https://www.peakprosperity.com/blog/114062/end-stimulus-and-start-crash
The End Of Stimulus? (And The Start Of The Crash?)
What the most important chart in the world is predicting
Back in January of 2016 we saw what appeared to be, and in my opinion should have been, the end of the Everything Bubble blown by the word's central banking cartel.
The carnage started in the emerging markets. Highly-leveraged positions and carry trades began to unwind. That's a fancy way of saying that all the big, sophisticated investors -- who were busy borrowing heavily in countries with cheap money (the US, Japan, and Europe) and using that debt to speculate in markets offering higher yields (junk debt, emerging markets, stocks, etc.) -- began to reverse their trades.
It quickly devolved into a “Sell everything!” scramble. We saw the dollar spike and stocks fall -- with emerging markets taking the full brunt of the carnage as their stock markets rapidly fell into bear territory, their currencies fell, and their bonds were destroyed.
Until...
Very early one morning in February of 2016 everything U-turned and rocketed higher. Suddenly and magically, the panic was over. This wasn’t the invisible hand of the market at work; it was the very-visible hand of central bank intervention.
With the benefit of hindsight, we now have a clear picture of what happened. The central banks huddled together, a bold (desperate?) plan was hatched, and key printing presses around the world were sent into overdrive. In the months to follow, the European Central Bank (ECB) and the Bank of Japan (BoJ) went on a record-breaking money printing spree:
The red arrows in the charts above mark this moment when the “markets” were saved.
Or, more specifically, when the portfolios the ultra-wealthy were "saved", as the assets within were boosted higher (yet again) by the central banks printing money from thin air:
Addicted To Money Printing
So what caused the weakness in early 2016 that spooked the system so much? The central banks themselves.
After many years of force-feeding stimulus into the global economy to create a "recovery", the central banks have become increasingly concerned that asset prices have become too dependent on said stimulus. So in late 2015, the banks took their feet off of their monetary gas pedals for a bit to see what might happen.
They were hoping that the markets could be gradually weaned off of their stimulus dependence with few ill effects. They wanted to engineer a "soft landing", where if priced declined, they'd come down gradually and not too much.
That didn't happen.
Instead, the cheap-money-addicted markets instantly started expressing massive withdrawal complications.
To re-acquaint you with how quickly things were devolving back then, these are news headlines pulled from an article I wrote back in the middle of January 2016:
Wal-Mart closing 269 stores, 154 in the US.
Business inventories to sales at new cycle highs
U.S. freight volume falls for first time in almost three years
US retail sales fall 0.1% in December
Empire State index weakens to recession lows.
South African rand hits new all-time lows in 2016
Brazil’s Real Falls Sharply Against Dollar
Brazil Unemployment Rate Rises to 9%
Canadian Dollar Hits 13 Year Low Against US Dollar
U.S. Energy Junk Bond Spreads At Record Width
Nigeria’s Currency Plummets On Open Market
Mexico’s Peso Hits New All-Time Low
Chinese Stocks Enter Bear Market (again)
European Stocks Enter Bear Market
Sound familiar at all? It should. These sound exactly like the headlines in the news today, here in May of 2018.
We are still paying the price from 2008, when the central banks committed a massive error by not allowing the markets and their bad debts to actually clear. Yes, it would have been acutely painful; but we would have been through the worst within a year or two and in the process restored the system to a much healthier and sustainable state.
Instead, the bad actors were protected (and rewarded!) and the root fundamental problems were literally 'papered over', left to continue to fester unobserved ever since. Similarly in early 2016, the central banks once again committed the same sin by rescuing everything with another wall of fresh, thin-air money.
To drive home how much, below is a chart showing the yearly change in world central bank balance sheets. The relative ‘area under the curve’ of each major period of money printing gives us a sense of the scale. To help you eyeball it, I’ve placed similar-sized orange rectangles in each area. Key to note is that central money printing has been increasing -- not decreasing -- the further out we've gotten from the Great Financial Crisis:
If we've been in "recovery" for years now, as the central banks have been touting, then why has 2016-2108 seen the most stimulus ever injected into the system?
History has taught us that we should trust or leaders' actions far more than their words. And their actions at this time indicate panic.
What is it that has them so worried? We should all ponder that question long and hard. I’m convinced that they know as well as we do that, once the over-inflated ““markets”” created by the central banks can no longer be sustained at their current nose-bleed heights, the damage will be extraordinary and unstoppable.
The End Of Stimulus? (And The Start Of The Crash?)
The pain of the 2008 crash will seem like a mere flesh wound compared to the devastation the next deflationary wave will wreak.
Of course, the central banks have no interest in seeing that happen and will, once more, do all they can to "rescue" the markets.
But will they act in time? More to the point, given all of their very public commitments to raising rates and reducing their balance sheets, will they allow a market correction to happen in the near term? (presumably, so they can ride to the rescue soon after as "saviors")
Politically, the prospect of showering even more wealth on the 0.001% is going to be a tough sell. This is especially true in Europe -- in Italy, Greece and Spain where the populace is suffering mightily already and is in no mood to further enrich the ultra-wealthy.
So it would seem that the central banks, at least publicly, have to stick to their stated plans to reduce their levels of money printing/balance sheet expansion.
As of right now, they are on track to end worldwide simulus in early 2019, when their collective net change in assets will dip below $0 for the first time in many years:
Given the importance of central bank purchases and market interventions, the above chart is probably the most important one in existence for divining where financial asset prices are headed.
If global monthly stimulus indeed drops to $0, then Watch out below!
Who know if the future will plays out anything like the projections given above? The central banks have proven weak-kneed at every tiny moment of market wobbliness. To date, they've chosen to print and pent and then print some more at every opportunity where the "“markets”" might have corrected.
But we all know that this charade cannot continue forever. Sooner or later it has to stop. Given the blow-ups we're now seeing in the emerging markets, there’s clearly serious trouble brewing somewhere in the system.
In Part 2: The Breaking Point Is Upon Us we provide plenty of data to support that claim.
The currencies and bonds of five countries are now in the danger zone, and many more teeter on the edge. My analysis is that the central banks will resort to their usual money printing to resolve the issue, but for reasons I explain in Part 2, these efforts will fail at some point in the next year -- and spectacularly so.
When today's Everything Bubble bursts, the effect will be nothing short of catastrophic as 50 years of excessive debt accumulation suddenly deflates.
Given the dangers involved, you should expect the central banks to 'go nuclear' in thier deflation-fighting efforts by sending “money to main street” -- likely in the form of a universal basic income, or a check from the Treasury refunding your last 3 years of tax payments, or maybe even an electronic deposit directly from the Federal Reserve into your bank account.
That's when the inevitable fiat currency crisis will begin in earnest. At that time you’ll need to run, not walk, to buy anything with intrinsic value that can't be inflated away -- before your currency becomes worthless....
Saturday, May 26, 2018
SC165-15
https://caitlinjohnstone.com/2018/05/25/brilliant-strategy-of-offering-north-korea-the-libya-model-somehow-falls-through/
Brilliant Strategy Of Offering North Korea “The Libya Model” Somehow Falls Through
Three days before President Trump announced him as the new National Security Advisor, deranged mutant death walrus John Bolton appeared on Radio Free Asia and said of negotiations with North Korea, “I think we should insist that if this meeting is going to take place, it will be similar to discussions we had with Libya 13 or 14 years ago.”
Bolton has been loudly and publicly advocating “the Libya model” with the DPRK ever since.
“I think we’re looking at the Libya model of 2003, 2004,” Bolton said on Face the Nation last month, and said the same on Fox News Sunday in case anyone failed to get the message.
Bolton never bothered to refine his message by saying, for example, “Without the part where we betray and invade them and get their leader mutilated to death in the streets.” He just said they’re doing Libya again.
This was what John Bolton was saying before he was hired, and this was what John Bolton continued to say after he was hired. This was what John Bolton was hired to do. He was hired to sabotage peace and facilitate death and destruction. That is what he does. That is what he is for. Can openers open cans, John Bolton starts wars. You don’t buy a can opener to rotate your tires, and you don’t hire John Bolton to facilitate peace.
It should have surprised no one, then, when the administration saw Bolton’s Libya comments and raised him a canceled peace talk.
“You know, there were some talk about the Libya model last week,” Vice President Pence told Fox News on Saturday. “And you know, as the president made clear, you know, this will only end like the Libya model ended if Kim Jong-un doesn’t make a deal.”
“Some people saw that as a threat,” Fox’s Martha MacCallum replied, because there is no other way it could possibly be interpreted.
Pence blathered something about it being “a fact”, not a threat, but that is because he is a fake plastic doll manufactured by Raytheon. It was an extremely obvious and blatant threat, so of course North Korea responded accordingly. Below is the full text of the response to Pence’s statement by North Korea’s Vice Foreign Minister Choe Son Hui, which reportedly was the basis for Trump’s cancellation of the scheduled summit in Singapore:
At an interview with Fox News on May 21, US Vice-President Pence made unbridled and impudent remarks that North Korea might end like Libya, military option for North Korea never came off the table, the US needs complete, verifiable and irreversible denuclearisation, and so on.
As a person involved in the US affairs, I cannot suppress my surprise at such ignorant and stupid remarks gushing out from the mouth of the US vice-president.
If he is vice-president of “single superpower” as is in name, it will be proper for him to know even a little bit about the current state of global affairs and to sense to a certain degree the trends in dialogue and the climate of détente.
We could surmise more than enough what a political dummy he is as he is trying to compare the DPRK, a nuclear weapon state, to Libya that had simply installed a few items of equipment and fiddled around with them.
Soon after the White House National Security Adviser Bolton made the reckless remarks, Vice-President Pence has again spat out nonsense that the DPRK would follow in Libya’s footstep.
It is to be underlined, however, that in order not to follow in Libya’s footstep, we paid a heavy price to build up our powerful and reliable strength that can defend ourselves and safeguard peace and security in the Korean peninsula and the region.
In view of the remarks of the US high-ranking politicians who have not yet woken up to this stark reality and compare the DPRK to Libya that met a tragic fate, I come to think that they know too little about us.
To borrow their words, we can also make the US taste an appalling tragedy it has neither experienced nor even imagined up to now.
Before making such reckless threatening remarks without knowing exactly who he is facing, Pence should have seriously considered the terrible consequences of his words.
It is the US who has asked for dialogue, but now it is misleading the public opinion as if we have invited them to sit with us.
