Treasury debt and mortgage-backed securities, almost entirely by using short-term overnight money borrowed at essentially zero cost, thanks to the Fed. Uncle Ben has lined their pockets.
If and when the Fed — which now promises to get unemployment below 6.5 percent as long as inflation doesn’t exceed 2.5 percent — even hints at shrinking its balance sheet, it will elicit a tidal wave of sell orders, because even a modest drop in bond prices would destroy the arbitrageurs’ profits. Notwithstanding Mr. Bernanke’s assurances about eventually, gradually making a smooth exit, the Fed is domiciled in a monetary prison of its own making.
While the Fed fiddles, Congress burns. Self-titled fiscal hawks like Paul D. Ryan, the chairman of the House Budget Committee, are terrified of telling the truth: that the 10-year deficit is actually $15 trillion to $20 trillion, far larger than the Congressional Budget Office’s estimate of $7 trillion. Its latest forecast, which imagines 16.4 million new jobs in the next decade, compared with only 2.5 million in the last 10 years, is only one of the more extreme examples of Washington’s delusions.
Even a supposedly “bold” measure — linking the cost-of-living adjustment for Social Security payments to a different kind of inflation index — would save just $200 billion over a decade, amounting to hardly 1 percent of the problem. Mr. Ryan’s latest budget shamelessly gives Social Security and Medicare a 10-year pass, notwithstanding that a fair portion of their nearly $19 trillion cost over that decade would go to the affluent elderly. At the same time, his proposal for draconian 30 percent cuts over a decade on the $7 trillion safety net — Medicaid, food stamps and the earned-income tax credit — is another front in the G.O.P.’s war against the 99 percent.
Without any changes, over the next decade or so, the gross federal debt, now nearly $17 trillion, will hurtle toward $30 trillion and soar to 150 percent of gross domestic product from around 105 percent today. Since our constitutional stasis rules out any prospect of a “grand bargain,” the nation’s fiscal collapse will play out incrementally, like a Greek/Cypriot tragedy, in carefully choreographed crises over debt ceilings, continuing resolutions and temporary budgetary patches.
The future is bleak. The greatest construction boom in recorded history — China’s money dump on infrastructure over the last 15 years — is slowing. Brazil, India, Russia, Turkey, South Africa and all the other growing middle-income nations cannot make up for the shortfall in demand. The American machinery of monetary and fiscal stimulus has reached its limits. Japan is sinking into old-age bankruptcy and Europe into welfare-state senescence. The new rulers enthroned in Beijing last year know that after two decades of wild lending, speculation and building, even they will face a day of reckoning, too.
THE state-wreck ahead is a far cry from the “Great Moderation” proclaimed in 2004 by Mr. Bernanke, who predicted that prosperity would be everlasting because the Fed had tamed the business cycle and, as late as March 2007, testified that the impact of the subprime meltdown “seems likely to be contained.” Instead of moderation, what’s at hand is a Great Deformation, arising from a rogue central bank that has abetted the Wall Street casino, crucified savers on a cross of zero interest rates and fueled a global commodity bubble that erodes Main Street living standards through rising food and energy prices — a form of inflation that the Fed fecklessly disregards in calculating inflation.
These policies have brought America to an end-stage metastasis. The way out would be so radical it can’t happen. It would necessitate a sweeping divorce of the state and the market economy. It would require a renunciation of crony capitalism and its first cousin: Keynesian economics in all its forms. The state would need to get out of the business of imperial hubris, economic uplift and social insurance and shift its focus to managing and financing an effective, affordable, means-tested safety net.
All this would require drastic deflation of the realm of politics and the abolition of incumbency itself, because the machinery of the state and the machinery of re-election have become conterminous. Prying them apart would entail sweeping constitutional surgery: amendments to give the president and members of Congress a single six-year term, with no re-election; providing 100 percent public financing for candidates; strictly limiting the duration of campaigns (say, to eight weeks); and prohibiting, for life, lobbying by anyone who has been on a legislative or executive payroll. It would also require overturning Citizens United and mandating that Congress pass a balanced budget, or face an automatic sequester of spending.
It would also require purging the corrosive financialization that has turned the economy into a giant casino since the 1970s. This would mean putting the great Wall Street banks out in the cold to compete as at-risk free enterprises, without access to cheap Fed loans or deposit insurance. Banks would be able to take deposits and make commercial loans, but be banned from trading, underwriting and money management in all its forms.
