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- Post #10,141
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- Nov 5, 2021 7:49pm Nov 5, 2021 7:49pm
- | Commercial Member | Joined Dec 2014 | 11,978 Posts
- Post #10,142
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- Nov 5, 2021 11:32pm Nov 5, 2021 11:32pm
- | Commercial Member | Joined Dec 2014 | 11,978 Posts
Into The Abyss We Go...
https://zh-prod-1cc738ca-7d3b-4a72-b.../picture-5.jpg
BY TYLER DURDEN
FRIDAY, NOV 05, 2021 - 10:20 PM
Authored by Michael Snyder via The Economic Collapse blog,
Why won’t our politicians ever listen? Just two days after voters made it exceedingly clear that they hate mandates, the Biden administration has announced that the nationwide OSHA mandate will go into effect on January 4th. Are Biden and his minions this dense, or do they just not care what the American people think?
It has been estimated that the new OSHA mandate will cover approximately 80 million Americans, and it could potentially result in millions of highly qualified workers losing their jobs in early 2022.
https://assets.zerohedge.com/s3fs-pu...?itok=a14gR7P3
What the Biden administration is trying to do is completely unconstitutional, and red states are already challenging it in court. Many people may not realize it yet, but this is one of the most important turning points in U.S. history.
From an economic standpoint, this new mandate is going to be absolutely disastrous. We are already in the midst of the worst worker shortage in all of U.S. history, and we are currently dealing with a supply chain crisis of epic proportions. Forcing millions of Americans out of their jobs right in the middle of the upcoming winter will take both the worker shortage and the supply chain crisis to entirely new levels.
But Biden is going to do it anyway.
On Thursday, we learned that January 4th has been set as the official deadline for compliance with the new OSHA mandate…
Tens of millions of Americans who work at companies with 100 or more employees will need to be vaccinated against COVID-19 by Jan. 4 or get tested for the virus weekly. The new government rules were issued Thursday.
The Occupational Safety and Health Administration says companies that fail to comply could face penalties of nearly $14,000 per violation.
If the company that you work for has 100 or more employees, you are covered by this mandate.
Needless to say, many employers will be frightened into submission by the extremely high financial penalties. Those companies that are deemed to be “repeat offenders” could potentially “face a maximum fine of $136,532”…
Repeat offenders or those found to be willfully non-compliant could face a maximum fine of $136,532. It is not immediately clear what constitutes a repeat offender.
Of course, many businesses across the country have no intention of ever complying with this new mandate.
Realizing this is the case, the Biden administration will be secretly sending out OSHA spies to conduct surprise inspections…
OSHA staffers will be doing random inspections to check if businesses are complying and employees could have to pay for their own tests out of pocket. The agency is using emergency orders that usually deal with workers exposed to ‘grave dangers’ to enforce the standards.
GOP lawmakers responded with fury and said some unvaccinated Americans were being forced to decide between putting food on the table or getting the shot, while retailers said the new rules will put an ‘unnecessary burden on businesses before the holiday season.
It’s official.
We now live in a dystopian nightmare.
And many local regimes are also choosing to become increasingly authoritarian. For example, just check out the new rules for children that will soon be implemented in San Francisco…
San Francisco will soon require children as young as 5 to show proof of Covid-19 vaccination to enter certain indoor public spaces like restaurants, entertainment venues, and sporting events, public health officials said this week.
The local mandate already requires children and adults over the age of 12 to show proof that they are vaccinated before entering those places. Now, city health officials are planning to extend the health order to children ages 5 to 11, the group newly eligible for the shot.
America used to be the “land of the free”, but that is clearly not true anymore.
The months ahead are not going to be pleasant. As mandates choke the life out of our economy, the ongoing shortages are going to get even worse and prices are going to go a lot higher.
In fact, we are already being told to brace ourselves for “sticker shock” when we go to buy meat…
For America’s meat-eaters, this is a problem. Some cuts have soared 25 percent over the past year, while others are fetching near-record prices, making meat one of the biggest contributors to pandemic inflation. And industry experts expect meat to keep gaining through the holidays and beyond.
“The sticker shock is what we all need to be prepared for,” said Bindiya Vakil, chief executive officer of supply-chain consultant Resilinc. “This is here to stay, at least through the summer of 2022.”
The good news is that nobody in this country is starving at this point.
The bad news is that food prices around the world continue to escalate dramatically, and this is pushing millions upon millions of people in poorer countries into hunger. This week, we learned that global food prices shot up another 3 percent in the month of October…
A United Nations index-tracking staple from wheat to vegetable oils climbed 3% to a fresh decade high in October, threatening even higher grocery bills for households that have already been strained by the pandemic. That could also add to central banks’ inflation worries and risks worsening global hunger that’s at a multiyear high.
As I have been relentlessly warning, a plethora of factors has combined to create a “perfect storm” for food prices…
Bad weather hit harvests around the world this year, freight costs soared and labor shortages have roiled the food supply chain from farms to supermarkets. An energy crisis has also proved a headache, forcing vegetable greenhouses to go dark and causing a knock-on risk of bigger fertilizer bills for farmers.
Many of these factors will continue to intensify in 2022.
So be thankful for what you have, because in some parts of the world things are already starting to get quite crazy.
For example, in North Korea citizens are now being encouraged to eat black swan meat due to the “crippling food shortage” in that nation…
North Korea has started touting the “exceptional” health benefits of consuming black swans after breeding them, while also farming rabbits as the country battles a crippling food shortage, according to state media.
“Black swan meat is delicious and has medicinal value,” the ruling party newspaper Rodong Sinmun said in an article published Monday.
I have been warning that this was coming, and things are only going to get worse from here.
So I would stock up while you still can because food prices are only going to go higher.
If you are one of those that may lose a job in the months ahead, I want you to know that our prayers are with you.
Don’t give up, and don’t lose hope.
I know that things are really dark right now, but sometimes the darkest valleys in life are where the light shines the brightest.
* * *
It is finally here! Michael’s new book entitled “7 Year Apocalypse” is now available in paperback and for the Kindle on Amazon.
- Post #10,143
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- Nov 5, 2021 11:39pm Nov 5, 2021 11:39pm
- | Commercial Member | Joined Dec 2014 | 11,978 Posts
Towards A Single World Currency
https://zh-prod-1cc738ca-7d3b-4a72-b.../picture-5.jpg
BY TYLER DURDEN
FRIDAY, NOV 05, 2021 - 11:00 PM
Authored by James Rickards via DailyReckoning.com,
Is the move toward central bank digital currencies real? And, if so, is it the first step toward a global reserve currency that will replace the dollar and euro as currencies of choice in reserve positions of major economies?
https://assets.zerohedge.com/s3fs-pu...?itok=NZ4ujmEa
Well, yes and no.
Before I expand on that answer and explain the impact central bank digital currencies will have on the more familiar world of foreign exchange, it’s helpful to say a bit more about what central bank digital currencies (CBDCs) are.
CBDCs are not cryptocurrencies. The CBDCs are digital in form, are recorded on a ledger (maintained by a central bank or Finance Ministry), and the message traffic is encrypted. Still, the resemblance to cryptos ends there.
The CBDC ledgers do not use blockchain, and CBDCs definitely do not embrace the decentralized issuance model hailed by the crypto crowd. CBDCs will be highly centralized and tightly controlled by central banks.
CBDCs are not new currencies. They are the same currencies you already know (dollars, yuan, euros, yen, sterling) in a new form, using new payment channels.
They are technological advances, but they do not replace existing reserve currencies.
CBDCs are currently being introduced by major central banks around the world. Countries are at different stages of deployment. China is the furthest along. They have a working prototype of a digital yuan that will be showcased at the Beijing Winter Olympics in February 2022.
If you’re there and want to buy tickets, meals, souvenirs, or pay for hotel rooms, you’ll be expected to pay with the new digital yuan using a mobile phone app or another digital payment channel.
The European Central Bank has also moved quickly on a CBDC version of the euro. They are not yet at the prototype stage, but they have made material advances and are getting close to that stage. Japan and the U.S. are at the back of the line.
The Fed has a research and development project underway with MIT to study how a digital dollar might intersect with or even replace the existing dollar payments system (which is already digitized, albeit without a centralized ledger).
The U.S. is probably several years away from its own CBDC at best.
So, yes, the move toward central bank digital currencies is real. How does this relate to what is sometimes called The Great Reset? This would be the movement toward a single global reserve currency.
This movement would be nominally led by the International Monetary Fund acting as a kind of world central bank. Still, the IMF cannot make decisions of this magnitude without U.S. approval. (The U.S. has just enough voting power in the IMF to veto any material decisions it does not like).
In turn, U.S. approval would require a global consensus among major economies including China, the UK, Germany, France, Italy, and other members of the G7 and G20.
This desire to create true world money would involve the creation of a digital special drawing right (SDR). SDRs are issued by the IMF to member nations and may be issued to other multilateral institutions such as the United Nations.
In effect, the IMF has a printing press as powerful as the Fed and ECB printing presses and can flood the world with their world money. Displacing the dollar would involve a meeting and agreement similar to the original Bretton Woods agreement of 1944. The agreement could take many forms. Still, the process would conform to what many call The Great Reset.
This process has been underway since 1969 when the SDR was created. Several issues of SDRs were distributed between 1970 and 1981, then none were issued until 2009 in the aftermath of the Global Financial Crisis of 2008. A new issue was distributed earlier this year.
Global elites see the COVID pandemic and climate alarm as a two-headed Trojan Horse that can be used to foist SDRs on a global population who have suddenly become accustomed to following government orders.
The recent COP26 meeting of elite climate alarmists and heads of state in Glasgow highlighted the use of central bankers and financial regulation to push the alarmist agenda by cutting off lending and underwriting services to energy companies that don’t promote renewables or that pursue oil and gas exploration (go here to learn all about a coming global climate tax, and also, how you can actually profit from it).
So, yes, the trend toward a single world currency is real also.
Still, things don’t happen that quickly in elite circles. Even Bretton Woods took over two years to design and another five years to implement even under the duress of World War II. The transition from sterling to the U.S. dollar as the leading reserve currency took thirty years from 1914 to 1944. As they say, it’s complicated.
At one level, there is no immediate change. A CBDC dollar is still a dollar. A CBDC euro is still a euro. Absent a new Bretton Woods type fixed-exchange-rate regime, these currencies would still fluctuate against each other. Our analyses would continue as before.
Still, there are three huge changes that could emerge from The Great Reset.
The first is that a new global currency regime would be an opportunity to devalue all major currencies in order to promote inflation and steal wealth from savers. All currencies cannot devalue against all other currencies at the same time; that’s a mathematical impossibility.
Yet, all currencies could devalue simultaneously against gold. This could easily drive gold prices to $5,000 per ounce or much higher to achieve the desired inflation.
EUR/USD might remain around $1.16, but both EUR and USD would be worth far less when measured by the weight of gold. This would be an accelerated version of what happened in stages between 1925 and 1933, between 1971 and 1980, and again between 1999 and 2011.
The second change would be that CBDCs make it much easier to impose negative interest rates, confiscations, and account freezes on some or all account holders.
This can be used for simple policy purposes or as a tool of the total surveillance state. Surveillance of incorrect behavior as defined by the Communist Party is the real driver of the digital yuan more than any aspiration to a yuan reserve currency role.
The third change would be the widespread issuance of SDRs and their adoption as the sole global reserve currency. A new Bretton Woods could force countries to hold 100% of their reserves in SDRs, and major corporations could be forced to maintain their books in SDRs.
This could lead to a fixed-exchange-rate regime with a peg based not on gold but on SDRs.
All of these shifts are now underway. Whether they play out over years or mere months remains to be seen. Exact outcomes are uncertain. What is certain is that I will watch developments closely and keep you ahead of the power curve as the elites continue their push toward digital money, world money, and the end of cash.
- Post #10,144
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- Edited Nov 6, 2021 12:10am Nov 5, 2021 11:48pm | Edited Nov 6, 2021 12:10am
- | Commercial Member | Joined Dec 2014 | 11,978 Posts
Righteousness + Force in America: The Trap of Righteous Activism Coupled with State Power
https://assets.zerohedge.com/s3fs-pu...?itok=akQJ1nWV
BY AMMODOTCOM
FRIDAY, NOV 05, 2021 - 11:03
There are two ways of getting things done: persuasion or coercion. You either convince someone of the value of your ideas or you hold a (literal or metaphorical) gun to their head. The latter has been the norm throughout human history. Most of what we value about the contemporary West is a shift toward the former occurring over the last 250 years or so.
However, there’s an important difference between the despotisms of old and coercive governments in the modern era: modern-day tyrants frame themselves as the righteous side in any conflict.
Think about it: Ancient Persian Emperors and the German Kaiser didn’t paint themselves as the moral superiors of their enemies. They simply wanted their stuff and, if they could, they took it. In contrast, during the American Civil War or the Allied cause during World War II, the force didn’t justify itself. Instead, the force was justified by the righteousness of the cause.
(President Lincoln openly, repeatedly stated more than a year into the Civil War that his call to "end slavery" was a useful means by which to justify his real objective: To preserve the Union.)
The need to justify force with righteousness is not limited to wartime. Every new coercive law or regulation is justified not on the basis of “I’m strong enough to take your stuff and so I think I will,” but because “our cause is just.” While some who would take your freedom or your life are motivated by their desire for power, the most vicious monsters in human history were all motivated by righteousness. They seek to perfect creation, no matter what the cost, rather than simply acquire power for its own end - a philosophically important distinction.
It is this philosophy of using state power to impose one's morality on others that in part has made American politics such a bloodsport nowadays. If you follow the thread from the Abolitionist movement (which provided moral justification for the Union's invasion of the Confederacy) through the Temperance movement (which culminated in Prohibition) to the Progressivism movement as we detail below, you'll see why.
What Do We Mean by Righteousness?
Righteousness is simply the sense that one's cause is so just that "the ends justify the means" – the ends could be anything. A critical feature of righteousness is the belief in the perfectibility of man and earth. It is often accompanied by philosophical progressivism, the view that the world becomes a better place, morally speaking, over time.
Righteousness requires coercion. This necessitates a large administrative state to enforce the prevailing diktats of the secular-religious. An excellent example from recent history is the campaign against tobacco, which in the span of a few years was chased from every public place.
Righteousness is not simply progressivism. It is a specific type of progressivism forged in America through the experience of Pietist Protestant Christians. The Pietists were originally Scandinavian Lutherans, but the posture of Pietism spread to most Protestant denominations in the United States: The Northern Baptists and Methodists, the Congregationalists, the Disciples of Christ, the Presbyterians, and others.
The Pietists rejected ritualistic or "liturgical" religious practice in favor of an inner experience expressed in one's daily life. Correct beliefs and proper living were the focus, culminating in the Holiness Movement, which was an extreme and fundamentalist expression of Pietism. Holiness tolerated no deviation from orthodoxy in either thought or deed.
Righteousness, like its Pietist forebears, isn't satisfied that you do and say the right things, you need to truly believe the right things. Compliance is not enough. You have to love Big Brother.
Righteousness moved from the realm of the deeply religious Protestant pietists of early America into the mainstream progressive movement. The latter adopted this surety and energy, seeking to expand their ersatz religion into every aspect of American life.
Righteousness is dangerous as a political force because of how certain it makes those infected with it. What's more, political righteousness makes the stakes increasingly apocalyptic, allowing the ends to continually justify any means, up to and including the death camp.
This is not hyperbole: Righteousness does not prohibit your political participation, it demands it, and it sees everything else about you as superfluous.
Righteousness Enters the World Stage: Abolitionism
It is often said that before the Civil War, the United States "are," but after the War, the United States "is." This is a reference to the formerly theoretically sovereign nature of each state as compared to "one nation, indivisible" found in the Pledge of Allegiance, which was created after the Civil War by a Union war veteran.
Why does this distinction matter? Because it was a distinction which the Confederacy, headed by Jefferson Davis, was willing to test in the furnaces of war.
https://assets.zerohedge.com/s3fs-pu...?itok=o8qw_O8m
In the run-up to the War, Davis repeatedly pointed out that the U.S. was a voluntary union of states which delegated authority to Washington, as ratified in the U.S. Constitution in the Bill of Rights #9 and #10. Thus if a state wanted to leave the Union, it could do so. Despite the best efforts of the southern states to maintain the Union, at the end of the day they voted to secede because their differences with the northern states were irreconcilable. Was slavery one of the issues over which they didn't agree? Yes, absolutely. Slavery was an issue that plagued the Founders as well.
Yet Davis made an important point: Just because one doesn't like slavery (and we don't like slavery, let's be clear) that does not then automatically mean that one supports President Lincoln using the U.S. Army to roll into the Confederacy in order to occupy them and make them behave the way we'd like them to. This is persuasion vs. coercion in action.
(One of the reasons Jefferson Davis was never tried for treason following the Civil War is that his case would've given him a platform to highlight the Constitutional issues presented by the North's invasion of the South.)
Fast forward to the present day. If you're reading this then you're likely a Unionist (i.e. happy that the U.S. is intact), at least in spirit if not in name, and also a fan of President Lincoln. Yet it was President Lincoln who said, in a widely publicized 1862 letter written more than a year into the War:
"My paramount object in this struggle is to save the Union and is not either to save or to destroy slavery. If I could save the Union without freeing any slave I would do it, and if I could save it by freeing all the slaves I would do it, and if I could save it by freeing some and leaving others alone I would also do that. What I do about slavery, and the colored race, I do because I believe it helps to save the Union; and what I forbear, I forbear because I do not believe it would help to save the Union. I shall do less whenever I shall believe what I am doing hurts the cause (of saving the Union), and I shall do more whenever I shall believe doing more will help the cause."
One can point this out without arguing in favor of slavery as it's clear President Lincoln knew what he was doing - trying to save the Union - and that picking up the moral banner of ending slavery was a useful means by which to ally himself because it furthered his goal of saving the Union. Machiavelli would've been proud, and so were the Abolitionists, who got a taste of what righteousness and force can do once the reins of state power are grasped.
It was these Abolitionists who not only claimed the moral high ground for President Lincoln during the War but who, following Appomattox, then went about the Reconstruction of the Southern state governments, which was largely a disaster. During Reconstruction, the Northern Republicans attempted to form Southern state governments with people who either had no experience in governance or had no connections to their constituents because the righteousness of their cause, "reconstructing" the South, would make it all work in the end.
Note that this is not a condemnation of the abolitionist cause, instead, it is a condemnation of the social phenomenon of righteousness, which generally sees political orthodoxy as trumping basic competence.
The end of the Civil War led to a total war against American citizens. Significant portions of Southern states were stripped of the right to vote and the right to keep and bear arms. The Radical Reconstructionist Congress was all too eager to ride roughshod over the Southern states because they felt ideologically and morally justified in doing so.
What caused the Civil War will always remain a question of debate. What will not is that it represented a massive transfer of power upward from sovereign individuals and states to a centralized federal government, as Jefferson Davis warned. This provided later incarnations of righteousness and force with a ready-made set of tools to increase the efficiency of coercion.
The Reconstruction period did little to heal the nation. It gave us the Klan and Jim Crow laws, but it stands as an example of righteousness having a large effect on American politics.
https://assets.zerohedge.com/s3fs-pu...?itok=ueQMkTA_
Righteousness must also be considered separately from the question of abolition itself, which was a moot point by the time the Reconstruction governments came into power. It's one thing to see slavery, which was the default mode of human production throughout all of human history, as a great moral evil that must be ended at once. It is another to dramatically punish, humiliate, and disenfranchise people who participated in this economic system.
It is still another thing entirely to attempt to dramatically remake the world into one's personal vision of Heaven on Earth. The carpetbaggers flooding Southern states during the Reconstruction Era believed that they simply needed to point the right guns in the right direction to create their earthly paradise.
Righteousness, in addition to a tangible ability of coercion through the military, cops, and courts, was the animating force of Reconstruction; however, it didn't end there.
Righteousness Comes for Your Daily Life: Temperance
The Prohibition Era and the Temperance Movement that preceded it are oft-overlooked areas of American history; however, this is our next stop on the tour of armed, militant righteousness.
Temperance was not originally in favor of Prohibition. The Temperance Movement, as the name suggests, was originally about moderate drinking. This was a time when the average American rarely consumed water and instead hydrated with beer and spirits. Only later did Temperance become synonymous with teetotaling and banning alcohol.
The pro-Prohibition or "dry" argument is rarely given enough attention, with many dismissing the period as a brief blip of madness requiring no further explanation. However, it's worth diving into what the drys believed.
The drys believed that alcohol was not simply an individual choice, but a highly corrosive social factor. They blamed the decay of the family and a host of other social ills on demon alcohol.
Post-World War I urbanization added gas to the fire. People were concerned about their children moving to cities and becoming introduced to saloon life. It followed, for the drys, that banning alcohol would end these social ills. In many cases, they believed the final result would be the Second Coming.
https://assets.zerohedge.com/s3fs-pu...?itok=lysH1LQr
The degree to which Prohibition "worked" or could have is debatable, but we definitively know that Prohibition drove the rise in organized crime and militarized policing in a symbiotic relationship.
Strange as it might sound, the "drys" tended to be part of the Progressive Movement of the early 20th Century. They too sought to cure social ills like child labor, dirty meat, women's disenfranchisement, and the like using coercion rather than persuasion. Despite the rather strange bedfellows, conservative Christian anti-liquor people allied with labor activists and proto-feminists. We can now begin to see how righteousness begins to move into the modern left.
Prohibition was also a dramatic intensification of force.
Abolition wanted to remove a barbaric economic system from America. Temperance, however, attempted to police the daily behaviors of average Americans. It is frequently noted how few who fought for the Southern cause were impacted by abolition. The abolitionists sought systemic change. No one was ever thrown in jail for being a plantation owner.
Temperance, on the other hand, made tens of millions of Americans into felons overnight.
The scale of Temperance is important to note as it is a far more aggressive posture than the War on Drugs because it went after a substance that had been widely used for centuries. Banning cocaine in 1920, the year the Volstead Act took effect, would have impacted orders of magnitude fewer people.
Abolitionists saw a system as the center of great moral outrage. Abolitionism saw individuals as the engine. And so that's who it targeted: Not a regional economic system, but individuals consuming the world's most widely used substance in any amount.
Righteousness Comes For Everything: The Progressive Era
The Progressive Era of the early 20th Century offers insight because it is the first serious attempt to use righteousness combined with coercion to take over every aspect of American society. Unfortunately, it would not be the last.
https://assets.zerohedge.com/s3fs-pu...?itok=tF69bHTv
The Progressive Era saw righteousness rule America as a broad coalition of suffragettes, Prohibitionists, labor reformers, child advocates, and other interest groups.
This was the era that gave us federal control over medicine, the income tax, compulsory education of children, and a host of other measures that curbed individual liberty.
People were not asked to live righteous lives. They were forced to use state power.
The Era was wrapped up in religious zeal, taking place at the same time as the Third Great Awakening, an uptick in Holiness, Nazarene, and Pentecostal religious denominations, which were Pietist Protestant movements emerging in the second half of the 19th Century. Much like later movements, these religious groups sought to make heaven on earth by reforming human behavior.
The social sciences also began in earnest around this time. They offered secular solutions that mirrored their religious alternatives. The man was broken, not by sin, but by socialization. Salvation was not to be found in the Gospels but in the social sciences.
This secular view of man fits well with the religious views of the Social Gospel. Social Gospel believed that the Gospel held answers not just for spiritual life, but for social problems as well: alcoholism, urban crime, racial tensions, environmental concerns, and other issues – common goals made for a common cause.
The Progressive Era was largely successful in that it transformed a passive and largely benign federal government into an all-pervasive bureaucracy. It formed the basis of the administrative state which was greatly expanded, first under FDR, then under LBJ.
It was the first time in American history that using righteousness and force seeking to coerce all non-believers into compliance became a mass, mainstream political trend in American politics. The parallels to the modern left are easy to draw in this context.
Righteousness Conquers the World: Wilson and Progressivism
Woodrow Wilson was, by all accounts, the progressive President. What he did at home pales in comparison to what he did abroad. Much of the map of the modern world owes a lot to President Woodrow Wilson.
https://assets.zerohedge.com/s3fs-public/styles/inline_image_mobile/public/inline-images/6_2.jpeg?itok=AihjgP2_
Wilson was the originator of the Wilsonian foreign policy, which broadly speaking means that aggressive ideological aims are pursued abroad. For Wilson, this meant forming the League of Nations, national sovereignty over ancient empires, and the Western-liberal version of democracy.
Nations had long fought for their own freedom. They had sometimes fought for the freedom of their allies, but it was thinly veiled realpolitik. Wilson, however, demanded a specific vision of freedom for the world.
It was not the riches of the colonial world or geopolitical considerations fueling Wilson's drive to get into World War I, something that he ran against. Wilson wanted to end the possibility of any future war by remaking the world in such a way that war would be impossible.
Righteousness and coercion were no longer the exclusive provinces of one set of religious do-gooders. It was the official policy of the American Departments of State and War.
Why Righteousness Trends Toward Totalitarianism
Righteousness is always impossible to enforce without tyrannical measures trending toward totalitarianism. This is because righteousness attempts to tackle problems so large that massive state intervention is required. The bigger the problem, the more state intervention, coercion, is required.
This is why the current iteration of righteousness and force is so insidious. It attempts to untangle the Gordian knot of human inequality. Not equality before the law or equality of opportunity. But human inequality as such.
The current crusade of righteousness is using the levers of state power, which are now capable of reaching every corner of the globe and monitoring virtually all private communication, to chase after a totally flat, "equal" society without any divergence of the outcome.
This type of equality means kneecapping some people and is arguably the final result of the stages of righteousness and forces outlined above. Righteousness and force in America first attempted to tackle an economic problem, Abolitionism; then a moral problem, Temperance; followed by a political problem, Progressivism.
It now attempts to solve the problem of why some people have more than others, more health, wealth, fame, beauty, etc.
..
Such radical leveling requires highly invasive state power. Such power is dangerous on its own but also invites sociopathic personalities to pursue it. The people who desire it most deserve it least.
Once this impulse is let out of the cage, it is very hard to get the genie back in the bottle. History teaches us this with outbursts of righteousness-driven force such as Mao's Red Guards or the violent American radicalism of the 1970s.
Wokeness and the social justice movement are a further intensification of the principle of righteousness armed with force because of its attempt to level every aspect of society at the outcome level.
Its desire to enforce radical equality of outcome is not limited to America's borders. Increasingly, since the Bush and Obama Administrations, it views American military power as something to be aggressively and proactively projected in its service.
Historically speaking, American intervention was justified by American interests, not a specific set of values. This is why America supported dictators around the world in the struggle against Communism. It was not an endorsement of their views or actions, but a recognition of realpolitik. America needed allies and found them where she could.
Compare with the post-9/11 view of American intervention: America must turn Iraq into Japan in the desert, not because this is good for America, but because liberal democracy is especially noble and righteous.
Righteousness and force have become universalist. Any deviation from a specific form of political organization or way of life is seen as prima facie evidence of electoral chicanery or tyranny.
This offers insight into the $64,000 question: Why can't San Francisco just leave Oklahoma City alone? For that matter, why can't California cities leave the more rural, suburban, and conservative parts of California alone? Because of this universalist drive for an extremely abstract notion of human equality effectively without limits.
Any variance from their all-encompassing notion of righteousness requires force, not persuasion, to correct.
"History doesn't repeat, but it rhymes" and this is a great example of how that old historical cliche plays out in the real world. The "protests" of summer 2020 aren't all that different from the protests of the 1960s and 1970s, but there is more going on here than a simple expression of popular rage or even the boredom of the young adults.
The riots of 2020 were not terribly different from how death squads work in banana republics. The leftists were allowed to burn, loot, pillage, and assault at will, but any response in defense would result in arrest and criminal charges. Thus, there is the quasi-religious nature to the movement, expressed in the exuberant fanatical violence of last summer. These riots act as something of a victory dance and an act of war – is it not clear that the righteous were able to increase their social and political power in the United States by rioting?
Furthermore, there is a religious aspect to the COVID-19 hysteria. It ignores actual data on the subject in favor of an ever-shifting official "science." The adherents of this leverage coercion through mask and vaccine mandates while also openly calling for punishment or even death for those who do not comply.
The COVID cult introduces fear into the mix, a form of coercion, with an eye toward gaining compliance and assistance from those not otherwise predisposed toward ideological flights of fancy.
The pandemic provided an opportunity for otherwise diffuse forces to band together in the name of controlling every aspect of human behavior. It also provided insight into just how many restrictions on human freedom people were willing to submit to.
Weaponized Righteousness Cannot Be Reasoned With
It runs counter to the general sense of fair play and open-mindedness that the Anglo-Saxon tradition is known for to say that there is a person or group of people who are not worth communicating with.
But the righteous want total control over every aspect of social and private life, and they are satisfied with nothing less and will do anything to get it. Their desires for control are an insatiable black hole, an endless quest for new dragons to slay.
Further, they do not respect the notion of rights as you and I understand them. Rights, for the militantly righteous, are positive values provided by the government in the service of moving the world closer to their utopia. Rights are not boundaries to be respected but are instead manipulated as a means to an end.
Finally, because their ideology has a quasi-religious nature to it, there is no arguing with them. Arguing with the righteous over whether or not America is an inherently racist country is a bit like arguing with a brick wall over whether or not the moon is made of green cheese.
Political righteousness has no sense of "live and let live," let alone any sense that persuasion is better than force.
The cynic can be reasoned with or even bribed. For the true believer, there is no acceptable result except for total and complete victory. Those seeking to ensure freedom for themselves, their family, their community, and their future would do well to form a clear picture of how militant, weaponized righteousness has worked in the past.
Righteousness and force didn't end last summer – we can see it in the digital pages of our electronic newspapers almost every day. The attempts to decide what is right for you and yours, and to enforce such at gunpoint is the essence of armed righteousness. The reader will ignore its ever-changing manifestations at his own peril.
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Nothing clarifies a man’s thoughts like staking his life on them.
When what you believe threatens to deliver death and danger to your door, you think again – hard – about those beliefs. This is the moment of truth when casual opinions dissolve and only convictions backed with soul-searching can stand. It's what made the American Founders special, and what made their thoughts more valuable than the pontifications of subsequent experts and elites: They were forced to risk their lives on their ideas, and the dross was burned away.
Thus we’ve brought together some of our favorite Founding Fathers quotes from America’s courageous revolutionaries.