I only wonder what is the ulterior motive behind its move and what is it the US has calculated to gain from that.
We will neither beg the US for dialogue nor take the trouble to persuade them if they do not want to sit together with us.
Whether the US will meet us at a meeting room or encounter us at nuclear-to-nuclear showdown is entirely dependent upon the decision and behavior of the United States.
In case the US offends against our goodwill and clings to unlawful and outrageous acts, I will put forward a suggestion to our supreme leadership for reconsidering the DPRK-US summit.
The message of Trump’s withdrawal couldn’t be more clear: we get to threaten you, you don’t get to threaten us. This extremely one-sided dynamic is not a style of negotiation that any sane person would go along with if they didn’t have to, and as Choe pointed out, North Korea doesn’t have to. Libya had only the barest rudiments of what could have eventually one day become a nuclear program. North Korea has a full arsenal, and thus a much bigger stack of bargaining chips. A negotiation at gunpoint can only be one-sided if the other side has no gun.
This negotiation was never meant to succeed. Publicly stating that North Korea gets “the Libya model” was like a hostage negotiator offering “the Waco model”. It was plainly designed to fail.
Of course the US-centralized empire has no intention of a mutually beneficial negotiation with a sovereign nation. That isn’t how imperialism works. You either join the mass of tightly allied nations which function in effective unison on foreign policy, or you are smashed like Libya. This policy of threatening nations to join the empire on pain of decimation is what is causing all nonconforming nations to form into a growing and increasingly close alliance of their own, and it is what is causing them to seek nuclear weapons so that they don’t end up like Libya.
If there’s a silver lining to be found in all of this, it was summed up by the Ron Paul Liberty Report‘s Daniel McAdams:
“I think Trump is making America great again by making America irrelevant. We are irrelevant in the North and South peace talks right now. The ball is completely in [South Korea President] Moon’s court, what is he going to do next; we’ve basically recused ourselves from the whole process. Which is very, very good for us. So I feel rather upbeat. I think although it’s always better to talk to people, and it would be better to talk, but in the current environment, for us to get out of the way is really the non-interventionist position.”
America getting out of the way would be great for everyone, especially for the Americans whose resources are being relentlessly consumed by constant aggressive interventionism and an oligarchy whose vastly disproportionate wealth is propped up with the barrel of a gun. The natural drive of plutocratic smash-and-grab imperialism is in the exact opposite direction of non-interventionism, but as people continue to wake up from the madness and the rest of the world refuses to be consumed by the blob, it’s possible that the empire ends not with a bang but with a barely noticed fizzle. And that is my sincere prayer for all of us.
Brilliant Strategy Of Offering North Korea “The Libya Model” Somehow Falls Through
Three days before President Trump announced him as the new National Security Advisor, deranged mutant death walrus John Bolton appeared on Radio Free Asia and said of negotiations with North Korea, “I think we should insist that if this meeting is going to take place, it will be similar to discussions we had with Libya 13 or 14 years ago.”
Bolton has been loudly and publicly advocating “the Libya model” with the DPRK ever since.
“I think we’re looking at the Libya model of 2003, 2004,” Bolton said on Face the Nation last month, and said the same on Fox News Sunday in case anyone failed to get the message.
Bolton never bothered to refine his message by saying, for example, “Without the part where we betray and invade them and get their leader mutilated to death in the streets.” He just said they’re doing Libya again.
This was what John Bolton was saying before he was hired, and this was what John Bolton continued to say after he was hired. This was what John Bolton was hired to do. He was hired to sabotage peace and facilitate death and destruction. That is what he does. That is what he is for. Can openers open cans, John Bolton starts wars. You don’t buy a can opener to rotate your tires, and you don’t hire John Bolton to facilitate peace.
It should have surprised no one, then, when the administration saw Bolton’s Libya comments and raised him a canceled peace talk.
“You know, there were some talk about the Libya model last week,” Vice President Pence told Fox News on Saturday. “And you know, as the president made clear, you know, this will only end like the Libya model ended if Kim Jong-un doesn’t make a deal.”
“Some people saw that as a threat,” Fox’s Martha MacCallum replied, because there is no other way it could possibly be interpreted.
Pence blathered something about it being “a fact”, not a threat, but that is because he is a fake plastic doll manufactured by Raytheon. It was an extremely obvious and blatant threat, so of course North Korea responded accordingly. Below is the full text of the response to Pence’s statement by North Korea’s Vice Foreign Minister Choe Son Hui, which reportedly was the basis for Trump’s cancellation of the scheduled summit in Singapore:
At an interview with Fox News on May 21, US Vice-President Pence made unbridled and impudent remarks that North Korea might end like Libya, military option for North Korea never came off the table, the US needs complete, verifiable and irreversible denuclearisation, and so on.
As a person involved in the US affairs, I cannot suppress my surprise at such ignorant and stupid remarks gushing out from the mouth of the US vice-president.
If he is vice-president of “single superpower” as is in name, it will be proper for him to know even a little bit about the current state of global affairs and to sense to a certain degree the trends in dialogue and the climate of détente.
We could surmise more than enough what a political dummy he is as he is trying to compare the DPRK, a nuclear weapon state, to Libya that had simply installed a few items of equipment and fiddled around with them.
Soon after the White House National Security Adviser Bolton made the reckless remarks, Vice-President Pence has again spat out nonsense that the DPRK would follow in Libya’s footstep.
It is to be underlined, however, that in order not to follow in Libya’s footstep, we paid a heavy price to build up our powerful and reliable strength that can defend ourselves and safeguard peace and security in the Korean peninsula and the region.
In view of the remarks of the US high-ranking politicians who have not yet woken up to this stark reality and compare the DPRK to Libya that met a tragic fate, I come to think that they know too little about us.
To borrow their words, we can also make the US taste an appalling tragedy it has neither experienced nor even imagined up to now.
Before making such reckless threatening remarks without knowing exactly who he is facing, Pence should have seriously considered the terrible consequences of his words.
It is the US who has asked for dialogue, but now it is misleading the public opinion as if we have invited them to sit with us.
I only wonder what is the ulterior motive behind its move and what is it the US has calculated to gain from that.
We will neither beg the US for dialogue nor take the trouble to persuade them if they do not want to sit together with us.
Whether the US will meet us at a meeting room or encounter us at nuclear-to-nuclear showdown is entirely dependent upon the decision and behavior of the United States.
In case the US offends against our goodwill and clings to unlawful and outrageous acts, I will put forward a suggestion to our supreme leadership for reconsidering the DPRK-US summit.
The message of Trump’s withdrawal couldn’t be more clear: we get to threaten you, you don’t get to threaten us. This extremely one-sided dynamic is not a style of negotiation that any sane person would go along with if they didn’t have to, and as Choe pointed out, North Korea doesn’t have to. Libya had only the barest rudiments of what could have eventually one day become a nuclear program. North Korea has a full arsenal, and thus a much bigger stack of bargaining chips. A negotiation at gunpoint can only be one-sided if the other side has no gun.
This negotiation was never meant to succeed. Publicly stating that North Korea gets “the Libya model” was like a hostage negotiator offering “the Waco model”. It was plainly designed to fail.
Of course the US-centralized empire has no intention of a mutually beneficial negotiation with a sovereign nation. That isn’t how imperialism works. You either join the mass of tightly allied nations which function in effective unison on foreign policy, or you are smashed like Libya. This policy of threatening nations to join the empire on pain of decimation is what is causing all nonconforming nations to form into a growing and increasingly close alliance of their own, and it is what is causing them to seek nuclear weapons so that they don’t end up like Libya.
If there’s a silver lining to be found in all of this, it was summed up by the Ron Paul Liberty Report‘s Daniel McAdams:
“I think Trump is making America great again by making America irrelevant. We are irrelevant in the North and South peace talks right now. The ball is completely in [South Korea President] Moon’s court, what is he going to do next; we’ve basically recused ourselves from the whole process. Which is very, very good for us. So I feel rather upbeat. I think although it’s always better to talk to people, and it would be better to talk, but in the current environment, for us to get out of the way is really the non-interventionist position.”
America getting out of the way would be great for everyone, especially for the Americans whose resources are being relentlessly consumed by constant aggressive interventionism and an oligarchy whose vastly disproportionate wealth is propped up with the barrel of a gun. The natural drive of plutocratic smash-and-grab imperialism is in the exact opposite direction of non-interventionism, but as people continue to wake up from the madness and the rest of the world refuses to be consumed by the blob, it’s possible that the empire ends not with a bang but with a barely noticed fizzle. And that is my sincere prayer for all of us.
Friday, May 25, 2018
SC165-14
http://www.informationclearinghouse.info/49488.htm
Washington Holds Gun to North Korea’s Head
The prospects for peace diplomacy between the US and North Korea took a sudden hit after President Donald Trump issued an extraordinary threat to Kim Jong Un. It was in effect a death threat.
Trump warned last week that if the North Korean leader does not comply with Washington’s demands for complete denuclearization, then Kim would “end up like Gaddafi”. Trump added that North Korea would be “decimated” if it did not give up its nuclear weapons.
Arguably, Trump’s rhetoric of violence towards another state is a violation of international law and the United Nations charter.
It was not the time first time the American president has engaged in criminal intimidation of the northeast Asian nation. Last September, he told the United Nations general assembly that North Korea would be “totally destroyed”.
Yet US news media are spinning the latest row by blaming North Korea for being devious, and backtracking “in typical fashion” from negotiations, allegedly in order to extract more concessions.
US media are ignoring the glaringly obvious fact that Washington is holding a gun to North Korea’s head, and in Mafia-style, making an offer it thinks Pyongyang “can’t refuse”.
All of a sudden, the much-anticipated summit between Trump and Kim – scheduled for June 12 in Singapore – has been thrown into doubt. North Korean state media have cautioned that the summit will be cancelled if the US insists on unilateral nuclear disarmament by Pyongyang.
The Trump administration responded by saying it is continuing with plans for the Singapore meeting. However, American and South Korean officials are reportedly in a tizzy to ascertain North Korea’s position in order to keep the summit on track. No doubt, Trump is anxious not to be deprived of his moment of glory.
Two developments have undermined North Korea’s willingness to engage with Washington. After the apparent breakthrough of Trump and Kim putting their previous belligerent rhetoric aside and agreeing to hold a face-to-face summit, North Korea has gone cold.