It would require, finally, benching the Fed’s central planners, and restoring the central bank’s original mission: to provide liquidity in times of crisis but never to buy government debt or try to micromanage the economy. Getting the Fed out of the financial markets is the only way to put free markets and genuine wealth creation back into capitalism.
That, of course, will never happen because there are trillions of dollars of assets, from Shanghai skyscrapers to Fortune 1000 stocks to the latest housing market “recovery,” artificially propped up by the Fed’s interest-rate repression. The United States is broke — fiscally, morally, intellectually — and the Fed has incited a global currency war (Japan just signed up, the Brazilians and Chinese are angry, and the German-dominated euro zone is crumbling) that will soon overwhelm it. When the latest bubble pops, there will be nothing to stop the collapse. If this sounds like advice to get out of the markets and hide out in cash, it is.
Now It Begins---America's State Wreck Gathers Steam, Part 1
Now it begins. They bought the February 8th dip just like the previous 40 odd plungelets in the stock averages since the March 2009 bottom, expecting another ka-ching in the easy money lane of the casino.
But this time it didn't work. The market had been retreating for days and then tumbled 724 Dow points yesterday allegedly on the Donald's $50 billion tariff assault on the China trade. Not surprisingly, the overnight follow-through in Asia was downright bloody with Shanghai down 3.4%, the Nikkei lower by 4.5% and China's NASDAQ equivalent off by more than 5%.
But this isn't just a case of nerves in the trading pits about a potential trade war, nor is it one of those pauses that refresh from the Wall Street bromide cabinet. And it's most definitely not the shaking out of "weak hands" that the talking heads of bubblevision trot out when all else fails to explain a swoon in the averages.
Instead, we'd say it marks the rise of the Trembling Hands. And notwithstanding another dead cat bounce or two, they will soon populate the remnant still in the casino.
That's because there is a lot more bad stuff going on than the Donald's reality show version of a trade war. In fact, the better word for the latter would be a "Trade Bazar" based on yesterday's announcements of extensive interim exemptions from the steel tariffs.
After you set aside all of the Western hemisphere producers, the entire EU, South Korea, Australia and sundry others, you have exempted upwards of 28 million tons of the 36 million tons of US steel imports. Except that each and every one of these steel suppliers have been invited to hire the beltway's best lobbyists, lawyers and influence peddlers to bargain with the Donald's henchman for the next 60 days on trade concessions in lieu of the 25% tariff.
Oh, and then there will be extensions and extensions of the extensions whenever the bargainers appear to be making "progress".
Needless to say, this emerging "art of the deal" version of protectionism will make the existing Swamp look tame by comparison.
That's because steel is just for starters. There are apparently more than 1,000 products on the list to be hit by the $50 billion China tariff, and the importers of each item will be hiring-up their own beltway bargaining squads. And we are talking about big hitters like Wal-Mart and Apple with virtual armies of beltway bandits at their beck and call.
And the same goes for the US exporters who are about to get slammed by targeted foreign retaliation such as the wine, fruits, nuts and seamless steel pipe exporters already named by China---to say nothing of the aircraft parts/module suppliers and the soybean farmers, among numerous beefier others, next in the line of fire.
It would seem that at a minimum, Barnum & Bailey retired their 3-ring circus a tad too soon. But there is surely no doubt that the 15,000 or so Washington hands working the foreign representation circuit, whether registered as lobbyists or not, will soon be thinking they died and went to racketeers heaven. It will be a war fought in the trenches of K-street based on bullets bulging with green stuff.
We mention the emergence of the Donald's Trade Bazaar because the usual suspects are already sounding the "all clear" down on Wall Street. It will be a "pleasant little war" of no special moment---so its time to buy the dips yet again.
Or as veteran Wall Street hand, Marc Chandler of Brown Brothers Harriman, noted:
"People are presenting this as it’s a trade war. I don’t think this is a trade war.....We have been to this dance before."
“Countries will respond with some symbolic retaliation on a small number of goods that make a little more than a rounding error in bilateral trade, take some measures to ensure that the defection of the U.S. does not lead to an import surge, and appeal to the conflict resolution mechanism at the WTO.”
Next?
Well, yes, next is exactly our point. The Imperial City is becoming swamped in conflict, dysfunction, distraction, distemper and massive decision circuit overload.
We call it State-Wreck and its been heading this way for a long-time. But the Donald is the coup d' grace in flesh and blood. He will soon have the Imperial City tied in knots, and that's even if he doesn't fire Robert Mueller, which most surely he should and might.