“Political freedom includes in it every other blessing. All the pleasures of riches, science, virtue and even religion itself derive their value from liberty alone. No wonder therefore wise and prudent legislators have in all ages been held in such great veneration; and no wonder too those illustrious souls who have employed their pens and sacrificed their lives in defense of liberty have met with such universal applause. Their reputations, like some majestic river which enlarges and widens as it approaches its parent ocean, shall become greater and greater through every age and outlive the ruins of the world itself.”
The sacred rights of mankind are not to be rummaged for among old parchments or musty records. They are written, as with a sunbeam, in the whole volume of human nature, by the hand of the divinity itself, and can never be erased or obscured by mortal power.”
Alexander Hamilton, "The Farmer Refuted", February 5, 1775
Benjamin Rush, to Catharine Macaulay, January 18, 1769
“If ye love wealth better than liberty, the tranquility of servitude better than the animating contest of freedom, go home from us in peace. We ask not your counsels or your arms. Crouch down and lick the hands which feed you. May your chains set lightly upon you, and may posterity forget that you were our countrymen.”
Samuel Adams
“We have no government armed with power capable of contending with human passions unbridled by morality and religion... Our Constitution was made only for moral and religious people. It is wholly inadequate to the government of any other.”
John Adams
“It is a document in proof that I am a real Christian, that is to say, a disciple of the doctrines of Jesus, very different from the Platonists, who call me infidel, and themselves Christians and preachers of the gospel, while they draw all their characteristic dogmas from what it’s Author never said nor saw. They have compounded from the heathen mysteries a system beyond the comprehension of man, of which the great reformer of the vicious ethics and deism of the Jews, were he to return on earth, would not recognize one feature.”
Thomas Jefferson, in a letter speaking about the Jefferson Bible
“Friends and neighbors complain that taxes are indeed very heavy, and if those laid on by the government were the only ones we had to pay, we might more easily discharge them; but we have many others, and much more grievous to some of us. We are taxed twice as much by our idleness, three times as much by our pride, and four times as much by our folly; and from these taxes, the commissioners cannot ease or deliver us by allowing an abatement. However, let us hearken to good advice, and something may be done for us: ‘God helps them that help themselves,’ as Poor Richard says.”
Benjamin Franklin, The Way to Wealth
“Of the liberty of conscience in matters of religious faith, of speech and of the press; of the trial by jury of the vicinage in civil and criminal cases; of the benefit of the writ of habeas corpus; of the right to keep and bear arms...If these rights are well defined and secured against encroachment, it is impossible that government should ever degenerate into tyranny.”
James Monroe
“Because no People can be truly happy, though under the greatest Enjoyment of Civil Liberties, if abridged of the Freedom of their Consciences, … I do hereby grant and declare, That no Person or Persons, inhabiting in this Province or Territories, who shall confess and acknowledge One almighty God, the Creator, Upholder and Ruler of the World; and profess him or themselves obliged to live quietly under the Civil Government, shall be in any Case molested or prejudiced, in his or their Person or Estate, because of his or their conscientious Persuasion or Practice, nor be compelled to frequent or maintain any religious Worship, Place or Ministry, contrary to his or their Mind, or to do or suffer any other Act or Thing, contrary to their religious Persuasion.”
William Penn, Pennsylvania Charter of Privileges, 1701
- Post #10,146
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- Nov 6, 2021 7:28am Nov 6, 2021 7:28am
- | Commercial Member | Joined Dec 2014 | 11,978 Posts
Globalist Elites Don't Trust You To Make The Right Choice
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BY TYLER DURDEN
SATURDAY, NOV 06, 2021 - 07:00 AM
Authored by James Rickards via DailyReckoning.com,
When the U.K. voted for Brexit in June 2016, the globalists were stunned. They couldn’t believe it. They then did everything they could to delay and fight Brexit.
Then when Donald Trump won the election as president in November 2016, the globalists were even more stunned. They went into complete denial and put their heads in the sand. They comforted themselves with the convenient myth that Russian interference lost them the election, not a popular rejection of their ideology.
Yet it kept getting worse for globalists. Both China and Russia have become more nationalistic and completely turned their backs on globalism. The pandemic only strengthened the trend away from globalism, and the fractured supply chains we’re now seeing expose globalism’s fragile underbelly.
These chains may be efficient and economical, but when they break down, it has a rippling effect on the global economy. It’s like pulling on one strand on a carpet.
The entire thing is affected.
Globalists worship at the altar of free trade. But free trade is a myth. It doesn’t exist outside classrooms. France subsidizes agriculture. The U.S. subsidizes electric vehicles. China subsidizes a long list of national champions with government contracts, cheap loans, and currency manipulation. Every major economy subsidizes one or more sectors using fiscal and monetary tools and tariffs and nontariff barriers to trade.
America grew rich and powerful from 1787–1962, a period of 175 years, using tariffs, subsidies, and other barriers to trade to nurture domestic industry and protect high-paying manufacturing jobs.
In fact, tariffs are as American as apple pie.
Beginning in 1962, the U.S. turned its back on a successful legacy of protecting its jobs and industry and embraced the free trade theory. This was done first through the General Agreement on Tariffs and Trade, or GATT, one of the original Bretton Woods institutions in addition to the World Bank and IMF.
Against the mercantilist system was a theory of free trade based on comparative advantage as advocated by British economist David Ricardo in the early 19th century. Ricardo’s theory said that trading nations are endowed with attributes that gave them a relative advantage in producing certain goods versus others.
These attributes could consist of natural resources, climate, population, river systems, education, ports, financial capacity, or any other factor of production. Nations should produce those goods as to which they have a natural advantage and trade with other nations for goods where the advantage was not so great.
Countries should specialize in what they do best, and let others also specialize in what they do best. Then countries could simply trade the goods they make for the goods made by others. All sides would be better off because prices would be lower as a result of specialization in those goods where you have a natural advantage.
It’s a nice theory often summed up in the idea that Tom Brady should not mow his own lawn because it makes more sense to pay a landscaper while he practices football.
For example, if the U.K. had an advantage in textile production and Portugal had an advantage in wine production, then the U.K. and Portugal should trade wool for wine. But if the theory of comparative advantage were true, Japan would still be exporting tuna fish instead of cars, computers, TVs, steel, and much more.
The problem with the theory of comparative advantage is that the factors of production are not permanent and they are not immobile.
If labor moves from the countryside to the city in China, then suddenly China has a comparative advantage in cheap labor. If finance capital moves from New York banks to direct foreign investment in Chinese factories, then China has a comparative advantage in capital also.
Before long, China has the advantage in labor and capital and is running huge trade surpluses with the U.S., putting Americans out of work and shutting down U.S. factories in the process.
Worse yet, countries such as China can pull comparative advantage out of thin air with government subsidies.
We’ve been living in a world where the U.S. has been a free trade sucker and everyone else breaks the rules. In a world where a few parties are free traders but most are mercantilists, the mercantilists win every time. They are like parasites sucking the free traders dry.
But to globalists, the moral arc of the universe bends in one direction, and that’s toward increasing globalization. Populism and protectionism are therefore moral evils that must be condemned.
But globalists have slowly realized that the nationalist trend is not an anomaly but a powerful force that is reversing globalist policies that have been ascendant since 1989, or even since the end of World War II when institutions like the IMF and World Bank were established to promote globalist goals.
But right now, free trade is on the ropes, currency wars are rampant and geopolitical hotspots like Taiwan are becoming more dangerous. What happened to globalism?
The globalist-in-chief is Columbia University academic Jeffrey D. Sachs. He led the charge for “market” solutions in Russia in the 1990s, which backfired into a takeover by oligarchs and the rise of Putin. He also led the charge for “opening” China in the early 2000s, which led to the rise of Xi Jinping and the strongest form of Communism since the death of Mao Zedong.
Is Sachs willing to admit any mistakes? No. Like most globalists who are too arrogant to question their own worldviews and assumptions, Sachs instead says the problem is democracy itself.
Essentially, Sachs wants to abandon traditional voting in the U.S. and U.K. to create a system more favorable to globalists. Sure, you can let voters choose center-right candidate x or center-left candidate y, who might be 10% apart on many issues. Neither of them will really rock the boat and have no fundamental disagreement with globalism in general.
As far as globalists are concerned, voters cannot be trusted to vote on fundamental issues like Brexit. They also can’t be trusted to vote against presidential candidates like Trump. Such decisions should be beyond democratic control, globalists believe.
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In fact, Time magazine ran an article gloating about how corporate and media elites essentially conspired to prevent Trump from winning the election. Media refusal to cover the Hunter Biden laptop scandal was just one example. Former intelligence officials joined in by claiming it bore all the trademarks of “Russian disinformation.” Of course, we all know the laptop was real. But they wouldn’t allow it to influence the election.
When elites don’t like the potential outcome, just change the rules.
Another issue that unites globalists is climate change. Globalists argue that climate change is too important to trust voters in individual countries. Climate change is the perfect cover for globalism because combating it requires an internationally coordinated policy run by elites.
Their real agenda is to define a “global problem” so they can advance “global solutions” such as world governance, world taxation, and world rule by elites. It doesn’t matter that the actual science behind hysterical climate alarmism is extremely weak.
Unfortunately, the media, corporations, governments, and international organizations are run mostly by globalists.
And many of them are working hard to silence dissent. We’re in a Brave New World.
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- Nov 6, 2021 7:40am Nov 6, 2021 7:40am
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There's Nothing Hawkish about the Fed's New Tapering Plan
TAGS U.S. History
11/04/2021
Ryan McMaken
The Federal Reserve concluded its November meeting of the Federal Open Market Committee (FOMC) on Wednesday.
According to the FOMC’s statement, the Fed now plans to taper beginning in mid-November by cutting back its asset purchases by $10 billion in Treasury securities and $5 billion in mortgage-backed securities. Right now, the Fed buys $80 billion in Treasurys and $40 billion in housing-backed securities each month. So, according to the FOMC statement:
Beginning later this month, the Committee will increase its holdings of Treasury securities by at least $70 billion per month and of agency mortgage‑backed securities by at least $35 billion per month.
The Fed also claims it will further decrease asset purchases in December and thus “will increase its holdings of Treasury securities by at least $60 billion per month and of agency mortgage-backed securities by at least $30 billion per month.”
Theoretically, this could mean that new purchases will be phased out by the middle of next year.
The key phrase here, of course, is “new purchases.” As it is now, tapering means only a gradual cutting back on purchases. There is no talk of actually decreasing the size of the Fed’s $8 trillion-plus portfolio. Indeed, the plan is, as Danielle DiMartino Booth describes it, “to keep the balance sheet at a huge size.”
And huge it is. October’s total for Fed assets was $8.5 trillion, with totals increasing by nearly $4 trillion since February of 2020. The Fed’s announced goal this week is slowly to flatten this line out. But by the time the line stops going up, the total will be around $9 trillion. But there are certainly no plans for bringing that $9 trillion any closer to zero. That’s now just going to be a given until the next round of asset purchases begins at the first sign of asset price deflation.
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In a normal universe, we have a name for this sort of monetary policy: it’s called “extreme dovishness” or “extremely accommodative.”
Yet in the bizarro universe of 2021, this sort of thing is regarded as anti-inflationary. The markets and the public and policymakers have become so accustomed to new forms of "unconventional" monetary policy that any scaling back of enormous asset purchases and ultralow interest rates is feared to be a shock to the markets.
To be fair, however, if the Fed does indeed scale back purchases, this will be somewhat anti-inflationary, even if in an extremely mild way. Fewer asset purchases do mean less money creation and—in regard to purchases of Treasurys— it does mean less monetization of federal debt. Nor is it surprising that the Fed is finally looking for ways to tap the brakes—although in the tiniest way possible. It’s become clear at this point that monetary inflation is no longer simply manifesting itself in asset price inflation leading to soaring home prices and stock prices. That sort of price inflation can be more easily masked by Consumer Price Index measures.
Rather, in 2021, goods price inflation has risen to the point that it can no longer be hidden, even as the likely natural direction of prices is downward, thanks to worker productivity gains and international trade over the past decade. That is, goods price inflation is so virulent that it has canceled out ongoing capital-fueled disinflation and driven price growth well into positive territory.
For instance, in September, the year-over-year CPI growth was 5.3 percent, a thirteen-year high. That’s also high enough for inflation to become a political issue, so the Fed can’t be seen just doing anything.
Hence, we get Wednesday’s announcement in which the Fed is going to ever so slightly cut back its inflationary efforts, but will also be careful to take steps so microscopically small as to not spook markets.
And so far, so good, from the perspective of the Fed and Wall Street. The Dow hit a new high on Wednesday, and there has been no sign that markets are concerned about the Fed’s taper. Assurances that the portfolio isn’t going to get any smaller are working, as are assurances that the Fed has no plans at all to allow interest rates to rise.
In fact, as James Hyerczyk put it, “the Federal Reserve sent a less-hawkish message than the financial markets were expecting.” Moreover, the markets by now know how this game is played.
As Booth and David Bahnsen pointed out on Fox Business on Wednesday, the Fed in 2016 claimed it was going to implement four rate hikes that year (by then, the portfolio had flattened out at $4.4 trillion). But what actually happened was the Fed didn’t raise rates until December—after the election. And the rate increase was tiny.
So, if the Fed is now saying it isn’t contemplating any rate hikes, the markets are likely to believe it.
Yet it is still possible that politics could intervene to change the situation. Even the Fed now recognizes that inflation is not likely to be as “transitory” as Fed officials originally predicted. This capitulation can already be seen in Fed language. The new FOMC statement changed its language from “Inflation is elevated, largely reflecting transitory factors” in earlier to statements to what now reads “Inflation is elevated, largely reflecting factors that are expected to be transitory.”
Contra Ms. Long, if the Fed is admitting it has some concern, what that really means is anxiety is high at the central bank. The Fed, of course, always downplays bad news and plays up good news.
More importantly, if the public’s expectations of inflation rise, that will drive even greater inflation as the public’s demand for dollars falls in the face of persistent inflation. That means more demand for goods and more goods price inflation. Price inflation could also cut into corporate profits, driving even some pushback from Wall Street.
If that happens, then the Fed may be forced by political realities to finally do something about price inflation and engage in a real scaling back of money supply growth by finally selling some of its portfolios and allowing interest rates to rise.
I say “maybe forced,” however, because the regime could always double down on preferring an inflation-fueled “boom”—with declining standards of living in real terms—rather than allowing an obvious recession. It remains impossible to predict.
But one thing that does appear sure is that unless there are sizable and undeniably “high” levels of inflation—depending on the public’s tolerance—the Fed’s current political strategy is to further pursue a policy resembling the current status quo as long as possible. It may very well be that the Fed will resist any real action at all until after the election in 2022 or perhaps even 2024.
Author:
Contact Ryan McMaken
Ryan McMaken is a senior editor at the Mises Institute. Send him your article submissions for the Mises Wire and Power and Market, but read article guidelines first.
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- Nov 6, 2021 11:03am Nov 6, 2021 11:03am
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Friday, November 5, 2021
Weekly Commentary: Dow 36,000 and Policy Mistakes
More evidence this week of a historic mania running unchecked. 1999 was crazy, but at least that mania was relatively contained within Internet and technology stocks. It wasn’t fueled by Trillions of central bank monetary inflation. These days, manias are everywhere – at home and abroad, stocks, bonds, derivatives, crypto, houses, etc. The small cap Russell 2000 jumped 6.1% this week, with the Semiconductors (SOX) up 8.8%. The Goldman Sachs Most Short Index surged 11.7%. The Dow powered past 36,000 – and it was Deja Vu All Over Again.
Bloomberg Television’s Romaine Bostick (November 1, 2021): “When you talk about buying and holding, are you doing it within the context of the risk/reward that stocks on their own offer… or are you also looking at it with respect to the type of support – whether implicit or explicit – by monetary policymakers, by fiscal policymakers that has led us to where we are today - where a lot of folks feel like we can’t really go down as long as the Fed is there.”
James A. Glassman, co-author “Dow 36,000…”: “Well, certainly I couldn’t have predicted zero interest rates… My feeling, certainly in the short term and maybe even the medium term, that we ought to pay attention to Fed policy. But if you look at the whole scope of American history, the fact is that the U.S. economy has done consistently well – over and over again. And we make policy mistakes all the time. But markets react, businesses react, and we do really well. And, essentially, an investment in stocks is a bet on the U.S. economy and that has turned out to be a really good bet - no matter who’s in charge – whether it’s Democrats or Republicans. I hate to say, as someone who has devoted his life to policy issues, that policy doesn’t matter. And I think it does. But there’s a certain equilibrium that we come back to. And for investors – long-term investors if you’re thinking about retirement – for you to worry about what Fed policy is today or tomorrow – or what Congress is going to do passing this or that bill – I think that’s a mistake. I really do. Just putting money in on a regular basis and keeping it there makes a whole lot sense… I would have to tell you that I would push for high proportions of stocks in a portfolio… In general, if you’re a long-term investor – and I mean by that ten years or more – I would be as aggressive as possible with owning stocks in a diversified portfolio.”
As Glassman and Kevin Hassett were (in the thick of 1999’s mania) about to publish “Dow 36,000: The New Strategy for Profiting From the Coming Rise in the Stock Market,” I began posting the Credit Bubble Bulletin. I was convinced a major Bubble had overtaken U.S. finance and securities markets – a Bubble fueled by a precarious shift to market-based “Wall Street Finance,” including the GSEs, MBS, ABS, derivatives, the brokers and hedge funds. Moreover, the Fed failed to respond to a momentous loosening of finance and proliferation of leveraged speculation. Indeed, Greenspan’s shift in monetary policy doctrine toward underpinning market-based finance was integral to Bubble development.
From Dow 36,000 introduction: “Single most important fact about stocks at the dawn of the twenty-first century: They are cheap... If you are worried about missing the market's big move upward, you will discover that it is not too late. Stocks are now in the midst of a one-time-only rise to much higher ground – to the neighborhood of 36,000 on the Dow Jones industrial average.”
I viewed “Dow 36,000” in 1999 as emblematic of the period - a testament to the euphoria of the times and reminiscent of Irving Fisher’s “stock prices have reached what looks like a permanently high plateau” (just weeks ahead of the 1929 Crash). With parallels to the “Roaring Twenties”, the technology revolution had nurtured a powerfully captivating bullish narrative. Along with the marketplace and Federal Reserve policymakers, Glassman and Hassett ignored mounting risks associated with Credit and speculative excess.
My interest was piqued when informed Glassman was to be interviewed Monday in commemoration of the Dow’s ascent to 36,000. After publishing a hyper-bullish book at a major market Bubble peak, would he convey a more cautious approach in today’s manic market backdrop? Definitely not. In a sign of these manic times, Glassman has become only more confident in equities and the buy and hold mantra.
I am fascinated by Glassman’s dismissiveness of Policy Mistakes. “We make policy mistakes all the time. But markets react, businesses react, and we do really well.” Glassman believes it’s a mistake to worry about Fed policy. He admits being surprised by zero rates. Curiously, no mention of QE. Federal Reserve Assets were $669 billion when “Dow 36,000” was published. Assets have reached $8.575 TN, having ballooned almost 12-fold (1,200%). I wouldn’t extrapolate.
They aren’t and won’t, but investors should be keenly focused on Policy Mistakes. Granted, open-ended QE to this point has ensured that every Mistake is followed by greater Mistakes – only more aggressive monetary stimulus ensuring a Fed balance sheet that will approach $9 TN over the coming months. With the Federal Reserve as vanguard, global central bankers are in the throes of a monumental Policy Mistake.
As expected, the Fed Wednesday announced details of its taper strategy, which is essentially starting with a $15 billion reduction. They will take a flexible approach with tapering, while penciling in this pace monthly. Meanwhile, Powell and the FOMC believe it’s much too early to discuss raising rates from zero.
It was the Fed’s big, much anticipated week. And it was overshadowed by a bigger story. A Bloomberg host asked a guest why U.S. yields were more impacted by Thursday’s Bank of England (BOE) policy announcement than by the Fed. He didn’t get a satisfactory answer.
Ten-year UK yields sank 19 bps this week to 0.85%, with yields dropping a notable 35 bps in 12 sessions (from October 21st highs). Australian yields sank 28 bps this week to 1.81%. German yields dropped 17 bps (negative 0.28%), with French yields down 21 bps (0.06%), Spain 21 bps (0.40%), and Portugal 21 bps (0.31%). Italian yields sank 29 bps (0.88%) and Greek yields fell 24 bps (1.07%). Ten-year Treasury yields dropped 10 bps this week to 1.46%, with a two-week drop of 18 bps. Two-year and five-year Treasury yields fell 10 bps (0.40%) and 13 bps (1.06%).
It was a huge week for the major global central banks. Clearly not ready to take a backseat following last week’s ECB meeting, Christine Lagarde “doubled down” in a speech ahead of the Fed announcement, saying the ECB was “very unlikely” to raise rates next year – a 2022 hike being “off the charts.” “Despite the current inflation surge, the outlook for inflation over the medium term remains subdued, and thus these three conditions are very unlikely to be satisfied next year.” Calling her “Madam Inflation,” “Germany's best-selling tabloid Bild scathingly criticised European Central Bank (ECB) President Christine Lagarde…, accusing her of destroying the earnings and savings of ordinary people…” (from Reuters). Little wonder Jens Weidmann threw in the towel.
Tuesday had the Reserve Bank of Australia (RBA) also downplaying inflation risk, shelving yield curve control measures, but sticking with its monthly QE program. RBA Governor Philip Lowe: “The latest data and forecasts do not warrant an increase in the cash rate in 2022. The Board is prepared to be patient."
Following Thursday’s Bank of England meeting, Bloomberg went with the headline “BOE Shocks Markets by Keeping Rates on Hold.” Recent hawkish comments from BOE officials had markets anticipating an imminent shift in rate policy. Why did Treasury and global yields notably respond to the BOE? Because the Bank of England caving on inflation risks signaled a unified central bank front in pushing back against market expectations for rising rates and higher market yields.
November 4 – Financial Times (Chris Giles and Delphine Strauss): “Bank of England governor Andrew Bailey had a Herculean three-card trick to pull off on Thursday when presenting the central bank’s new inflation forecast and decision to hold back on immediately raising interest rates. Bailey, who fuelled expectations of a rate rise last month by saying the BoE ‘will have to act’ to tackle surging inflation, wanted those listening to accept three different messages — which to many in the audience may have appeared contradictory. First, that the BoE Monetary Policy Committee is much more concerned about inflation than it was previously and interest rates really are going to rise ‘over coming months’. Second, that it was good to wait and see before taking action because the outlook for economic growth had darkened and the overall picture was terribly uncertain. And third that people should continue to heed his words even though he acknowledged that his comments last month about taming inflation had been ‘truisms’ and therefore empty of meaning.”
A plethora of rationalization and justification from the global central bank community – much stretching credulity. And it’s difficult not to see this week’s developments as important confirmation of a concerted strategy from key global central banks. They’re in this mess together; created it together; and are now trapped together. As a group, they will dismiss rapidly mounting inflationary risks, choosing to remain locked in ultra-stimulative monetary policies. As a group, they will disregard manic markets and precarious financial imbalances.
It’s not difficult to discern why they would adopt such an approach. Global fragilities have turned acute. China’s Bubble is faltering, with contagion spreading to key EM markets. And last week, we observed acute instability afflict developed bond markets, including the UK, Australia, New Zealand, Canada and even U.S. Treasuries. They’re petrified of bursting Bubbles.
It’s like the stock market. If you’re going to be wrong, much better to be wrong with the group. And I could only chuckle. It’s virtually become a ritual. In analysis prior to Wednesday’s release of the Fed’s policy statement, commentators on Bloomberg Television again recalled the infamous Policy Mistake committed by the ECB when they raised the deposit rate 25 bps to 3.25% on July 3, 2008. According to Wall Street, they perpetrated the cardinal sin of contemporary central banks: they parted company with the Fed (that commenced rate cuts in Sept. ‘07) and tightened policy only weeks before the start of the “great financial crisis.” Listening to the pundits, one is left with the impression that the ECB’s hike actually contributed to the mayhem.
For starters, it’s silly to assert that a small 25 bps rate increase is such a big deal. If it causes significant market reaction, odds are that rates were held too low for too long. And indeed, that is the story of the mortgage finance Bubble period. Despite double-digit mortgage Credit growth, Fed funds ended 2002 at 1.25%. After averaging $268 billion annually during the nineties, mortgage Credit expanded an unprecedented $1.001 TN in 2003. The Fed funds rate was reduced 25 bps in 2003 to end the year at 1.00%. Mortgage Credit was up to $1.466 TN in 2005, yet rates had only been increased to 4.25%. 2006 saw growth of another $1.4 TN, along with $1 TN of subprime derivatives. Financial conditions remained ultra-loose until the subprime eruption in the summer of 2007.
The Fed’s failure to tighten policy and rein in mortgage-related excess was a monumental Policy Mistake – one that led directly to the post-Bubble introduction of QE. And then the Fed stuck with zero rates until the end of 2015. Rather than “exiting” its bloated post-crisis balance sheet, the Fed had doubled holdings again by 2014 to $4.5 TN. And despite booming markets and a recharged economic expansion, Fed funds didn’t return to 1% until mid-2017. By September 2019, with record stock prices and multi-decade low unemployment, the Fed reinstituted QE. The epitome of a Policy Mistake begetting only greater Policy Mistakes.
It’s easy to brush off this week. Contemporary central bankers simply partaking in contemporary central banking. No harm, no foul. But I see it much differently, with central bankers out this week with the huge backhoe digging a hole so deep we’ll never find our way out. I was reminded of Bernanke back in 2013 “pushing back against a tightening of financial conditions” – signaling to markets that the Federal Reserve would not tolerate weakness or corrections.
The big central banks this week signaled they will push back again rising rate expectations and market yields – essentially intervening in the markets to quash market adjustment to surging inflation risk. I have major issues with this. For one, market discipline is today all we have between reckless fiscal and monetary policies and any hope for a future without financial and economic chaos. Financial conditions must tighten, or inflation will run wild. Second, today’s artificially low rates and manipulated market yields are fueling precarious Bubbles and market manias. There is no justification for continuing with zero rates and huge monthly QE liquidity injections.
It’s tiring to hear chair Powell repeatedly fall back on the Fed’s “dual mandate of stable prices and full employment”. Give us a break.
“In 1977, Congress amended the Federal Reserve Act, directing the Board of Governors of the Federal Reserve System and the Federal Open Market Committee to ‘maintain long run growth of the monetary and credit aggregates commensurate with the economy's long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices and moderate long-term interest rates.’”
In no way did this amendment grant the Fed carte blanch to print Trillions. The crafter of this legislation had in mind the Fed restraining money and Credit growth to ensure monetary and price stability. And for the Fed to use its full-employment mandate these days as justification for zero rates, and QE is also making a mockery out of that mandate.
The economy created 843,000 new jobs over the past two months. October’s 4.6% Unemployment Rate is down from June’s 5.9% and the year ago 6.9%. Average hourly earnings were up 4.9% y-o-y. The September trade deficit surged to a record $80.9 billion. And for the services-dominated U.S. economic structure, this week’s ISM data confirmed an overheated economy. Exceeding estimates by almost five points, the ISM Services Index surged to an all-time high 66.7 (data back to 1997). New Orders and Business Activity components also jumped to record highs. Backlogs and Export Orders jumped. Prices Paid rose to the high since 2005. “Demand shows no signs of slowing.”
Powell: “We have not focused on whether we need to [discuss the] liftoff test, because we don’t meet the liftoff test now because we’re not at maximum employment. What I’m saying is, when – given where inflation is and where it's projected to be, let’s say we do meet the maximum employment test, then the question for the committee at that time will be “has the inflation test been met”, and I don’t want to get ahead of the committee on that.”
Bloomberg’s Matthew Boesler: “So, when you’re looking at this question of assessing whether or not the U.S. economy is at maximum employment, do you have a framework for making that judgment that is independent of what inflation is doing? And if not, does it complicate that assessment given all of the uncertainty about inflation right now and the inclination to believe that the high inflation we’re seeing is not related to capacity utilization in the labor market?”
Powell: “So, we don’t actually define maximum employment in terms of inflation. Of course, there’s a connection there. Maximum employment has to be a level that is consistent with stable prices. But that’s not really how we think about it. We think about maximum employment as looking at a broad range of things. You can’t just look at, unlike inflation where you can have a number, but with maximum employment you could be in a situation hypothetically where the unemployment rate is low, but there are many people who are out of the labor force, and will come back in. And so, you wouldn’t really be at maximum employment because there’s this group that isn’t counted as unemployed. So, we look at a range of things, and by many measures we are at a very tight labor market.”
I’m not sure why Powell used “hypothetically.” The Fed today disregards its stable prices mandate in favor of some nebulous full employment concept, specifically focused on the unusually large number of workers who left the workforce during the pandemic. Powell: “They’re holding themselves out of the labor market because of caretaking needs or because of fear of COVID or for whatever reason.” That’s an issue, of course. And how many millions are enjoying working from home at their new careers as online traders of meme stocks, ETFs, options and cryptocurrencies? How many have retired early after seeing their investment and trading accounts inflate spectacularly? It is a grievous Policy Mistake to disregard inflation while focusing on labor market holdouts.
I was again this week reminded of Adam Fergusson’s masterpiece, “When Money Dies: The Nightmare of Deficit Spending, Devaluation, and Hyperinflation in Weimar Germany.” On my initial reading, I was struck by how Reichsbank officials held to the belief that they were responding to outside forces and were not responsible for surging prices. The Fed blames COVID, global supply shocks and other factors beyond its control for temporarily elevated inflation. Do they honestly believe they can print $4.8 TN in 112 weeks without unleashing powerful inflationary dynamics?
Matthew Boesler: “And if I could just follow-up briefly… You talked a little bit about this possibility that the two goals might be in tension and how you would have to balance those two things. Could you talk a little bit about what the Fed’s process for balancing those two goals would be in an event that, say come next year you decide there’s a serious risk of persistent inflationary pressures…?”
Powell: “It’s a risk management thing. I can’t reduce it an equation. But, ultimately, it’s about risk management. So, you want to be in a position to act to cover the full range of plausible outcomes, not just the base case. And in this case, the risk is skewed for now; it appears to be skewed toward higher inflation. So, we need to be in a position to act in case it becomes necessary to do so or appropriate to do so. And we think we will be. So that’s how we’re thinking about it, and I think through that, judgmentally too, it’s appropriately to be patient. It’s appropriate for us to see what the labor market and what the economy look like when they heal further.”