Pyongyang has cited the public comments made by Trump’s National Security Advisor John Bolton in which the latter said that Washington was looking to the “Libya model” as a guideline for how it is preparing to deal with North Korea. Bolton was referring to when former Libyan leader Muammar Gaddafi agreed to unilaterally terminate his nuclear weapons program in 2003-2004 in order to appease the George W Bush administration.
It was an audacious reference point by the sinisterly hawkish Bolton given how seven years later, Gaddafi’s government was overthrown by an illegal US-NATO war which resulted in the Libyan leader being murdered on the streets.
North Korea had previously cited the case of Libya and Iraq as examples of how countries without an insurance policy of weapons of mass destruction are liable to be subjected to American regime-change attack.
Now with notorious Bush-era regime-change architect John Bolton explicitly referring to Libya as a “model” – on the cusp of supposed diplomatic engagement – it is no small wonder that North Korea has decided to snap back.
The other development is the going ahead of annual military exercises this month conducted by US forces and their South Korean ally. Currently, both militaries are carrying out “Max Thunder” maneuvers reportedly involving warplanes and warships near the North Korea border which, as usual, looks to Pyongyang like preparations for invasion. How is that supposed to be “confidence-building” for North Korea?
While warning that the meeting with Trump might not take place, North Korea also abruptly cancelled high-level talks last week with South Korean counterparts, citing the ongoing joint US military exercises as reason for the cancellation. North Korea hit out at South Korea for being “foolish and incompetent” over the continuation of military exercises.
Again, that was another dramatic reversal in diplomacy. Only a few weeks ago, North Korea’s Kim held a historic meeting with South Korean President Moon Jae In at the Demilitarized Zone separating the two countries since the end of the Korean War (1950-53). Both leaders vowed a new era of cooperation and their intention to sign a formal peace treaty to finally mark the end of the war.
Western media interpretation of North Korea’s vacillation is misplaced and unnecessarily cynical. This is not about Pyongyang playing mind games and gouging for concessions, as the media imply.
It is simply a reflection of the United States revealing its real and reprehensible agenda of expecting North Korea to unilaterally disarm without any reciprocation from Washington. In short, capitulation and surrender.
Added to that demand is the very grave underlying threat of Washington then moving on to regime change when North Korea is deemed “safe”, that is, defenseless.
Trump’s keenness to hold a “historic summit” with Kim is not about seeking a mutual peace settlement. The real-estate-tycoon-turned-president is all about glitzy spectacle and vainglorious success. He has even talked about how he deserves a Nobel Peace Prize.
Of course, a globally televised handshake with Kim totally plays to Trump’s ego and the former reality TV star’s craving for ratings.
That’s why Trump appeared to slap back Bolton last week by trying to reassure North Korea the “US wasn’t using the Libya model”.
But then in the same moment Trump blundered even further by going on to say, bizarrely, that North Korea would end up like Libya if it did not give up its nuclear weapons.
The morally decrepit warmonger John Bolton and CIA torture-supporter Mike Pompeo as Secretary of State are very sound reasons for why North Korea appears to be turning its back on proposed talks.
With Trump then showing his ignorance and brutish instincts there is even more reason for Pyongyang to be wary.
Peace for the Korean Peninsula is a multilateral formula. North Korea giving up its nuclear weapons is only one part of the equation. Another indispensable part is Washington removing its military forces, signing a peace guarantee with Pyongyang, ending its economic warfare, and permitting the two Koreas to pursue reconciliation without interference.
But, as noted previously in this column, Washington’s strategic interests in maintaining military force in the Asia-Pacific towards Russia and China are such that it is anathema for the US to agree to a genuine peace settlement in Korea.
Beneath the superficial American diplomacy, Washington’s agenda is for North Korea’s surrender to Uncle Sam.
Telling North Korea to “negotiate or else” is like holding a gun to its head. No nation with any self-respect would comply.
Pyongyang is just right to give Washington short shrift due to the latter’s bad faith and arrogant ignorance about its obligations. Trump’s backsliding on the Iran nuclear deal is another object lesson for North Korea.
Ominously, though, Uncle Sam is going to get very nasty after having had his nose tweaked.
Washington Holds Gun to North Korea’s Head
The prospects for peace diplomacy between the US and North Korea took a sudden hit after President Donald Trump issued an extraordinary threat to Kim Jong Un. It was in effect a death threat.
Trump warned last week that if the North Korean leader does not comply with Washington’s demands for complete denuclearization, then Kim would “end up like Gaddafi”. Trump added that North Korea would be “decimated” if it did not give up its nuclear weapons.
Arguably, Trump’s rhetoric of violence towards another state is a violation of international law and the United Nations charter.
It was not the time first time the American president has engaged in criminal intimidation of the northeast Asian nation. Last September, he told the United Nations general assembly that North Korea would be “totally destroyed”.
Yet US news media are spinning the latest row by blaming North Korea for being devious, and backtracking “in typical fashion” from negotiations, allegedly in order to extract more concessions.
US media are ignoring the glaringly obvious fact that Washington is holding a gun to North Korea’s head, and in Mafia-style, making an offer it thinks Pyongyang “can’t refuse”.
All of a sudden, the much-anticipated summit between Trump and Kim – scheduled for June 12 in Singapore – has been thrown into doubt. North Korean state media have cautioned that the summit will be cancelled if the US insists on unilateral nuclear disarmament by Pyongyang.
The Trump administration responded by saying it is continuing with plans for the Singapore meeting. However, American and South Korean officials are reportedly in a tizzy to ascertain North Korea’s position in order to keep the summit on track. No doubt, Trump is anxious not to be deprived of his moment of glory.
Two developments have undermined North Korea’s willingness to engage with Washington. After the apparent breakthrough of Trump and Kim putting their previous belligerent rhetoric aside and agreeing to hold a face-to-face summit, North Korea has gone cold.
Pyongyang has cited the public comments made by Trump’s National Security Advisor John Bolton in which the latter said that Washington was looking to the “Libya model” as a guideline for how it is preparing to deal with North Korea. Bolton was referring to when former Libyan leader Muammar Gaddafi agreed to unilaterally terminate his nuclear weapons program in 2003-2004 in order to appease the George W Bush administration.
It was an audacious reference point by the sinisterly hawkish Bolton given how seven years later, Gaddafi’s government was overthrown by an illegal US-NATO war which resulted in the Libyan leader being murdered on the streets.
North Korea had previously cited the case of Libya and Iraq as examples of how countries without an insurance policy of weapons of mass destruction are liable to be subjected to American regime-change attack.
Now with notorious Bush-era regime-change architect John Bolton explicitly referring to Libya as a “model” – on the cusp of supposed diplomatic engagement – it is no small wonder that North Korea has decided to snap back.
The other development is the going ahead of annual military exercises this month conducted by US forces and their South Korean ally. Currently, both militaries are carrying out “Max Thunder” maneuvers reportedly involving warplanes and warships near the North Korea border which, as usual, looks to Pyongyang like preparations for invasion. How is that supposed to be “confidence-building” for North Korea?
While warning that the meeting with Trump might not take place, North Korea also abruptly cancelled high-level talks last week with South Korean counterparts, citing the ongoing joint US military exercises as reason for the cancellation. North Korea hit out at South Korea for being “foolish and incompetent” over the continuation of military exercises.
Again, that was another dramatic reversal in diplomacy. Only a few weeks ago, North Korea’s Kim held a historic meeting with South Korean President Moon Jae In at the Demilitarized Zone separating the two countries since the end of the Korean War (1950-53). Both leaders vowed a new era of cooperation and their intention to sign a formal peace treaty to finally mark the end of the war.
Western media interpretation of North Korea’s vacillation is misplaced and unnecessarily cynical. This is not about Pyongyang playing mind games and gouging for concessions, as the media imply.
It is simply a reflection of the United States revealing its real and reprehensible agenda of expecting North Korea to unilaterally disarm without any reciprocation from Washington. In short, capitulation and surrender.
Added to that demand is the very grave underlying threat of Washington then moving on to regime change when North Korea is deemed “safe”, that is, defenseless.
Trump’s keenness to hold a “historic summit” with Kim is not about seeking a mutual peace settlement. The real-estate-tycoon-turned-president is all about glitzy spectacle and vainglorious success. He has even talked about how he deserves a Nobel Peace Prize.
Of course, a globally televised handshake with Kim totally plays to Trump’s ego and the former reality TV star’s craving for ratings.
That’s why Trump appeared to slap back Bolton last week by trying to reassure North Korea the “US wasn’t using the Libya model”.
But then in the same moment Trump blundered even further by going on to say, bizarrely, that North Korea would end up like Libya if it did not give up its nuclear weapons.
The morally decrepit warmonger John Bolton and CIA torture-supporter Mike Pompeo as Secretary of State are very sound reasons for why North Korea appears to be turning its back on proposed talks.
With Trump then showing his ignorance and brutish instincts there is even more reason for Pyongyang to be wary.
Peace for the Korean Peninsula is a multilateral formula. North Korea giving up its nuclear weapons is only one part of the equation. Another indispensable part is Washington removing its military forces, signing a peace guarantee with Pyongyang, ending its economic warfare, and permitting the two Koreas to pursue reconciliation without interference.
But, as noted previously in this column, Washington’s strategic interests in maintaining military force in the Asia-Pacific towards Russia and China are such that it is anathema for the US to agree to a genuine peace settlement in Korea.
Beneath the superficial American diplomacy, Washington’s agenda is for North Korea’s surrender to Uncle Sam.
Telling North Korea to “negotiate or else” is like holding a gun to its head. No nation with any self-respect would comply.
Pyongyang is just right to give Washington short shrift due to the latter’s bad faith and arrogant ignorance about its obligations. Trump’s backsliding on the Iran nuclear deal is another object lesson for North Korea.
Ominously, though, Uncle Sam is going to get very nasty after having had his nose tweaked.
Wednesday, May 23, 2018
SC165-13
https://caitlinjohnstone.com/2018/05/19/the-friendly-mask-of-the-orwellian-oligarchy-has-fallen-off/
The Friendly Mask Of The Orwellian Oligarchy Is Slipping Off
Gina Haspel has been confirmed as America’s new CIA Director, fulfilling her predecessor Mike Pompeo’s pledge to turn the CIA into “a much more vicious agency”. “Bloody Gina” has reportedly been directly involved in both torturing people and destroying evidence of torture in her long and depraved career, which some say hurts the CIA’s reputation.
Others say it just makes it more honest.