Either way, there is a massive partisan blood-letting coming and the ordinarily trans-partisan Deep State will be right in the middle of the brawl. That's because partisan Democratic hacks----led by the detestable former CIA director John Brennan---- got way beyond their skis, and baldly high-jacked the tools of the Deep State in a desperate effort to prevent the election and inauguration of Donald Trump.
But the unveiling of what lies in its vasty deep is now beyond recall. The very real attempt by the Obama/Clinton leadership of the CIA/FBI/NSC/NSA/DNI/State/Homeland Security complex to meddle in the 2016 election against the Donald will all come out----even as the Dems and their legal trolls on Mueller's witch-hunting squad become ever more shrill in their McCarthyite hysteria about the Russians.
Moreover, the coming quasi-civil war will potentially bring both indictments of Obama's election meddlers and a counter-reaction from a Mueller based campaign to oust the Donald. Indeed, what portends in the months ahead is more incendiary than anything to rock the Imperial City during the last century, at least.
But here's the thing. This is not happening in a splendid vacuum with no import for the other end of the Acela Corridor. In fact, the entire state-driven economic and financial fantasy that has been building for more than 30 years is now squarely in harm's way.
The former always depended upon Washington based stimulus, subventions, bailouts and booty. But now having attained an asymptotic high, the Great Bubble is stranded with no Washington fixers to keep it going; instead, it is fixing to slide into a long night of deflation, disorder and decay.
That is to say, we printed 2870 on the S&P 500, $19.7 trillion of GDP and $97 trillion of household net worth, but those stats weren't the embodiment of sustainable capitalist prosperity; they were the fruit of a $68 trillion national LBO, a central bank-driven financial asset bubble that has no historical antecedent and the rise of an Imperial Deep State in Washington that is a mortal threat to both democracy and national solvency.
We ruminate on these large matters because in the last day or two signs of a new phase of crisis have proliferated.
Not the least of these is last night's unseemly passage of a $1.3 trillion omnibus appropriations bill which encompassed 2,232 pages of fiscal largesse. While it funded every single agency of government at startlingly higher levels, not a single member of Congress had actually read it during the 24 hours between when it was printed and when it was enacted.
More on the measure's mountains of domestic pork in next weeks postings---except to note that the Tea Party fiscal opposition has now been crushed once and for all. In fact, the action last night elevated the entire appropriated side of the Federal budget to a level that will add $4.2 trillion to the national debt over the next decade.
Still, the heart of the bill---a $695 billion defense appropriation for the current fiscal year---is the real tell. That represents a staggering $80 billion annual increase over the previous DOD spending caps---meaning that the Warfare State has busted loose from any vestige of restraint and rationality.
And it comes at the very moment that Imperial Washington has descended into outright bellicosity on all points of the political spectrum. Trump has taken himself hostage to the neocon interventionist establishment he campaigned against, while the Dems and progressive left have descended so deep into anti-Russian hysteria that they have become nothing less than handmaidens of the Warfare State.
Indeed, whatever impulse the Donald may have had toward curtailment of the America's imperial interventions was obliterated on Thursday when he announced that his war-hawk general at the national security advisor post, H.R. McMaster, would be replaced by a downright horror show.
We refer to former UN Ambassador John Bolton. You really can't say anything bad enough about him except that he is one war-loving sicko, who has rarely meet an unfriendly country he didn't want to bomb or a un-compliant regime he didn't want to change. That includes North Korea, Iran, Syria and Russia for starters.
But it's worse. Now that he has installed Mike Pompeo at the State Department, Bloody Gina Haspel at the CIA and Bolton next door to the Oval Office, the Donald has surrounded himself with the neocon war department. It would literally be impossible to find a worse trio of militaristic interventionists, nor is it possible to ignore the immediate implications of their appointments.
As we shall lay out in Part 2, the trio and the Donald will soon be ending the one constructive thing Obama did during his eight years----the nuke agreement with Iran. And that foolish action, in turn, will bust the middle east and the wider world wide open. It may even lead to military confrontation with Russia.
It also means that the impending fiscal carnage is now beyond recall, and that the mother of all "yield shocks" in the bond pits will soon shake Wall Street to the rafters.
Stay tuned, but also consider the State Wreck introduction below. We posted this in the New York Times exactly 5-years ago at what turns out to be the half-way point to the calamity now at hand.
From the New York Times, March 30, 2013 by David Stockman
The Dow Jones and Standard & Poor’s 500 indexes reached record highs on Thursday, having completely erased the losses since the stock market’s last peak, in 2007. But instead of cheering, we should be very afraid.