Euro zone CPI hit 4.1% (y-o-y) back in July 2008, boosted by crude that had skyrocketed to $140. The ECB in July 2008 couldn’t anticipate Lehman, and crude would soon commence epic collapses. They adopted a risk management approach, moving incrementally to tighten policy – to push back against elevated inflation - and then reversed course with rates down to 2.0% by December. The profound impact monetary stability has on all aspects of financial, economic, social and political wellbeing demands conservative central banking doctrine and cautious policymaking. Do no harm. Above all, no big Mistakes.
The Fed and the global central banking community today inflict great harm as they proceed on the greatest monetary policy blunder the world has ever experienced.
The Wall Street Journal’s Michael Derby: “I wonder if the Fed has given any thought yet to the end game for the balance sheet, in terms of once you get the taper process complete. Will you hold the balance sheet steady or will you allow it to start passively winding down? And then in a related question, do you have any greater insight into what Fed bond buying actually does for the economy in terms of its economic impact?”
Powell: “So in terms of the balance sheet, those questions that you mentioned. We haven’t gone back to them… In terms of the effect of asset purchases on the economy, so there’s a tremendous amount of research and scholarship on this and… you can find different people coming out with different views. But I would say the most mainstream view would be that you’re at the effective lower bound, so how do you affect longer-term rates. There are two ways, one – so… let’s say you can’t lower rates any further hypothetically. So, you can give forward guidance, you can say we’re going to keep rates low for a period of time… The other thing you can do is just go buy those securities, buy longer-term securities. That will drive down longer-term rates and hold them lower, and rates right across the rates spectrum matter for borrowers. So lower rates encourage more borrowing, encourage more economic activity…”
It’s readily apparent what Trillions of monetary inflation do for securities, crypto, and asset prices – for speculation and feeding a mania. The euphoria of a record equities market run and Dow 36,000. It’s easy. Buy and hold. Never get shaken out. Don’t worry about Mistakes. Don’t worry about anything. And by the end of the week, market pundits celebrated how adeptly Powell had orchestrated a taper without even a whiff of tantrum. As the arbiter of Fed policies, markets exclaimed, “no Mistake here!”
I would worry about the dynamics fueling this market Bubble. Below the surface, it’s turning messy. Another big short squeeze melt-up in equities, along with another painful bond market squeeze. Scores of levered trades and strategies in mayhem. Dangerous market dysfunction. And there’ll be a huge price to pay for ongoing aggressive Fed support for manic markets. Perhaps even a larger cost to a bond market that cannot adjust to surging inflation because central banks believe it’s within their mandate to manipulate markets. This week’s market action only solidifies my view that when markets eventually do adjust, it’s bound to be violent.
November 5 – Financial Times (Laurence Fletcher, Tommy Stubbington and Kate Duguid): “The era of unlimited central bank largesse is drawing to a close, injecting intense volatility in to government bonds and inflicting heavy damage on a clutch of high-profile hedge funds. Superstars of the industry have been left nursing billions of dollars in losses after an abrupt rethink on how and when central banks will reverse the huge wave of support they provided to markets when the pandemic hit last year. Initially, central banks said that process would be very slow, despite soaring inflation, and hedge funds believed them. But markets began to fret last month that the US Federal Reserve and other central banks would have to raise interest rates more quickly, wrongfooting high-profile traders including Chris Rokos and Crispin Odey. An intense sell-off in short-term government debt upended some of these funds’ biggest bets…”
For the Week:
The S&P500 gained 2.0% (up 25.1% y-t-d), and the Dow rose 1.4% (up 18.7%). The Transports surged 5.9% (up 34.7%). The Utilities added 0.5% (up 7.7%). The Banks increased 0.4% (up 42.2%), and the Broker/Dealers gained 2.0% (up 32.7%). The S&P 400 Midcaps jumped 4.0% (up 25.7%), and the small cap Russell 2000 surged 6.1% (up 23.4%). The Nasdaq100 advanced 3.2% (up 26.9%). The Semiconductors rose 8.8% (up 34.4%). The Biotechs declined 1.1% (down 2.1%). With bullion jumping $35, the HUI gold index rallied 4.0% (down 13.6%).
Three-month Treasury bill rates ended the week at 0.0375%. Two-year government yields dropped 10 bps to 0.40% (up 28bps y-t-d). Five-year T-note yields sank 13 bps to 1.06% (up 70bps). Ten-year Treasury yields fell 10 bps to 1.45% (up 54bps). Long bond yields declined five bps to 1.89% (up 24bps). Benchmark Fannie Mae MBS yields dropped 11 bps to 1.90% (up 55bps).
Greek 10-year yields dropped 24 bps to 1.07% (up 45bps y-t-d). Ten-year Portuguese yields fell 21 bps to 0.31% (up 28bps). Italian 10-year yields sank 29 bps to 0.88% (up 33bps). Spain's 10-year yields fell 21 bps to 0.40% (up 35bps). German bund yields declined 17 bps to negative 0.28% (up 29bps). French yields sank 21 bps to 0.06% (up 40bps). The French to German 10-year bond spread widened four to 34 bps. U.K. 10-year gilt yields fell 19 bps to 0.85% (up 65bps). U.K.'s FTSE equities index added 0.9% (up 13.1% y-t-d).
Japan's Nikkei Equities Index jumped 2.5% (up 7.9% y-t-d). Japanese 10-year "JGB" yields fell four bps to 0.06% (up 4bps y-t-d). France's CAC40 surged 3.1% (up 26.8%). The German DAX equities index rose 2.3% (up 17.0%). Spain's IBEX 35 equities index increased 0.8% (up 13.1%). Italy's FTSE MIB index jumped 3.4% (up 25.0%). EM equities were mostly higher. Brazil's Bovespa index gained 1.3% (down 11.9%), and Mexico's Bolsa rose 1.3% (up 18.0%). South Korea's Kospi index was unchanged (up 3.3%). India's Sensex equities index increased 1.3% (up 25.8%). China's Shanghai Exchange dropped 1.6% (up 0.5%). Turkey's Borsa Istanbul National 100 index surged 4.0% (up 7.2%). Russia's MICEX equities index added 0.6% (up 26.9%).
Investment-grade bond funds saw inflows of $429 million, while junk bond funds posted negative flows of $1.268 billion (from Lipper).
Federal Reserve Credit last week declined $7.6bn to $8.531 TN. Over the past 112 weeks, Fed Credit expanded $4.804 TN, or 129%. Fed Credit inflated $5.720 Trillion, or 203%, over the past 469 weeks. Elsewhere, Fed holdings for foreign owners of Treasury, Agency Debt last week fell $5.7bn to $3.481 TN. "Custody holdings" were up $66bn, or 1.9%, y-o-y.
Total money market fund assets slipped $4.6bn to $4.555 TN. Total money funds increased $219bn y-o-y, or 5.1%.
Total Commercial Paper dropped $26.3bn to $1.153 TN. CP was up $202bn, or 21.3%, year-over-year.
Freddie Mac 30-year fixed mortgage rates fell five bps to 3.09% (up 31bps y-o-y). Fifteen-year rates slipped two bps to 2.35% (up 3bps). Five-year hybrid ARM rates declined two bps to 2.54% (down 35bps). Bankrate's survey of jumbo mortgage borrowing costs had 30-year fixed rates up four bps to 3.17% (up 19bps).
Currency Watch:
For the week, the U.S. Dollar Index added 0.2% to 94.32 (up 4.9% y-t-d). For the week on the upside, the Brazilian real increased 1.7%, the South African rand 1.3%, the Mexican peso 1.1%, the Japanese yen 0.5%, the Swiss franc 0.4%, the Swedish krona 0.3% and the euro 0.1%. For the week on the downside, the Australian dollar declined 1.6%, the South Korean won 1.4%, the Norwegian krone 1.4%, the British pound 1.3%, the New Zealand dollar 0.8%, the Canadian dollar 0.6%, and the Singapore dollar 0.1%. The Chinese renminbi increased 0.11% versus the dollar (up 2.01% y-t-d).
Commodities Watch:
November 1 – Bloomberg (Grant Smith and Julian Lee): “OPEC delivered barely half the oil-production increase it had planned for October as African members continued to struggle with output losses. The Organization of Petroleum Exporting Countries is reviving supplies halted during the pandemic, but added only 140,000 barrels a day last month because of the difficulties faced by Angola and Nigeria…”
October 31 – Bloomberg: “China may be forced to start buying crude at elevated prices to replenish its thinning crude stockpiles, adding more pressure to a nation that’s facing energy shortages and seeking to avert a diesel crisis. Commercial and strategic oil inventories have shrunk to the lowest level since November 2018 in terms of filled capacity… China attempted to cool prices this year by releasing crude reserves, but that had little impact, and only exacerbated the steady decline in overall stockpiles.”
October 31 – Wall Street Journal (Anna Hirtenstein): “Luc Filip doesn’t work at a big energy company or an industrial manufacturer. He isn’t a day trader or an OPEC official. But he is still helping drive the surge in oil prices. Mr. Filip is head of investments at SYZ Private Banking in Switzerland, and his big concern is inflation taking a bite out of the $28.5 billion of clients’ investments he manages. So he has been buying oil.”
November 2 – Bloomberg (Megan Durisin): “Wheat prices have surged from the U.S. to Russia, hitting a record in Europe and raising bread costs all over the world. And there may not be much relief soon. The crop -- grown on more land than any other -- was hit by droughts, frost and heavy rain this year in key exporters. That’s curbed supplies used in everything from pizza crusts and French baguettes to Asian noodles and African couscous, pushing benchmark prices in Chicago to an almost nine-year high. That’s not just threatening higher grocery bills -- it’s giving central banks a bigger inflation headache and risks worsening global hunger that’s already at a multiyear high.”
The Bloomberg Commodities Index slipped 0.6% (up 31.6% y-t-d). Spot Gold jumped $35 to $1,818 (down 4.2%). Silver rallied 1.1% to $24.16 (down 8.5%). WTI crude retreated $2.30 to $81.27 (up 68%). Gasoline fell 2.1% (up 65%), while Natural Gas advanced 1.7% (up 117%). Copper declined 0.6% (up 23%). Wheat dipped 0.8% (up 20%), and Corn fell 2.7% (up 14%). Bitcoin dropped $1,219, or 2.0%, this week to $61,192 (up 111%).
Coronavirus Watch:
November 2 – Reuters (Tina Bellon and Eric M. Johnson): “In Wichita, Kansas, nearly half of the roughly 10,000 employees at aircraft companies Textron Inc and Spirit AeroSystems remain unvaccinated against COVID-19, risking their jobs in defiance of a federal mandate, according to a union official. ‘We're going to lose a lot of employees over this,’ said Cornell Beard, head of the local Machinists union district. Many workers did not object to the vaccines as such, he said, but were staunchly opposed to what they see as government meddling in personal health decisions.”
November 2 – Bloomberg: “More provinces in China are fighting Covid-19 than at any time since the deadly pathogen first emerged in Wuhan in 2019. The highly-infectious delta variant is hurtling across the country despite the increasingly aggressive measures that officials have enacted in a bid to thwart it. More than 600 locally-transmitted infections have been found in 19 of 31 provinces in the latest outbreak… China reported 93 new local cases on Wednesday, and 11 asymptomatic infections. Three more provinces detected cases: central Chongqing, Henan, and Jiangsu on the eastern coast. Officials in China say they are committed to maintaining a so-called Covid Zero approach, even though flare-ups are coming faster, spreading further and evading many of the measures that previously controlled the virus.”
November 4 – Reuters (Krisztina Than and Nikolaj Skydsgaard): “Coronavirus infections are hitting record levels in many countries across Europe as winter takes hold, prompting a call for action from the World Health Organization which described the new wave as a ‘grave concern’. Soaring numbers of cases, especially in Eastern Europe, have prompted debate on whether to reintroduce curbs on movement before the Christmas holiday season and on how to persuade more people to get vaccinated.”
Market Mania Watch:
November 1 – Bloomberg (Emily Graffeo): “In a year already packed with superlatives, the fund industry has a new milestone to celebrate. Inflows into exchange-traded products across the world have just surpassed $1 trillion in 2021… The $3.9 billion added by investors in the latest data carried the sum past the magic mark. Even with two months left to go, 2021 marks the first calendar year where ETPs have reeled in over $1 trillion. A record-topping rally in the stock market and soaring commodity prices have helped propel a more than 30% increase over last year’s all-time high. An ETP is the catch-all term for a family of products including ETFs that can track the performance of stocks, bonds, commodities or currencies. ‘Although it’s a new record, I can’t say I’m surprised,’ said Liz Young, head of investment strategy at SoFi. ‘One, we’ve had this huge wave of TINA -- there is no alternative -- so people are just hungry for equities. And two, we have a lot of new entrants into investing, and people are cost conscious. So when they’re DIY-investing and they’re on a platform trying to save on commission, an ETF is a lot cheaper than a mutual fund.”
October 31 – Wall Street Journal (Alexander Osipovich and Gunjan Banerji): “High-speed trading firms are paying brokers billions of dollars a year to execute options orders, leading them to promote the risky trades whose popularity has boomed among small investors. The practice, called payment for order flow, has made options a cash cow for brokerages such as Robinhood Markets Inc. and TD Ameritrade. They can make twice as much or more from selling customers’ options orders as they do from selling order flow for stocks. In the 12 months through June, the 11 largest U.S. retail brokerages collected $2.2 billion for selling customers’ options orders, according to Larry Tabb… at Bloomberg Intelligence. That was about 60% higher than their take from selling equities orders.”
November 2 – Bloomberg (Sabrina Willmer and Melissa Karsh): “Apollo Global Management Inc., Blackstone Inc. and their rivals handed back $45 billion to investors last quarter as they reported record earnings in a hot market for deals. Rising markets fueled the industry’s frenzied pace. Exits by private equity in the U.S. reached a record $638 billion this year through September… And firms including Carlyle Group Inc. and KKR & Co. are rapidly spending current funds as they prepare to return to the market with bigger buyout pools. ‘It is a perfect storm right now,’ said Patrick Davitt, an analyst at Autonomous Research. ‘The IPO markets are open, the debt markets are open. Pretty much every avenue for exiting positions is.’”
November 3 – CNBC (Yun Li): “The SPAC market could be staging a comeback with issuance hitting an eight-month high as the industry continues to ride out regulatory challenges. A total of 57 special purpose acquisition companies began trading in October, the highest amount since March when a record of 109 SPACs were issued, according to SPACInsider... The number of new deals in October nearly doubled that in September and was also higher than the total during the same time last year…”
November 2 – Bloomberg (Zijia Song): “Goldman Sachs Group Inc.’s new class of managing directors is its biggest ever, with women accounting for fewer than one in three of the promotions. The firm named 643 members in its biennial announcement, a nearly 40% increase from two years ago…”
Market Instability Watch:
November 4 – Bloomberg (Garfield Reynolds): “The calm market reaction to the Federal Reserve’s taper announcement could well be the eye of a storm as traders refuse to back down from betting that central bankers are too complacent about the threat of out-of-control inflation… ‘The FOMC’s insistence that this is still just a temporary shock ‘related to the pandemic and the reopening of the economy’ looks to be dangerously behind the curve,’ said Capital Economics’ Paul Ashworth of the inflationary spike. ‘But it could be some considerable time before the Fed is willing to admit that elevated inflation is likely to be more persistent.’”
November 1 – Bloomberg (Brody Ford): “By the standards of March 2020, last week’s whiplash in the U.S. Treasury market may not look like much, but it’s a mistake to ignore it, Bank of America strategists are warning. The extreme yield-curve flattening that occurred as short-term rates soared -- pricing in an earlier start to Federal Reserve rate increases in response to elevated consumer inflation -- caused sharp losses for several rates-focused leveraged funds, impairing their risk-taking capacity, Mark Cabana, Ralph Axel, and Meghan Swiber wrote… ‘Liquidity strains are currently localized to the Treasury market but could spillover into other markets,’ they wrote. Illiquidity in inflation-protected Treasuries is particularly worrisome, as ‘sharply higher real rates may pose a threat to risky asset values.’”
November 4 – Bloomberg (Rebecca Choong Wilkins and Ailing Tan): “For nearly a decade, it was one of the most profitable trades in global credit. Now junk-rated Chinese debt is sliding from boom to bust in spectacular fashion… The selloff that began with China Evergrande Group five months ago is spreading rapidly… Even by the volatile standards of Chinese markets, the superlatives are striking. A developer-packed index of the country’s junk-rated dollar bonds has lost about 26% since the end of May, the steepest decline in a decade. New issuance from builders has dwindled to the lowest level in 18 months, and even some investment-grade property giants are facing sharply higher borrowing costs. High-profile Chinese bond funds managed by Fidelity and Value Partners are headed for record annual losses… The stress is most acute in the $870 billion offshore market…”
October 31 – Financial Times (Tommy Stubbington): “Central banks normally dictate to the bond market. But now, investors are ramping up bets that policymakers have got inflation all wrong, and are forcing some to change tack. For much of this year, investors had swallowed central bankers’ mantra that there was no need to raise interest rates to combat a ‘transitory’ burst of inflation. But an autumn surge in energy prices and the surprising persistence of supply bottlenecks in the global economy have sparked an increase in bets on earlier increases in borrowing costs.”
November 1 – Financial Times (Robin Wigglesworth and Nicholas Megaw): “Volatility in US bonds is surging in stark contrast to the relatively placid run for equities, leading some analysts to warn over the danger that central banks trigger a spasm of volatility in Wall Street’s stock market. Fixed income markets have been jolted by fears that rising inflation will force monetary policymakers into scaling back stimulus programmes, but stocks have largely shrugged off these concerns… The gap between measures of the near-term, derivatives-implied volatility of the S&P 500 benchmark and US Treasury bonds has widened at its fastest rate in a decade, according to Bank of America. Some analysts now warn that the divergence indicates investors are complacent about the risks posed by more hawkish central banks.”
November 1 – Financial Times (Tommy Stubbington): “A key gauge of the risk associated with holding Italian bonds climbed on Monday to its highest in a year, a rise fuelled by questions over the strength of the European Central Bank’s backing of riskier government debt. Eurozone bonds have been swept up in a global debt sell-off over the past week as traders bet that persistently high inflation will force the ECB to lift interest rates from record lows as soon as next year.”
October 31 – Bloomberg (Cormac Mullen): “Hedge funds dumped benchmark Treasury futures positions last week at close to the fastest pace in three years. Leveraged funds sold a net 177,126 10-year futures contracts, almost matching an outflow seen in March that was the biggest since 2018, according to the latest Commodity Futures Trading Commission data.”
Inflation Watch:
November 4 – Reuters (Chris Kahn): “Americans are increasingly turning away from the coronavirus and focusing their attention elsewhere, especially toward rising consumer prices and other economic areas where Democrats are less trusted, Reuters/Ipsos polling shows… While COVID-19 continues to claim more than 1,000 lives a day in the United States, the Oct. 18-22 national opinion survey shows the country's fixation on public health and diseases has faded since the beginning of the year. In October, just 12% of U.S. adults rated public health issues like the coronavirus as a top national priority, down from 20% in February. Meantime, two-thirds of the country, including majorities of Democrats, Republicans and independents, say that ‘inflation is a very big concern for me.’”
November 1 – Bloomberg (Bjorn Van Roye, Brendan Murray and Tom Orlik): “Last year the global economy came juddering to a halt. This year it got moving again, only to become stuck in one of history’s biggest traffic jams. New indicators developed by Bloomberg Economics underscore the extremity of the problem, the world’s failure to find a quick fix, and how in some regions the Big Crunch of 2021 is still getting worse. The research quantifies what’s apparent to the naked eye across much of the planet — in supermarkets with empty shelves, ports where ships are backed up far offshore, or car plants where output is held back by a lack of microchips. Looming over all of these: rising price tags on almost everything.”
November 4 – Reuters (Francesco Guarascio): “World food prices rose for a third straight month in October to reach a fresh 10-year peak, led again by increases in cereals and vegetable oils, the UN food agency said… The October reading was the highest for the index since July 2011. On a year-on-year basis, the index was up 31.3% in October.”
November 4 – Bloomberg (William Horobin): “The global surge in energy prices pushed inflation in the OECD area to 4.6% in September, the highest rate since 2008. The report on the 38-member group adds pressure to major central banks that have said the situation is largely transitory and shied from any sudden tightening of policy to contain prices.”
November 3 – Financial Times (John Redwood): “In a world of disrupted supply chains and marked shortages of energy, products and transport capacity, there is a lot of inflation about. In Germany, it has hit 4.5%, Spain 5.5%, the US 5.4% and in Brazil more than 10%... The central banks told us price rises would be modest as lockdowns ended. They expected inflation to retreat quickly as economies returned to normal. At the end of last year the US Fed thought it would rise to just 1.8% this year. In March they adjusted that up to 2.4%. Today’s rate is more than double that. The European Central Bank in December 2020 thought EU inflation would only by 1% this year, but eurozone inflation is currently four times that.”
November 4 – Bloomberg (Ryan Dezember): “A poor harvest of spring wheat and concern over the winter crop have pushed prices for the grain to their highest levels in years and signal more food inflation ahead. Drought across the Northern Hemisphere is the main culprit. Strong demand around the world, snarled supply lines and rising costs of farm inputs, like fertilizer and fuel, are contributing. Futures prices for hard-red spring wheat… this week hit their highest price on the Minneapolis Grain Exchange since the 2008 planting season. At $10.44 a bushel, spring wheat costs roughly twice what it did the past two autumns.”
November 1 – Bloomberg (Kim Chipman and Megan Durisin): “Benchmark wheat in Chicago climbed above $8 a bushel for the first time in almost nine years as importers boost purchases amid adverse weather conditions and soaring fertilizer prices that risk denting next year’s harvests. The advance may ramp up already high food costs worldwide… Some farmers are now contending with dry soil at planting time, as well as a run up in fertilizer prices. Wheat is on its longest streak of monthly gains since 2007.”
November 4 – Bloomberg (Elizabeth Elkin): “A shortage of nitrogen fertilizer is getting so bad that farmers won’t be able to get what they need for their fields in the near future. That’s according to executives at CF Industries Holdings Inc... If the owner of the world’s largest nitrogen facility is right and farmers have to scale back fertilizer applications, that could lower corn yields, pushing up the price of food even further.”
November 1 – Bloomberg (Marvin G. Perez): “Cotton prices surged near a 10-year high as forecasts for lower Indian supply heightened concern that a global deficit will get worse, threatening to increase costs for clothing… Prices have jumped more than 45% this year, cutting into margins for apparel makers and threatening to raise prices for everything from t-shirts to jeans.”
November 1 – Bloomberg (Maxwell Adler): “New Yorkers are in for a 24% increase in their heating bills this winter as a global natural gas shortage is sending prices for the fuel surging. Utility Consolidated Edison Inc. is warning New York customers they’ll pay $341 per month on average to heat their homes from November through March 2022, marking a $66 increase from last winter…”
Biden Administration Watch:
November 1 – Bloomberg (Laura Litvan and Erik Wasson): “Senator Joe Manchin said Congress needs more time to assess the impact of President Joe Biden’s $1.75 trillion tax and spending package on the economy and the national debt, slamming the door on hopes by Democratic leaders for quick action on the plan. The West Virginia Democrat… refused to say whether he supports the outline Biden presented last week or whether there had been any progress in negotiations over the weekend. His remarks are a blow to Biden, who presented to House Democrats what he said was a compromise plan worked out over weeks of negotiations that would win support from all 50 senators who caucus with Democrats. Manchin also criticized progressive Democrats for holding up a bipartisan infrastructure bill until there’s full agreement on the larger economic package, adding to tension between the two wings of the party.”
November 2 – Reuters (Jeff Mason and Trevor Hunnicutt): “President Joe Biden said… the White House will be making an announcement about his nominations to lead the U.S. Federal Reserve ‘fairly quickly.’ Biden told reporters that he has been thinking about personnel decisions, including whether to re-nominate Fed Chair Jerome Powell, and that he expected there would be ‘plenty of time’ for his central bank nominees to be cleared by the Senate before current terms expire. A Fed chair nomination this week would have some recent historical precedent. Former president Donald Trump nominated Powell as chair on Nov 2, 2017, about a year after he won the election and the day after the Fed’s November policy meeting.”
November 1 – Reuters (Andrea Shalal): “U.S. Treasury Secretary Janet Yellen… said she does not think the U.S. economy is overheating and that while inflation is higher than in recent years, it is related to disruption from the COVID-19 pandemic… ‘I would not say the US economy is currently overheating, we're still 5 million jobs below where we were pre-pandemic and labor force participation has declined and the reasons relate to the pandemic,’ Yellen told a news conference…”
Federal Reserve Watch:
November 2 – Wall Street Journal (Nick Timiraos): “Federal Reserve Chairman Jerome Powell used the bulk of a widely anticipated speech in late August to explain why he was still confident that this year’s inflation surge would prove temporary. His remarks haven’t aged well. Economic data released over the past two months have cast doubt on parts of Mr. Powell’s thesis… In particular, recent data have pointed to some broadening in price pressures, a pickup in wage growth and a continued run of higher prices for certain goods that have already seen acute inflation this year. ‘It is increasingly clear that the Fed…is facing multiple, overlapping predominantly supply shocks, most of which are still largely pandemic-driven and ought in principle not to extend into the medium term,’ said Krishna Guha, vice chairman of Evercore ISI. ‘But [they] add up to a more complex as well as more extended phase of high inflation.’”
November 3 – Bloomberg (Craig Torres, Rich Miller, and Olivia Rockeman): “Federal Reserve Chair Jerome Powell is doubling down on the U.S. central bank’s new policy framework -- saying he won’t entertain interest-rate increases until the labor market heals further, even though inflation could run hot for months. ‘There is still ground to cover to reach maximum employment,’ Powell told reporters... ‘The inflation that we’re seeing is really not due to a tight labor market.’”
November 3 – Associated Press (Christopher Rugaber): “If you find the current economy a bit confusing, don’t worry: So does the nation’s top economic official, Federal Reserve Chair Jerome Powell. At a highly anticipated news conference…, Powell said the Fed was sticking by its bedrock economic forecast: COVID-19 will eventually fade, which, in turn, will enable supply chain bottlenecks to unsnarl. More people will return to the workforce, the economy will strengthen and inflation pressures will ease. And yet the nation’s leading economic figure acknowledged that it isn’t at all clear when or even whether things will play out the way he and other Fed officials hope. And so far, they haven’t.”
November 3 – Yahoo Finance (Brian Cheung): “The nation’s top economic policymaker acknowledged that inflationary pressures are impacting everyday Americans, but doubled down on his view that the hot pace of price increases should abate in time. ‘We understand the difficulties that high inflation poses for individuals and families, particularly those with limited means to absorb higher prices for essentials such as food and transportation,’ Federal Reserve Chairman Jerome Powell said…”
October 31 – Wall Street Journal (Mickey D. Levy): “Inflation is a bigger challenge than the Federal Reserve acknowledges. It has already risen dramatically, and it is suppressing real wages. Expectations of further inflation have begun to influence wage demands, costs of production, supply-chain estimates, and business pricing strategies. Lower-income earners are being squeezed the most. It isn’t enough that the Fed says it will begin tapering its asset purchases, while it continues to hope that inflation will recede to 2% when supply shortages dissipate. The Fed must acknowledge that its monetary policy has been a source of inflation, and that it will need to raise interest rates more quickly than it presumed.”
October 29 – Bloomberg (Simon Kennedy): “Goldman Sachs… economists said they now expect inflation will force the Federal Reserve to hike interest rates next July, a year earlier than previously expected… Economists led by Jan Hatzius said the Fed will raise its benchmark from a range of zero to 0.25% soon after it stops tapering its massive asset-purchase program. A second increase will follow in November 2022 and the central bank will then raise rates two times a year after that, they said.”
U.S. Bubble Watch:
November 4 – Associated Press (Martin Crutsinger): “The U.S. trade deficit hit an all-time high of $80.9 billion in September as American exports fell sharply while imports, even with supply chain problems at American ports, continue to climb. The September deficit topped the previous record of $73.2 billion set in June… The deficit is the gap between what the United States exports to the rest of the world and the imports it purchases from foreign nations. In September, exports plunged 3% to $207.6 billion while imports rose 0.6% to $288.5 billion.”
November 3 – Bloomberg (Vince Golle): “U.S. service providers expanded at a record pace in October… The Institute for Supply Management’s services index advanced to 66.7 last month, exceeding all projections, from 61.9 in September… The gauges of new orders and business activity also increased to the highest in data back to 1997, indicating the economy picked up steam… ‘Demand shows no signs of slowing,’ Anthony Nieves, chair of the ISM services business survey committee, said… ‘However, ongoing challenges -- including supply chain disruptions and shortages of labor and materials -- are constraining capacity and impacting overall business conditions.’ The ISM’s measure of prices paid by service providers for materials and services increased to the highest level since September 2005. An index of supplier delivery times climbed to the second highest on record, indicating extended delays and lingering capacity constraints.”
November 4 – Reuters (Lucia Mutikani): “The number of Americans filing new claims for unemployment benefits fell to the lowest level in nearly 20 months last week, suggesting the economy was regaining momentum… The tightening labor market is driving up wages as companies scramble for workers, contributing to keeping inflation high. Labor costs surged in the third quarter…, with productivity sinking at its steepest pace in 40 years… Initial claims for state unemployment benefits fell 14,000 to a seasonally adjusted 269,000 for the week ended Oct. 30…”
November 1 – Reuters (Lucia Mutikani): “U.S. manufacturing activity slowed in October, with all industries reporting record-long lead times for raw materials, indicating that stretched supply chains continued to constrain economic activity early in the fourth quarter. The Institute for Supply Management (ISM) survey… also hinted at some moderation in demand amid surging prices, with a measure of new orders dropping to a 16-month low. Still, demand remains strong as retail inventories continue to be depressed… According to the ISM, ‘companies and suppliers continue to deal with an unprecedented number of hurdles to meet increasing demand.’ ‘Stress in U.S. supply chains isn't abating, lending downside risk to our forecast for GDP growth in the near term and a clear upside risk to the forecast for inflation,’said Ryan Sweet, a senior economist at Moody's Analytics…”
November 1 – Wall Street Journal (Thomas Gryta and Chip Cutter): “With the machinery of international trade slowed, business leaders are ditching, at least temporarily, overseas partners and the conventional wisdom of the global economy in favor of reliability, even if it costs more. Some are moving workers and production facilities closer to home and relocating plants closer to suppliers… ‘It’s about control. I want to have more control in an uncertain world,’ said Ellen Kullman, chief executive of… Carbon Inc. and the former CEO of DuPont. For more than a generation, many executives at large multinationals have pursued a tested strategy: securing inexpensive manufacturing in distant locales, outsourcing many low-skill jobs and relying on just-in-time production and ocean transportation to grind down costs. But since the pandemic, many companies have had trouble getting raw materials as well as hiring production workers and booking space on shipping vessels. Input shortages and supply line bottlenecks are disrupting the availability and quality of goods and services for everything from sneakers to airline flights to breakfast hours at McDonald’s.”