The lying, torturing, propagandizing, drug trafficking, coup-staging, warmongering Central Intelligence Agency has done some of the most unspeakably horrific things to human beings that have ever happened in the history of our species. If you think I’m exaggerating, do your own research into into some of the CIA’s activities like the Phoenix Program, which used “Rape, gang rape, rape using eels, snakes, or hard objects, and rape followed by murder; electric shock (‘the Bell Telephone Hour’) rendered by attaching wires to the genitals or other sensitive parts of the body, like the tongue; the ‘water treatment’; the ‘airplane’ in which the prisoner’s arms were tied behind the back, and the rope looped over a hook on the ceiling, suspending the prisoner in midair, after which he or she was beaten; beatings with rubber hoses and whips; the use of police dogs to maul prisoners,” and “The use of the insertion of the 6-inch dowel into the canal of one of my detainee’s ears, and the tapping through the brain until dead. The starvation to death (in a cage), of a Vietnamese woman who was suspected of being part of the local political education cadre in one of the local villages…The use of electronic gear such as sealed telephones attached to…both the women’s vaginas and men’s testicles [to] shock them into submission.”
This is what the CIA is. This is what the CIA has always been. This is what Mike Pompeo said he wanted to help make the CIA “much more vicious” than. Appointing Gina Haspel as head of the agency is just putting an honest face on it.
It really couldn’t be more fitting that the US now has an actual, literal torturer as the head of the CIA. It also couldn’t be more fitting that it has a reality TV star billionaire President, an Iraq-raping Bush-era neoconservative psychopath as National Security Advisor, a former defense industry director as Secretary of Defense, a former Goldman Sachs executive as Secretary Treasurer, and a former Rothschild, Inc. executive as Secretary of Commerce. These positions have always facilitated torture, oppression, war profiteering and Wall Street greed; the only thing that has changed is that they now have a more honest face on them.
The mask of the nationless Orwellian oligarchy which dominates our world is slipping off all over the place.
Israel is now openly massacring unarmed Palestinian civilians, prompting a UN investigation into possible war crimes. Only two nations voted in opposition to the investigation, and surprise surprise it was the two nations apart from Israel who most clearly owe their existence to the institutionalized slaughter and brutalization of their indigenous occupants in recent history: the US and Australia. All other members of the UN Human Rights Council either voted in support of the investigation or abstained.
Internet censorship is becoming more and more brazen as our governments become increasingly concerned that we are developing the wrong kinds of political opinions. Ever since the establishment Douma and Skripal narratives failed to take hold effectively, we’ve been seeing more and more frantic attempts to seize control of public discourse. Two weeks after the Atlantic Council explained to us that we need to be propagandized by our governments for our own good, Facebook finally made the marriage of Silicon Valley and the western war machine official by announcing a partnership with the Atlantic Council to ensure that we are all receiving properly authorized information.
The Atlantic Council is pure corruption, funded by powerful oligarchs, NATO, the US State Department, empire-aligned Gulf states and the military-industrial complex. Many threads of the establishment anti-Russia narrative trace back to this highly influential think tank, from the DNC hack to the discredited war propaganda firm Bellingcat to imaginary Russian trolls to the notorious McCarthyite PropOrNot blacklist publicized by the Washington Post. Facebook involving itself with this malignant warmongering psyop factory constitutes an open admission that the social media site considers it its duty to manipulate people into supporting the agendas of the western empire.
We’re seeing similar manipulations in Twitter, which recently announced that it will be hiding posts by more controversial accounts, and by Wikipedia, which has been brazenly editing the entries of anti-imperialist activists with a cartoonishly pro-establishment slant.
It is always a good sign when people in power become concerned that their subjects are developing the wrong kinds of political opinions, because it means that truth is winning. All this gibberish we’ve been hearing about “Russian disinformation” and “Russian propaganda” is just a label that has been pinned on dissenting narratives by a mass media propaganda machine that has lost control of the narrative.
And this is why it’s getting so overt, barely even attempting to conceal its true nature anymore. Our species’ newfound ability to network and share information has enabled a degree of free thinking that the cultural engineers did not anticipate and have not been able to stay ahead of, and they’re being forced to make more and more overt grabs to try and force us all back into our assigned brain boxes.
But the oligarchs who rule us and their Orwellian power structure is already in a lose-lose situation, because the empire that they have built for themselves rests upon the illusion of freedom and democracy. The most powerful rulers of our world long ago eschewed the old model of sitting on thrones and executing dissidents in the town square, instead taking on a hidden role of influence behind the official elected governments and using mass media propaganda to manufacture the consent of the governed.
This system is far more efficient than the old model because a populace will never rebel against rulers it doesn’t know exist, and it has enabled the western oligarchs to amass more power and influence than the kings of old ever dreamed possible. But it has a weakness: they have to control the narrative, and if they fail to do that they can’t switch to overt totalitarianism without shattering the illusion of freedom and provoking a massive public uprising.
So the wealth-holding manipulators are stuck between a rock and a hard place now, trying to use new media outlets like Facebook, Twitter and Wikipedia to herd the unwashed masses back into their pens. The more brazen they get with those manipulations, however, the more the mask slips off, and the greater the risk of the public realizing that they aren’t actually free from tyrannical rule and exploitation.
The real currency of this world is not backed by gold, nor by oil, nor by bureaucratic fiat, nor even by direct military might. No, the real currency of this world is narrative, and the ability to control it. The difference between those who rule this world and those who don’t is that those who rule understand this distinction and are sufficiently sociopathic to exploit it for their own benefit.
Power only exists where it exists because of the stories that humans agree to tell one another. The idea that government operates a certain way, that money operates a certain way, these things are purely conceptual constructs that are only as true as people pretend they are. Everyone could agree tomorrow that Donald Glover is the undisputed King of America and the new official US currency is old America Online trial CDs if they wanted to, and since that was the new dominant narrative it would be the reality. Everyone could also agree to create a new system which benefits all of humanity instead of a few sociopathic plutocrats. The only thing keeping money and government moving in a way that benefits our current rulers is the fact that those rulers have been successful in controlling the narrative.
They’ll never get that cat back into the bag once it’s out, and they know it. We the people will be able to create our own narratives and write our own rules about how things like money and government ought to operate, and there is no way that will work out to the benefit of the ruling manipulators and deceivers. So they fight with increasing aggression to lull us back to sleep, often overextending themselves and behaving in a way that gives the public a glimpse behind the mask of this entire corrupt power structure. Someday soon that mask will slip right off and come crashing to the floor. That crash will wake the baby, and that baby will not go back to sleep.
The Friendly Mask Of The Orwellian Oligarchy Is Slipping Off
Gina Haspel has been confirmed as America’s new CIA Director, fulfilling her predecessor Mike Pompeo’s pledge to turn the CIA into “a much more vicious agency”. “Bloody Gina” has reportedly been directly involved in both torturing people and destroying evidence of torture in her long and depraved career, which some say hurts the CIA’s reputation.
Others say it just makes it more honest.
The lying, torturing, propagandizing, drug trafficking, coup-staging, warmongering Central Intelligence Agency has done some of the most unspeakably horrific things to human beings that have ever happened in the history of our species. If you think I’m exaggerating, do your own research into into some of the CIA’s activities like the Phoenix Program, which used “Rape, gang rape, rape using eels, snakes, or hard objects, and rape followed by murder; electric shock (‘the Bell Telephone Hour’) rendered by attaching wires to the genitals or other sensitive parts of the body, like the tongue; the ‘water treatment’; the ‘airplane’ in which the prisoner’s arms were tied behind the back, and the rope looped over a hook on the ceiling, suspending the prisoner in midair, after which he or she was beaten; beatings with rubber hoses and whips; the use of police dogs to maul prisoners,” and “The use of the insertion of the 6-inch dowel into the canal of one of my detainee’s ears, and the tapping through the brain until dead. The starvation to death (in a cage), of a Vietnamese woman who was suspected of being part of the local political education cadre in one of the local villages…The use of electronic gear such as sealed telephones attached to…both the women’s vaginas and men’s testicles [to] shock them into submission.”
This is what the CIA is. This is what the CIA has always been. This is what Mike Pompeo said he wanted to help make the CIA “much more vicious” than. Appointing Gina Haspel as head of the agency is just putting an honest face on it.
It really couldn’t be more fitting that the US now has an actual, literal torturer as the head of the CIA. It also couldn’t be more fitting that it has a reality TV star billionaire President, an Iraq-raping Bush-era neoconservative psychopath as National Security Advisor, a former defense industry director as Secretary of Defense, a former Goldman Sachs executive as Secretary Treasurer, and a former Rothschild, Inc. executive as Secretary of Commerce. These positions have always facilitated torture, oppression, war profiteering and Wall Street greed; the only thing that has changed is that they now have a more honest face on them.
The mask of the nationless Orwellian oligarchy which dominates our world is slipping off all over the place.
Israel is now openly massacring unarmed Palestinian civilians, prompting a UN investigation into possible war crimes. Only two nations voted in opposition to the investigation, and surprise surprise it was the two nations apart from Israel who most clearly owe their existence to the institutionalized slaughter and brutalization of their indigenous occupants in recent history: the US and Australia. All other members of the UN Human Rights Council either voted in support of the investigation or abstained.
Internet censorship is becoming more and more brazen as our governments become increasingly concerned that we are developing the wrong kinds of political opinions. Ever since the establishment Douma and Skripal narratives failed to take hold effectively, we’ve been seeing more and more frantic attempts to seize control of public discourse. Two weeks after the Atlantic Council explained to us that we need to be propagandized by our governments for our own good, Facebook finally made the marriage of Silicon Valley and the western war machine official by announcing a partnership with the Atlantic Council to ensure that we are all receiving properly authorized information.
The Atlantic Council is pure corruption, funded by powerful oligarchs, NATO, the US State Department, empire-aligned Gulf states and the military-industrial complex. Many threads of the establishment anti-Russia narrative trace back to this highly influential think tank, from the DNC hack to the discredited war propaganda firm Bellingcat to imaginary Russian trolls to the notorious McCarthyite PropOrNot blacklist publicized by the Washington Post. Facebook involving itself with this malignant warmongering psyop factory constitutes an open admission that the social media site considers it its duty to manipulate people into supporting the agendas of the western empire.
We’re seeing similar manipulations in Twitter, which recently announced that it will be hiding posts by more controversial accounts, and by Wikipedia, which has been brazenly editing the entries of anti-imperialist activists with a cartoonishly pro-establishment slant.