Over the last 13 years, the stock market has twice crashed and touched off a recession: American households lost $5 trillion in the 2000 dot-com bust and more than $7 trillion in the 2007 housing crash. Sooner or later — within a few years, I predict — this latest Wall Street bubble, inflated by an egregious flood of phony money from the Federal Reserve rather than real economic gains, will explode, too.
Since the S.&P. 500 first reached its current level, in March 2000, the mad money printers at the Federal Reserve have expanded their balance sheet sixfold (to $3.2 trillion from $500 billion). Yet during that stretch, economic output has grown by an average of 1.7 percent a year (the slowest since the Civil War); real business investment has crawled forward at only 0.8 percent per year; and the payroll job count has crept up at a negligible 0.1 percent annually. Real median family income growth has dropped 8 percent, and the number of full-time middle class jobs, 6 percent. The real net worth of the “bottom” 90 percent has dropped by one-fourth. The number of food stamp and disability aid recipients has more than doubled, to 59 million, about one in five Americans.
So the Main Street economy is failing while Washington is piling a soaring debt burden on our descendants, unable to rein in either the warfare state or the welfare state or raise the taxes needed to pay the nation’s bills. By default, the Fed has resorted to a radical, uncharted spree of money printing. But the flood of liquidity, instead of spurring banks to lend and corporations to spend, has stayed trapped in the canyons of Wall Street, where it is inflating yet another unsustainable bubble.
When it bursts, there will be no new round of bailouts like the ones the banks got in 2008. Instead, America will descend into an era of zero-sum austerity and virulent political conflict, extinguishing even today’s feeble remnants of economic growth.
THIS dyspeptic prospect results from the fact that we are now state-wrecked. With only brief interruptions, we’ve had eight decades of increasingly frenetic fiscal and monetary policy activism intended to counter the cyclical bumps and grinds of the free market and its purported tendency to underproduce jobs and economic output. The toll has been heavy.
As the federal government and its central-bank sidekick, the Fed, have groped for one goal after another — smoothing out the business cycle, minimizing inflation and unemployment at the same time, rolling out a giant social insurance blanket, promoting homeownership, subsidizing medical care, propping up old industries (agriculture, automobiles) and fostering new ones (“clean” energy, biotechnology) and, above all, bailing out Wall Street — they have now succumbed to overload, overreach and outside capture by powerful interests. The modern Keynesian state is broke, paralyzed and mired in empty ritual incantations about stimulating “demand,” even as it fosters a mutant crony capitalism that periodically lavishes the top 1 percent with speculative windfalls.
The culprits are bipartisan, though you’d never guess that from the blather that passes for political discourse these days. The state-wreck originated in 1933, when Franklin D. Roosevelt opted for fiat money (currency not fundamentally backed by gold), economic nationalism and capitalist cartels in agriculture and industry.
Under the exigencies of World War II (which did far more to end the Depression than the New Deal did), the state got hugely bloated, but remarkably, the bloat was put into brief remission during a midcentury golden era of sound money and fiscal rectitude with Dwight D. Eisenhower in the White House and William McChesney Martin Jr. at the Fed.
Then came Lyndon B. Johnson’s “guns and butter” excesses, which were intensified over one perfidious weekend at Camp David, Md., in 1971, when Richard M. Nixon essentially defaulted on the nation’s debt obligations by finally ending the convertibility of gold to the dollar. That one act — arguably a sin graver than Watergate — meant the end of national financial discipline and the start of a four-decade spree during which we have lived high on the hog, running a cumulative $8 trillion current-account deficit. In effect, America underwent an internal leveraged buyout, raising our ratio of total debt (public and private) to economic output to about 3.6 from its historic level of about 1.6. Hence the $30 trillion in excess debt (more than half the total debt, $56 trillion) that hangs over the American economy today.
This explosion of borrowing was the stepchild of the floating-money contraption deposited in the Nixon White House by Milton Friedman, the supposed hero of free-market economics who in fact sowed the seed for a never-ending expansion of the money supply. The Fed, which celebrates its centenary this year, fueled a roaring inflation in goods and commodities during the 1970s that was brought under control only by the iron resolve of Paul A. Volcker, its chairman from 1979 to 1987.
Under his successor, the lapsed hero Alan Greenspan, the Fed dropped Friedman’s penurious rules for monetary expansion, keeping interest rates too low for too long and flooding Wall Street with freshly minted cash. What became known as the “Greenspan put” — the implicit assumption that the Fed would step in if asset prices dropped, as they did after the 1987 stock-market crash — was reinforced by the Fed’s unforgivable 1998 bailout of the hedge fund Long-Term Capital Management.