November 1 – Associated Press (Ken Sweet and Emily Swanson): “Americans’ opinions on the U.S. economy have soured noticeably in the past month, a new poll finds, with nearly half expecting economic conditions to worsen in the next year. Just 35% of Americans now call the national economy good, while 65% call it poor, according to a poll by The Associated Press-NORC Center for Public Affairs Research. That’s a dip since September, when 45% of Americans called the economy good, and a return to about where views of the nation’s economy stood in January and February, when the pandemic was raging... The deterioration in Americans’ economic sentiments comes as the cost of goods is rising nationwide, particularly gas prices, and bottlenecks in the global supply chain have made purchasing everything from furniture to automobiles more difficult.”
October 31 – Wall Street Journal (Amara Omeokwe): “The Covid-19 pandemic has boosted retirements among baby boomers, further straining the tight labor supply and leaving a hole for employers to fill. Older workers who could least afford to retire early—those with lower incomes and less education—have been more likely to leave the workforce during the pandemic… The question is whether their retreat is temporary or permanent. Some retired because of Covid-19 fears, and others after failing to find suitable work. The rising value of stocks, homes and other assets also has prompted a group of more affluent boomers to also retire earlier than expected, economists said.”
November 3 – Bloomberg (Joe Deaux): “Deere & Co. said the new contract it provided to striking union employees is the company’s best and final offer, and they aren’t returning to the bargaining table. The world’s largest maker of farm equipment said it remains in contact with the United Auto Workers union that represents workers, but that it has nothing else to bargain about. The comments come a day after workers voted down a second tentative agreement, extending the strike by some 10,000 workers into a third week.”
November 3 – Yahoo Finance (Aarthi Swaminathan): “Supply chain disruptions are slamming business left and right as the holiday season nears. ‘You've got the proverbial softball through the snake right now,’ Generac CEO Aaron Jagdfeld said… ‘Christmas season demand, in particular, is exacerbating the problem. ... all signs kind of point to maybe by the second half of next year that some of these tougher supply chain challenges abate.’”
November 2 – Reuters (Lucia Mutikani): “The U.S. residential rental vacancy rate dropped further in the third quarter as the economy continued to normalize after severe disruptions caused by the COVID-19 pandemic, potentially indicating that high inflation could last for a while. The… rental vacancy rate fell to 5.8% last quarter, the lowest since the second quarter of 2020. That was down from 6.2% in the April-June period and 6.4% a year ago.”
November 2 – Wall Street Journal (Scott McCartney): “Going to Florida over the holidays? Everyone else is. Getting delayed going or coming from home? Everyone else might be. This won’t be a normal holiday travel season. Travelers had best plan accordingly. Multiple airlines have sold more tickets this year than they can accommodate. Normal weather disruptions or temporary hiccups have cascaded into major meltdowns because of staffing shortages. Airlines haven’t had enough spare crews to recover normally, so customers end up stranded for long periods. Any bad weather or other problems at the holidays could spell trouble for travelers.”
November 1 – CNBC (Leslie Josephs): “American Airlines on Monday canceled more than 460 flights, or 16% of its mainline schedule, as the carrier scrambled to stabilize its operation after reporting staffing shortages that led to travel disruptions for tens of thousands of people over the weekend. The… airline canceled more than 2,300 mainline flights since Friday, blaming the issues on high winds on Thursday and a shortfall of crews. On Sunday alone, it canceled more than 1,000 flights, or 30% of its operation… That affected more than 136,000 customers…”
October 31 – Financial Times (Obey Manayiti and Andrew Edgecliffe-Johnson): “Containers piled high at the Port of New York and New Jersey form an attention-grabbing view from the 115,000 square feet warehouse operated by Michael Sarcona, president of logistics company Sarcona Management. The facility is one of eight that Sarcona operates near the port with a combined capacity of almost 2m sq ft, but right now that is not nearly enough. He has a team of employees and real estate agents urgently searching for more space.”
November 2 – CNBC (Abigail Johnson Hess): “Today, typical college costs (including tuition and fees, room and board, and allowances for books and supplies, transportation and other personal expenses) range from $27,330 for public in-state university students to $55,800 for private nonprofit college students… According to the researchers’ analysis of… data for the years 1980 to 2019, college costs have increased by 169% over the past four decades — while earnings for workers between the ages of 22 and 27 have increased by just 19%.”
November 2 – Bloomberg (Patrick Clark): “Zillow Group Inc. is pulling the plug on its tech-powered home-flipping operation, after an ambitious effort to transform the company collapsed when its vaunted pricing algorithms proved unequal to the task. The company plans to take writedowns of as much as $569 million and reduce its workforce by 25% as it winds down the business in coming months…”
Fixed-Income Bubble Watch:
November 1 – Reuters (Karen Brettell): “The U.S. Treasury said… it plans to borrow $1.015 trillion in the fourth quarter, more than the August estimate of $703 billion, due to having a lower balance at the beginning of the quarter. This is somewhat offset by a lower end-of-quarter balance and higher receipts… The fourth-quarter estimate assumes an end-Dec. cash balance of $650 billion.”
November 1 – Wall Street Journal (Matt Wirz): “Mortgage companies in the U.S. issued $21 billion of mortgage-backed bonds in October, the second heaviest month of borrowing since the 2008-09 financial crisis, according to… Bank of America... One reason: It is cheaper for many companies to borrow in the ‘private-label’ market than to issue bonds guaranteed by government-sponsored enterprises Fannie Mae and Freddie Mac. The lower-cost funding is prompting home-loan originators such as loanDepot Inc., as well as real estate investment trusts to tap the market…”
November 1 – Bloomberg (Caleb Mutua and Brian Smith): “JPMorgan… sold $3 billion of bonds in the U.S. investment-grade market, adding to a streak of debt transactions from big Wall Street banks including Citigroup Inc., Goldman Sachs... and Bank of America Corp.”
November 1 – Bloomberg (Gowri Gurumurthy): “After two exceptionally elevated years for the U.S. investment-grade and high-yield primary debt offerings, issuance is expected to return to a more normal pattern in 2022, Goldman Sachs analyst Amanda Lynam writes. Goldman estimates U.S. high-yield bond supply of $325 billion for 2022…; this represents a sharp slowdown from the record-setting pace of the past two years and a more than 25% decline from the 2021 full-year forecast of $450 billion.”
China Watch:
October 31 – Bloomberg: “China’s economy showed signs of further weakness in October as power shortages and surging commodity prices weighed on manufacturing, while strict Covid controls put a brake on holiday spending. The official manufacturing purchasing managers’ index fell to 49.2…, the second month it was below the key 50-mark that signals a contraction in production… Another worrying sign in the data was the pick-up in inflationary pressure in October. Both input and output prices for manufacturers jumped, suggesting producers are passing on higher costs to customers. Producer-price inflation is already at its highest level in almost 26 years.”
November 1 – CNBC (Weizhen Tan): “There are signs of stagflation in China, as prices continue to rise while the latest manufacturing data show production slowing, economists say. China’s factory activity contracted more than expected in October, shrinking for a second month…The official manufacturing Purchasing Managers’ Index for October came in at 49.2, falling below the 50 level which separates expansion from contraction… In contrast, the output price index has risen to the highest level since it was published in 2016, Zhang said.”
November 3 – Reuters (Lucia Mutikani): “Activity in China's services sector expanded at a faster pace in October, buoyed by robust demand, although rising inflationary pressures weighed on business confidence for the year ahead, a private survey showed… The Caixin/Markit services Purchasing Managers' Index (PMI) rose to 53.8 in October - the highest since July - from 53.4 in September.”
November 2 – Reuters (Ryan Woo, Roxanne Liu and Liangping Gao): “China will not give up on its zero-tolerance policy towards local COVID-19 cases any time soon, some experts said, as the policy has allowed it to quickly quell local outbreaks, while the virus continues to spread outside its borders. To stop local cases from turning into wider outbreaks, China has developed and continually refined its COVID-fighting arsenal -- including mass testing, targeted lockdowns and travel restrictions - even when those anti-COVID measures occasionally disrupted local economies. ‘The policy (in China) will remain for a long time,’ Zhong Nanshan, a respiratory disease expert who helped formulate China's COVID strategy in early 2020, told state media. ‘How long it will last depends on the virus-control situation worldwide.’”
November 3 – Bloomberg: “Chinese Premier Li Keqiang said preemptive steps and fine-tuning of policies are needed to address challenges facing the economy, as concern builds over slowing growth. During a meeting… of the State Council, Li also called for authorities to ensure the supplies of major agricultural goods and improve capacity of reserves, according to state broadcaster CCTV.”
November 2 – Bloomberg: “China unexpectedly boosted the injection of short-term cash into the banking system as record amount of policy loans come due and Premier Li Keqiang flags challenges to the nation’s growth. The People’s Bank of China added 50 billion yuan ($7.8bn) in the financial system with seven-day reverse repurchase agreements, after injecting 10 billion yuan per day in the last two sessions. While the operation still led to a net liquidity drainage after considering maturities, it signals that authorities have grown concerned about a potential cash tightness in the coming weeks.”
November 1 – Bloomberg: “China’s fiscal policy will provide the main support to economic growth next year while significant monetary easing is unlikely, according to a former adviser to China’s central bank. ‘The economy overall really is still okay and we will see average growth this year at around 8%,’ Huang Yiping, a former member of the People’s Bank of China’s monetary policy committee, said… ‘So the need for aggressive easing is quite limited…’ ‘Monetary policy will probably remain flexible, and actions probably will be structural,’ he said, adding that this could mean targeted easing and lending to small businesses. ‘The main job for supporting growth, I think, will be with the fiscal policy next year.’”
October 31 – Bloomberg: “China’s major developers saw home sales tumble last month, prolonging the real estate slump and putting more pressure on growth in the world’s second-largest economy. New-home sales by area at the nation’s top 100 developers fell 32% in October from a year earlier, a report by… China Real Estate Information Corp. showed... Sales rose 1.4% from a month earlier. Both September and October are traditionally fast seasons for homebuying, but sentiment has evaporated amid the widening crisis…”
November 4 – Bloomberg: “The selloff in Chinese property dollar bonds intensified on Thursday amid signs of cracks emerging in the nation’s much larger onshore market. Kaisa Group… led declines in the nation’s offshore bonds as a financial product it guarantees missed a payment, while Shimao Group Holdings Ltd.’s 4.75% dollar note due 2022 was poised for its biggest drop on record. China’s dollar high-yield debt fell for the 10th day in 11 after yields climbed above 21%. Trading was halted in two yuan bonds after they plunged more than 20%. China’s property firms are caught in a vicious circle where surging borrowing costs make refinancing upcoming maturities prohibitively expensive, thereby triggering further losses in their bonds as traders price in potential haircuts.”
October 31 – Bloomberg (Alice Huang and Sofia Horta e Costa): “Who will survive in China’s property sector is becoming a key question for investors as the country’s credit market undergoes its biggest shakeout in years. A surge in Chinese junk dollar bond yields in October, briefly reaching 20%, has made it all but impossible for stressed developers to refinance their maturing debt. Such firms have just over $2 billion of onshore and dollar-bond payments due in November…”
November 4 – Bloomberg: “Chinese developer Kaisa Group… missed payments on wealth management products it guaranteed, the latest sign of stress in the nation’s beleaguered real estate industry. The company has faced ‘unprecedented pressure on its liquidity’ due to unfavorable factors such as credit rating downgrades and a challenging property market environment, Kaisa said…”
November 1 – Bloomberg (Rebecca Choong Wilkins and Alice Huang): “A selloff in Chinese developers’ debt is deepening, with one of the 20 biggest developers joining a host of firms looking to dodge defaults as debt crises effectively shut them out of the overseas financing market… Yango Group Co. has become the latest developer trying to improve its liquidity and avoid default by delaying near-term bond payments.”
November 2 – Financial Times (Thomas Hale and Andy Lin): “Evergrande faces rising repayment pressure on its dollar-denominated bonds in the coming months, despite making several last-minute transfers in October that allowed the heavily indebted Chinese property company to narrowly avoid a default. Investors and global markets will be watching for clues as to the eventual fate of the world’s most indebted property developer, which faces $8.1bn in interest and principal payments on its offshore bonds before the end of 2022 and has hundreds of projects across China.”
November 2 – Bloomberg: “Property developers in China looking to raise badly needed cash by selling assets are finding it hard to strike deals as potential buyers in the sector hoard funds after home sales plunged and Beijing stepped up its borrowing crackdown. China Evergrande Group last month ended discussions to sell a controlling stake in its property-management business that would have raised about $2.6 billion. A plan to unload a trophy office tower in Hong Kong also stumbled, while Modern Land China Co. defaulted on a $250 million bond last week after it was unable to sell some assets… Oceanwide Holdings Co. is seeking to offload its main office complex in Beijing after a unit defaulted. The failure to sell holdings exacerbates the cash squeeze for some of the nation’s property giants, many of which are shut out of financial markets… Falling home prices and a land sale slump further complicate asset sales.”
October 31 – Bloomberg (Olivia Tam and Adrian Leung): “China’s indebted developers are struggling to meet Beijing’s tighter financing rules. Two-thirds of the top 30 Chinese property firms by sales ranked by the China Real Estate Info Corp. have breached at least one of the metrics known as the ‘three red lines.’”
November 4 – Bloomberg (Venus Feng): “Hui Ka Yan’s 60-meter boat dwarfs almost everything around it in Hong Kong’s Gold Coast yacht club. Moored a short walk from one of China Evergrande Group’s massive apartment complexes, ‘Event’ is just one piece of Hui’s fortune that’s coming under increased scrutiny as his company struggles to make good on more than $300 billion of liabilities. With Chinese authorities urging Hui to use his own money to alleviate Evergrande’s market-roiling crisis, the property tycoon’s personal balance sheet has become a key variable for bond investors trying to game out how long the developer can stave off default.”
November 2 – Bloomberg (Jasmine Ng): “Army biscuits and luncheon meat are among the most searched items online by Chinese citizens after the government urged households this week to stock up on food and daily necessities. Orders for compressed biscuits, a common military ration, have soared on China’s e-commerce platforms… Other trending products include rice, soy sauce, chili sauce and noodles, Alibaba Group Holding Ltd.’s Taobao website shows. The top search on JD.com is ‘household stockpile list.’ The surge in interest follows a notice from the commerce ministry… asking local authorities to ensure adequate food supply and encouraging people to stock up on daily necessities for winter or emergencies. It sparked speculation online on whether the move was linked to a widening coronavirus outbreak, a cold snap, or even rising tensions with Taiwan.”
October 31 – Financial Times (Edward White and Thomas Hale): “A Chinese court has approved the $170bn restructuring of HNA Group, a victory for the conglomerate’s state controllers that could prove instructive for how Beijing deals with indebted property group Evergrande. HNA, formerly China’s most aggressive offshore dealmaker, said... a court in Hainan… had backed a plan to revamp more than 300 group companies into four new entities.”
November 3 – Bloomberg: “China’s lending to the real estate sector ‘basically recovered to normal’ levels in October following slow growth earlier this year, the Shanghai Securities Journal reported, citing an unidentified government agency. Lending scale picked up substantially in October, the newspaper says.”
November 1 – Financial Times (Edward White, Primrose Riordan and Demetri Sevastopulo): “The head of a leading American business lobby group in China has warned of an exodus of western executives from the world’s biggest consumer market as President Xi Jinping tightens coronavirus controls.”
Central Banker Watch:
November 4 – Financial Times (Chris Giles and Tommy Stubbington): “The Bank of England has backed away from an immediate rise in interest rates, leaving the central bank’s benchmark at the historic low of 0.1% even as it published its highest inflation forecast for a decade. Predicting inflation would reach 5% in the spring of next year, the BoE’s Monetary Policy Committee said… it was likely that rate rises would be needed ‘over coming months’. But the level of urgency on tackling inflation was dialled down compared with BoE governor Andrew Bailey’s comments last month that the MPC ‘will have to act’ to restrain rising prices.”
November 2 – Bloomberg (Swati Pandey and Garfield Reynolds): “The Reserve Bank of Australia bowed to market pressure…, abandoning a bond-yield target after an acceleration in inflation spurred traders to price in higher borrowing costs. The decision to scrap the 0.1% yield target on the April 2024 security comes after a bond market selloff last week and amid an improving domestic outlook underpinned by high vaccination rates. The RBA kept its cash rate at a record low 0.1%, as expected. ‘Given that other market interest rates have moved in response to the increased likelihood of higher inflation and lower unemployment, the effectiveness of the yield target in holding down the general structure of interest rates in Australia has diminished,’ Governor Philip Lowe said…”
November 2 – Bloomberg (Marcus Wong): “European Central Bank President Christine Lagarde renewed her pushback against market bets for an interest-rate increase in 2022 after an attempt last week left investors unimpressed. ‘In our forward guidance on interest rates, we have clearly articulated the three conditions that need to be satisfied before rates will start to rise,’ Lagarde said… ‘Despite the current inflation surge, the outlook for inflation over the medium term remains subdued, and thus these three conditions are very unlikely to be satisfied next year,’ she said.”
November 2 – Bloomberg (Swati Pandey and Garfield Reynolds): “Bond market one, central banks zero. That’s the headline score after a bruising week in global markets forced a policy change in Australia that’s sent ripples across the globe. But market moves in the wake of the decision suggest traders are unsure about just how far they can push the world’s central banks. Spiraling inflation set the ball rolling for Australia, sparking a selloff in local debt markets that boosted yields more than eight times higher than the central banks’s target. Reserve Bank of Australia Governor Philip Lowe ditched his 0.1% cap…, as central bankers worldwide struggle to convince traders and households that they won’t let inflation get out of control. The RBA’s climb down in the face of the biggest yield spikes since the 1990s shows how policy makers may struggle to stave off investor demands for action.”
November 1 – Bloomberg (Jiyeun Lee): “South Korea’s central bank said it’s on guard against stronger-than-expected price pressures after data showed inflation spiking to the fastest since 2012, boosting the case for another interest rate hike this month. In a statement… after data showed consumer prices jumping 3.2% in October, the Bank of Korea said it is closely monitoring the possibility of an upward trend in global commodity prices and supply chain bottlenecks lasting longer than expected, turning up inflationary pressure.”
November 2 – Bloomberg (Marcus Wong): “Traders have had a mixed view for most of this year about when emerging-Asia central banks will begin to normalize policy. Suddenly though, they are rushing to price in rate-hike bets across the region. The hawkish shift is most evident in South Korea and India, where markets are now anticipating at least a quarter-point increase in the next three months, while they are also building in Malaysia and Thailand over a two-year horizon. Expectations for tighter monetary policy are being driven higher around the world as surging energy costs and Covid-driven supply-chain disruptions are causing inflation to accelerate.”
Global Bubble Watch:
October 31 – Reuters (Jan Strupczewski, Crispian Balmer, Andrea Shalal and Jason Lange): “Leaders of the world's 20 biggest economies (G20) will endorse an OECD deal on a global minimum corporate tax of 15%..., with a view to have the rules in force in 2023. ‘We call on the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting to swiftly develop the model rules and multilateral instruments as agreed in the Detailed Implementation Plan, with a view to ensure that the new rules will come into effect at global level in 2023,’ the draft conclusions… said.”
November 2 – Financial Times (Richard Milne): “Maersk said there was no end in sight to the global supply chain crisis as the world’s largest container shipping group enjoyed the most profitable quarter in its 117-year history and made a $1bn push deeper into air freight. Chief executive Soren Skou told the Financial Times that congestion outside ports such as Los Angeles and Long Beach was getting worse as retailers and manufacturers struggled to keep up with surging demand after the Covid-19 pandemic. ‘The ports are not working as well as they should do, so we can’t discharge containers as fast as we would like. It’s hard to see exactly when the situation will improve. Our customers are dealing with super high customer demand, and on top of that they have very low inventory,’ he added.”
November 1 – Reuters (Marc Jones and Tommy Wilkes): “China's property sector woes could spell trouble for prestige mega-projects in London, New York, Sydney and other top cities as the developers behind them scramble for cash. While China Evergrande Group's struggles have dominated the crisis, the risk to multi-trillion dollar global property markets stems from some of its rivals that have spent the last decade competing to build ever taller and grander skyscrapers. Shanghai-based Greenland Holdings, which breaches as many of China's debt ‘red lines’ as Evergrande, has just built Sydney's tallest residential tower, has plans to do the same in London and has billions of dollars worth of projects in Brooklyn, Los Angeles, Paris and Toronto.”
October 31 – Bloomberg (Swati Pandey): “Australia’s housing market advanced for a 13th straight month, even as signs mounted of a potential cooling ahead in response to worsening affordability, increased supply and the withdrawal of government support. Residential property values in Australia’s major cities rose 1.4% in October, to be up almost 21% from a year earlier, according to CoreLogic… House prices are outpacing wages by a ‘ratio of about 12:1,’ it said.”
EM Watch:
October 31 – Bloomberg (Justin Villamil): “As semiconductor shortages roil global supply chains, few auto-parts suppliers have been as hard hit as those in Mexico. Nemak SAB and Metalsa SA -- makers of engine blocks, transmission cases, bumpers and fuel tanks that make their way into automobiles assembled around the world -- have seen their bonds post the worst returns among emerging-market peers over the past six weeks.”
Europe Watch:
October 30 – Reuters (Balazs Koranyi): “Germany's best-selling tabloid Bild scathingly criticised European Central Bank (ECB) President Christine Lagarde…, accusing her of destroying the earnings and savings of ordinary people by tolerating a rise in inflation. The article… may signal fresh hostility towards the ECB on the part of the German public, which has for a decade been sceptical of the bank's ultra-easy policy. Two days ago the bank left rates policy unchanged despite consumer price growth hitting a 13-year high. The newspaper called Lagarde ‘Madam Inflation,’ accusing her of being a high-earner who liked wearing luxury fashion and saying she didn't seem to care about ordinary people's difficulties. ‘Christine Lagarde is melting pensions, wages and savings,’ it said.”
November 4 – Reuters (Francesco Guarascio): “Euro zone producer prices jumped in September more than expected, driven by skyrocketing energy costs, recording their highest increase on record in a new sign of strong inflationary pressures in the bloc… The European Union's statistics office Eurostat estimated that prices at factory gates in the 19 countries sharing the euro rose 2.7% month-on-month in September for a 16.0% year-on-year jump, in the biggest increases ever recorded for the bloc.”
Japan Watch:
October 31 – Bloomberg (Isabel Reynolds): “Japanese Prime Minister Fumio Kishida firmed up his month-old government with an election that saw his Liberal Democratic Party avoid the worst-case scenarios that opinion polls had suggested beforehand. The LDP won 261 seats to preserve its outright majority in the 465-seat lower house, results on Monday showed, dropping from the 276 seats it held when parliament was dissolved.”
Social, Political, Environmental, Cybersecurity Instability Watch:
November 1 – Associated Press (Seth Borenstein): “World leaders turned up the heat and resorted to end-of-the-world rhetoric… in an attempt to bring new urgency to sputtering international climate negotiations. The metaphors were dramatic and mixed at the start of the talks, known as COP26. British Prime Minister Boris Johnson described global warming as ‘a doomsday device’ strapped to humanity. United Nations Secretary-General António Guterres told his colleagues that humans are ‘digging our own graves.’ And Barbados Prime Minister Mia Mottley, speaking for vulnerable island nations, added moral thunder, warning leaders not to ‘allow the path of greed and selfishness to sow the seeds of our common destruction.’”
November 3 – Wall Street Journal (David Benoit): “Most of the world’s big banks, its major investors and insurers, and its financial regulators have for the first time signed up to a coordinated pledge that will incorporate carbon emissions into their most fundamental decisions. The lenders and investors say they will help fund a shift that will reduce carbon emissions by businesses and spur the growth of industries that can help limit climate change. Regulators are putting in place new rules to oversee the shift. The United Nations’ Glasgow Financial Alliance for Net Zero says financial groups with assets of $130 trillion have committed to its program to cut emissions. That is enough scale to generate $100 trillion through 2050 to fund investments needed for new technologies, and enough reach to impose pathways for corporations and financial institutions to restructure themselves, the group said.”
October 31 – Financial Times (Edward White and Thomas Hale): “Up to 3bn out of the projected world population of about 9bn could be exposed to temperatures on a par with the hottest parts of the Sahara by 2070, according to research by scientists from China, US and Europe. However, rapid reductions in greenhouse gas emissions could halve the number of people exposed to such hot conditions. ‘The good news is that these impacts can be greatly reduced if humanity succeeds in curbing global warming,’ said study co-author Tim Lenton, climate specialist and director of the Global Systems Institute at Exeter university. The report highlights how the majority of humans live in a very narrow mean annual temperature band of 11C-15C (52F-59F).”
Leveraged Speculation Watch:
November 2 – Bloomberg (Nishant Kumar and Hema Parmar): “The hedge fund traders watched as a nightmare scenario played out in the world’s bond markets. From Australia to the U.K. to the U.S., government bond yields abruptly moved against them last week amid growing speculation that central banks will accelerate plans for raising interest rates in the face of persistent inflation. The losses piled up -- and for a few became so big that the firms halted some trading to contain the damage. Balyasny Asset Management, BlueCrest Capital Management and ExodusPoint Capital Management each curtailed the betting of two to four traders after they hit maximum loss levels…”
November 5 – Bloomberg (Nishant Kumar and Hema Parmar): “Chris Rokos’s hedge fund tumbled about 18% last month amid recent bond-market upheaval, putting it on track for its worst year ever, according to a person familiar with the matter. Rokos Capital Management is now down more than 26% in 2021, the person said. A spokesman for the London-based firm declined to comment. It’s one of several hedge funds hurt by last week’s unexpected bond-market volatility, prompted by growing speculation that central banks will raise rates faster than expected in order to contain inflation.”
November 2 – Bloomberg (Nishant Kumar): “Hedge fund Alphadyne Asset Management’s bad year is getting worse in a hurry. The macro strategy fund, which had $11 billion of assets at the start of last month, is down another 6.5% in October, bringing losses for the year to 17%... Without a dramatic turnaround, the… firm is facing the possibility of ending the year down for the first time since starting in 2006.”
Geopolitical Watch:
October 29 – Bloomberg: “Taiwan has no future prospect other than unification with China, Chinese Foreign Minister Wang Yi said in Rome at the G-20 summit. Wang was responding to questions on efforts by countries including the United States to support Taiwan’s greater participation in the United Nations and in the international community, according to a statement posted on China’s foreign ministry website... Chinese officials slammed the U.S. earlier in the week and warned its support for Taiwan could pose ‘huge risks’ to relations between Beijing and Washington.”
October 31 – Reuters (Andrea Shalal): “U.S. Secretary of State Antony Blinken and Chinese Foreign Minister Wang Yi locked horns over Taiwan on the sidelines of a Group of 20 summit on Sunday, trading warnings against moves that could further escalate tensions across the Taiwan Strait. In an hour-long meeting in Rome, Blinken made ‘crystal clear’ that Washington opposes any unilateral changes by Beijing to the status quo around Taiwan,a senior State Department official said.”
November 1 – Associated Press (Robert Burns): “China’s growing military muscle and its drive to end American predominance in the Asia-Pacific is rattling the U.S. defense establishment. American officials see trouble quickly accumulating on multiple fronts — Beijing’s expanding nuclear arsenal, its advances in space, cyber and missile technologies, and threats to Taiwan. ‘The pace at which China is moving is stunning,’ says Gen. John Hyten, the No. 2-ranking U.S. military officer, who previously commanded U.S. nuclear forces and oversaw Air Force space operations. At stake is a potential shift in the global balance of power that has favored the United States for decades.”
November 1 – Reuters (Maria Kiselyova): “Russia's foreign minister accused Ukrainian leaders… of trying to drag Moscow into the conflict in eastern Ukraine, following an escalation in fighting between government forces and rebels in the breakaway region. ‘We observe attempts to carry out provocations, elicit some reaction from the militia and drag Russia into some kind of combat action,’ Sergei Lavrov told Russia's state television. Russia accused Ukraine of destabilising the situation after government forces used a Turkish-made Bayraktar TB2 drone to strike a position controlled by Russian-backed separatists last week.”
November 4 – Bloomberg (Javier Blas, Grant Smith and Salma El Wardany): “OPEC+ is heading for a politically consequential showdown with President Joe Biden, as Saudi Arabia and its allies must choose whether to heed American demands for more oil. The cartel looked set to rebuff the request, triggering a bare-knuckle fight with the White House, which is worried that inflation caused by high energy prices could derail its economic agenda. ‘You take a look at oil prices,’ Biden told reporters… Fuel costs are high because of ‘the refusal of Russia or the OPEC nations to pump more oil.’”
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- Edited 12:39pm Nov 6, 2021 11:18am | Edited 12:39pm
- | Commercial Member | Joined Dec 2014 | 11,978 Posts
The assembled governments of the world meeting in Glasgow for COP26 are fixing to declare war on the backbone of modern economic life and the abundance and relief from human poverty and suffering with which it has gifted the world. We are referring, of course, to its agenda to essentially drive fossil fuels—which currently make up 80% of BTU consumption—from the global energy supply system over the next several decades.
All of this is being done in the name of preventing global temperatures from rising by 1.5 degrees Celsius above “pre-industrial” levels.
But when it comes to the crucial matter of exactly which pre-industrial baseline level, you can see the skunk sitting on the woodpile a mile away. That’s because, as we showed in Part 1, global temperatures have been higher than the present—often by upward of 10–15 degrees Celsius—for most of the past 600 million years!