It is always a good sign when people in power become concerned that their subjects are developing the wrong kinds of political opinions, because it means that truth is winning. All this gibberish we’ve been hearing about “Russian disinformation” and “Russian propaganda” is just a label that has been pinned on dissenting narratives by a mass media propaganda machine that has lost control of the narrative.
And this is why it’s getting so overt, barely even attempting to conceal its true nature anymore. Our species’ newfound ability to network and share information has enabled a degree of free thinking that the cultural engineers did not anticipate and have not been able to stay ahead of, and they’re being forced to make more and more overt grabs to try and force us all back into our assigned brain boxes.
But the oligarchs who rule us and their Orwellian power structure is already in a lose-lose situation, because the empire that they have built for themselves rests upon the illusion of freedom and democracy. The most powerful rulers of our world long ago eschewed the old model of sitting on thrones and executing dissidents in the town square, instead taking on a hidden role of influence behind the official elected governments and using mass media propaganda to manufacture the consent of the governed.
This system is far more efficient than the old model because a populace will never rebel against rulers it doesn’t know exist, and it has enabled the western oligarchs to amass more power and influence than the kings of old ever dreamed possible. But it has a weakness: they have to control the narrative, and if they fail to do that they can’t switch to overt totalitarianism without shattering the illusion of freedom and provoking a massive public uprising.
So the wealth-holding manipulators are stuck between a rock and a hard place now, trying to use new media outlets like Facebook, Twitter and Wikipedia to herd the unwashed masses back into their pens. The more brazen they get with those manipulations, however, the more the mask slips off, and the greater the risk of the public realizing that they aren’t actually free from tyrannical rule and exploitation.
The real currency of this world is not backed by gold, nor by oil, nor by bureaucratic fiat, nor even by direct military might. No, the real currency of this world is narrative, and the ability to control it. The difference between those who rule this world and those who don’t is that those who rule understand this distinction and are sufficiently sociopathic to exploit it for their own benefit.
Power only exists where it exists because of the stories that humans agree to tell one another. The idea that government operates a certain way, that money operates a certain way, these things are purely conceptual constructs that are only as true as people pretend they are. Everyone could agree tomorrow that Donald Glover is the undisputed King of America and the new official US currency is old America Online trial CDs if they wanted to, and since that was the new dominant narrative it would be the reality. Everyone could also agree to create a new system which benefits all of humanity instead of a few sociopathic plutocrats. The only thing keeping money and government moving in a way that benefits our current rulers is the fact that those rulers have been successful in controlling the narrative.
They’ll never get that cat back into the bag once it’s out, and they know it. We the people will be able to create our own narratives and write our own rules about how things like money and government ought to operate, and there is no way that will work out to the benefit of the ruling manipulators and deceivers. So they fight with increasing aggression to lull us back to sleep, often overextending themselves and behaving in a way that gives the public a glimpse behind the mask of this entire corrupt power structure. Someday soon that mask will slip right off and come crashing to the floor. That crash will wake the baby, and that baby will not go back to sleep.
SC165-12
https://www.oftwominds.com/blog.html
The Next Recession Will Be Devastatingly Non-Linear
Linear correlations are intuitive: if GDP declines 2% in the next recession, and employment declines 2%, we get it: the scale and size of the decline aligns. In a linear correlation, we'd expect sales to drop by about 2%, businesses closing their doors to increase by about 2%, profits to notch down by about 2%, lending contracts by around 2% and so on.
But the effects of the next recession won't be linear--they will be non-linear, and far more devastating than whatever modest GDP decline is registered. To paraphrase William Gibson's insightful observation that "The future is already here — it's just not very evenly distributed": the recession is already here, it's just not evenly distributed-- and its effects will be enormously asymmetric.
Non-linear effects can be extremely asymmetric. Thus an apparently mild decline of 2% in GDP might trigger a 50% rise in the number of small businesses closing, a 50% collapse in new mortgages issued and a 10% increase in unemployment.
Richard Bonugli of Financial Repression Authority alerted me to the non-linear dynamic of the coming slowdown. I recently recorded a podcast with Richard on one sector that will cascade in a series of non-linear avalanches once the current asset bubbles pop and the current central-bank-created "recovery" falters under its staggering weight of debt, malinvestment and speculative excess.
The core dynamic of the next recession is the unwind of all the extremes: extremes in debt expansion, in leverage, in the explosion of debt taken on by marginal borrowers, in malinvestment, in debt-fueled speculation, in emerging market debt denominated in US dollars, in financial repression, in political corruption--the list of extremes that have stretched the system to the breaking point is almost endless.
Public-sector pensions are just the tip of the iceberg. What happens when the gains in equities and bonds that have nurtured the illusion that public-sector pension funds are solvent and can be funded by further tax increases reverse into losses?
Pushing taxes high enough to fund soaring public pension obligations will spark taxpayer revolts as the tax increases will be monumental once the delusion of solvency is stripped away in the upcoming recession.
The entire status quo rests on the marginal borrower/buyer. All the demand for pretty much anything has been brought forward by the central banks' repression of interest rates and the relentless goosing of liquidity: anyone who can fog a mirror can buy a vehicle on credit, get a mortgage guaranteed by a federal agency, or pile up credit card and student loan debts.
Those with stock portfolios can gamble with margin debt; those with access to central bank credit can borrow billions to fund stock buy-backs or the purchase of competitors, the better to establish a cartel or quasi-monopoly.
What's not visible in all the cheery statistics is how many enterprises and households are barely keeping their heads above water as inflation shreds the purchasing power of their net incomes. Inflation is supposedly tame, but once again, following Gibson's aphorism, inflation is already here, it's just not evenly distributed.
While employees with employer-paid health insurance are dumbstruck by $50 or $100 increases in their monthly co-pays, those of us who are paying the unsubsidized "real cost of health insurance" are being crushed by increases in the hundreds of dollars per month.
The number of cafes, restaurants and other small businesses with high fixed costs that will close as soon as sales falter is monumental. Add up soaring healthcare premiums, increases in minimum wages, higher taxes and junk fees and rising rents, and you have a steadily expanding burden that is absolutely toxic to small businesses.
The first things to go are marginal employees, overtime, bonuses, benefits, etc.--whatever can be jettisoned in a last-ditch effort to save the company from insolvency. The first bills cash-strapped households will stop paying are credit cards, auto loans and student loans; defaults won't notch higher by 2%; they're going to explode higher by 20% and accelerate from there.
Here are a few charts that reveal the extremes that have been reached to maintain the illusion of "recovery" and normalcy: total credit has exploded higher, after a slight decline very nearly brought down the global financial system in 2008-09:
The massive expansion of assets purchased by central banks will eventually be slowed or even unwound, removing the rocket fuel that's pushed stocks and bonds to the moon:
As governments/central banks borrow/print "money" in increasingly fantastic quantities to keep the illusion of "recovery" alive, the currencies being debauched lose purchasing power. Venezuela is not an outlier; it is the first of many canaries that will be keeling over in the coal mine.
Wide swaths of the economy won't even notice the recession devastating the rest of the economy, at least at first. Public employees will be immune until their city, county, state or agency runs out of money and can no longer fund its obligations; shareholders of Facebook et al. who cashed out at the top will be doing just fine, booking their $18,000 a night island get-aways, and those few willing to bet on declines in the "everything bubbles" of real estate, stocks and bonds will eventually do well, though the Powers That Be will engineer massive short-covering rallies in a last-ditch effort to mask the systemic rot.
The acceleration of non-linear consequences will surprise the brainwashed, loving-their-servitude mainstream media. The number of small businesses that suddenly close will surprise them; the number of homeowners jingle-mailing their "ownership" (i.e. obligation to pay soaring property taxes) to lenders will surprise them; the number of employees being laid off will surprise them, and the collapse of new credit being issued will surprise them.
Don't be surprised; be prepared.
The Next Recession Will Be Devastatingly Non-Linear
Linear correlations are intuitive: if GDP declines 2% in the next recession, and employment declines 2%, we get it: the scale and size of the decline aligns. In a linear correlation, we'd expect sales to drop by about 2%, businesses closing their doors to increase by about 2%, profits to notch down by about 2%, lending contracts by around 2% and so on.
But the effects of the next recession won't be linear--they will be non-linear, and far more devastating than whatever modest GDP decline is registered. To paraphrase William Gibson's insightful observation that "The future is already here — it's just not very evenly distributed": the recession is already here, it's just not evenly distributed-- and its effects will be enormously asymmetric.
Non-linear effects can be extremely asymmetric. Thus an apparently mild decline of 2% in GDP might trigger a 50% rise in the number of small businesses closing, a 50% collapse in new mortgages issued and a 10% increase in unemployment.
Richard Bonugli of Financial Repression Authority alerted me to the non-linear dynamic of the coming slowdown. I recently recorded a podcast with Richard on one sector that will cascade in a series of non-linear avalanches once the current asset bubbles pop and the current central-bank-created "recovery" falters under its staggering weight of debt, malinvestment and speculative excess.
The core dynamic of the next recession is the unwind of all the extremes: extremes in debt expansion, in leverage, in the explosion of debt taken on by marginal borrowers, in malinvestment, in debt-fueled speculation, in emerging market debt denominated in US dollars, in financial repression, in political corruption--the list of extremes that have stretched the system to the breaking point is almost endless.
Public-sector pensions are just the tip of the iceberg. What happens when the gains in equities and bonds that have nurtured the illusion that public-sector pension funds are solvent and can be funded by further tax increases reverse into losses?
Pushing taxes high enough to fund soaring public pension obligations will spark taxpayer revolts as the tax increases will be monumental once the delusion of solvency is stripped away in the upcoming recession.
The entire status quo rests on the marginal borrower/buyer. All the demand for pretty much anything has been brought forward by the central banks' repression of interest rates and the relentless goosing of liquidity: anyone who can fog a mirror can buy a vehicle on credit, get a mortgage guaranteed by a federal agency, or pile up credit card and student loan debts.
Those with stock portfolios can gamble with margin debt; those with access to central bank credit can borrow billions to fund stock buy-backs or the purchase of competitors, the better to establish a cartel or quasi-monopoly.
What's not visible in all the cheery statistics is how many enterprises and households are barely keeping their heads above water as inflation shreds the purchasing power of their net incomes. Inflation is supposedly tame, but once again, following Gibson's aphorism, inflation is already here, it's just not evenly distributed.