That Mr. Greenspan’s loose monetary policies didn’t set off inflation was only because domestic prices for goods and labor were crushed by the huge flow of imports from the factories of Asia. By offshoring America’s tradable-goods sector, the Fed kept the Consumer Price Index contained, but also permitted the excess liquidity to foster a roaring inflation in financial assets. Mr. Greenspan’s pandering incited the greatest equity boom in history, with the stock market rising fivefold between the 1987 crash and the 2000 dot-com bust.
Soon Americans stopped saving and consumed everything they earned and all they could borrow. The Asians, burned by their own 1997 financial crisis, were happy to oblige us. They — China and Japan above all — accumulated huge dollar reserves, transforming their central banks into a string of monetary roach motels where sovereign debt goes in but never comes out. We’ve been living on borrowed time — and spending Asians’ borrowed dimes.
This dynamic reinforced the Reaganite shibboleth that “deficits don’t matter” and the fact that nearly $5 trillion of the nation’s $12 trillion in “publicly held” debt is actually sequestered in the vaults of central banks. The destruction of fiscal rectitude under Ronald Reagan — one reason I resigned as his budget chief in 1985 — was the greatest of his many dramatic acts. It created a template for the Republicans’ utter abandonment of the balanced-budget policies of Calvin Coolidge and allowed George W. Bush to dive into the deep end, bankrupting the nation through two misbegotten and unfinanced wars, a giant expansion of Medicare and a tax-cutting spree for the wealthy that turned K Street lobbyists into the de facto office of national tax policy. In effect, the G.O.P. embraced Keynesianism — for the wealthy.
The explosion of the housing market, abetted by phony credit ratings, securitization shenanigans and willful malpractice by mortgage lenders, originators and brokers, has been well documented. Less known is the balance-sheet explosion among the top 10 Wall Street banks during the eight years ending in 2008. Though their tiny sliver of equity capital hardly grew, their dependence on unstable “hot money” soared as the regulatory harness the Glass-Steagall Act had wisely imposed during the Depression was totally dismantled.
Within weeks of the Lehman Brothers bankruptcy in September 2008, Washington, with Wall Street’s gun to its head, propped up the remnants of this financial mess in a panic-stricken melee of bailouts and money-printing that is the single most shameful chapter in American financial history.
There was never a remote threat of a Great Depression 2.0 or of a financial nuclear winter, contrary to the dire warnings of Ben S. Bernanke, the Fed chairman since 2006. The Great Fear — manifested by the stock market plunge when the House voted down the TARP bailout before caving and passing it — was purely another Wall Street concoction. Had President Bush and his Goldman Sachs adviser (a k a Treasury Secretary) Henry M. Paulson Jr. stood firm, the crisis would have burned out on its own and meted out to speculators the losses they so richly deserved. The Main Street banking system was never in serious jeopardy, ATMs were not going dark and the money market industry was not imploding.
Instead, the White House, Congress and the Fed, under Mr. Bush and then President Obama, made a series of desperate, reckless maneuvers that were not only unnecessary but ruinous. The auto bailouts, for example, simply shifted jobs around — particularly to the aging, electorally vital Rust Belt — rather than saving them. The “green energy” component of Mr. Obama’s stimulus was mainly a nearly $1 billion giveaway to crony capitalists, like the venture capitalist John Doerr and the self-proclaimed outer-space visionary Elon Musk, to make new toys for the affluent.
Less than 5 percent of the $800 billion Obama stimulus went to the truly needy for food stamps, earned-income tax credits and other forms of poverty relief. The preponderant share ended up in money dumps to state and local governments, pork-barrel infrastructure projects, business tax loopholes and indiscriminate middle-class tax cuts. The Democratic Keynesians, as intellectually bankrupt as their Republican counterparts (though less hypocritical), had no solution beyond handing out borrowed money to consumers, hoping they would buy a lawn mower, a flat-screen TV or, at least, dinner at Red Lobster.
But even Mr. Obama’s hopelessly glib policies could not match the audacity of the Fed, which dropped interest rates to zero and then digitally printed new money at the astounding rate of $600 million per hour. Fast-money speculators have been “purchasing” giant piles of Treasury debt and mortgage-backed securities, almost entirely by using short-term overnight money borrowed at essentially zero cost, thanks to the Fed. Uncle Ben has lined their pockets.