Moreover, during the more recent era since the great extinction event 66 million years ago, the decline in temperatures has been almost continuous, touching lower than current levels only during the 100,000-year glaciation cycles of the last 2.6 million years of the Pleistocene ice ages. Not unsurprisingly, therefore, the Climate Howlers have chosen to ignore 599,830,000 of those years in favor of the last 170 years (since 1850) alone.
They actually put old William Jennings Bryan of the Scopes Trial to shame. At least he thought the world was 6,000 years old!
Still, the juxtaposition of the temperature record of the last 66 million years and the sawed-off charts of the climate alarmists tells you all you need to know: to wit, they have simply banished all the “inconvenient” science from the narrative.
Well, dear reader, I knew from the beginning that this climate change thingy was a hoax -- and said so at the time -- and Mr. Stockman is at the top of his game with this article. If you missed it in yesterday's column, the link to Part 1 is here. Part 2 showed up on the internationalman.com Internet site on Friday sometime -- and another link to it is here.
David Stockman on the GreenMageddon... Part 3
by David Stockman
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Editor’s Note: Right now, the global elite and world leaders are coming together at the UN Climate Change conference in Glasgow to address the "problem" of climate change.
Over the next couple of days, Washington DC insider David Stockman will debunk the narrative and offer a comprehensive look at the climate change agenda, including what it means for you.
Below is part three of David’s article series.
The geological and paleontological evidence overwhelmingly says that today’s average global temperature of about 15 degrees C and CO2 concentrations of 420 ppm are nothing to fret about. Even if they rise to about 17–18 degrees C and 500–600 ppm by the end of the century, it may well balance or improve the lot of mankind.
After all, bursts of civilization during the last 10,000 years uniformly occurred during the red portion of the graph below. The aforementioned river civilizations—the Minoan, the Greco-Roman era, the Medieval flowering, and the industrial and technological revolutions of the present era. At the same time, several lapses into the dark ages happened when the climate turned colder (blue).
And that’s only logical. When it's warmer and wetter, growing seasons are longer, and crop yields are better—regardless of the agricultural technology and practices of the moment. And it’s better for human and community health, too—most of the deadly plagues of history have occurred in colder climates, such as the Black Death of 1344–1350.
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Yet, the Climate Crisis Narrative shitcans this massive body of "the science" by means of two deceptive devices that invalidate the entire Anthropogenic Global Warming (AGW) story.
First, it ignores the entirety of the planet’s pre-Holocene (last 10,000 years) history, even though the science shows that more than 50% of the time in the last 600 million years, global temperatures were in the range of 25 degrees C or 67% higher than current levels and far beyond anything projected by the most unhinged climate models today. But, crucially, the planetary climate systems did not go into a doomsday loop of scorching meltdown—warming was always checked and reversed by powerful countervailing forces.
Even the history the alarmists do acknowledge has been grotesquely falsified. As we showed in Part 2, the so-called hockey stick of the past 1000 years in which temperatures were flat until 1850 and are now rising to allegedly dangerous levels is a complete crock. It was fraudulently manufactured by the IPCC (International Panel on Climate Change) to cancel the fact that temperatures in the pre-industrial world of the Medieval Warm Period (AD 1000–1200) were actually higher than at present.
Secondly, it is falsely claimed that global warming is a one-way street in which rising concentrations of greenhouse gases (GHGs) and especially CO2 are causing the Earth’s heat balance to continuously increase. The truth, however, is that higher CO2 concentrations are a consequence and by-product, not a driver and cause, of the current naturally rising temperatures.
Again, the now "canceled" history of the planet knocks the CO2-driver proposition into a cocked hat. During the Cretaceous Period between 145 and 66 million years ago, a natural experiment provided complete absolution for the vilified CO2 molecule. During that period, global temperatures rose dramatically from 17 degrees C to 25 degrees C—a level far above anything today’s Climate Howlers have ever projected.
Alas, CO2 wasn’t the culprit. According to science, ambient CO2 concentrations actually tumbled during that 80-million-year expanse, dropping from 2,000 ppm to 900 ppm on the eve of the Extinction Event 66 million years ago.
You would think that this powerful countervailing fact would give the CO2 witch-hunter's pause, but that would be to ignore what the whole climate change brouhaha is actually about. That is, it’s not about science, human health, and well-being or the survival of planet Earth; it’s about politics and the ceaseless search of the political class and the apparatchiks and racketeers who inhabit the beltway for still another excuse to aggrandize state power.
Indeed, the climate change narrative is the kind of ritualized policy mantra that is concocted over and over again by the political class and the permanent nomenklatura of the modern state—professors, think-tankers, lobbyists, career apparatchiks, officialdom—in order to gather and exercise state power.
To paraphrase the great Randolph Bourne, inventing purported failings of capitalism—such as a propensity to burn too much hydrocarbon—is the health of the state. Indeed, fabrication of false problems and threats that purportedly can only be solved by heavy-handed state intervention has become the modus operandi of a political class that has usurped near-complete control of modern democracy.
In doing so, however, the ruling elites have gotten so used to such unimpeded success that they have become sloppy, superficial, careless, and dishonest. For instance, the minute we get a summer heatwave, these natural weather events are jammed into the global warming mantra with nary a second thought by the lip-syncing journalists of the MSM.
Yet there is absolutely no scientific basis for all this tom-tom beating. In fact, NOAA publishes a heatwave index based on extended temperature spikes, which last more than 4 days and which would be expected to occur once every 10 years based on the historical data.
As is evident from the chart below, the only true heatwave spikes we have had in the last 125 years were during the dust bowl heat waves of the 1930s. The frequency of mini-heatwave spikes since 1960 is actually no greater than it was from 1895 to 1935.
https://ecp.yusercontent.com/mail?ur...MJM_pyvEnQ--~D
Likewise, all it takes is a good Cat 2 hurricane and they are off to the races, gumming loudly about AGW. Of course, this ignores entirely NOAA’s own data as summarized in what is known as the ACE (accumulated cyclone energy) index.
This index was first developed by renowned hurricane expert and Colorado State University professor William Gray. It uses a calculation of a tropical cyclone’s maximum sustained winds every six hours. The latter is then multiplied by itself to get the index value and accumulated for all storms for all regions to get an index value for the year as shown below for the past 170 years (the blue line is the seven-year rolling average).
Your editor has a special regard for the expertise of William Gray. Back in our private equity days, we invested in a Property-Cat company, which was in the super-hazardous business of insuring against the extreme layers of damage caused by very bad hurricanes and earthquakes. Correctly setting the premiums was no trifling business, and it was the analytics, long-term databases, and current-year forecasts of Professor Gray upon which our underwriters crucially depended.
That is to say, hundreds of billions of dollars of insurance coverage were then and still is being written with ACE as a crucial input. Yet, if you examine the 7-year rolling average (blue line) in the chart, it is evident that ACE was as high or higher in the 1950s and 1960s as it is today and that the same was true of the late 1930s and the 1880–1900 periods.
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The above is an aggregate index of all storms and is therefore as comprehensive a measure as exists. But for want of doubt, the next three panels look at hurricane data at the individual storm count level. The pink portion of the bars represents the number of big Cat 3–5 storms, while the red portion reflects the number of Cat 1–2 storms and the blue the number of tropical storms that did not reach Cat 1 intensity.
The bars accumulate the number of storms in 5-year intervals and reflect recorded activity back to 1851. The reason we present three panels—for the Eastern Caribbean, Western Caribbean, and Bahamas/Turks & Caicos, respectively—is that the trends in these three sub-regions clearly diverge. And that’s the smoking gun.
If global warming were generating more hurricanes as the MSM constantly maintains, the increase would be uniform across all of these subregions, but it’s clearly not. Since the year 2000, for example,
- the Eastern Caribbean has had a modest increase in both tropical storms and higher-rated Cats relative to most of the past 170 years;
- the Western Caribbean has not been unusual at all, and, in fact, has been well below the counts during the 1880–1920 period; and
- the Bahamas/Turks & Caicos region, since 2000, has actually been well weaker than during 1930–1960 and 1880–1900.
The actual truth of the matter is that Atlantic hurricane activity is generated by atmospheric and ocean temperature conditions in the eastern Atlantic and North Africa. Those forces, in turn, are heavily influenced by the presence of an El Niño or La Niña in the Pacific Ocean. El Niño events increase the wind shear over the Atlantic, producing a less-favorable environment for hurricane formation and decreasing tropical storm activity in the Atlantic basin. Conversely, La Niña causes an increase in hurricane activity due to a decrease in wind shear.
These Pacific Ocean events, of course, have never been correlated with the low level of natural global warming now underway.
The number and strength of Atlantic hurricanes may also undergo a 50- to 70-year cycle known as the Atlantic multidecadal oscillation. Again, these cycles are unrelated to global warming trends since 1850.
Still, scientists have reconstructed Atlantic major hurricane activity back to the early eighteenth century (the 1700s) and found five periods averaging 3–5 major hurricanes per year and lasting 40–60 years each and six other periods averaging 1.5–2.5 major hurricanes per year and lasting 10–20 years each. These periods are associated with a decadal oscillation related to solar irradiance, which is responsible for enhancing/dampening the number of major hurricanes by 1–2 per year and is clearly not a product of AGW.
Moreover, like in all else, the long-term records of storm activity also rule out AGW because there was none for most of the time during the last 3,000 years, for instance. Yet, according to a proxy record for that period from a coastal lake in Cape Cod, hurricane activity has increased significantly during the last 500–1,000 years compared to earlier periods.
In short, there is no reason to believe that these well-understood precursor conditions and longer-term trends have been impacted by the modest increase in average global temperatures since the Little Ice Age (LIA) ended in 1850.
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As it happens, the same story is true with respect to wildfires—the third category of natural disasters that the Climate Howlers have glommed onto. But in this case, it’s bad forestry management, not man-made global warming, which has turned much of California into a dry wood fuel dump.
But don’t take our word for it. This comes from the George Soros-funded Pro Publica, which is not exactly a right-wing tin foil hat outfit. It points out that environmentalists had shackled federal and state forest management agencies so much so that today’s tiny "controlled burns" are but an infinitesimal fraction of what Mother Nature herself accomplished before the helping hand of today’s purportedly enlightened political authorities arrived on the scene.
"Academics believe that between 4.4 million and 11.8 million acres burned each year in prehistoric California. Between 1982 and 1998, California’s agency land managers burned, on average, about 30,000 acres a year. Between 1999 and 2017, that number dropped to an annual 13,000 acres. The state passed a few new laws in 2018 designed to facilitate more intentional burning. But few are optimistic this, alone, will lead to significant change.
We live with a deathly backlog. In February 2020, Nature Sustainability published this terrifying conclusion: California would need to burn 20 million acres—an area about the size of Maine—to restabilize in terms of fire."
In short, if you don’t clear and burn out the deadwood, you build up nature-defying tinderboxes that then require only a lightning strike, a spark from an unrepaired power line, or human carelessness to ignite into a raging inferno. As one 40-year conservationist and expert summarized,
"…There’s only one solution, the one we know yet still avoid. We need to get good fire on the ground and whittle down some of that fuel load."
In fact, a dramatically larger human footprint in the fire-prone shrublands and chaparral (dwarf trees) areas along the coasts increase the risk residents will start fires. California’s population nearly doubled from 1970 to 2020, from about 20 million people to 39.5 million people, and nearly all of the gain was in the coastal areas.
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Under those conditions, California’s strong, naturally-occurring winds, which crest periodically, are the main culprit that fuels and spreads the human-set blazes in the shrublands. The Diablo winds in the north and Santa Ana winds in the south can actually reach hurricane force. As wind moves west over California mountains and down toward the coast, it compresses, warms, and intensifies. The winds blow flames and carry embers, spreading the fires quickly before they can be contained.
Among other proofs that industrialization and fossil fuels aren’t the culprits is the fact that researchers had shown that when California was occupied by indigenous communities, wildfires would burn up some 4.5 million acres a year. That’s nearly six times the 2010–2019 period when wildfires burned an average of just 775,000 acres annually in California.
Beyond the untoward clash of all of these natural forces of climate and ecology with misguided government forest and shrubland husbandry policies, there is actually an even more dispositive smoking gun, as it were.
To wit, the Climate Howlers have not yet embraced the apparent absurdity that the planet’s purportedly rising temperatures have targeted the Blue State of California for special punishment. Yet when we look at the year-to-date data for forest fires, we find that, unlike California and Oregon, the US as a whole is now experiencing the weakest fire years since 2010.
That’s right. As of August 24 each year, the 10-year average burn has been 5.114 million acres across the US, but in 2020, it was 28% lower, at 3.714 million acres.
National fire data year to date:
https://ecp.yusercontent.com/mail?ur...bKb5dAm8Cw--~D
Indeed, what the above chart shows is that on a national basis, there has been no worsening trend at all during the last decade—just huge oscillations year to year, driven not by some grand planetary heat vector but by changing local weather and ecological conditions.
You just can’t go from 2.7 million burned acres in 2010 to 7.2 million acres in 2012, then back to 2.7 million acres in 2014, then to 6.7 million acres in 2017, followed by just 3.7 million acres in 2020—and still, argue along with the Climate Howlers that the planet is angry.
On the contrary, the only real trend evident is that on a decadal basis during recent times, average forest fire acreage in California has been slowly rising, owing to the above-described dismal failure of government forest management policies. But even the mildly rising average fire acreage trend since 1950 is a rounding error compared to the annual averages from prehistoric times, which were nearly 6 times greater than during the most recent decade.
Furthermore, the gently rising trend since 1950, as shown below, should not be confused with the Climate Howlers’ bogus claim that California’s fires have "grown more apocalyptic every year," as The New York Times reported.
In fact, they are comparing 2020’s above-average burn to 2019, which saw an unusually small amount of acreage burned—just 280,000 acres compared to 1.3 million and 1.6 million in 2017 and 2018, respectively, and 775,000 on average over the last decade.
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Nor is this lack of correlation with global warming just a California and US phenomenon. As shown in the chart below, the global extent of drought, measured by five levels of severity, with brown being the most extreme, has shown no worsening trend at all during the past 40 years.
Global Extent of Five Levels Of Drought, 1982–2012
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This brings us to the gravamen of the case. To wit, there is no climate crisis whatsoever, but the AGW hoax has so thoroughly contaminated the mainstream narrative and the policy apparatus in Washington and capitals all around the world that contemporary society is fixing to commit economic hari-kari.
That’s because, in contradistinction to the phony case that the rise of fossil fuel use after 1850 has caused the planetary climate system to become unglued, there has been a massive acceleration of global economic growth and human well-being. One essential element behind that salutary development has been the massive increase in the use of cheap fossil fuels to power economic life.
The chart below could not be more dispositive. During the pre-industrial era between 1500 and 1870, real global GDP crawled along at just 0.41% per annum. By contrast, during the past 150 years of the fossil fuel age, global GDP growth accelerated to 2.82% per annum–or nearly 7 times faster.
This higher growth, of course, in part resulted from a larger and far healthier global population made possible by rising living standards. Yet, it wasn’t human muscle alone that caused the GDP level to go parabolic, as per the chart below.
It was also due to the fantastic mobilization of intellectual capital and technology. One of the most important vectors of the latter was the ingenuity of the fossil fuel industry in unlocking the massive trove of stored work that Mother Nature extracted, condensed, and salted away from the incoming solar energy over the long warmer, and wetter eons of the past 600 million years.
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Needless to say, the curve of world energy consumption tightly matches the rise of global GDP shown above. Thus, in 1860, global energy consumption amounted to 30 exajoules per year and virtually 100% of that was represented by the blue layer, labeled "biofuels," which is just a polite name for wood and the decimation of the forests which it entailed.
Since then, annual energy consumption has increased 18-fold to 550 exajoules (at 100 billion barrels of oil equivalent), but 90% of that gain was due to natural gas, coal, and petroleum. The modern world and today’s prosperous global economy would simply not exist absent of the massive increase in the use of these efficient fuels, meaning that per-capita income and living standards would otherwise be only a small fraction of current levels.
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Yes, that dramatic rise in prosperity in generating fossil fuel consumption has given rise to a commensurate increase in CO2 emissions. But contrary to the Climate Change Narrative, CO2 is not a pollutant!
As we have seen, the correlated increase in CO2 concentrations—from about 290 ppm to 415 ppm since 1850—amounts to a rounding error in both the long-trend of history and in terms of atmospheric loadings from natural sources.
As to the former, concentrations of less than 500 ppm are only recent developments of the last ice age, while during prior geologic ages concentrations reached as high as 2400 ppm.
Likewise, the oceans contain an estimated 37,400 billion tons of suspended carbon, land biomass has 2,000-3,000 billion tons and the atmosphere contains 720 billion tons of CO2. The latter alone is more than 20X current fossil emissions (35 billion tons) shown below.
Of course, the opposite side of the equation is that oceans, land, and atmosphere absorb CO2 continuously so the incremental loadings from human sources is very small. That also means that even a small shift in the balance between oceans and air would cause a much more severe rise/fall in CO2 concentrations than anything attributable to human activity.
But since the Climate Howlers falsely imply that the "pre-industrial" level of 290 parts per million was extant since, well, the Big Bang and that the modest rise since 1850 is a one-way ticket to boiling the planet alive, they obsess over the "sources versus sinks" balance in the carbon cycle for no valid reason whatsoever.
Actually, the continuously shifting carbon balance of the planet over any reasonable period of time is big, so what!
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Editor’s Note: Western countries are leading the charge in restructuring their economies around the issue of climate change. They’re committed to a comprehensive agenda to "decarbonize" their economies by 2050.
That means these governments will wage a new war on carbon emissions.
And it’s just getting started...
What comes next, is more government intervention and likely a carbon tax.
Legendary speculator Doug Casey has spent decades profiting from government-created distortions like this and he believes that could be the mother of all opportunities to profit from government stupidity.
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If you’re interested, I would take a look at this today and act swiftly. This opportunity will close in less than 12 hours.
- Post #10,150
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- Edited 12:17pm Nov 6, 2021 11:41am | Edited 12:17pm
- | Commercial Member | Joined Dec 2014 | 11,978 Posts
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How profitable?
Mr. 10X Targets Gains of 1,000%
He’s not looking for nickels and dimes. If Mr. 10X doesn’t see the potential for gigantic gains, then he moves on. A 1,000% return is enough to multiply every $10,000 investment into $110,000.
Recently, Mr. 10X found a new trade that’s already generating huge triple-digit returns.
We’ll share the amazing results in a moment.
First, let me tell you about his latest discovery.
Mr. 10X calls these low-risk, high-potential-profit opportunities “RIP” trades… These are investments likely to rip higher in the near future.
RIP trades are lopsided investments nearly certain to soar higher. Because of the investing secret, we’ll soon share it with you.
Three unstoppable megatrends are the driving force behind RIP trades.
We’ll reveal these three trends shortly.
As these trends continue to gain momentum — the odds are stacked heavily in favor of making A LOT of money with minimum risk.
The only question is: “When?”
Mr. 10X’s ideas have already made himself and his clients enormous sums of money. For example, they recently collected…
Massive Payout of 77X…
One investment recently returned a gigantic 7,780% profit — enough to multiply a modest $10,000 investment into a mountain of money totaling $787,800.
Here’s the chart showing how this trade shot almost straight up like a rocket…
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If you have any interest in collecting huge payouts like these, you’ll want to pay close attention…
Because there are dozens of RIP trades with potentially monster profits available right now.
And we’ll reveal them shortly. Before we pull back the curtains though…
Imagine what you could do collecting nearly $800,000 in profits from a single trade…
Pay off your home, buy a vacation home, save the money to set yourself up for a stress-free, financially secure retirement…
Or put the profits to work in other trades to multiply your nest egg even more.
Even better imagine the possibility of cashing out for five and six-figure gains over and over again. While we can’t predict the future, we’ve just shown you what’s possible.
Based on this gentleman’s real-life results, the huge profit potential is obvious.
And there’s no time to waste because these RIP trades are already delivering big payouts like we just showed you. And we expect even bigger profits coming soon.
Remember, Mr. 10X is an active hedge fund manager with hundreds of wealthy clients counting on him to multiply their money. They expect results. And he delivers.
When you see the huge profit potential in the most promising RIP trades we’re looking at today, we believe you’ll want to get in on these trades now before it’s too late.
Certain areas of the markets are starting to soar now thanks to the RIP trades we’ll explain in a moment. The gains can be spectacular and life-changing. Here are some examples of stocks in a niche area of the market that have taken off recently…
- 2,127% Cypress Dev.
- 1,777% Giga Metals
- 8,325% Kodiak Co.
- 7,973% Melkior
- 2,127% Outback
- 1,747% Eskay
- 3,233% Royal Standard
- 1,750% Manganese X
- 1,479% North Peak
- 1,133% KORE Mining
- 3,233% Rainforest
- 4,775% Freegold
- 1,224% E3 Metals
- 947% Norsemont Mining
- 2,285% Northern Superior
- 2,254% Oroco
- 1,224% Eloro
- 1,792% Rock Tech
Of course, past performance does not guarantee future results, but that’s the enormous profit potential we’re looking at here.
Extracting the maximum profit possible with minimum risk.
So who is “Mr. 10X”? Meet…
Doug Casey’s Hand-PickedHedge Fund Manager
The man who has earned Doug Casey’s trust and respect is Chris MacIntosh.
Here’s what Doug says about Chris. And why he considers Chris’ insights so valuable.
“Chris is actually unique. He has a totally sound economic, political, and philosophical outlook. He writes entertainingly; his stuff always draws me in.
Best of all, he finds unique value propositions, which have a low downside and typically 10–1 upside.
His research is indispensable to any intelligent investor.”
– Doug Casey, International Man Founder
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Chris MacIntosh is known for his ability to identify low-risk, high-reward trades that can multiply your money 10X or more.
Like Doug, Chris’ blunt manner of speaking and his contrarian insights on a wide range of topics make him controversial.
He doesn’t much care what other people think of his strong opinions.
He cares only about identifying the most lucrative trades with the highest probability of making money.
He follows his research to its logical, fact-based conclusions.
And that’s where he finds the types of lopsided trades his wealthy clients love.
Thanks to his proprietary system which we cannot reveal, Chris has discovered what he calls RIP trades… these are investments likely to rip higher in the near future.
They’re “When not IF” opportunities for an enormous profit.
And they’re based on three unstoppable megatrends gaining momentum every day.
Most importantly, this is not wishful thinking.
Chris’ thesis is already proven correct because…
RIP Trades Are Already Roaring…
Recently, Chris identified several RIP trades in an obscure sector of the markets.
Chris’ thesis quickly proved to be correct. As a result, he and his investors scored several big wins recently.
Chris identified several strong plays that more than doubled in less than a year including:
PowerCell (PCELL): 181% Profit
Chris recommended getting into PowerCell when shares were selling for $69.70.
He then sold the shares for $196 pocketing a huge payout.
But that’s not the only lucrative trade Chris found in this forgotten sector.
There was also Ceres (CWR). That trade produced an impressive 111% profit.
Chris advised buying shares at $182.75 before the price ballooned up to $387. That’s when Chris got out of the trade and banked another triple-digit profit.
And we’re not done yet because Chris recommended a third trade that would have more than doubled your money.
Hydrogenics (HYGS) generated an enormous 147% gain.
Chris told his readers to load up on shares of Hydrogenics at the bargain price of $6.07.
When Fortune 500 company Cummins acquired Hydrogenics just four months later, Chris and his readers collected a huge payout of $15 per share.
As you can see from the spectacular results we’ve just shown you, Chris knows how to find triple-digit winners in little-known corners of the markets.
Generous returns where you quickly more than double your investment… multiply your money rapidly enough to make up for years of falling behind…
Or if you have already built a big pile of money for retirement, returns like this can transform it into a mountain of money fast.
That shows you the kinds of big winners Chris’ unique research approach can produce.
Once Chris identifies these opportunities, it’s just a matter of placing money in those sectors and waiting for them to boom.
Chris believes RIP trades are the biggest moneymaking opportunity today thanks to three strong trends that practically force RIP trades to soar higher.
Several obscure investments are surging thanks to these three global trends that are only getting stronger and gaining momentum with each passing day.
RIP Trades Revealed…
So what exactly are RIP trades?
RIP is an acronym with each letter representing one of the megatrends driving these lucrative trades higher and higher.
Each trend alone could be enough to cause certain stocks in an obscure area of the market to skyrocket.
Combined, these powerful trends present an amazing investment opportunity for those who know how to play the situation.
“R” is for recovery.
Specifically, the massive monetary stimulus aimed at engineering a global economic recovery.
Governments around the world have printed trillions of dollars in an effort to jumpstart their economies. This has consequences that lead astute investors to big profits.
Why?
Because such a massive and unprecedented increase in the money supply is highly inflationary. That’s the “I” in the RIP trade: inflation.
With a huge supply of money competing for a limited supply of goods and services, you can expect the price of just about everything to rise as a result.
Finally, “P” is for the pandemic that triggered the money printing. The COVID-19 pandemic caused the global economy to shut down.
In response, governments started printing more money to spur economic recovery.
The result of an increased money supply is inflation.
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give money printing creates the inflation that makes the RIP trade an almost certain winner.
”RIP” trades are so potentially profitable due to the combination of these three huge trends acting together:
Recovery: the massive money printing aimed at helping the economy recover.
Inflation: a huge increase in the money supply causes inflation. We can expect the price of almost everything to rise. It’s already happening as you’ve probably noticed.
Pandemic: the global COVID pandemic poured gasoline on the fire. As governments around the world try to print their way to economic recovery, the result is inflation.
That is the simple yet powerful and lucrative Idea behind RIP trades.
These megatrends are gaining momentum every day. That’s why we see even bigger profit potential in RIP trades going forward.
Knowing the ultimate result will be massive inflation, we can position ourselves to profit handsomely.
And with no end to the massive money printing experiment in sight…
Inflation will only rise higher in the coming months and years.
The Secret That PracticallyGuarantees Giant Gains…
At a higher level, the three megatrends driving the RIP trades higher share an important characteristic.
This characteristic reveals the secret to finding investments that are nearly certain to make money: Government intervention creates distortions in the economy.
These distortions present golden opportunities to bank big profits.
Everyone knows how much government intervention we all deal with. We see it every day in the form of taxes, subsidies, price controls, rules, and regulations.
The government used the COVID pandemic as the justification to shut down the economy and implement more rules and restrictions to control our everyday lives.
It was also the excuse for printing the trillions of dollars in excess money that has already caused inflation to soar higher.
The government manipulates interest rates, injects trillions of dollars into the economy, and creates a never-ending parade of expensive government programs to implement.
Any intelligent person can analyze these situations, predict the outcomes, and put their money in places where it’s almost certain to multiply.
As Doug says: “It’s almost as if the government is guaranteeing your success.”
Yet for some reason, few people take advantage of the golden opportunities government intervention creates.
People who are paying attention can anticipate what’s going to happen. Then position themselves for massive profits as the situation plays out.
Doug Casey has done this over and over again during his long and successful investing career. He’s a self-made multi-millionaire because of it.
And now Chris MacIntosh is doing the same thing. He and his clients are routinely enjoying gigantic gains and collecting enormous payouts like we’ve shown you already.
Let us give you some examples of the life-changing profits available.
Gold is a classic example of government-guaranteed profits.
Until 1971, the government set the price of gold. In other words, government intervention prevented the free markets from setting the real price of gold.
After having been artificially suppressed for so long, it wasn’t hard to figure out the price of gold was set to explode when the government let the free market work.
Intelligent investors who understood the basic supply and demand laws of economics positioned themselves to happily accept the government-guaranteed profits to come.
And they were rewarded with astronomical profits of more than 2,000%. Many gold stocks skyrocketed more than 5,000%!
Doug has made millions in gold mining stocks over the years by taking advantage of this simple secret and putting his money in places where it would multiply rapidly.
Uranium is another great example. In 2000, the price of uranium dropped as low as $10 per pound. That price was so low, it wasn’t even worth mining or producing uranium.
Savvy investors understood the golden opportunity for big profits.
With 20% of America’s electricity generated from nuclear power, something had to give.
Unless the uranium price exploded higher, there wouldn’t be any uranium to fuel the nuclear power plants. And America wouldn’t have enough electricity.
Sure enough, investors smart enough to buy uranium stocks saw enormous gains of as much as 132,868%.
In other words, a $10,000 investment could have exploded into a $13 MILLION fortune.
Now it’s your turn to cash in on these lucrative trades where the government makes big profits a near certainty. With Chris as your guide.
RIP Trades Could Create Generational Wealth When You Position Yourself for Huge Profits Now
Certain companies are well-positioned to reap windfall profits from the inflation caused by government intervention.
Investing in the sectors and companies most likely to prosper and generate huge profits in this economic environment sets us up for potential returns of 10X or more.
The sooner you get into these RIP trades, the more potential profit you stand to collect.
How much profit can you expect?
These 3 RIP Trades Could Make You More Money Than You’ll Ever Need…
RIP Trade #1:
8 Chances for 10X Returns
In one overlooked sector, Chris has identified eight trades that could return giant profits of 1,000% or more.
Putting just $500 into each of these plays could generate profits of $84,798.
Invest $1,000 into each and there’s a chance you could walk away with a cool $169,596 if they soar as Chris expects.
RIP Trade #2:
Multiply $4,000 into $174,963
In another niche corner of the markets, Chris has identified four solid plays that could generate stunning profits ranging from 1,673% to as much as 10,307%.
Putting a modest amount of just $1,000 into each of these stocks could generate astronomical profits.
Your initial $4,000 investment ($1,000 in each of the four stocks) could balloon into a giant payout of $174,963 if this sector performs as we believe it will!
Doug Casey loves this sector. Some of the biggest profits of his long and successful career have come from investments in this market.
During the last bull market, even the worst-performing stocks in this sector exploded by 1,900%. Turning every $1,000 into $20,000.
And there are even more RIP trades with massive profit potential…
RIP Trade #3:
Transform $1,000 into $165,150
Chris has discovered six stocks in another obscure sector with the potential to generate giant gains as high as 16,415% if they rise back to their previous highs.
Putting the modest sum of $1,000 into that one single play could net you a gigantic payout of $165,150.
$10,000 could explode into more than $1.65 million in just one trade.
You’ve just seen three RIP trades with the potential to generate huge returns. And that’s if they return to just their normal levels. We expect them to soar even higher.