While employees with employer-paid health insurance are dumbstruck by $50 or $100 increases in their monthly co-pays, those of us who are paying the unsubsidized "real cost of health insurance" are being crushed by increases in the hundreds of dollars per month.
The number of cafes, restaurants and other small businesses with high fixed costs that will close as soon as sales falter is monumental. Add up soaring healthcare premiums, increases in minimum wages, higher taxes and junk fees and rising rents, and you have a steadily expanding burden that is absolutely toxic to small businesses.
The first things to go are marginal employees, overtime, bonuses, benefits, etc.--whatever can be jettisoned in a last-ditch effort to save the company from insolvency. The first bills cash-strapped households will stop paying are credit cards, auto loans and student loans; defaults won't notch higher by 2%; they're going to explode higher by 20% and accelerate from there.
Here are a few charts that reveal the extremes that have been reached to maintain the illusion of "recovery" and normalcy: total credit has exploded higher, after a slight decline very nearly brought down the global financial system in 2008-09:
The massive expansion of assets purchased by central banks will eventually be slowed or even unwound, removing the rocket fuel that's pushed stocks and bonds to the moon:
As governments/central banks borrow/print "money" in increasingly fantastic quantities to keep the illusion of "recovery" alive, the currencies being debauched lose purchasing power. Venezuela is not an outlier; it is the first of many canaries that will be keeling over in the coal mine.
Wide swaths of the economy won't even notice the recession devastating the rest of the economy, at least at first. Public employees will be immune until their city, county, state or agency runs out of money and can no longer fund its obligations; shareholders of Facebook et al. who cashed out at the top will be doing just fine, booking their $18,000 a night island get-aways, and those few willing to bet on declines in the "everything bubbles" of real estate, stocks and bonds will eventually do well, though the Powers That Be will engineer massive short-covering rallies in a last-ditch effort to mask the systemic rot.
The acceleration of non-linear consequences will surprise the brainwashed, loving-their-servitude mainstream media. The number of small businesses that suddenly close will surprise them; the number of homeowners jingle-mailing their "ownership" (i.e. obligation to pay soaring property taxes) to lenders will surprise them; the number of employees being laid off will surprise them, and the collapse of new credit being issued will surprise them.
Don't be surprised; be prepared.
Monday, May 21, 2018
SC165-11
http://www.informationclearinghouse.info/49475.htm
Selfish US Diktats Could Push Europe to Develop Ties With Russia, China & Iran
Russian President Vladimir Putin’s cordial reception for German leader Angela Merkel in Sochi last Friday made for a pleasant contrast to the boorish way that Washington is acting towards its European allies.
On a sun-lit day at the Black Sea resort, Putin greeted the German chancellor with smiles and a bouquet of roses. After discussions, the two leaders told reporters about the need for cooperation and dialogue to resolve various international issues, including the Ukraine crisis, conflict in Syria, and the Iran nuclear deal.
Three days before Merkel visited Sochi, the Americans delivered yet another snub to their supposed European allies. US envoy to Ukraine Kurt Volker went to the Kiev-controlled side of the conflict zone in the eastern Donbass region, where he declared American military support for retaking the breakaway self-proclaimed republics of Donetsk and Lugansk.
The envoy also said that President Donald Trump and Defense Secretary James Mattis were “on the same page” concerning the Ukraine policy.
Volker’s hardline message was a revelation of Washington’s role in the four-year-old Ukraine conflict, which has seen the US-backed Kiev regime launch an offensive on the breakaway republics. The eastern areas declared independence following the illegal overthrow of the Ukraine government by US-backed factions in February 2014. The factions that came to power characteristically espouse anti-Russian sentiments and Neo-fascist politics, which the ethnic Russian people of Donbass repudiated.
Washington – which made its first delivery of lethal military equipment to Kiev forces last month – is thus standing in direct violation of the Minsk Peace Accords that were negotiated in 2015 under the so-called Normandy Format brokered by Russia, Germany and France.
In Sochi, Merkel and Putin restated the importance of abiding by the Minsk agreement.
Washington is thus audaciously snubbing the Minsk process and its European allies, in particular Germany and France.
Hours before Merkel arrived in Sochi, there was a surge in ceasefire violations along the contact line in Donbass, reportedly committed by the US-backed Kiev forces.
It seems certain that given the recent supply of US weaponry and the American envoy’s gung-ho rhetoric about retaking the breakaway republics, the Kiev forces were emboldened to send Merkel a message ahead of her meeting with Putin. The message being: to hell with Minsk and dialogue.
It also seems plausible that the Americans gave the Kiev regime a tacit green light to step up the violence to coincide with Merkel coming to Sochi. Merkel may be talking about dialogue and adhering to the Normandy Format with Russia, but in effect Washington is giving the orders for more aggression.
The upsurge in ceasefire violations is exactly what Moscow warned of if Washington proceeded with supply of Javelin anti-tank missiles.
Putin and Merkel also emphasized ongoing cooperation on the Nord Stream 2 project delivering natural gas to Europe via Germany. The $11 billion, 1,222km pipeline under the Baltic Sea is estimated to double the gas supply to Germany by 2019. It represents a major joint venture investment by Russia and Germany, as well as other European energy companies.
Another area of cooperation concerns the Iran nuclear accord. Merkel and Putin said Europe and Russia remain committed to the 2015 UN-ratified accord, despite the Trump administration’s abrupt withdrawal earlier this month.
Again, Washington has strained transatlantic relations on both counts. While Merkel was in Sochi, Washington reiterated threats that it would impose sanctions on Russia and Germany if they proceed with the Nord Stream 2 project. The US has justified invoking sanctions on “national security grounds” owing to alleged Russian meddling in its 2016 presidential elections, as well as due to the crisis in Ukraine, which Washington blames on Russian interference.
The Trump administration has also warned that European companies and banks could be liable for secondary sanctions if they continue to do business with Iran under the terms of the Joint Comprehensive Plan of Action (JCPOA), the formal name for the Iran nuclear deal.
Trump’s tearing-up of the JCPOA comes with the US re-imposing sanctions on Iran which were supposed to have been cancelled through the earlier signing of the accord by the Obama administration. If Trump follows through with threats of secondary sanctions on European firms, it could cost the Europeans billions of dollars’ worth of investments and trade.
The intensifying disputes between the US and Europe reach back to several other broken understandings, including the Paris climate accord, which Trump ditched last year, as well as Washington playing hard ball over trade tariffs and financial contributions to NATO military spending.
What seems to be emerging is the US using high-handed tactics to unilaterally push European partners into accepting Washington’s strategic priorities. In particular, sanctions are being wielded by the Americans to coerce others into conforming with US economic interests.
The Nord Stream 2 project is a perfect example. The US wants to dislodge Russia as the gas supplier to the vast European energy market. But American gas would cost 20-30 percent more than Russian supplies. In order to warp market forces in its favor, the Americans are using sanctions under dubious pretexts. The upshot is the Europeans will pay more for energy supply, which will have widespread inflationary knock-on impacts.
For the Europeans, recent geopolitical developments represent a harsh learning curve. Following Washington’s policy has already cost the Europeans bitterly in terms of the Ukraine crisis and the US-led sanctions on Russia. The biggest loser in terms of exports and jobs is Europe.
That crisis has led a precarious decline in relations between Europe and Russia from the buildup of US-led NATO military forces. If a war were to break out, it would be Europe that would bear the brunt of catastrophe.
What seems clearer than ever is Washington’s arrogant disregard for European interests. Threatening sanctions on European businesses over legitimate participation in the Iran nuclear deal and jeopardizing regional security are just two examples of how little Washington actually cares about so-called allies.
Then when Europe’s strongest leader, Germany’s Merkel, makes a cordial visit to Russia, Washington blatantly delivers a slap to her pronouncements on cooperation and dialogue for finding peace in Ukraine, or on the future of European energy security from working with Moscow.
Europe is learning the hard way that it has much more to gain from developing amicable relations with Russia than from pursuing Washington’s self-serving policy of hostility.
That has long been the case, arguably. But what is making the case increasingly palpable and urgent is the way Washington is riding roughshod over Europeans, inflicting economic and material pain on their livelihoods. That harsh experience of Washington’s selfish diktats will inevitably drive Europe to asserting more independence and possibly seeking more normal relations with Russia, as well as China, Iran and others.
Some cynics in Western media pooh-poohed Putin’s bouquet of flowers to Merkel, snidely saying the Russian leader was condescending. How irrational. What’s wrong with showing a little human kindness and respect? American politicians seem to have no idea about that. Giving orders and cynicism is all they seem to know.
Selfish US Diktats Could Push Europe to Develop Ties With Russia, China & Iran
Russian President Vladimir Putin’s cordial reception for German leader Angela Merkel in Sochi last Friday made for a pleasant contrast to the boorish way that Washington is acting towards its European allies.
On a sun-lit day at the Black Sea resort, Putin greeted the German chancellor with smiles and a bouquet of roses. After discussions, the two leaders told reporters about the need for cooperation and dialogue to resolve various international issues, including the Ukraine crisis, conflict in Syria, and the Iran nuclear deal.
Three days before Merkel visited Sochi, the Americans delivered yet another snub to their supposed European allies. US envoy to Ukraine Kurt Volker went to the Kiev-controlled side of the conflict zone in the eastern Donbass region, where he declared American military support for retaking the breakaway self-proclaimed republics of Donetsk and Lugansk.
The envoy also said that President Donald Trump and Defense Secretary James Mattis were “on the same page” concerning the Ukraine policy.
Volker’s hardline message was a revelation of Washington’s role in the four-year-old Ukraine conflict, which has seen the US-backed Kiev regime launch an offensive on the breakaway republics. The eastern areas declared independence following the illegal overthrow of the Ukraine government by US-backed factions in February 2014. The factions that came to power characteristically espouse anti-Russian sentiments and Neo-fascist politics, which the ethnic Russian people of Donbass repudiated.
Washington – which made its first delivery of lethal military equipment to Kiev forces last month – is thus standing in direct violation of the Minsk Peace Accords that were negotiated in 2015 under the so-called Normandy Format brokered by Russia, Germany and France.
In Sochi, Merkel and Putin restated the importance of abiding by the Minsk agreement.
Washington is thus audaciously snubbing the Minsk process and its European allies, in particular Germany and France.
Hours before Merkel arrived in Sochi, there was a surge in ceasefire violations along the contact line in Donbass, reportedly committed by the US-backed Kiev forces.