If and when the Fed — which now promises to get unemployment below 6.5 percent as long as inflation doesn’t exceed 2.5 percent — even hints at shrinking its balance sheet, it will elicit a tidal wave of sell orders, because even a modest drop in bond prices would destroy the arbitrageurs’ profits. Notwithstanding Mr. Bernanke’s assurances about eventually, gradually making a smooth exit, the Fed is domiciled in a monetary prison of its own making.
While the Fed fiddles, Congress burns. Self-titled fiscal hawks like Paul D. Ryan, the chairman of the House Budget Committee, are terrified of telling the truth: that the 10-year deficit is actually $15 trillion to $20 trillion, far larger than the Congressional Budget Office’s estimate of $7 trillion. Its latest forecast, which imagines 16.4 million new jobs in the next decade, compared with only 2.5 million in the last 10 years, is only one of the more extreme examples of Washington’s delusions.
Even a supposedly “bold” measure — linking the cost-of-living adjustment for Social Security payments to a different kind of inflation index — would save just $200 billion over a decade, amounting to hardly 1 percent of the problem. Mr. Ryan’s latest budget shamelessly gives Social Security and Medicare a 10-year pass, notwithstanding that a fair portion of their nearly $19 trillion cost over that decade would go to the affluent elderly. At the same time, his proposal for draconian 30 percent cuts over a decade on the $7 trillion safety net — Medicaid, food stamps and the earned-income tax credit — is another front in the G.O.P.’s war against the 99 percent.
Without any changes, over the next decade or so, the gross federal debt, now nearly $17 trillion, will hurtle toward $30 trillion and soar to 150 percent of gross domestic product from around 105 percent today. Since our constitutional stasis rules out any prospect of a “grand bargain,” the nation’s fiscal collapse will play out incrementally, like a Greek/Cypriot tragedy, in carefully choreographed crises over debt ceilings, continuing resolutions and temporary budgetary patches.
The future is bleak. The greatest construction boom in recorded history — China’s money dump on infrastructure over the last 15 years — is slowing. Brazil, India, Russia, Turkey, South Africa and all the other growing middle-income nations cannot make up for the shortfall in demand. The American machinery of monetary and fiscal stimulus has reached its limits. Japan is sinking into old-age bankruptcy and Europe into welfare-state senescence. The new rulers enthroned in Beijing last year know that after two decades of wild lending, speculation and building, even they will face a day of reckoning, too.
THE state-wreck ahead is a far cry from the “Great Moderation” proclaimed in 2004 by Mr. Bernanke, who predicted that prosperity would be everlasting because the Fed had tamed the business cycle and, as late as March 2007, testified that the impact of the subprime meltdown “seems likely to be contained.” Instead of moderation, what’s at hand is a Great Deformation, arising from a rogue central bank that has abetted the Wall Street casino, crucified savers on a cross of zero interest rates and fueled a global commodity bubble that erodes Main Street living standards through rising food and energy prices — a form of inflation that the Fed fecklessly disregards in calculating inflation.
These policies have brought America to an end-stage metastasis. The way out would be so radical it can’t happen. It would necessitate a sweeping divorce of the state and the market economy. It would require a renunciation of crony capitalism and its first cousin: Keynesian economics in all its forms. The state would need to get out of the business of imperial hubris, economic uplift and social insurance and shift its focus to managing and financing an effective, affordable, means-tested safety net.
All this would require drastic deflation of the realm of politics and the abolition of incumbency itself, because the machinery of the state and the machinery of re-election have become conterminous. Prying them apart would entail sweeping constitutional surgery: amendments to give the president and members of Congress a single six-year term, with no re-election; providing 100 percent public financing for candidates; strictly limiting the duration of campaigns (say, to eight weeks); and prohibiting, for life, lobbying by anyone who has been on a legislative or executive payroll. It would also require overturning Citizens United and mandating that Congress pass a balanced budget, or face an automatic sequester of spending.
It would also require purging the corrosive financialization that has turned the economy into a giant casino since the 1970s. This would mean putting the great Wall Street banks out in the cold to compete as at-risk free enterprises, without access to cheap Fed loans or deposit insurance. Banks would be able to take deposits and make commercial loans, but be banned from trading, underwriting and money management in all its forms.
It would require, finally, benching the Fed’s central planners, and restoring the central bank’s original mission: to provide liquidity in times of crisis but never to buy government debt or try to micromanage the economy. Getting the Fed out of the financial markets is the only way to put free markets and genuine wealth creation back into capitalism.