But it gets even better.
Because Chris has identified ten more sectors he expects to produce oversized returns.
Chris has already done the hard work for you. And now he’d like to hand you his best ideas on a silver platter.
That’s why Doug Casey and International Man approached Chris about allowing you to have access to him.
Best of all, Doug and his team have arranged a steep discount for you.
Introducing…
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Chris MacIntosh’s Capitalist Exploits Insider
Capitalist Exploits Insider (or CapEx Insider for short) is not your typical investment research.
Fantastic investment service and brilliant writing.
“I couldn't be happier with this service. Chris McIntosh is a very savvy investor (not to mention a highly entertaining writer) with a knack for finding the most obscure companies that provide the deepest values — he's a legend in the investment world.”
– Ted.K
CapEx Insider is a unique investment advisory for several reasons.
Chris is an active hedge fund manager. Not a retired Wall Street analyst starting a second career.
You get access to Chris’ best ideas and enjoy insider access to his portfolio with dozens of lucrative opportunities.
So you can generate potentially huge profits by taking advantage of the unique opportunities available in today’s chaotic world.
Chris “eats his own cooking” as he likes to say.
He’s putting his own money into the same ideas he shares with you. So you can be confident you’re getting his best ideas.
The current portfolio consists of dozens of trades spread over 12 lucrative themes to provide maximum diversification and reduce risk.
And as you’ve already seen from Chris’ real results, it’s not unusual to see 1,000% returns. Enough to multiply every $10,000 into $110,000.
That’s why Doug Casey is such a big fan of Chris’ work. And why he reached out to Chris to make this valuable research available to you today.
How much should you expect to pay for access to a hedge fund manager of Chris’ caliber?
First of all, Chris’ wealthy hedge fund clients must meet strict financial requirements.
They must be accredited investors with a minimum of $150,000 to invest and a net worth of at least $2.1 million.
On top of that, Chris’ wealthy clients pay management fees and performance fees sometimes adding up to more than $20,000 per year.
Until now regular investors have been denied access to lucrative opportunities like these.
But now a LIMITED number of people have the opportunity to access the best investment ideas of an active hedge fund manager handpicked by legendary speculator Doug Casey.
And don’t worry. You won’t pay anything remotely close to $20,000. And you won’t have to share a penny of your profits either. They’re yours to spend and enjoy as you wish.
Thanks to a special arrangement with Doug Casey and International Man, anyone who can ACT QUICKLY will get access to CapEx Insider at a HUGE DISCOUNT.
We expect you’ll be shocked at how affordable it is to get access to hedge fund quality investment research and recommendations starting today.
Before we get to the tiny investment, let us reveal everything you’ll get when you become a member of CapEx Insider today.
This is not a standard investment advisory.
Most provide monthly research with random updates.
That’s not Chris’ style. He understands the markets are moving daily.
That’s why you need more than a single issue every thirty days. By the time you get your monthly issue, the information could already be outdated.
That’s why Chris will deliver a fresh, new issue of CapEx Insider to you every week.
That means you’ll get Chris’ best ideas more often than you’ll hear from a normal investment advisory. You’ll get more current and up-to-date information.
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Chris MacIntosh
I’m not a 'publisher.' I’m an investor whose mandate is simple: to identify low-risk/high-reward opportunities wherever they may lie.
I’m not wedded to any asset, sector, jurisdiction, or investment vehicle, but instead, use subject-matter experts to guide me on opportunities that enable me and my members to achieve outsized returns.
Current CapEx Insider members love Chris’ unique writing style. He’s witty and entertaining while still being informative and making his point clearly.
He’ll share his latest insights on what’s happening in the world and in the global financial markets. More importantly, he’ll tell you how it affects your investments.
Chris will also share his latest investment thesis, research, analysis, and recommendations.
At the end of each issue of CapEx Insider, Chris shares…
5 Fresh, New Trades Every Week
Chris calls these “The Big Five.” These are five investment ideas that are totally off the radar of Wall Street and the average fund manager with enormous upside potential.
Five ideas Chris has discovered during his weekly deep dive into every nook and cranny of the financial markets.
Over a month, that adds up to 20 new opportunities to extract more money from the markets.
And that’s not all.
CapEx Insider members will enjoy…
Live Access to Chris MacIntosh
The ability to interact with Chris MacIntosh and his team on a regular basis is something few people get. And something you don’t expect from a regular advisory.
But as a member of CapEx Insider, you’ll be one of the privileged few.
Chris holds a monthly call where he will review the current portfolio. Providing any updates or new information he has uncovered.
Chris will also answer your questions. This is a rare opportunity to ask a top hedge fund manager about anything.
You can ask about specific investments. Why did he make the original recommendation? Or what the exit strategy is.
You can ask Chris how he analyzes the global financial markets.
Or his approach to analyzing investment opportunities.
You’re free to ask Chris his opinions on asset allocation and portfolio management.
Chris enjoys sharing his unique perspective on global events and investing. He’s also outspoken and entertaining.
These monthly calls will be live. That gives you the opportunity to ask any question that pops into your head as you’re watching or listening.
However, if you can’t attend the live calls, don’t worry. The calls will be recorded and made available on the members-only website.
This gives you the opportunity to watch or listen at your leisure whenever it’s convenient for you. Plus you can stop, rewind, and listen again to anything or everything of interest.
It gets even better because members also get access to the CapEx Insider…
BONUS 8% Income Portfolio
While the CapEx Insider portfolio is focused on hunting for trades with huge potential gains, the Income Portfolio is different.
This is a bonus portfolio Chris created at the request of several institutional clients.
They asked for safe, low-risk stocks that generate higher-than-average income.
This was quite a challenge considering we’re seeing interest rates at their lowest rates in 5,000 years. And debt exploding to its highest levels in history.
Bonds in some markets actually have negative interest rates.
And stocks in developed countries are paying only 2% to 3% in dividend income.
Those returns won’t even keep up with rising inflation.
Chris went to work searching the financial markets for safe stocks paying shareholders 8% or more in income. It was a daunting task.
And Chris delivered big time.
He uncovered several gems in obscure markets that don’t get much attention. These companies are consistently generating healthy income with little or no debt.
And treating shareholders well with high dividend payouts of at least 8%. That’s the minimum threshold. If a stock isn’t paying 8% dividends or more, Chris moves on.
The current Income Portfolio contains dozens of safe stocks diversified across several industries and geographies. All of them pay a dividend of at least 8%.
The Income Portfolio is especially for people looking for income in addition to the huge potential capital gains in the regular CapEx Insider portfolio.
At a time when bond yields are less than 2% and banks are paying less than 1% interest on deposits, 8% is an AMAZING inflation-beating rate of return.
This is an enormous benefit normally reserved for high-net-worth clients — like the institutional investors that requested it.
But when you join CapEx Insider today, you’ll get instant access to the BONUS Income Portfolio.
And we’re still not done.
CapEx Insider Members-Only Website Overflows with Helpful Resources…
There’s a community forum, especially for our valued CapEx Insider members. This is a place where like-minded people can get together to ask questions and share ideas.
You’ll find the forum on the secure, password-protected, CapEx Insider website.
As soon as you join us at CapEx Insider today, you’ll get instant access to the website.
It holds a treasure chest of investing information.
For starters, you’ll find several short videos explaining how to get started.
And how to get the most out of your CapEx Insider membership.
- How to Get Started with CapEx Insider
Discover the “secret sauce” behind Chris’ success. You’ll see his proprietary research system. Along with several real-world examples of the system in action. - Brokerages and Finding Stocks
Shows you how to use CapEx Insider with an existing brokerage account. And how to open a brokerage account with a recommended broker. - Member’s Area Walkthrough
This video shows you every page on the member’s site so you know where to find everything and get your questions answered quickly. - BONUS Income Portfolio
Helpful information on the origin of the Income Portfolio and the strategies used to find this low-risk, high-income stocks. You can use these strategies yourself.
And answers to the most frequently asked questions (FAQ).
If your question is not answered, you can get help from Chris’ courteous and professional support staff.
CapEx Insider Investor Training
On the same page, you’ll find a series of investor videos. This is like having a hedge fund manager show you his “secrets” for finding the best investments including:
- Asymmetric Trades
“Asymmetry” is investing jargon for lopsided trades — low risk and high reward — Chris is so good at finding. Discover nuances of these trades most people miss. - Identifying Sectors
How to identify the sectors where we’ll find the lowest-risk stocks with the highest upside potential. Most investors have this completely backward. - Selecting Stocks
How to use stock screening tools to identify the best plays in a particular sector. - Allocation Strategy
Chris’ allocation strategy is likely completely different from anything you’ve seen. It’s the “secret sauce” that reduces risk to a minimum and increases profits. - Portfolio Management
How to manage your portfolio without being glued to your computer all day. Including how to determine the best time to sell.
Every CapEx Insider Investment Theme Explained
Another page shows the details on all the current CapEx Insider investment themes.
You can think of each theme as an investment thesis or a big idea. Each theme has a catalyst that makes us believe it’s low risk with a chance to generate 10X returns.
There are currently more than a dozen investment themes in the CapEx Insider portfolio. This page provides a thorough analysis of each of them.
You’ll find the current investment “buy” recommendations for each theme.
There’s a link to the original investment recommendation so you can understand the compelling reasons behind the investment thesis.
Another link goes to any questions about the investment theme that have come up on the monthly webinars. So you can stay up to date on the latest developments.
Including links to the exact moment where the question was asked and answered to save you the time, hassle, and frustration of finding it yourself.
Plus a link to the community forum so you can see discussion among members about any investment theme.
You’ll get all of this for each and every investment theme.
Next is…
3 CapEx Insider Portfolios
At the top of the page, you’ll find a video where Chris shares his latest updates.
Under the video is the open portfolio. Every trade broke down by investment theme. Showing the company name, ticker symbol, and recent price.
Under the open portfolio, you’ll find the closed portfolio where you’ll see all of Chris’ past winning trades.
Finally, underneath the closed portfolio is the BONUS Income Portfolio we told you about earlier. With dozens of low-risk, high-income stocks paying at least 8%.
CapEx Insider Archives
On the “Archives” page you’ll find every weekly report Chris has ever written. And every Q&A webinar we’ve ever done.
Reading and watching these is a great education on how to approach investment research. And how to find the best investment opportunities in the markets today.
CapEx Insider Extras
Lastly, there’s the “Extras” page where you’ll discover a goldmine of reports, videos, and “how-to” guides such as:
- Three Things to Own in a Crisis (These things are essential in times of chaos)
- Bitcoin: A Critical Assessment (An analysis of Bitcoin and its potential)
- The Basics of Options (A how-to guide on buying and selling options for profit)
- And MUCH more…
Before we get to the incredibly low bargain price…
You may be wondering why Chris would agree to provide this type of high-level investment research service to ordinary folks like us.
That’s a fair question. And we wondered the same thing. So we asked Chris.
Of course, he’s not doing this free. However, Chris sees this as a win-win situation. He remembers when he was getting started in the investing world.
He knows how valuable it would have been to have access to hedge fund quality investment research and recommendations. Plus the ability to ask questions.
He understands the value of seeing how a successful money manager thinks through his investment analysis. And how he performs his research.
He realizes having such access could have shaved years off his learning curve.
He’s already doing the investment research and analysis anyway.
It’s not like this puts more work on his plate.
It’s simply a way for him to reach and help more people. And earn a little extra for his efforts. A win-win situation all around.
The question you probably have now is: How much is this going to cost me?
High-net-worth individuals regularly pay upwards of $20,000 per year plus 20% of the profits year after year for access to this type of research.
And they happily pay the fees because they’re still making boatloads of money.
Don’t worry though, because you’ll pay only a tiny fraction of that $20,000 fee. And not a penny of your profits. That’s your money to spend, save, and invest as you wish.
So how big is the generous discount?
When you take advantage of this special invitation today, you’ll have the opportunity to…
Join CapEx Insider Now for Less than $7 per day
We’ve set the highly discounted price of this introductory offer at just $2,499 per year.
That’s a mere fraction of the $20,000 annual fee some people pay to get access to Chris’ ideas. And there’s no performance fee so you’ll keep 100% of your profits to use as you wish.
$2,499 works out to the bargain price of less than $7 per day.
That’s probably less than you spend on lunch. Yet so much more valuable. Especially for your financial health and your financial future.
Chris targets 1,000% returns — enough to 10X your initial investment.
Some of his recommendations have far exceeded 300% returns.
That’s more than enough to cover six years of CapEx Insider…in a single trade.
Plus, to make this offer more irresistible we’re going to tell you how to get CapEx Insider at an even bigger discount.
But only if you ACT TODAY…
Think about it.
You could potentially secure your financial future by accepting this special offer and following the investment ideas Chris hands you on a silver platter.
Chris’ subscribers agree. Here’s what some of them have said about Chris’ work:
Worth 50–100x the cost… It took me 45–50 days to make back my investment in the course in profit on positions.”— Brian H.
Well researched, thought out, and presented thematic investment ideas with actionable trade recommendations. Add that to an incredibly entertaining writing style and you have a publication I look forward to every day. Bottom line they have made me a lot of $.”— Elizabeth D.
CapEx is a truly rare service that gives you superbly researched contrarian investment ideas with asymmetrical risk payoff potential that you will simply not find anywhere else.
Chris MacIntosh and his team are true pros. They also share a wealth of professional knowledge on trade execution and risk management tradecraft. I love it, not least of all because it has made me money while helping me sleep at night with wise risk management. Well worth the reasonable price.”— Tim H.
These are real comments from real people just like you who rave about Chris’ investment research and how much money it has made them.
You’ll get instant access to everything we’ve described here as soon as you accept this special invitation.
We’ve shown you some of the incredible payouts Chris and his clients have received recently: huge triple- and quadruple-digit gains of 181%, 363%, even 7,870%.
Then we revealed three of the best RIP trade setups. And the dozen or more investment recommendations Chris has made to capitalize on these opportunities.
You could make back your entire investment on your very first trade.
And if you don’t or if you’re not absolutely thrilled about your experience with either Chris or CapEx Insider, just contact us for a 100% full refund of every penny you paid.
That’s right. Chris is so confident you’ll love CapEx Insider that he’s removing all your risk and placing it squarely on his back with a…
30-Day 100% Money Back Guarantee
You’ll have a full 30 days to “kick the tires” and give CapEx Insider a test drive.
Over the 30 days, you’ll receive four of Chris’ weekly updates. You’ll have a chance to see for yourself Chris’ insightful contrarian view of the world.
You’ll enjoy his entertaining and informative style of writing.
And you’ll get an inside look at the thorough analysis that goes into each investment idea before it is presented to members like you.
You’ll also be able to attend one of Chris’ live monthly Q&A webinars.
You’ll hear his updates on the CapEx Insider portfolio. You’ll hear how he interacts with and answers questions from your follow CapEx Insider members.
You’ll be entertained by his quick wit and sense of humor.
Even better, you’ll have the opportunity to ask Chris any question you want. You’ll be able to see for yourself that Chris is the real deal.
You’ll have a full month to check out everything we’ve told you about on the members-only CapEx Insiders website…
- The CapEx Insider Portfolio (including all the lucrative RIP trades)
- The BONUS 8% Income Portfolio (dozens of safe stakes paying 8% dividends)
- CapEx Insider Themes (detailed explanations on how & why Chris chose them)
- CapEx Insider Investor Training (details on Chris’ proprietary research system)
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P.S. Three unstoppable megatrends are making certain sectors of the markets skyrocket.
People who understand these trends and position themselves correctly could set themselves up financially for life.
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- Post #10,151
- Quote
- Nov 7, 2021 6:09am Nov 7, 2021 6:09am
- | Commercial Member | Joined Dec 2014 | 11,978 Posts
The origins of the Federal Reserve (FED)
https://zamizdat.info/2020/10/05/jekyll-hide/
- Post #10,152
- Quote
- Nov 7, 2021 6:26am Nov 7, 2021 6:26am
- | Commercial Member | Joined Dec 2014 | 11,978 Posts
https://ecp.yusercontent.com/mail?ur...Cwf9JW0dcQ--~D
Fiscal Responsibility
Nehemiah was approached by several groups of needy Jews. The first complained that they had no money with which to buy food for their families. The second complained that they had to mortgage their property to buy food and they were afraid of foreclosure. The third group went into debt to pay their taxes and were worried that they would have to indenture their children. Needless to say, Nehemiah was not happy to hear these reports and he confronted the wealthy of the community, who had been taking advantage of their brethren.
Nehemiah chewed out the ones who had driven the poor to such desperate straits. He called them loan sharks and pointed out the irony of ransoming Jews from slavery just for these lenders to drive them back into it. The “fat cats” knew that he was right and had no response. He concluded that the lenders should adhere to the way of G-d in their actions; doing so would ward off ridicule from the other nations.
Nehemiah and his followers had also lent out money. They publicly canceled the debts owed to them and they encouraged the other lenders to do likewise. He instructed that the property of the indebted parties should be returned to them. The lenders readily agreed to this, unconditionally. After instructing the kohanim likewise, Nehemiah shook out his garment and said that G-d should likewise “shake out” from their homes all those who would violate this arrangement. The people said “Amen” and praised G-d.
Not only did Nehemiah stand up for the poor, going so far as to cancel debts that were owed to him, he and his staff never accepted public funds to pay their wages – and Nehemiah governed for 12 years! His predecessors not only collected their salaries, but they also made the people provide them with bread and wine! Not only did Nehemiah not draw a salary, but he also paid from his own pocket towards the wall reconstruction project. Everyone worked on the wall and Nehemiah supported 150 prominent Jews and numerous converts from his own table. Every day he had to have prepared an ox, six sheep, poultry, and a ten-day supply of wine. Despite all these personal expenses, Nehemiah would not accept tax money to pay his salary, figuring that the people’s fiscal burden was already heavy enough. Nehemiah asked G-d to remember his sacrifices as a merit for the people. (The Talmud in Sanhedrin 93b suggests that this request was a little too full of himself, so G-d took him down a peg by making Nehemiah’s Book a part of the Book of Ezra.)
By Rabbi Jack Abramowitz
Listen to the shiur from Rabbi Elli Fischer on OU Torah
Listen to the shiur from Racheli Luftglass on Torat Imecha
- Post #10,153
- Quote
- Nov 7, 2021 10:35am Nov 7, 2021 10:35am
- | Commercial Member | Joined Dec 2014 | 11,978 Posts
November 7, 2021
New York Times “Quacks Up” After CDC Secretly Admits Covid Jabs Don’t Work
By: Sorcha Faal, and as reported to her Western Subscribers
A riveting new Security Council (SC) report circulating in the Kremlin today first noting Chairman Alexei Kudrin of the Accounts Chamber of the Russian Federation revealing: “According to various estimates, the losses of the world economy from the pandemic total from $4 trillion to $10 trillion, with the bulk of those losses accounting particularly for budgets of regions and municipalities...Health, social support systems have demonstrated unreadiness for global shocks… Today’s task of state bodies and supervisory agencies at all levels is to draft mechanisms that will enable those systems to become more stable and efficient”, says in response to this “global shock”, it sees American leftist tech multi-billionaire Bill Gates calling for the United States and the United Kingdom to invest billions-of-dollars into a global pandemic task force running “germ games” to prepare for future outbreaks or biological attacks.
This transcript sees Security Council Members agreeing that instead of running “germ games”, the United States would be better served to play a “truth game”—most particularly like the “truth game” played by famed National Football League legend Aaron Rodgers this past week, who during what’s called an “explosive vax interview” laid waste to the Covid scamdemic—was an interview wherein Rodgers said he didn’t need an experimental Covid jab because of his good health, lifestyle and natural immunity—saw Rodgers revealing that he’s been tested over 300 times for Covid, and whose positive test this week came from him being in contact with a vaccinated person—saw Rodgers saying that the idea that “unvaccinated people are the most dangerous people in society” is the leftist media’s “propaganda narrative”—then it saw Rodgers stating and asking: “This idea that it’s a pandemic of the unvaccinated, it’s a just a total lie...If the vaccine is so great, then how come people are still getting Covid and spreading Covid and unfortunately dying from Covid?...If the vaccine is so safe, then how come the manufactures of the vaccine have full immunity from lawsuits?”—
Security Council Members in this transcript examining the issue of the socialist Biden Regime giving Covid experimental vaccine makers “full legal immunity from lawsuits”, note that injury and/or death claims from all vaccines in America are adjudicated through the Countermeasures Injury Compensation Program (CICP), that in fiscal year 2021, caused the US government to pay out $246.9-million in claims for vaccine-related injuries and deaths—but for Covid experimental vaccine injuries and deaths, the CICP hasn’t paid anything—a strange occurrence when noticing that the US government logged more than 726,000 Covid vaccine injuries and deaths between 14 December 2020 and 17 September 2021—but whose strangeness disappears because the Biden Regime quietly changed the law, and today sees it being: “The Covid fund is not authorized to provide reimbursement for attorneys’ fees...A Covid vaccine-injured child would only be reimbursed for “reasonable medical expenses”...Since the child survived and isn’t employed, there’s no other compensation...The Covid fund allows a one-year window to file a claim whereas the regular vaccine fund has a three-year window”.
While the socialist Biden Regime was quietly changing US law so those injured or killed by experimental Covid vaccines can’t be fully compensated, this report continues, the investigative journalists at Technofog-Substack uncovered secret US government emails shockingly proving that the CDC changed to definition of vaccine when they discovered that experimental Covid jabs weren’t working—in August-2021, saw the CDC stating: “Vaccine– a PRODUCT that stimulates a person’s immune system to produce immunity to a SPECIFIC DISEASE”—but in September-2021, after the definition was changed, saw the CDC stating; “Vaccine– a PREPARATION that is used to stimulate the body’s immune response against DISEASES”—is a CDC definition change of vaccine designed to protect Covid jab makers, and when noticed by Republican Party leader US Congressman Thomas Massie, saw him posting the message: “Check out @CDCgov’s evolving definition of “vaccination”…They’ve been busy at the Ministry of Truth”.
This transcript sees Security Council Members noting that the “newspaper of record” leftist publication New York Times failed to inform its readers that CDC downgraded its definition of vaccine from “prevent” to “immunity” to “prevention” to protect experimental Covid jab makers—a failure to inform the New York Times was forced to do, otherwise its readers would rightly accuse the CDC of “medical quackery”, a term that’s branded on those who pretends, professionally or publicly, to have skill, knowledge, qualification or credentials they do not possess; otherwise called charlatans or snake oil salesman.
At the same time the New York Times is protecting the “medical quacks” at the CDC, however, this report notes, it bears noticing that its famed columnist Ross Douthat just published in the New York Times his gobsmacking article “How I Became Extremely Open-Minded”, wherein he describes his painful multi-year battle with Lyme Disease no medicine or prescribed treatment is able to cure—a battle against this disease Douthat says drove him outside the boundaries of acceptable and approved modern medicine and into the waiting arms of alternative medicine—specifically a Rife Machine, that after using for the first time saw Douthat proclaiming: “Naturally, it worked”—and in explaining why he’s risking his career by telling a truth being kept hidden, saw Douthat stating: “There are two good reasons to share this sort of story. The first is that it’s true, it really happened, and any testimony about what it’s like to fight for your health for years would be dishonest if it left the weird stuff out...The second is that this kind of experience — not the Rife machine specifically, but the experience of falling through the solid floor of establishment consensus and discovering something bizarre and surprising underneath — is extremely commonplace...And the interaction between the beliefs instilled by these experiences and the skepticism they generate (understandably) from people who haven’t had them, for whom the floor has been solid all their lives, is crucial to understanding cultural polarization in our time”.
Invented by the late American inventor and early exponent of high-magnification time-lapse cine-micrography Royal Raymond Rife, this report explains, the Rife Machine is a device that uses the resonance frequency of a pathogen to destroy it within the human body—and as to why the Rife Machine isn’t more popular, sees it being said:
Unfortunately, research with the rife machine abruptly stopped when the American Medical Association (AMA) refused to publish any paper supporting the rife technology.
It’s commonly thought that the AMA was directly responsible for the suppression of the rife device, which was considered “new medical technology.”
In fact, in 1942 the U.S. Court of Appeals found the AMA guilty of suppressing new medical technologies in favor of drug companies.
It wasn’t until the 1980s that research with the rife machine resumed. In 1987, Barry Lynes wrote and published a book titled The Cancer Cure that Worked, which revived the subject in alternative therapy circles.
Today, researchers are still experimenting with the rife machine.
While there are no long-term studies on its effects, scientists have concluded that low-rife frequency electromagnetic waves do affect tumors while leaving healthy cells untouched.
While studies on its effectiveness are still being conducted, the rife machine has become a well-known alternative to traditional cancer therapies.
In April-2020, this report concludes, the United States Federal Trade Commission began sending out “warning letters” to Rife Machine makers that had discovered and programmed into their devices the resonant frequency for the Covid virus and stated: “For COVID-19, no such study is currently known to exist for the product identified above...Thus, any coronavirus-related prevention or treatment claims regarding such product are not supported by competent and reliable scientific evidence”—US government “warning letters” that were followed by The Energy and Resources Institute (TERI) in India announcing it had found a way to cure the COVID-19 by using an extraordinary sound therapy using electro-frequency vibration, exactly like the Rife Machine does—and is astonishing research joined with that conducted by Dr. Minghui Yao and Dr. Hongbo Wang at the School of Artificial Intelligence, Tiangong University in Tianjin-China, who in their critical to the world scientific paper being kept hidden from the American people titled “A Potential Treatment For COVID-19 Based On Modal Characteristics And Dynamic Responses Analysis Of 2019-nCoV”, revealed: “The 2019-nCoV is ravaging the world, taking lots of lives, and it is emergent to find a solution to deal with this novel pneumonia…This paper provides a potential treatment for COVID-19 utilizing resonance to destroy the infection ability of 2019-nCoV”. [Note: Some words and/or phrases appearing in quotes in this report are English language approximations of Russian words/phrases having no exact counterpart.]
https://www.whatdoesitmean.com/vcv21.png
https://www.whatdoesitmean.com/vcv22.png
https://www.whatdoesitmean.com/vcv23.png
https://www.whatdoesitmean.com/vcv27.png
https://www.whatdoesitmean.com/vcv24.jpg
https://www.whatdoesitmean.com/vcv26.jpg
https://www.whatdoesitmean.com/vcv25.jpg
November 7, 2021,
![](https://resources.faireconomy.media/images/emojis/64/00a9-fe0f.png?v=15.1)
[Note: Many governments and their intelligence services actively campaign against the information found in these reports so as not to alarm their citizens about the many catastrophic Earth changes and events to come, a stance that the Sisters of Sorcha Faal strongly disagree with in believing that it is every human being’s right to know the truth. Due to our mission’s conflicts with that of those governments, the responses of their ‘agents’ has been a longstanding misinformation/misdirection campaign designed to discredit us, and others like us, that is exampled in numerous places, including HERE.]
[Note: The WhatDoesItMean.com website was created for and donated to the Sisters of Sorcha Faal in 2003 by a small group of American computer experts led by the late global technology guru Wayne Green (1922-2013) to counter the propaganda being used by the West to promote their illegal 2003 invasion of Iraq.]
[Note: The word Kremlin (fortress inside a city) as used in this report refers to Russian citadels, including in Moscow, having cathedrals wherein female Schema monks (Orthodox nuns) reside, many of whom are devoted to the mission of the Sisters of Sorcha Faal.]
- Post #10,154
- Quote
- Nov 7, 2021 10:51am Nov 7, 2021 10:51am
- | Commercial Member | Joined Dec 2014 | 11,978 Posts
Good morning World...
Please take a few minutes to read and understand why we have arrived at this terrible moment in time. Now the final battle starts.
The world and human race against the Globalists who have controlled all of our lives since we were born.
However, G-d was always really in control. That is why they cannot win however they have and will continue to cause much death and destruction which was always their goal.
Bruce Warren Margolese
November 7, 2021, at 11:00 AM
Take a minute on November 11, 2021, at 11:00 AM to remember the brave women and men who gave up their lives for our freedoms which again we must fight for.
AMEN !!!
- Post #10,155
- Quote
- Edited 11:12am Nov 7, 2021 10:59am | Edited 11:12am
- | Commercial Member | Joined Dec 2014 | 11,978 Posts
China Trade Surplus Hits Record Just As US Trade Deficit Rises To All-Time High
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BY TYLER DURDEN
SUNDAY, NOV 07, 2021 - 10:41 AM
Amid widespread power shortages, a sudden surge in new covid cases, and lockdowns...
https://assets.zerohedge.com/s3fs-pu...?itok=swVK39Qt
... and an accelerating collapse in China's property sector, overnight Beijing reported yet another record monthly trade surplus in October as exports surged despite global supply-chain disruptions.
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China's export growth moderated slightly to 27.1% YoY in October, above the 22.8% consensus expectation, implying a sequential gain of 2.6% in October (a modest slowdown from +3.0% in September) despite electricity constraints in October. At the same time, imports rose 20.6% YoY in October, missing expectations of a 26.2% surge, but fell 3.2% sequentially in October (vs. -0.7% in September). As a result of the far bigger growth in exports over imports, the monthly trade surplus rose further to a record high of $84.5bn in October, supporting the appreciation of the Chinese yuan in October, even as China's economy has slowed down sharply in recent months.
https://assets.zerohedge.com/s3fs-pu...?itok=GkX77ukm
While China’s trade growth has remained well above pre-pandemic levels all year, its exports through October have already surpassed all of 2020 as the world just can't get enough of goods made in China (even if they have to wait months in the Port of LA).
Digging into data, we find that China’s exports to the European Union and the U.S. have grown fastest among its major trading partners this year. The nation’s trade surplus with the U.S., a source of trade tensions between the world’s two largest economies, rose to 2.08 trillion yuan ($325 billion) in the 10 months through October from 1.75 trillion yuan a year earlier, partly because Chinese imports of U.S. soybeans slowed due to weather-related issues in recent months.
Broken down by major export destinations, export growth to South Korea was resilient and picked up to 33.1% YoY in October (vs. 27.9% in September). Exports to India also rose 46.4% YoY in October, similar to 46.2% YoY in September. Growth of exports to ASEAN edged up to 18.0% YoY (vs. 17.3% in September). Among major DMs, growth of exports to the US slowed meaningfully to 22.7% YoY in October (vs. 30.6% YoY in September) while exports to the EU accelerated to 44.3% YoY from 28.6% YoY in September.