It seems certain that given the recent supply of US weaponry and the American envoy’s gung-ho rhetoric about retaking the breakaway republics, the Kiev forces were emboldened to send Merkel a message ahead of her meeting with Putin. The message being: to hell with Minsk and dialogue.
It also seems plausible that the Americans gave the Kiev regime a tacit green light to step up the violence to coincide with Merkel coming to Sochi. Merkel may be talking about dialogue and adhering to the Normandy Format with Russia, but in effect Washington is giving the orders for more aggression.
The upsurge in ceasefire violations is exactly what Moscow warned of if Washington proceeded with supply of Javelin anti-tank missiles.
Putin and Merkel also emphasized ongoing cooperation on the Nord Stream 2 project delivering natural gas to Europe via Germany. The $11 billion, 1,222km pipeline under the Baltic Sea is estimated to double the gas supply to Germany by 2019. It represents a major joint venture investment by Russia and Germany, as well as other European energy companies.
Another area of cooperation concerns the Iran nuclear accord. Merkel and Putin said Europe and Russia remain committed to the 2015 UN-ratified accord, despite the Trump administration’s abrupt withdrawal earlier this month.
Again, Washington has strained transatlantic relations on both counts. While Merkel was in Sochi, Washington reiterated threats that it would impose sanctions on Russia and Germany if they proceed with the Nord Stream 2 project. The US has justified invoking sanctions on “national security grounds” owing to alleged Russian meddling in its 2016 presidential elections, as well as due to the crisis in Ukraine, which Washington blames on Russian interference.
The Trump administration has also warned that European companies and banks could be liable for secondary sanctions if they continue to do business with Iran under the terms of the Joint Comprehensive Plan of Action (JCPOA), the formal name for the Iran nuclear deal.
Trump’s tearing-up of the JCPOA comes with the US re-imposing sanctions on Iran which were supposed to have been cancelled through the earlier signing of the accord by the Obama administration. If Trump follows through with threats of secondary sanctions on European firms, it could cost the Europeans billions of dollars’ worth of investments and trade.
The intensifying disputes between the US and Europe reach back to several other broken understandings, including the Paris climate accord, which Trump ditched last year, as well as Washington playing hard ball over trade tariffs and financial contributions to NATO military spending.
What seems to be emerging is the US using high-handed tactics to unilaterally push European partners into accepting Washington’s strategic priorities. In particular, sanctions are being wielded by the Americans to coerce others into conforming with US economic interests.
The Nord Stream 2 project is a perfect example. The US wants to dislodge Russia as the gas supplier to the vast European energy market. But American gas would cost 20-30 percent more than Russian supplies. In order to warp market forces in its favor, the Americans are using sanctions under dubious pretexts. The upshot is the Europeans will pay more for energy supply, which will have widespread inflationary knock-on impacts.
For the Europeans, recent geopolitical developments represent a harsh learning curve. Following Washington’s policy has already cost the Europeans bitterly in terms of the Ukraine crisis and the US-led sanctions on Russia. The biggest loser in terms of exports and jobs is Europe.
That crisis has led a precarious decline in relations between Europe and Russia from the buildup of US-led NATO military forces. If a war were to break out, it would be Europe that would bear the brunt of catastrophe.
What seems clearer than ever is Washington’s arrogant disregard for European interests. Threatening sanctions on European businesses over legitimate participation in the Iran nuclear deal and jeopardizing regional security are just two examples of how little Washington actually cares about so-called allies.
Then when Europe’s strongest leader, Germany’s Merkel, makes a cordial visit to Russia, Washington blatantly delivers a slap to her pronouncements on cooperation and dialogue for finding peace in Ukraine, or on the future of European energy security from working with Moscow.
Europe is learning the hard way that it has much more to gain from developing amicable relations with Russia than from pursuing Washington’s self-serving policy of hostility.
That has long been the case, arguably. But what is making the case increasingly palpable and urgent is the way Washington is riding roughshod over Europeans, inflicting economic and material pain on their livelihoods. That harsh experience of Washington’s selfish diktats will inevitably drive Europe to asserting more independence and possibly seeking more normal relations with Russia, as well as China, Iran and others.
Some cynics in Western media pooh-poohed Putin’s bouquet of flowers to Merkel, snidely saying the Russian leader was condescending. How irrational. What’s wrong with showing a little human kindness and respect? American politicians seem to have no idea about that. Giving orders and cynicism is all they seem to know.
SC165-10
https://www.truthdig.com/articles/the-coming-collapse/
The Coming Collapse
The Trump administration did not rise, prima facie, like Venus on a half shell from the sea. Donald Trump is the result of a long process of political, cultural and social decay. He is a product of our failed democracy. The longer we perpetuate the fiction that we live in a functioning democracy, that Trump and the political mutations around him are somehow an aberrant deviation that can be vanquished in the next election, the more we will hurtle toward tyranny. The problem is not Trump. It is a political system, dominated by corporate power and the mandarins of the two major political parties, in which we don’t count. We will wrest back political control by dismantling the corporate state, and this means massive and sustained civil disobedience, like that demonstrated by teachers around the country this year. If we do not stand up we will enter a new dark age.
The Democratic Party, which helped build our system of inverted totalitarianism, is once again held up by many on the left as the savior. Yet the party steadfastly refuses to address the social inequality that led to the election of Trump and the insurgency by Bernie Sanders. It is deaf, dumb and blind to the very real economic suffering that plagues over half the country. It will not fight to pay workers a living wage. It will not defy the pharmaceutical and insurance industries to provide Medicare for all. It will not curb the voracious appetite of the military that is disemboweling the country and promoting the prosecution of futile and costly foreign wars. It will not restore our lost civil liberties, including the right to privacy, freedom from government surveillance, and due process. It will not get corporate and dark money out of politics. It will not demilitarize our police and reform a prison system that has 25 percent of the world’s prisoners although the United States has only 5 percent of the world’s population. It plays to the margins, especially in election seasons, refusing to address substantive political and social problems and instead focusing on narrow cultural issues like gay rights, abortion and gun control in our peculiar species of anti-politics.
This is a doomed tactic, but one that is understandable. The leadership of the party, the Clintons, Nancy Pelosi, Chuck Schumer, Tom Perez, are creations of corporate America. In an open and democratic political process, one not dominated by party elites and corporate money, these people would not hold political power. They know this. They would rather implode the entire system than give up their positions of privilege. And that, I fear, is what will happen. The idea that the Democratic Party is in any way a bulwark against despotism defies the last three decades of its political activity. It is the guarantor of despotism.
Trump has tapped into the hatred that huge segments of the American public have for a political and economic system that has betrayed them. He may be inept, degenerate, dishonest and a narcissist, but he adeptly ridicules the system they despise. His cruel and demeaning taunts directed at government agencies, laws and the established elites resonate with people for whom these agencies, laws and elites have become hostile forces. And for many who see no shift in the political landscape to alleviate their suffering, Trump’s cruelty and invective are at least cathartic.
Trump, like all despots, has no ethical core. He chooses his allies and appointees based on their personal loyalty and fawning obsequiousness to him. He will sell anyone out. He is corrupt, amassing money for himself—he made $40 million from his Washington, D.C., hotel alone last year—and his corporate allies. He is dismantling government institutions that once provided some regulation and oversight. He is an enemy of the open society. This makes him dangerous. His turbocharged assault on the last vestiges of democratic institutions and norms means there will soon be nothing, even in name, to protect us from corporate totalitarianism.
But the warnings from the architects of our failed democracy against creeping fascism, Madeleine Albright among them, are risible. They show how disconnected the elites have become from the zeitgeist. None of these elites have credibility. They built the edifice of lies, deceit and corporate pillage that made Trump possible. And the more Trump demeans these elites, and the more they cry out like Cassandras, the more he salvages his disastrous presidency and enables the kleptocrats pillaging the country as it swiftly disintegrates.
The press is one of the principal pillars of Trump’s despotism. It chatters endlessly like 18th-century courtiers at the court of Versailles about the foibles of the monarch while the peasants lack bread. It drones on and on and on about empty topics such as Russian meddling and a payoff to a porn actress that have nothing to do with the daily hell that, for many, defines life in America. It refuses to critique or investigate the abuses by corporate power, which has destroyed our democracy and economy and orchestrated the largest transfer of wealth upward in American history. The corporate press is a decayed relic that, in exchange for money and access, committed cultural suicide. And when Trump attacks it over “fake news,” he expresses, once again, the deep hatred of all those the press ignores. The press worships the idol of Mammon as slavishly as Trump does. It loves the reality-show presidency. The press, especially the cable news shows, keeps the lights on and the cameras rolling so viewers will be glued to a 21st-century version of “The Cabinet of Dr. Caligari.” It is good for ratings. It is good for profits. But it accelerates the decline.
All this will soon be compounded by financial collapse. Wall Street banks have been handed $16 trillion in bailouts and other subsidies by the Federal Reserve and Congress at nearly zero percent interest since the 2008 financial collapse. They have used this money, as well as the money saved through the huge tax cuts imposed last year, to buy back their own stock, raising the compensation and bonuses of their managers and thrusting the society deeper into untenable debt peonage. Sheldon Adelson’s casino operations alone got a $670 million tax break under the 2017 legislation. The ratio of CEO to worker pay now averages 339 to 1, with the highest gap approaching 5,000 to 1. This circular use of money to make and hoard money is what Karl Marx called “fictitious capital.” The steady increase in public debt, corporate debt, credit card debt and student loan debt will ultimately lead, as Nomi Prins writes, to “a tipping point—when money coming in to furnish that debt, or available to borrow, simply won’t cover the interest payments. Then debt bubbles will pop, beginning with higher yielding bonds.”
An economy reliant on debt for its growth causes our interest rate to jump to 28 percent when we are late on a credit card payment. It is why our wages are stagnant or have declined in real terms—if we earned a sustainable income we would not have to borrow money to survive. It is why a university education, houses, medical bills and utilities cost so much. The system is designed so we can never free ourselves from debt.
However, the next financial crash, as Prins points out in her book “Collusion: How Central Bankers Rigged the World,” won’t be like the last one. This is because, as she says, “there is no Plan B.” Interest rates can’t go any lower. There has been no growth in the real economy. The next time, there will be no way out. Once the economy crashes and the rage across the country explodes into a firestorm, the political freaks will appear, ones that will make Trump look sagacious and benign.
And so, to quote Vladimir Lenin, what must be done?