That, of course, will never happen because there are trillions of dollars of assets, from Shanghai skyscrapers to Fortune 1000 stocks to the latest housing market “recovery,” artificially propped up by the Fed’s interest-rate repression. The United States is broke — fiscally, morally, intellectually — and the Fed has incited a global currency war (Japan just signed up, the Brazilians and Chinese are angry, and the German-dominated euro zone is crumbling) that will soon overwhelm it. When the latest bubble pops, there will be nothing to stop the collapse. If this sounds like advice to get out of the markets and hide out in cash, it is.
Friday, March 23, 2018
SC161-12
https://srsroccoreport.com/cracks-now-appearing-in-the-worlds-major-oil-industry/
CRACKS NOW APPEARING IN THE WORLD’S MAJOR OIL INDUSTRY
As the sell-off in the broader stock markets intensifies, it will be bad news for the world’s largest oil companies. Why? Because cracks are already beginning to appear in the biggest and most profitable global oil companies. While rising costs and higher debt levels have been plaguing the U.S. shale oil industry, these negative factors are now impacting the major oil companies as well.
When the oil price fell below $100 in 2014, it spelled doom for the U.S. and global oil industry. As oil prices continued to decline, energy companies were forced to increase their debt and reduce their capital expenditures (CAPEX). Cutting CAPEX spending while adding debt aren’t a good recipe for positive financial earning in the future.
According to several energy analysts, they believe 2018 will be a turnaround year for the major oil companies. Unfortunately, the fate of the price of petroleum and the oil companies are tied to the broader markets. When the markets rise, it’s good for the oil price and energy companies, and when the markets fall, then the opposite is true. However, the next major market selloff will likely cause irreversible damage to the global oil industry.
Investors need to realize that the global oil industry required $120+ oil in 2013 to replace reserves and bring on more oil production. When that price level was not obtained that year, oil companies began to cut CAPEX spending even before the price fell below $100 a barrel in 2014. Today, with the price of oil trading at $64, it is approximately half of what the global oil industry requires to fund new production growth.
So, there lies the rub. Even though oil companies are more profitable currently, it was achieved by destroying future production. As we can see in the chart below, CAPEX spending in eight of the largest global oil companies fell 56% from $245 billion in 2013 to $109 billion in 2017:
Yes, it’s true that a lower oil price forces oil companies to cut CAPEX spending to remain profitable, but it will also negatively impact their earnings in the future. While all the major oil companies cut their CAPEX spending significantly over the past four years, Brazil’s Petrobras and ConocoPhillips both reduced it the most by 70%.
Now, to offset the falling oil price, many of the oil companies resorted to adding more debt to pay shareholder dividends or to fund CAPEX spending (or both). For example, Shell’s long-term debt increased from $36 billion in 2013 to $74 billion in 2017 while ExxonMobil, one of the most profitable major oil companies in the world, saw its debt increase significantly from $7 billion to $24 billion during the same period:
These eight major oil companies have increased their debt right at the very time the stock markets are beginning rolling over. As I have mentioned, when the stock market suffers a big correction-crash, so will the oil price. A falling oil price will force oil companies to cut their CAPEX spending, once again, to provide positive cash flow for their shareholders. Furthermore, rising debt levels and interest rates have severely cut into these energy companies’ profits.
In 2013, these eight oil companies paid $5.7 billion to service the interest on their debt. However, that nearly tripled to $15.4 billion in 2017. Thus, $10 billion in profits were vaporized just so these major oil companies could service their debt. We must remember, during major market corrections, ASSET VALUES DECLINE, while DEBTS & LIABILITIES stay the same. Which means, a much lower oil price will make it increasingly difficult for these oil majors to remain profitable as a large portion of their profits is now being used to pay their interest expense:
These three charts represent the CRACKS that are now beginning to appear in world’s largest oil companies. Even though the oil majors have been somewhat immune to much of the negative issues plaguing the U.S. shale energy industry, it seems like the disease is finally spreading to them. It’s just a matter of time before the Falling EROI – Energy Returned On Investment and Thermodynamics starts bankrupting oil companies that have been around for more than half of a century.
While this may seem like I am overly pessimistic, the data and the facts speak for themselves.
Lastly, the public has no clue just how critical the oil supply is to our Just-In-Time-Inventory-Economy. Even though the housing market is still booming, what would our Suburban Economy look like with 50+% less of petroleum liquid fuels?? Please don’t belch out that Electric Cars (EV’s) are the answer… they are not. Also, the current electric battery technology used to power a semi-tractor trailer would only have enough energy to also transport a fraction (2,000 lbs) of the freight compared to a typical diesel engine (48,000-50,000 lbs).