Exports to Japan grew 16.3% YoY (vs. +15.2% YoY in September).
Incidentally, it's hardly a coincidence that just days after the US reported a record trade deficit (so much for all those China tariffs), China posted the biggest trade surplus ever. As we reported last week, in October, the US reported a trade deficit of $80.9BN, the highest on record, and double the pre-covid levels.
https://assets.zerohedge.com/s3fs-pu...?itok=rM43A0bq
Also, curiously, as we have pointed out previously, a look into the bilateral trade deficit between the US and China shows that the recent divergence in data continues, with China reporting a greater trade surplus than the US reports as a deficit, a reversal from the trend observed pre-covid (we discussed this extensively in "A Bizarre Discrepancy Is Blowing Up The Trade "Data" Between US And China").
https://assets.zerohedge.com/s3fs-pu...?itok=_JqgNcYQ
By major export category, machines and electrical products accounted for almost 60% of Chinese exports by the value this year, the customs administration said. Labor-intensive products such as clothing and plastic products made up another 18%. Goods such as household appliances, lightings, and furniture saw the fastest export growth in October, Goldman analysts said in a note, to wit:
moving-in-related products continued to outpace other major export categories in October.
Household appliances exports rose 39.4% YoY (vs. 38.8% YoY in September) and lightings grew 31.0% YoY (vs. +35.1% in September), although furniture exports moderated further to +14.4% YoY from +15.8% in September. Among tech-related products, exports in electronic integrated circuits remained relatively resilient and grew 29.5% YoY (vs. 32.7% in September), and LCD panels rose 33.8% YoY in October (vs. 36.6% in September). On consumer electronic products, cellphone exports slowed sharply to 12.1% YoY from +70.0% YoY in September, while computers exports grew 19.3% YoY in October, accelerating slightly from +14.6% YoY in September.
Additionally, exports of personal protection related products (mainly plastic and textile articles) remained at high levels in absolute terms, with the growth of textile & fabric goods up 7.2% YoY (-5.6% YoY in September) and exports of plastic articles increased 8.2% YoY (vs. +11.6% YoY in September).
Among major imports categories, crude oil imports grew 56.3% YoY, higher than 34.9% in September, and coal imports rose 292% YoY, accelerating further from 234% YoY in September as the domestic coal inventory level remained low in October. In contrast, iron ore imports fell 1.8% YoY in October, reversing from +41.1% in September. Both lower prices and "dual control policy" targetting high-emission sectors contributed to weaker iron ore imports. Imports of integrated circuits increased 11.2% YoY in October, similar to +11.5% YoY in September. In volume terms, crude oil imports contracted further by 11.2% YoY (vs. -15.3% YoY in September) and the decline in iron ore imports widened to -14.2% YoY (vs. -11.9% YoY in September). However, coal import volume picked up to 96.2% YoY from 76.1% YoY in September.
https://assets.zerohedge.com/s3fs-pu...?itok=G3PGayze
Breakdown aside, the strong trade performance is providing support for a Chinese economy that’s slowed sharply in recent months due to weak domestic demand caused by a real estate downturn, electricity shortages that have slowed industrial output, and weak consumer spending worsened by sporadic outbreaks of the coronavirus. Just two weeks ago, Goldman slashed its China 2022 GDP estimate to 5.2%, the lowest it has ever been.
https://assets.zerohedge.com/s3fs-pu...?itok=puEpkiKu
Of note, China’s coal imports almost doubled in October from a year earlier as Beijing scrambled to deal with power cuts caused by a shortage of the commodity and surging demand for electricity, especially from export-oriented manufacturers. Imports of natural gas, an alternative to electricity for heating homes, jumped 22% in the first 10 months of the year. One wonders if anyone at the COP26 will point out that China has just unleashed a tidal wave of CO2 emissions on the rest of the world just to keep warm this winter, in response to its idiotic "green" policies of pretending it could ever comply with net-zero regulations heading into the winter Olympics.
In retrospect, China's trade frenzy should not come as a surprise - global trade has been running at record levels this year as economies around the world recovered from virus-induced lockdowns in 2020. That has put a strain on supply chains in many countries due to shortages of containers and ships as well as capacity at ports, including drivers who deliver goods to retailers.
As China flooded the world with its products in 2021, it received countless pieces of non-Chinese paper in exchange, and as Bloomberg notes, dollar inflows supported China’s currency this year and added to the government’s reserves of foreign exchange, which rose to $3.22 trillion at the end of October, according to the People’s Bank of China. The dollars offer China an important cushion against any future shocks in the world economy, even as individual companies like Evergrande struggle to repay their debts.
* * *
Looking ahead, Bloomberg predicts that the nation’s strong export momentum will last at least for the next few months. Demand for Chinese products could slow if consumers in developed economies continue to shift away from goods toward services consumption, and countries in South and Southeast Asia resume factory production following pandemic-related shutdowns.
That said, even China's trade dynamo may soon slow - as we reported last week, China's premier warned of “downward pressure” on the economy and vowed measures to boost domestic demand, including more supportive policies for small and medium-sized companies. Curiously, it has vowed not to use the property market to provide temporary stimulus, and the central bank has remained conservative, sticking to making short-term loans to keep interbank liquidity stable. Bank reserve requirements have been unchanged since July and policy interest rates have been steady since last year.
- Post #10,156
- Quote
- Nov 9, 2021 8:07am Nov 9, 2021 8:07am
- | Commercial Member | Joined Dec 2014 | 11,978 Posts
How Long Can Lies & Control Supplant Reality & Free Markets?
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BY TYLER DURDEN
TUESDAY, NOV 09, 2021 - 06:30 AM
Authored by Matthew Piepenburg via GoldSwitzerland.com,
The facts of surreal yet broken (and hence increasingly controlled and desperate) financial markets are becoming harder to deny and ignore. Below, we look at the blunt evidence of control rather than the fork-tongued words of policymakers and ask a simple question: How long can lies & control supplant reality?
https://assets.zerohedge.com/s3fs-pu...?itok=eSMQTukE
The Great Disconnect: Tanking Growth vs. Supported Markets
It’s becoming harder to keep up with the increasingly downgraded GDP growth estimations from the Atlanta Fed.
As recently as August, its GDPNow 3q21 estimates for the quarterly percentage change was as high as 6%.
But within a matter of weeks, this otherwise optimistic figure was cut embarrassingly in half.
Last month their GDP forecast sank much further to 0.5%, and as of this writing, it has been downgraded yet again to 0.2%.
https://assets.zerohedge.com/s3fs-pu...?itok=twvKy5ud
Needless to say, 6% estimated growth falling to effectively 0% growth is hardly a bullish indicator for the kind of strengthening economic conditions which one might otherwise associate with risk asset prices reaching all-time highs for the same period.
The current ratio of corporate equities to GDP in the U.S. (>200%) is the highest in history.
https://assets.zerohedge.com/s3fs-pu...?itok=efjrvbez
This growing yet shameful disconnect between market highs and economic lows is getting harder to explain, ignore or deny by the architects of the most artificial, rigged, and dishonest market cycle in modern history.
In short, it is no longer even worth pretending that stock markets are correlated to such natural measurements as natural supply & demand or a nation’s economic productivity.
After all, who needs GDP in the New Abnormal?
By now, even Fed doublespeak can’t hide the fact that the only market force which the post-08 markets require is an accommodative central bank—i.e., a firehose of multi-trillion liquidity on demand.
https://assets.zerohedge.com/s3fs-pu...?itok=iIkIsLeh
But as for this most recent GDP downgrade, it is being blamed on tanking US export data.
More Fantasy: Bogus Taper?
In the meantime, the much-anticipated taper has been announced. As predicted, it’s as bogus as a 42nd Street Rolex.
Taking $15B off a $120B/month QE rate and sending the Fed’s balance sheet to over $9T by year-end while keeping rates at zero is hardly the kind of “tightening” that signifies a “healthy” market.
Add to that the liquidity provided by Standing Repo Facility and the FIMA swap lines and you quickly see that the bond market will see more, not less, “support.”
In short: This was a bogus taper and nothing has changed.
Even if central banks allow rates to rise one day, it will only be when inflation is rising faster.
And as discussed in prior reports, gold markets can and will rise if rates rise, so long as inflation rises faster, which for all the reasons we’ve addressed elsewhere, convinces us that a future of negative real rates is the only future these duplicitous central banks can allow.
More Inflationary Tricks (i.e., Fantasy)
Why?
Because short of default, the only and time-tested trick left up the sleeves of debt-soaked policymakers to dig their way out of a nightmarish and historically unprecedented debt hole (which they alone created) is by pursuing policies of deeply negative real rates.
This twisted inflationary playbook, so familiar to rigged insiders yet unknown to the vast majority of retail investors, boils down to a policy play by which our “experts” solve debt with more debt and hide the truth behind more complex policy adjectives (i.e., lies.).
Specifically, this means the “experts” will: 1) deliberately seek more inflation while 2) lying about true inflation levels and then 3) repress interest rates in order to partially inflate their way out of debt with 4) increasingly debased currencies.
Take the U.S. Dollar’s purchasing power, for example…
https://assets.zerohedge.com/s3fs-pu...?itok=REYuXE_i
Keeping the Serfs Down—The Policy of the New Feudalism
Needless to say, more inflation is a direct tax on the increasingly poorer middle class.
Sadly, too many are too busy trying to make sense of months of lockdowns, illegal vaccine mandates, movement restrictions, crime waves and inflating rent payments to notice that they have been made into serfs in a Brave New World where greater than 80% of the stock market wealth is held by the top 10% of the population.
Let’s be clear: I’m a screaming capitalist, but a pandemic world in which Bezos, Musk, and other billionaire wealth have increased by 70% while 89 million Americans have lost their jobs is NOT capitalism, but a symptom of a rigged system in which the anti-trust rules I learned in law school, or the social and economic principles I learned in economics are simply gone.
Then again, when I was in school, we were once taught how to think, not what to think.
With each passing day, we see increasing evidence of what I wrote (and described) elsewhere as new feudalism marked by grotesquely distorted notions of truth, reporting, data, natural market forces, and political/financial accountability.
In order to keep this report objective rather than an op-ed, let’s just consider the facts and case studies right before us.
Yellen & Dimon—Two Classic Lords Spinning Familiar Yarns
Take, for example, the aforementioned tanking of GDP, now being attributed to openly tanking export data out of the U.S. and the undeniable supply chain disruptions impacting the global economy.
To address this, none other than two of the most media prolific “lords” of the new feudalism, Fed Chairwoman-turned-Treasury-Secretary Janet Yellen and current JP Morgan CEO and 2008 bailout-beneficiary-turned-Fed-Crony, Jamie Dimon, assure us not to worry.
How nice.
Yellen, for her part, has recently said:
“I don’t think we’re about to lose control of inflation.”
“As we make further progress on the pandemic, I expect these bottlenecks to subside. Americans will return to the labor force as conditions improve.”
Again: How nice.
But let’s not let warm words get in the way of cold facts.
Yellen, like every Fed Chair since Greenspan, has a long history of buying time with comforting words that have nothing to do with a hard reality:
“You will never see another financial crisis in your lifetime.”
-Janet Yellen, spring 2018
“I do worry that we could have another financial crisis. ″
-Janet Yellen, fall 2018
Despite a long and well-documented history of outright dishonesty spewing from the mouths of financial media darlings and policymakers like Yellen and Dimon, both are now pushing a bullish “be calm and carry on while we profit and control” meme.
They recently seized upon Biden’s move to run the Ports of Los Angeles and Long Beach on a 24/7 schedule to alleviate bottlenecks, which increased throughput by roughly 15% (3,500 containers/week v. 950,000 containers per month.)
That’s nice, and sure, it helps.
But despite such band-aid measures, supply chains won’t normalize until early 2023, at the earliest…and that assumes no further disruptions, which frankly, is a naive assumption.
Folks, it’s not up to Yellen or Dimon to give us honest guidance as to whether supply chains will normalize in 2021. It is up to China and Biden’s entirely Orwellian vaccine mandate.
Speaking of Yellen, Dimon, et al, aren’t we all a bit curious about the now undeniable marriage of the Federal Reserve (an illegal private bank) and the U.S. Treasury Department?
And as for bank CEOs like Dimon, have we not forgotten other bank CEOs like Goldman’s Hank Paulson, who made a similar “marriage” to the Treasury Department just in time to bail his former bank out of the Great Financial Crisis that it helped create?
Are these the honest brokers we want deciding our economic fates or signaling/controlling our economic future?
Vaccine Passes and Mandates—The Great Smokescreen
And as to the mandate… Note Yellen’s careful yet semantic magic of hiding autocracy behind humanitarian lingo.
Her comment above regarding bottlenecks “subsiding” once “we make further progress on the pandemic” is very comforting, no?
But it’s just another veiled way (i.e., smokescreen) of pushing a vaccine mandate which defies every principle of the social contract our founding fathers achieved in that silly document I revered as a 1L and known otherwise as to the U.S. Constitution.
As I’ve said many times before, I’m no source for medical advice, and my circle includes many who are vaccinated and unvaccinated alike—with equal respect for the choices we’ve made and equal disgust for the notion that such choices should be imposed rather than voluntary.
Simple Questions, Cold Math, Global Control
But should we not at least be asking ourselves if the pandemic discussion is less about global health and more about global control?
Without seeking to offend anyone’s COVID stance, can we nevertheless agree that C.J. Hopkins makes an undeniably clear and common-sensical point by simply asking a few basic questions?
For example, why has so much political, social and economic power been given to a minority of policymakers to scare/distract the world into ignoring a now obvious global power-shift justified by a virus which causes mild-to-moderate symptoms in 95% of the infected and whose case fatality rate is quantifiably somewhere in the range of 0.1% to 0.5%?
Yet despite such simple math, tens of thousands of firemen, police officers, nurses, and military personnel—the very heroes who have placed themselves on the front lines of our increasingly criminalized, sick, and psychologically damaged population– are now being forced out of work for not agreeing to a forced jab imposed by anti-heroes?
One has to at least wonder why so much effort has been made by a government-influenced/co-conspired media to spend its time criminalizing the unvaccinated rather than making front-page noise pointing out the obvious criminalization of our global financial system?
The Real Criminals
By that, I’m thinking of the years of recently revealed insider trading at the Fed and in Congress, the anti-trust violations of the non-tax-paying Amazon robber-baron (whose warehouse employees are on food stamps), or the open media censorship and just plain shady that occurs daily at Facebook—an entity so blatantly shameful that it thinks a name-change can hide its dark “face”?
Or how about years of open price manipulation by bullion banks, the BIS, and other dark corners of the OTC to deliberately force the natural price of gold and silver to the floor in order to illegally price-fix and protect globally debased currencies from the embarrassment of what a natural gold price would otherwise confirm, namely: Your currency has died, thanks to the white-collar criminals otherwise touted as experts.
In case you think this is mere sensationalism or speculation, I’ve written hundreds of pages and countless reports of graphical/mathematical/objective evidence of the same, and even an entire book on the rigged-to-fail system otherwise passing as normal to make this clear distortion of economic rules and political laws objective rather pejorative.
Nor am I/we alone in pointing out the objective truth. From the honest minority in controlled markets to an honest minority in politics, plain-spoken facts are fighting for free expression.
More Honest Voices
Take, for example, the recent press conference (ignored, of course, by the main/muddy stream media) held by key members of the European Parliament to openly defy the insanely autocratic notion of a health pass to distinguish the compliant from the free or the “safe” from the “unsafe”.
As one brave parliamentary member from Germany, Christine Anderson, candidly observed, if you think the vaccine pass was made because the government cares about you, you are clearly ignoring its real motive—which is to control you.
And this straight from the European Parliament.
Control, of course, only works if enough people are scared, tired, or uninformed enough to be controlled.
As for the financial system, signs of its increasingly obvious attempt at more controls to mask increasingly shameful policies are literally everywhere.
And yet… and yet…the media, the masses, and the majority of investors continue to follow their murky and shady “guidance.”
Again, just keep it simple and factual rather than partisan or medically controversial.
Criminal Evidence
In the last 20 years, for example, policymakers have tripled the global debt levels yet made no commensurate progress with global GDP, which is literally 1/3 of this embarrassing debt pile.
https://assets.zerohedge.com/s3fs-pu...?itok=7rh0c5YZ
That is shameful. Debt like this always destroys economies. Always.
Instead, those same “experts” have mouse-clicked more instant money out of thin air in the last decade than all the money ever created by all the combined central banks since their inception.
https://assets.zerohedge.com/s3fs-pu...?itok=_6mHTZkm
They actually want you to believe that a debt crisis can be solved with alas…more debt.
Such staggering money creation has led unequivocally and directly to the greatest and most inflated risk asset bubble in the history of capital markets.
https://assets.zerohedge.com/s3fs-pu...?itok=R3UnwVbZ
Yet rather than admit to the open failure of such monetary expansion, which has simply crushed the natural purchasing power of fiat currencies…
https://assets.zerohedge.com/s3fs-pu...?itok=WNOCf59C
…the architects of this failed experiment will now try to blame such excessive debt and currency destruction on a severe flu pandemic rather than years of their own pre-COVID policy crimes.
Today, politicians and their central bank masters are literally comparing the Pandemic’s death toll to the unthinkable disaster which was the +75M killed in World War 2.
They then employ this pandemic narrative to justify another Bretton Woods-like reset.
To any who has studied, or far worse, experienced the second world war, do you think it’s even remotely fair to compare it to the “war on Covid”?
The Carefully Telegraphed “Reset”
And what is this “needed” reset?
In a nutshell, it’s more fake money in the form of CBDC or even digital SDRs from that shameless control center of failed monetarism otherwise known as the IMF and a central bank near you.
Those Who Control Money & Information
In an open and free system, rather than criminalizing police officers, nurses, or even athletes who refuse a jab, should we not be pointing our headlines, adjectives, and subpoenas at the bankers, experts, and policymakers who put the global financial system at this horrific, debt-soaked and socially destructive turning point?
Are you waiting for Mark Zuckerberg, Don Lemon, Wolf Blitzer, or the censorship boards at YouTube, Facebook, or Google to guide you?
Sadly, those who control money, as well as information, have immense and undeniable power.
Thus, a media that controls deliberate COVID distraction, supported by the lords who created this financial serfdom, continues.
That is, the feudalists responsible for such grossly mismanaged financial markets are all too aware (and nervous) that they have equally created the greatest wealth transfer and wealth disparity ever witnessed, akin to the pre-revolutionary era of Marie Antoinette France, Romanov Russia, Batista Cuba or Weimar Germany—none of which ended well…
https://assets.zerohedge.com/s3fs-pu...?itok=_OjXQPYO
Such otherwise immoral and corrupt wealth disparity, wealth transfer, and wealth creation explain why the very architects of the same would rather have the masses fighting about jabs, school boards, and “woke” SJW’s gone wild rather than at themselves–the root cause of the fracturing we see all around us.
Why?
Because controlling serfs with lies, fear and division are better than letting those serfs replace you with truths and/or pitch-forks.
Truth Still Matters—Fundamentals Too
For that select, yet blunt and independent-thinking minority who thankfully prefer candor over propaganda, reality over fantasy and genuine rather than hyped solutions to the problems and problem-makers all around us, all l/we can do is trust history, facts, natural market forces, and each other.
As for us, our candid solution to the foregoing string cite of distortions, controls and historical tipping points remains the same.
Regardless of the tricks, re-sets, and digital new bluffs of the new feudalism, enough free-thinkers, nations, informed investors, and wealth managers understand that they hold a better (and golden) hand to combat the dirty hands and dirty currencies unraveling all around us.
If there’s one thing history and free-market forces have taught us it’s this: In the end, broken systems die, and real money returns.
- Post #10,157
- Quote
- Edited 4:02pm Nov 9, 2021 10:25am | Edited 4:02pm
- | Commercial Member | Joined Dec 2014 | 11,978 Posts
When Bubble Meets Trouble
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John P. Hussman, Ph.D.
President, Hussman Investment Trust
November 2021
I think it’s clear that we’re deep into bubble territory. Bubbles are characterized typically at the end of a long bull market by a period where they accelerate, and they start to rise at two or three times the average speed of the bull market, which they did last year of course. Of course, they’re always extremely overpriced by average historical standards. There are a few people who would still argue that 2000 was higher, but most of the data suggests that this is the new American record for highest priced stocks in history. Then there’s the most important thing of all, which is crazy behavior, the kind of meme stock, high participation by individuals, enormous trading volume in penny stocks, enormous trading volume in options, huge margin levels, peak borrowing of all kinds, and the news is on the front page.
This is all characteristic of the handful of great bubbles that we’ve had.
We’ve checked off all the boxes. Now the question is how high is high? Very hard to tell always what the peak will be, but what you do know is that how high the peak has no bearing at all on what the fair value is. What it does change is the amount of pain that you get to go back to fair value and below. You profoundly do not wish for a super high level to your bubble, and you profoundly do not wish for more than one asset class to be bubbling at the same time. I’ve been very clear about what I consider a definition of success – and that is only that, sooner or later, you will have made money to have sidestepped the bubble phase.
You can very seldom identify the pin that pops it. 1929, no one has agreed yet what the pin was. The biggest cage rattler of all is everything else you haven’t thought about that could go wrong. And my guess is that’s probably the cause, in the end, of most of the bubbles deflating. The mechanics of a bubble is you have maximum borrowing, maximum enthusiasm. And then the following day, you’re still enthusiastic but not quite as enthusiastic as yesterday. A week later, you’re not quite as enthusiastic as last week and last month. And gradually, the enthusiasm level drops off a bit, you have no more money to borrow, you’re fully borrowed, and the buying pressure gradually slows down. And that’s it.
The next time we’re pessimistic, we have more potential to write down asset prices than we have ever had in history, anywhere.
– Jeremy Grantham, GMO, The Top of the Cycle, August 2021
Jeremy Grantham recently observed “Seriousness is flagged by the language that you use. I’ve always tried to make a big difference, but the difference is often wasted because people don’t remember what you sounded like when you were serious. The difference I’m trying to make is just the routine ‘the market is expensive,’ and the significant. The significant is three bubbles. This is serious.”
My own concerns here share that sort of pointed seriousness. I expect that the coming decade – and possibly even the next 12 months – will be a disaster for the U.S. stock market. Emphatically, our own investment discipline doesn’t require forecasts or rely on projections. Rather, our investment stance will change as valuations, market internals, and other observable factors change. My real concern is for passive investors – particularly charitable organizations whose missions would be compromised by a loss of over 50% in their equity investments (and whose missions might be enhanced by avoiding even part of that), and retirees who have barely enough to enjoy their future, but with most of it dependent on the temporarily bloated prices they see printed on a page or flashing on a screen.
Measured from current extremes, I expect that the unwinding of this bubble will drag S&P 500 total returns below Treasury bill returns for least a decade, and possibly two. Yet like other bubbles, I expect that most of the damage will come off the top, resulting in market conditions that are reasonably investable within a year or two. Presently, the valuation measures we find best correlated with actual subsequent market returns are at the most extreme levels in U.S. history. Moreover, as I’ve detailed before, the low level of interest rates does nothing to improve those prospective returns. For a review, see the section titled “The mapping between observable valuations and expected returns is independent of the level of interest rates” in Alice’s Adventures in Equilibrium.
Valuation Review
The chart below shows the valuation measure we find best correlated with actual subsequent market returns in market cycles across history – the ratio of U.S. nonfinancial equity market capitalization to corporate gross value-added, including our estimates of foreign revenue (MarketCap/GVA). This measure is now 50% above levels that were never seen in history prior to last year.
https://www.hussmanfunds.com/wp-cont.../mc211108a.png
The next chart shows two companion measures. The blue line shows the ratio of the S&P 500 to the present discounted value of actual S&P 500 per-share dividends since 1900, using a fixed discount rate of 10% (Price/DVV). The chart assumes that dividends beyond 2021 grow at a nominal rate of 4% annually, consistent with the trend of S&P 500 revenues, earnings, and nominal GDP over the past two decades. The red line shows our Margin-Adjusted P/E (MAPE), which is also at extremes that eclipse the 1929 and 2000 bubble peaks.
https://www.hussmanfunds.com/wp-cont.../mc211108b.png
The chart below shows the correlation between these valuation measures and actual subsequent S&P 500 12-year total returns, in data since 1928. Even if actual S&P 500 total returns exceed these projections by the same amount that they have during the 12-year bubble period from 2009-2021 (which would essentially require valuations to permanently remain above the 1929 and 2000 extremes), the total return of the S&P 500 would be roughly zero.
https://www.hussmanfunds.com/wp-cont.../mc211108c.png
Notably, more rapid nominal growth would not improve likely market returns. The level of U.S. long-term interest rates is strongly correlated with trailing nominal GDP growth. Faster growth – whether due to real GDP or inflation – is associated with higher interest rates (and more normal equity market valuations) at the end of the period. As I observed last month, even if we examine the times in U.S. history that growth in nominal GDP, S&P 500 revenues, or cyclically-adjusted earnings averaged over 10% annually for a decade or more, or that 10-year CPI inflation averaged even 4% annually, S&P 500 valuations at the end of those 10-year periods were always at or below historical norms – on average more than 30% below those norms.
Think about it this way. MarketCap/GVA is now 3.5, compared with a 2000 peak of 2.4, an extreme that was not exceeded until last year. Over the past 20 years, whether one measures to the pre-pandemic peak or the current one, U.S. nonfinancial gross value-added has grown at just 4% annually. Now allow the current level of valuations to slip – not too far – not even below the 1929 or 2000 extremes. Even in that event, the resulting 10-year annual gain in the S&P 500 index would be:
1.04*(2.4/3.5)^(1/10)-1 = 0.15%
Fortunately, the dividend yield of the S&P 500 is 1.30%, so as long as bubble valuations can be reliably sustained, at least investors will have that.
It is a fiction that stocks, at any price, are better than low-yielding bonds. If you want to make that argument to investors – here I’m speaking directly to analysts on Wall Street and the Fed – at least have the intellectual decency to test your estimates against decades of actual subsequent market returns, and show them side-by-side. By our estimates, the S&P 500 is likely to lag Treasury bonds by about 8% annually over the coming decade – the largest gap in history, and slightly worse than the outcomes after 1929 and 2000. For a discussion of equity risk premium (ERP) models, including the Shiller-Black-Jirav “excess CAPE yield”, see A Good Response to a Bad Situation.
Yes, bond yields are lower than they were in 2000, but equity valuations are also more extreme. The end result for relative returns is likely to be similar to that of previous bubbles. Even an “error” as large as the one we’ve seen in the past 12 years (which would require future valuations to remain at bubble extremes) would leave S&P 500 total returns at or below the lowly returns on Treasury bonds. The main thing the Federal Reserve has accomplished is to create a yield-seeking bubble that has driven both bonds and stocks to valuations that imply dismal future outcomes.
https://www.hussmanfunds.com/wp-cont.../mc211108d.png
Another word to analysts: never discount the expected future cash flows of long-term security using a rate of return that you don’t actually believe investors will accept over the entire life of that security – or that is wildly inconsistent with the long-term returns that investors have historically required – and then have the audacity to call the resulting price “fair value.” It’s just not right.
When bubble meets trouble
A few of Jeremy Grantham’s observations about speculative bubbles should not be missed. Not just because they agree with our own thinking, but because hearing the same concepts in different words, from a different speaker, can often deepen one's understanding.
“How high the peak has no bearing at all on what the fair value is. What it does change is the amount of pain that you get to go back to fair value and below. I’ve been very clear about what I consider a definition of success – and that is only that, sooner or later, you will have made money to have sidestepped the bubble phase.”
This is a point I’ve emphasized often, but it can’t be repeated enough: amplifying a bubble doesn’t somehow avoid its consequences – it makes those consequences worse. Amplifying a bubble doesn’t even create “wealth” for the economy as a whole, only temporary opportunities for wealth transfer between individuals. That’s because the wealth isn’t in the price – it’s in the future stream of cash flows. If one holder sells, the next buyer has to hold the bag, and ultimately it’s the cash flows that matter. The only thing progressively higher valuations do is to progressively lower the long-term returns that investors will subsequently enjoy if they buy (or hold) at those valuations.
One of the things that you may have noticed is that our downside targets for the markets don’t simply slide up in parallel with the market. Most analysts have an ingrained ‘15% correction’ mentality, such that no matter how high prices advance, the probable maximum downside risk is just 15% or so (and that would be considered bad). Factually speaking, however, that’s not the way it works. The inconvenient fact is that valuation ultimately matters. That has led to the rather peculiar risk projections that have appeared in this letter in recent months. Trend uniformity helps to postpone that reality, but in the end, there it is. Given current conditions, it is increasingly likely that valuations will begin to matter with a vengeance.
– John P. Hussman, Ph.D., March 7, 2000
I’ve often observed that risk management is generous. Being on the sidelines during a late-stage bubble can feel horrible, but the “missed” gains are typically transient. Invariably, rich valuations are followed by very long periods where the market either collapses or goes nowhere in an interesting way. Consider the 14-year period from May 1995 to March 2009 – two financial bubbles in the interim, yet in the end, the S&P 500 lagged Treasury bills for the full period. The S&P 500 lagged T-bills for the 21-year period from February 1961 to August 1982, a span that included the “Go-Go” bubble of the late-1960’s and its collapse, along with the blue-chip (Nifty Fifty) bubble that collapsed in 1973-74. The easy one, of course, was the 16-year period from November 1916 to May 1932, which included the bubble of the roaring ’20s and its subsequent collapse in 1929-1932.
The result is the same if you measure from the bubble peaks. The S&P 500 lagged Treasury bills from 1929-1947, 1966-1985, and 2000-2013. 50 years out of an 84-year period. That’s just what overvalued markets do.
“The next time we’re pessimistic, we have more potential to write down asset prices than we have ever had in history, anywhere.”
Speculative bubbles collapse. I don’t know how to make that point simpler, but somehow it needs to be said. Still, attention to investor psychology – speculation versus risk-aversion – can help enormously. A market crash is nothing more than low risk-premium meeting risk-aversion. Indeed, when investors become risk-averse, they treat safe liquidity as a desirable asset rather than an inferior one, so creating more of the stuff does nothing to support stocks. That’s how the market could collapse in 2000-2002 and 2007-2009 despite aggressive and persistent Fed easing.