We must invest our energy in building parallel, popular institutions to protect ourselves and to pit power against power. These parallel institutions, including unions, community development organizations, local currencies, alternative political parties and food cooperatives, will have to be constructed town by town. The elites in a time of distress will retreat to their gated compounds and leave us to fend for ourselves. Basic services, from garbage collection to public transportation, food distribution and health care, will collapse. Massive unemployment and underemployment, triggering social unrest, will be dealt with not through government job creation but the brutality of militarized police and a complete suspension of civil liberties. Critics of the system, already pushed to the margins, will be silenced and attacked as enemies of the state. The last vestiges of labor unions will be targeted for abolition, a process that will soon be accelerated given the expected ruling in a case before the Supreme Court that will cripple the ability of public-sector unions to represent workers. The dollar will stop being the world’s reserve currency, causing a steep devaluation. Banks will close. Global warming will extract heavier and heavier costs, especially on the coastal populations, farming and the infrastructure, costs that the depleted state will be unable to address. The corporate press, like the ruling elites, will go from burlesque to absurdism, its rhetoric so patently fictitious it will, as in all totalitarian states, be unmoored from reality. The media outlets will all sound as fatuous as Trump. And, to quote W.H. Auden, “the little children will die in the streets.”
As a foreign correspondent I covered collapsed societies, including the former Yugoslavia. It is impossible for any doomed population to grasp how fragile the decayed financial, social and political system is on the eve of implosion. All the harbingers of collapse are visible: crumbling infrastructure; chronic underemployment and unemployment; the indiscriminate use of lethal force by police; political paralysis and stagnation; an economy built on the scaffolding of debt; nihilistic mass shootings in schools, universities, workplaces, malls, concert venues and movie theaters; opioid overdoses that kill some 64,000 people a year; an epidemic of suicides; unsustainable military expansion; gambling as a desperate tool of economic development and government revenue; the capture of power by a tiny, corrupt clique; censorship; the physical diminishing of public institutions ranging from schools and libraries to courts and medical facilities; the incessant bombardment by electronic hallucinations to divert us from the depressing sight that has become America and keep us trapped in illusions. We suffer the usual pathologies of impending death. I would be happy to be wrong. But I have seen this before. I know the warning signs. All I can say is get ready.
The Coming Collapse
The Trump administration did not rise, prima facie, like Venus on a half shell from the sea. Donald Trump is the result of a long process of political, cultural and social decay. He is a product of our failed democracy. The longer we perpetuate the fiction that we live in a functioning democracy, that Trump and the political mutations around him are somehow an aberrant deviation that can be vanquished in the next election, the more we will hurtle toward tyranny. The problem is not Trump. It is a political system, dominated by corporate power and the mandarins of the two major political parties, in which we don’t count. We will wrest back political control by dismantling the corporate state, and this means massive and sustained civil disobedience, like that demonstrated by teachers around the country this year. If we do not stand up we will enter a new dark age.
The Democratic Party, which helped build our system of inverted totalitarianism, is once again held up by many on the left as the savior. Yet the party steadfastly refuses to address the social inequality that led to the election of Trump and the insurgency by Bernie Sanders. It is deaf, dumb and blind to the very real economic suffering that plagues over half the country. It will not fight to pay workers a living wage. It will not defy the pharmaceutical and insurance industries to provide Medicare for all. It will not curb the voracious appetite of the military that is disemboweling the country and promoting the prosecution of futile and costly foreign wars. It will not restore our lost civil liberties, including the right to privacy, freedom from government surveillance, and due process. It will not get corporate and dark money out of politics. It will not demilitarize our police and reform a prison system that has 25 percent of the world’s prisoners although the United States has only 5 percent of the world’s population. It plays to the margins, especially in election seasons, refusing to address substantive political and social problems and instead focusing on narrow cultural issues like gay rights, abortion and gun control in our peculiar species of anti-politics.
This is a doomed tactic, but one that is understandable. The leadership of the party, the Clintons, Nancy Pelosi, Chuck Schumer, Tom Perez, are creations of corporate America. In an open and democratic political process, one not dominated by party elites and corporate money, these people would not hold political power. They know this. They would rather implode the entire system than give up their positions of privilege. And that, I fear, is what will happen. The idea that the Democratic Party is in any way a bulwark against despotism defies the last three decades of its political activity. It is the guarantor of despotism.
Trump has tapped into the hatred that huge segments of the American public have for a political and economic system that has betrayed them. He may be inept, degenerate, dishonest and a narcissist, but he adeptly ridicules the system they despise. His cruel and demeaning taunts directed at government agencies, laws and the established elites resonate with people for whom these agencies, laws and elites have become hostile forces. And for many who see no shift in the political landscape to alleviate their suffering, Trump’s cruelty and invective are at least cathartic.
Trump, like all despots, has no ethical core. He chooses his allies and appointees based on their personal loyalty and fawning obsequiousness to him. He will sell anyone out. He is corrupt, amassing money for himself—he made $40 million from his Washington, D.C., hotel alone last year—and his corporate allies. He is dismantling government institutions that once provided some regulation and oversight. He is an enemy of the open society. This makes him dangerous. His turbocharged assault on the last vestiges of democratic institutions and norms means there will soon be nothing, even in name, to protect us from corporate totalitarianism.
But the warnings from the architects of our failed democracy against creeping fascism, Madeleine Albright among them, are risible. They show how disconnected the elites have become from the zeitgeist. None of these elites have credibility. They built the edifice of lies, deceit and corporate pillage that made Trump possible. And the more Trump demeans these elites, and the more they cry out like Cassandras, the more he salvages his disastrous presidency and enables the kleptocrats pillaging the country as it swiftly disintegrates.
The press is one of the principal pillars of Trump’s despotism. It chatters endlessly like 18th-century courtiers at the court of Versailles about the foibles of the monarch while the peasants lack bread. It drones on and on and on about empty topics such as Russian meddling and a payoff to a porn actress that have nothing to do with the daily hell that, for many, defines life in America. It refuses to critique or investigate the abuses by corporate power, which has destroyed our democracy and economy and orchestrated the largest transfer of wealth upward in American history. The corporate press is a decayed relic that, in exchange for money and access, committed cultural suicide. And when Trump attacks it over “fake news,” he expresses, once again, the deep hatred of all those the press ignores. The press worships the idol of Mammon as slavishly as Trump does. It loves the reality-show presidency. The press, especially the cable news shows, keeps the lights on and the cameras rolling so viewers will be glued to a 21st-century version of “The Cabinet of Dr. Caligari.” It is good for ratings. It is good for profits. But it accelerates the decline.
All this will soon be compounded by financial collapse. Wall Street banks have been handed $16 trillion in bailouts and other subsidies by the Federal Reserve and Congress at nearly zero percent interest since the 2008 financial collapse. They have used this money, as well as the money saved through the huge tax cuts imposed last year, to buy back their own stock, raising the compensation and bonuses of their managers and thrusting the society deeper into untenable debt peonage. Sheldon Adelson’s casino operations alone got a $670 million tax break under the 2017 legislation. The ratio of CEO to worker pay now averages 339 to 1, with the highest gap approaching 5,000 to 1. This circular use of money to make and hoard money is what Karl Marx called “fictitious capital.” The steady increase in public debt, corporate debt, credit card debt and student loan debt will ultimately lead, as Nomi Prins writes, to “a tipping point—when money coming in to furnish that debt, or available to borrow, simply won’t cover the interest payments. Then debt bubbles will pop, beginning with higher yielding bonds.”
An economy reliant on debt for its growth causes our interest rate to jump to 28 percent when we are late on a credit card payment. It is why our wages are stagnant or have declined in real terms—if we earned a sustainable income we would not have to borrow money to survive. It is why a university education, houses, medical bills and utilities cost so much. The system is designed so we can never free ourselves from debt.
However, the next financial crash, as Prins points out in her book “Collusion: How Central Bankers Rigged the World,” won’t be like the last one. This is because, as she says, “there is no Plan B.” Interest rates can’t go any lower. There has been no growth in the real economy. The next time, there will be no way out. Once the economy crashes and the rage across the country explodes into a firestorm, the political freaks will appear, ones that will make Trump look sagacious and benign.
And so, to quote Vladimir Lenin, what must be done?
We must invest our energy in building parallel, popular institutions to protect ourselves and to pit power against power. These parallel institutions, including unions, community development organizations, local currencies, alternative political parties and food cooperatives, will have to be constructed town by town. The elites in a time of distress will retreat to their gated compounds and leave us to fend for ourselves. Basic services, from garbage collection to public transportation, food distribution and health care, will collapse. Massive unemployment and underemployment, triggering social unrest, will be dealt with not through government job creation but the brutality of militarized police and a complete suspension of civil liberties. Critics of the system, already pushed to the margins, will be silenced and attacked as enemies of the state. The last vestiges of labor unions will be targeted for abolition, a process that will soon be accelerated given the expected ruling in a case before the Supreme Court that will cripple the ability of public-sector unions to represent workers. The dollar will stop being the world’s reserve currency, causing a steep devaluation. Banks will close. Global warming will extract heavier and heavier costs, especially on the coastal populations, farming and the infrastructure, costs that the depleted state will be unable to address. The corporate press, like the ruling elites, will go from burlesque to absurdism, its rhetoric so patently fictitious it will, as in all totalitarian states, be unmoored from reality. The media outlets will all sound as fatuous as Trump. And, to quote W.H. Auden, “the little children will die in the streets.”
As a foreign correspondent I covered collapsed societies, including the former Yugoslavia. It is impossible for any doomed population to grasp how fragile the decayed financial, social and political system is on the eve of implosion. All the harbingers of collapse are visible: crumbling infrastructure; chronic underemployment and unemployment; the indiscriminate use of lethal force by police; political paralysis and stagnation; an economy built on the scaffolding of debt; nihilistic mass shootings in schools, universities, workplaces, malls, concert venues and movie theaters; opioid overdoses that kill some 64,000 people a year; an epidemic of suicides; unsustainable military expansion; gambling as a desperate tool of economic development and government revenue; the capture of power by a tiny, corrupt clique; censorship; the physical diminishing of public institutions ranging from schools and libraries to courts and medical facilities; the incessant bombardment by electronic hallucinations to divert us from the depressing sight that has become America and keep us trapped in illusions. We suffer the usual pathologies of impending death. I would be happy to be wrong. But I have seen this before. I know the warning signs. All I can say is get ready.
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