Unfortunately, technology has not solved our problems…. it has just created even bigger ones. When you understand this simple principle, then it’s easy to see how the world unfolds in the future.
CRACKS NOW APPEARING IN THE WORLD’S MAJOR OIL INDUSTRY
As the sell-off in the broader stock markets intensifies, it will be bad news for the world’s largest oil companies. Why? Because cracks are already beginning to appear in the biggest and most profitable global oil companies. While rising costs and higher debt levels have been plaguing the U.S. shale oil industry, these negative factors are now impacting the major oil companies as well.
When the oil price fell below $100 in 2014, it spelled doom for the U.S. and global oil industry. As oil prices continued to decline, energy companies were forced to increase their debt and reduce their capital expenditures (CAPEX). Cutting CAPEX spending while adding debt aren’t a good recipe for positive financial earning in the future.
According to several energy analysts, they believe 2018 will be a turnaround year for the major oil companies. Unfortunately, the fate of the price of petroleum and the oil companies are tied to the broader markets. When the markets rise, it’s good for the oil price and energy companies, and when the markets fall, then the opposite is true. However, the next major market selloff will likely cause irreversible damage to the global oil industry.
Investors need to realize that the global oil industry required $120+ oil in 2013 to replace reserves and bring on more oil production. When that price level was not obtained that year, oil companies began to cut CAPEX spending even before the price fell below $100 a barrel in 2014. Today, with the price of oil trading at $64, it is approximately half of what the global oil industry requires to fund new production growth.
So, there lies the rub. Even though oil companies are more profitable currently, it was achieved by destroying future production. As we can see in the chart below, CAPEX spending in eight of the largest global oil companies fell 56% from $245 billion in 2013 to $109 billion in 2017:
Yes, it’s true that a lower oil price forces oil companies to cut CAPEX spending to remain profitable, but it will also negatively impact their earnings in the future. While all the major oil companies cut their CAPEX spending significantly over the past four years, Brazil’s Petrobras and ConocoPhillips both reduced it the most by 70%.
Now, to offset the falling oil price, many of the oil companies resorted to adding more debt to pay shareholder dividends or to fund CAPEX spending (or both). For example, Shell’s long-term debt increased from $36 billion in 2013 to $74 billion in 2017 while ExxonMobil, one of the most profitable major oil companies in the world, saw its debt increase significantly from $7 billion to $24 billion during the same period:
These eight major oil companies have increased their debt right at the very time the stock markets are beginning rolling over. As I have mentioned, when the stock market suffers a big correction-crash, so will the oil price. A falling oil price will force oil companies to cut their CAPEX spending, once again, to provide positive cash flow for their shareholders. Furthermore, rising debt levels and interest rates have severely cut into these energy companies’ profits.
In 2013, these eight oil companies paid $5.7 billion to service the interest on their debt. However, that nearly tripled to $15.4 billion in 2017. Thus, $10 billion in profits were vaporized just so these major oil companies could service their debt. We must remember, during major market corrections, ASSET VALUES DECLINE, while DEBTS & LIABILITIES stay the same. Which means, a much lower oil price will make it increasingly difficult for these oil majors to remain profitable as a large portion of their profits is now being used to pay their interest expense:
These three charts represent the CRACKS that are now beginning to appear in world’s largest oil companies. Even though the oil majors have been somewhat immune to much of the negative issues plaguing the U.S. shale energy industry, it seems like the disease is finally spreading to them. It’s just a matter of time before the Falling EROI – Energy Returned On Investment and Thermodynamics starts bankrupting oil companies that have been around for more than half of a century.
While this may seem like I am overly pessimistic, the data and the facts speak for themselves.
Lastly, the public has no clue just how critical the oil supply is to our Just-In-Time-Inventory-Economy. Even though the housing market is still booming, what would our Suburban Economy look like with 50+% less of petroleum liquid fuels?? Please don’t belch out that Electric Cars (EV’s) are the answer… they are not. Also, the current electric battery technology used to power a semi-tractor trailer would only have enough energy to also transport a fraction (2,000 lbs) of the freight compared to a typical diesel engine (48,000-50,000 lbs).
Unfortunately, technology has not solved our problems…. it has just created even bigger ones. When you understand this simple principle, then it’s easy to see how the world unfolds in the future.
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