Grantham’s phrase “the next time we’re pessimistic” is crucial, because pure speculative psychology is the only thing standing between an hypervalued market that continues to advance and a hypervalued market that drops like a rock. Our best gauge of that psychology – the uniformity of market internals – remains divergent enough to keep market conditions in a trap-door situation.
When investors are inclined to speculate, they tend to be indiscriminate about it, so we gauge that psychology based on the uniformity or divergence of market internals across thousands of stocks, industries, sectors, and security types, including debt securities of varying creditworthiness. I introduced our main gauge of market internals back in 1998 (what I called “trend uniformity”), and have made only modest adaptations since then. The main recent adaptation has been to adopt a slightly more “permissive” threshold in our gauge of market internals when interest rates are near zero and certain measures of risk-aversion are well-behaved, which captures the idea that tossing deranged Fed policy into the mix boosts the implications of a given improvement in market internals. The effect is to promote a more constructive shift following material market losses.
Both valuations and market internals continue to be essential elements of our investment discipline. In contrast, my error in this bubble was that I attended too strongly to historically reliable “limits” to speculation. Those limits became wholly ineffective amid the Fed-induced delusion that zero interest rates leave investors “no alternative” to speculate, regardless of the level of valuation. I’ve regularly detailed our key adaptation – becoming content to gauge the presence or absence of speculative pressures based on valuations and market internals, but without assuming that speculation has any well-defined limit.
Since late-2017, we’ve refrained from adopting or amplifying a bearish outlook when we observe that uniformity. We’ve also become open to moderately constructive stances – though still with safety nets and tail-risk hedges – regardless of the level valuations, provided that market internals indicate that investors have the speculative bit in their teeth. All of this is what Ben Graham might have described as “intelligent speculation, kept within minor limits.”
At present, our measures of market internals remain sufficiently divergent to hold us to a strong defensive stance. Indeed, the main headwind for hedged equity strategies in recent weeks has been the divergence between the broad market and capitalization-weighted indices dominated by overvalued large-cap glamour stocks. Still, we’re close enough to the threshold to refrain from “fighting” a further advance or amplifying our bearish outlook if investors remain punch-drunk enough to chase greater extremes. What we will not do, except at markedly less extreme valuations, is to adopt an unhedged investment stance. I expect that this bubble will end terribly, and the damage will take more than a decade to undo.
I know that many of you believe that the current episode of speculative enthusiasm will persist forever –that the Fed will make it persist. We’ve already established that market returns are likely to be flat or poor even if the market achieves what Irving Fisher disastrously projected as a “permanently high plateau” in 1929, and valuations remain forever above extremes never seen before last year. Investors should also consider what might happen if valuations merely touch their historical norms – even 20 years from today – and growth in fundamentals matches that of the past 20 years. The simple arithmetic implies that the S&P 500 would actually lose value on a total return basis.
One of the striking features of the past five years has been the domination of the financial scene by purely psychological elements. In previous bull markets the rise in stock prices remained in fairly close relationship with the improvement in business during the greater part of the cycle; it was only in its invariably short-lived culminating phase that quotations were forced to disproportionate heights by the unbridled optimism of the speculative contingent. But in the 1921-1933 cycle this ‘culminating phase’ lasted for years instead of months, and it drew its support not from a group of speculators but from the entire financial community. The ‘new era’ doctrine – that ‘good’ stocks were sound investments regardless of how high the price paid for them – was at the bottom only a means of rationalizing under the title of ‘investment’ the well-nigh universal capitulation to the gambling fever.
That enormous profits should have turned into still more colossal losses, that new theory should have been developed and later discredited, that unlimited optimism should have been succeeded by the deepest despair are all in strict accord with age-old tradition.
– Benjamin Graham & David Dodd, Security Analysis, 1934
It may be impossible to warn investors-turned-speculators at the peak of a bubble, without having been thoroughly discredited first. It’s only those who attend to, and care about valuations – and the well-being of others – that apply for that thankless job. After all, the only way to establish bubble valuations is for the market to blow through every lesser extreme, and to dismantle the very belief that valuations matter at all. As Galbraith wrote of speculative bubbles decades ago, “Strongly reinforcing the vested interest in euphoria is the condemnation that the reputable public and financial opinion directs at those who express doubt or dissent. Past experience, to the extent that it is part of memory at all, is dismissed as the primitive refuge of those who do not have the insight to appreciate the incredible wonders of the present.”
I’ve been through this particular rodeo before. In decades of complete market cycles prior to the recent bubble, I’ve repeatedly been somewhat discredited at bubble peaks, yet also ended up having done admirably over the complete cycle, typically with smaller full-cycle drawdowns than for the market itself. Despite the challenges we’ve addressed during the recent bubble, that certainly remains my objective going forward.
It’s slightly amusing that people think they know me for being a permabear. What they don’t realize is that they actually know me for having successfully navigated decades of market cycles – including periods of bullish and even leveraged investment stances – and then having erred by being overly bearish during this bubble. Nobody would even know my name had I not been successful before this extended carnival of Fed-induced speculation. I’ve openly addressed the error, and I remain convinced that attention to valuations and market internals is critical. An improvement in market internals here could defer our immediate concerns, but remember Grantham’s warning – “How high the peak has no bearing at all on what the fair value is. What it does change is the amount of pain that you get to go back to fair value and below.”
On Wall Street, urgent stupidity has one terminal symptom, and it is the belief that money is free. Investors have turned the market into a carnival, where everybody ‘knows’ that the new rides are the good rides, and the old rides just don’t work. Where the carnival barkers seem to hand out free money just for showing up. Unfortunately, this business is not that kind – it has always been true that in every pyramid, in every easy-money sure-thing, the first ones to get out are the only ones to get out. We’ve seen two-tiered markets before: most prominently in 1929, 1968-69, and 1972. Even at those pre-crash extremes, the S&P never sold above 20 times record earnings. The market clearly faces problems at a multiple of 32. Technology stocks will ultimately fare worse. Over time, price/revenue ratios come back in line. Currently, that would require an 83% plunge in tech stocks (recall the 1969-70 tech massacre). If you understand values and market history, you know we’re not joking.
– John P. Hussman, Ph.D., March 7, 2000
The tech-heavy Nasdaq 100 went on to lose an almost implausibly precise 83% by October 2002
Given my general avoidance of forecasts, there are very few situations when I would state my views about the market as a ‘warning.’ Unfortunately, in contrast to more general Market Climates that we observe from week to week, the current set of conditions provides no historical examples when stocks have followed with decent returns. Every single instance has been a disaster. Whatever market exposure investors accept today ought to be the same market exposure that investors are committed to maintaining for the duration of a bear market, without abandoning their investment plan. Investors with no plan to own stocks through a market decline, holding them only in the hope of selling at market highs, may discover in hindsight that these were them.
– John P. Hussman Ph.D., October 15, 2007
“Then there’s the most important thing of all, which is crazy behavior, the kind of meme stock, high participation by individuals, enormous trading volume in penny stocks, enormous trading volume in options, huge margin levels, peak borrowing of all kinds, and the news is on the front page. This is all characteristic of the handful of great bubbles that we’ve had.”
I don’t think it’s necessary to catalog the full inventory of speculative madness that has emerged during this bubble. Investors see it with their own eyes. The problem is that somehow they’ve been able to convince themselves that it’s not madness. As Galbraith wrote decades ago, “No one wishes to believe that this is fortuitous or undeserved; all wish to think it is the result of their own superior insight or intuition. The very increase in values thus captures the thoughts and minds of those being rewarded. Speculation buys up, in a very practical way, the intelligence of those involved.”
Let me be very clear here. The striking, often instantaneous “wealth” that seems to be popping up around you almost daily is not a reflection of a brave new world. It is a symptom of a speculative wave at its crest. I know that most investors don’t believe that. Of course, you don’t believe that! It would mean that a large portion of what you consider to be “wealth” will simply evaporate as smaller prices are placed on the pieces of paper and digital “objects” you own.
This isn’t new, guys. It only reminds me of what we saw in 2000. For example, Xcelera – a company that owned nothing but a single hotel in the Cayman Islands – swelled to a market capitalization of $11.7 billion in March 2000, then poof. Or Palm, which I also wrote about back then:
The peak of this idiocy will probably go into the history books as occurring on March 2nd. On that day, 3Com spun off Palm Inc., a majority-owned subsidiary. On March 1st, just before the spinoff, 3Com was valued at roughly $42 billion in market capitalization. But somehow, in the next day’s exuberance, the market cap of PALM — the spinoff – soared to $93 billion. In other words, the market suddenly valued a sliver of the parent company at over twice what the whole company was worth the day before. This is despite the fact that Palm represents only about 15% of 3Com’s revenues and less than 5% of its earnings. Perhaps not surprisingly, Palm has since collapsed from a high of 165 to a still unpalatable 31. That gives it a market cap of over $17 billion, compared to the $15 billion market cap of the parent 3Com, which still owns about 95% of Palm (about 1.5 PALM per share of COMS).
This is what you call a risk arbitrage. Selling Palm short and buying 3Com essentially gets the remaining lines of 3Com’s business for nothing. Unfortunately, the majority of the float in Palm has already been borrowed by short-sellers, so the shares are nearly impossible to borrow and short. But let’s see. If you were 3Com, and you realized that the market was temporarily dominated by idiots who can’t even do arithmetic, what would you do? Oh, how about quickly spinning off the remaining 95% of Palm, and doing a huge share buyback of 3Com? CBS MarketWatch May 9, 2000: ‘After Monday’s closing bell, the company set July 27 as the day it will spin off the remaining 532 million shares of Palm it owns, which is earlier than originally expected. Separately, the company said it would expand its share repurchase program.’ Separately, my @$$. Well, at least somebody understands this idiocy.
– John P. Hussman, Ph.D., May 10, 2000
“The mechanics of a bubble is you have maximum borrowing, maximum enthusiasm. And then the following day, you’re still enthusiastic but not quite as enthusiastic as yesterday. A week later, you’re not quite as enthusiastic as last week and last month. And gradually, the enthusiasm level drops off a bit, you have no more money to borrow, you’re fully borrowed, and the buying pressure gradually slows down. And that’s it.”
Here, Grantham’s comments match the dynamic that Franco Modigliani described in March 2000.
I can show, really precisely, that there are two warranted prices for a share. The one I prefer is based on such fundamentals as earnings and growth rates, but the bubble is rational in a certain sense. The expectation of growth produces the growth, which confirms the expectation; people will buy it because it went up. But once you are convinced that it is not growing anymore, nobody wants to hold stock because it is overvalued. Everybody wants to get out and it collapses, beyond the fundamentals.
– Nobel Laureate Franco Modigliani, New York Times, March 30, 2000
As I detailed in How to Spot a Bubble, There are essentially two “rational” prices for a stock – one is the price that is consistent with the long-term returns that investors actually expect and ultimately require, and one is the price that validates the short-term expectations of investors based solely on extrapolating the current trend. The defining feature of a bubble is an inconsistency between expected returns based on price behavior and expected returns based on valuations. As a bubble progresses, the gap between those two prices becomes progressively larger, but holding on feels “rational” in a certain sense provided that prices are advancing relentlessly. Then, as Grantham observes, the enthusiasm level drops off a bit, and you typically see a “waterfall” as speculators rush to sell. The question then becomes “to whom?”
“The biggest cage rattler of all is everything else you haven’t thought about that could go wrong.”
Presently, market valuations are now so extreme that investors are likely to be deeply disappointed even if their expectations about earnings are correct. Unfortunately, my impression is that Wall Street’s projections of corporate earnings are profoundly at odds with the macroeconomic equilibrium that drives those earnings. The financial damage will be even more breathtaking if those projections prove to be wrong, as I suspect they will. We’ll talk about that next.
Corporate earnings versus arithmetic
A frequent – if not universal – feature of the final stage of a speculative bubble is the tendency of investors to move their attention away from the level of valuations, and to transfer it, as Graham & Dodd lamented in 1932, “almost exclusively to the earnings trend, i.e. to the changes in earnings expected in the future.” Unfortunately, this shift of attention has the subtle effect of making price irrelevant as an investment consideration.
The other problem is that because bubble prices generally reflect a combination of extreme price/earnings multiples times record earnings that have been temporarily elevated by record profit margins, the subsequent downturn in earnings can vastly amplify market losses as both earnings and price/earnings multiples retreat simultaneously.
Well, we’ve set that house of cards up again. What’s worse is that investors don’t seem to recognize it – partly because there’s nowhere they would have learned what follows, and partly because there’s nowhere that Wall Street analysts would have learned it either. So while none of this is common knowledge, all of it is likely to result in a “surprising” shortfall in corporate earnings over the coming quarters.
Let’s start with a proposition that one can prove with simple (if tedious) arithmetic: every deficit of government (spending in excess of revenue) is matched by a surplus across other sectors – households, corporations, and foreign countries – where their income will exceed their consumption and net investment. The chart below shows what this looks like. I’ve excluded some very small payment items for simplicity, but the basic upshot is simple: every time the government runs a deficit, you’ll see it directly reflected in the sum of three surpluses: personal savings, retained corporate profits, and trade deficits (a surplus from the perspective of foreigners).
Think of it this way. What a government deficit does is direct goods and services produced by other sectors of the economy toward consumption and investment (including transfer payments to individuals, subsidies to companies, and public infrastructure) that have been approved by Congress. In return, the sectors that produced those goods and services receive income for output that they did not consume. This private surplus takes the form of securities, and in equilibrium, those securities are exactly the same ones (Treasury debt and base money) that the government issued in order to finance the deficit.
The red line in the chart below is essentially the federal deficit as a share of GDP (including amounts spent on transfers to other sectors). The blue line is the sum of personal, corporate, and foreign surpluses. The two lines are mirror images of each other because this sort of equilibrium is just arithmetic.
https://www.hussmanfunds.com/wp-cont.../mc211108e.png
Data: Federal Reserve Economic Database
Already, investors may feel a bit sick here. See, the deficit that the U.S. government ran during the pandemic amounted to nearly 19% of GDP, and that – in equilibrium – is exactly why corporate earnings, personal savings, and trade deficits enjoyed a record surge in recent quarters. Meanwhile, the spending bills currently on the table ($1 trillion for infrastructure and $1.8 trillion for social and climate spending) are 8-10 year spending proposals, partially offset by revenue measures. There’s nothing in current legislation that’s going to replicate the breathtaking federal deficits we’ve seen in the past 18 months. That means – purely by the force of arithmetic – that the sum of those other three surpluses must shrink. The only question is which of the three will take that hit.
https://www.hussmanfunds.com/wp-cont.../mc211108f.png
Notice that even if the government doesn’t run a deficit, any individual sector can still run a surplus to the extent that some other sector runs a deficit. So for example, corporations can accumulate earnings even without government deficits, provided that households or foreigners are going into debt.
Unfortunately for workers, that’s exactly how corporations were able to enjoy high-profit margins following the global financial crisis: the growth of unit labor costs (the compensation paid to labor per unit of output produced) was extraordinarily weak, so income that would have otherwise become personal savings instead became corporate profits.
Imagine you’re a company that produces one unit of output. If you can increase the price of that unit of output more than your costs go up, your profit margin will widen. Put another way, as your real unit labor cost declines, your profit margin increases. On the other hand, if unit labor costs accelerate faster than the rate of inflation – as they are now doing – profit margins are driven lower.
The record, historically oversized corporate profits that investors observe here are largely an artifact of record pandemic deficits, coupled with a long period of suppressed unit labor costs. In the coming quarters, those deficits won’t go to zero, but they’ll shrink substantially. At the same time, upward pressure on unit labor costs, if it continues, will limit the ability of corporations to shift surpluses away from workers and toward corporate profits.
In short, as the federal deficit narrows and unit labor costs increase, the two deficits that have contributed most to the corporate sector surplus in recent years will shrink. In equilibrium, the combined effect of smaller government deficits and rising unit labor costs is likely to hit corporate profit margins like a hammer.
The green line in the chart below is where we are. The blue line is where we’re probably headed. It’s certainly possible for margins to enjoy a period of strength when demand is at its peak (as we observed for several quarters in 2006 and 2007), but in general, profit margins largely follow real unit labor costs, and that’s clearly been true even in recent decades.
https://www.hussmanfunds.com/wp-cont.../mc211108g.png
Oh, and it’s probably worth noting that while reported S&P 500 earnings (GAAP – generally accepted accounting principles) can be somewhat volatile, profit margins for the index are well-correlated with those of U.S. corporate profit margins as a whole. Figure that if operating margins retreat to about 9%, you’re looking at operating earnings of about $135 for the index, which would put the operating P/E at about 35 using current revenues and index levels. Do what you wish with that.
https://www.hussmanfunds.com/wp-cont.../mc211108h.png
The Fed has learned nothing
John Bull can stand many things, but he cannot stand interest rates of two percent.
– Walter Bagehot, British Chancellor of the Exchequer, 1852
It’s remarkable over 150 years have passed since Walter Bagehot wrote Lombard Street, yet nothing has changed. When activist central bankers drive interest rates too low, yield-seeking speculation reliably follows. The only activities that can be done at 0% that can’t be done at 2% are a) projects that are so unproductive that they can’t survive a higher hurdle rate, and b) speculative “carry trades” where interest is the primary cost of doing business.
When central bankers drive interest rates too low, yield-starved investors respond by searching for any risky security that will offer a “pickup” in yield. Wall Street responds by issuing more “products,” regardless of how sketchy those securities may be. Speculators have their day, and a collapse invariably follows. The Fed should have learned that during the mortgage bubble. The Fed has learned nothing. At every point that the Federal Reserve could have acted to limit the formation of a speculative bubble, it has doubled down instead.
This general lowering of standards by investment banking firms was due to two causes, the first being the ease with which all issues could be sold, and the second being the scarcity of sound investments to sell. Now they had to choose between selling poor investments or none at all – between making large profits or shutting up shop – and it was too much to expect from human nature that under such circumstances they would adequately protect their clients’ interests”
– Benjamin Graham & David Dodd, Security Analysis, 1932
Walter Bagehot is one of the great historical thinkers in monetary policy, famously setting out the fundamental principles of what a central bank should do:
- Ordinarily, as little as possible – “I shall have failed in my purpose if I have not proved that the system of entrusting all our reserve to a single board is very anomalous; that it is very dangerous; that its bad consequences, though much felt, have not been fully seen. We should try to reduce the demands on the Bank as much as we can. The central machinery being inevitably frail, we should carefully and as much as possible diminish the strain on it.”
- In a crisis – To lend freely, to solvent enterprises, on the basis of sound collateral, at sufficiently high-interest rates to discourage unnecessary or precautionary borrowing.
Decades later, some of Bagehot’s prescriptions were written into the Federal Reserve Act, which is why much of Section 13 emphasizes that liquidity should be provided almost exclusively by purchasing government securities and that even emergency lending to corporations should be for a short term, based on commercial or agricultural collateral “sufficient to protect taxpayers from losses” – never by taking corporate securities. The reason is simple – if the Fed was to purchase corporate securities and lose money, it would have effectively printed money to bail out private investors, without the constitutional spending authority of Congress.
Investors forget that the only reason the Fed was able to buy corporate debt during the pandemic (which it did to the tune of just $14 billion, in an economy with over $11 trillion in corporate debt), was because Congress explicitly allocated funds to the Treasury for emergency support of corporations, municipalities, and payroll protection loans. Maybe in the next collapse, the Fed will find a way to circumvent the Federal Reserve Act and the fiscal authority of Congress and buy stocks as if they represent sound collateral. Don’t count on it. If they do, we’ll attend to valuations and market internals, without assuming any well-defined limit to speculation.
Even without evidence that activist departures from systematic policy rules (like the Taylor Rule) have a reliable and economically meaningful impact on real GDP growth or employment, it seems that Fed officials simply can’t resist the temptation of playing masters of the universe. As a result, they repeatedly create yield-seeking bubbles and then pretend that they are helpless to stop them. I expect that this one, too, will collapse. We’ve learned not to fight yield-seeking speculation too much when our measures of market internals are favorable, for whatever reason, but from a public policy standpoint, it’s still distressing.
In fact, the Federal Reserve was helpless only because it wanted to be. Clearly, the Federal Reserve was less interested in checking speculation than in detaching itself from responsibility from the speculation that was going on. And it will be observed that some anonymous draftsman achieved a wording that indicated that not the present level but only a further growth in speculation would be viewed with alarm. Never before or since have so many become so wondrously, so effortlessly, and so quickly rich. Perhaps Messrs. Hoover and Mellon, and the Federal Reserve were right in keeping their hands off. Perhaps it was worth being poor for a long time to be so rich for just a little while.
– John Kenneth Galbraith, The Great Crash – 1929
So here we are, at the highest point to date of the most extreme speculative bubble in the history of the nation. In aggregate, there’s no “getting out” of stock, or cash, or bonds, or any other security – every share of stock that’s been issued has to be held by someone. Every dollar of base money created by the Fed has to be held by someone. Every bond certificate issued by a borrower has to be held by someone.
Securities aren’t aggregate wealth – they’re an asset to the holder and liability of the issuer. They’re evidence of a past exchange and a promise of future payments. Someone always has to hold the thing until it’s retired. The only thing the holder – or the series of holders – will get between now and then is the stream of cash flows that the security pays out over time. The wealth isn’t in the price. It’s in the cash flows.
Once security is issued, the price people attach to it has no effect on those cash flows. As Grantham observes, “How high the peak has no bearing at all on what the fair value is.” When the prices collapse, what someone imagined to be “wealth” simply evaporates. Encouraging you to sell only means that someone else will end up holding the thing. So the only advice I can offer is that you think carefully about both return and risk; about what your spending needs are; about how much you can tolerate losing without distress. The losses themselves – to someone – are baked in the cake.
If you ask “what alternative do I have to zero-interest cash?” my answer is this: I expect that bonds and lowly, dismal T-bills will likely outperform stocks over the coming 10-20 years, and that’s a shame all around. I expect that the best refuge as the bubble collapses will be non-passive investment strategies: value-conscious hedged equity; full-cycle disciplines that have the ability to respond to changing market conditions; possibly managed futures on the commodity side. None of these are on anyone’s minds here. My impression is that flexible, hedged strategies will be important because the prospective returns for passive approaches are likely to be worse than zero.
The Federal Reserve simply does not understand the risks of asset price bubbles and asset price collapses. It is clear from the data that they don’t get it. Greenspan could never make up his mind whether the market was overpriced – irrational expectations – or whether it was fine. Yellen couldn’t. Bernanke couldn’t see a housing bubble that was a 3-sigma 100-year event. Where were the statisticians? The answer is that the Federal Reserve statisticians do not do asset bubbles. They are, in that respect, utterly clueless – and we apparently never see that. We are willing to look through the crash of 2000, the housing crash – really dangerous affair – they didn’t do their duty, they didn’t head it off, they didn’t raise the limits for mortgages, they didn’t warn anybody, they allowed it to happen. Yes, they did pretty good in the decline. They were pretty good at applying bandages, and stimulus, and support for the wounded. But they sure as hell should not have allowed that housing bubble to occur.
They don’t get it. They don’t see the risks, and they don’t see them now. And so this time, we don’t just have a housing bubble. We have a housing bubble, a stock market bubble, a commodity bubble, and an interest rate bubble. This is going to be the biggest writedown.
– Jeremy Grantham, GMO, August 2021
An opportune moment
As I’ve regularly observed, the main difference between the current bubble and past market cycles is that once interest rates hit zero, historically reliable “overvalued, overbought, overbullish” syndromes became ineffective in signaling a limit to speculation – at least while our measures of market internals were favorable. Grantham is right – “We’ve checked off all the boxes. Now the question is how high is high?” Given the limited usefulness of overextended syndromes in recent years, we can’t answer that with any confidence. That said, Grantham’s comment about prices accelerating at the finale reminded me of Didier Sornette’s description of bubbles in their terminal phase: “the market return from today to tomorrow is proportional to the crash hazard rate. In essence, investors must be compensated by a higher return in order to be induced to hold an asset that might crash.”
Given that we’ve seen a hockey-stick advance in recent weeks that has pushed the market toward or through its upper Bollinger bands at every resolution, even as our gauges of market internals remain divergent, I asked when in the past we’ve also observed record highs, valuations above their historical norms, overextended conditions featuring an accelerating rate of change (ROC) at multiple short-term resolutions, broadly bullish advisory sentiment, and at least mild dispersion in participation. The chart below is just a version of what I’ve often described as “overvalued, overbought, overbullish” conditions, but adding acceleration in the “overbought” component, and also requiring some degree of dispersion among individual stocks. I expected to see more instances, but here they are (for what it’s worth, even the instance in late-2020 was followed by a 10% market retreat).
https://www.hussmanfunds.com/wp-cont.../mc211108j.png
Emphatically, nothing in our discipline presumes that this bubble cannot continue. We’ll respond to observable valuations, market internals, and other factors as they change, and an improvement in market internals here could defer our immediate (though not long-term) concerns. Still, in a bubble that’s already “checked all the boxes,” this may be a particularly opportune moment to remember that, for disciplined investors, risk management is generous.
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Rising Fundamentals for Gold and Silver
https://assets.zerohedge.com/s3fs-pu...?itok=sEWJFe5E
BY MONETARY METALS
TUESDAY, NOV 09, 2021 - 10:26
By Keith Weiner
To listen to the audio version of this article, click here.
Prices move up and down, in the restless churn of our irredeemable monetary system. There are several schools of thought whose theories attempt to describe, if not predict, the next price move.
Investors Have Given Up on a V-Shaped Recovery, BNY's Young Cautions
The Different Theories on What Moves Gold and Silver Prices
For example, the Quantity Theory school attempts to relate the quantity (or change in quantity) of dollars, to each commodity. Generally, this theory predicts rising prices based on the reasoning of “more dollars chasing the same or fewer ounces of gold and silver.” The problem is that the new holders of these new dollars are not necessarily bidding up gold and silver (our thorough rebuttal to this is here).
Other schools attempt to compare mine production with industrial and jewelry demand. Or attempt to hold up a famous buyer of the metal, while ignoring the thousands of not-famous sellers who sold the metal to said, the famous buyer. We should not make too much ado over a move of metal from one corner of the market to another (as we’ll discuss below).
Gold and Silver Fundamental Analysis: Contango, Backwardation and the Basis
None of these schools describes the fundamentals of the gold and silver markets, much less predicts the price moves. To look at the fundamentals, one must look at the gold and silver bases. The basis, to oversimplify slightly, is futures price – spot price. This shows the fundamentals because a market in scarcity (as oil has been recent) has a lower price for future delivery than for immediate delivery. In other words, buyers prefer their oil now rather than later. And this preference is expressed as a higher price for delivery now, vs. later. This condition—called “backwardation”—is a signal to everyone warehousing the commodity to de-carry it. That is, to sell the commodity in the spot market and buy back their position via a futures contract. They pocket a small but risk-free profit for doing so.
Backwardation in Oil
As of Friday, this profit is about $1.20 for the December crude oil contract—about 17% annualized. No wonder oil has been going up so much!
It is a good indicator of scarcity, because if someone has oil in storage then he has an incentive to de-carry it. Therefore, if the backwardation persists then we know that there are more buyers of spot oil than there are warehousemen storing it.
Conversely, if the price of a futures contract were higher than the spot price—called “contango”—it provides a different incentive. It offers a profit to anyone who can buy spot and simultaneously sell a future. This means that the market values oil in storage more than oil to be consumed today.
Backwardation means that the marginal supply of the commodity is the warehouse. It’s a bullish indicator because the warehouse has only a finite quantity. Contango means that the marginal demand is the warehouse. It’s a bearish indicator because the warehousemen will not keep buying indefinitely.
What About the Prices of Gold and Silver?
Now let’s compare gold and silver to oil. Gold has a contango of $1.09. Silver has a contango of $0.03.
Recall that oil has a backwardation of $1.20. This is huge, representing about 1.5% of the price. In gold, $1.09 is about 0.06% of the price. In silver, $0.03 is about 0.1% of the price.
Gold and silver have been mined for thousands of years, and virtually all of that gold is still in human hands (it’s less with silver, though still massive). This means that there is no such thing as scarcity or abundance per se, in the monetary metals. There is scarcity or abundance of metals to the market. This is why we ignore moves of metal from one place to another.
Scarcity or abundance to the market is what we are measuring with the basis.
Gold Price Fundamental Analysis – Gold Basis
Since early August, the price of gold has gone nowhere, and the price of silver has dropped about $1, or about 4%. With each gyration on these paths, the basis (our measures of scarcity, respectively) has moved inversely to the price of the metal, in dollar terms.
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- Post #10,159
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- Nov 9, 2021 5:27pm Nov 9, 2021 5:27pm
- | Commercial Member | Joined Dec 2014 | 11,978 Posts
Thanks to Bailouts, Wall Street Banks Are More Fragile than Ever
11/08/2021
Doug French
The financial covid crash of 2020 came and went in a month as the US government threw every monetary and fiscal trick it had at the government-imposed flash panic. We’ll never know which malinvestments would have been cleansed. We live on with goods and labor shortages and with higher prices, we’re assured by experts are transient. Supply chain issues, we’re told constantly, with no mention of the Federal Reserve’s balance sheet has doubled since the 2020 crash.
In 2008, Hank Paulson was a less, shall we say, flexible Treasury secretary than today’s person at the Treasury, Janet Yellen. Sure, Paulson oversaw a $700 billion Troubled Assets Relief Program (TARP) bank bailout. But, that amount seemed quaint as I was reminded of it reading A Colossal Failure of Common Sense: The Inside Story of the Collapse of Lehman Brothers.
The book, authored by the vice president of distressed debt and convertible securities trading at Lehman Brothers, Larry McDonald, with Patrick Robinson, provides an eyewitness account of the nation’s largest bankruptcy, a tripped domino which provided some semblance of an Austrian theory–style malinvestment flushing.
McDonald provides no academic theory, just street-level observation of hubris. He describes Lehman as “24,992 people making dough and 8 losing it.” The head man, Dick Fuld, a small man with a big ego, would not take Paulson’s advice to sell Lehman Brothers, overloaded with $120 billion in commercial and residential real estate.
The company’s property portfolio was contained in “no fewer than twenty-four hundred line items” all encumbered with debt. The Lehman leverage ratio had grown to 44 to 1, only to be outdone by Fannie Mae and Freddie Mac’s 65 to 1 leverage.
Fuld never left the thirty-first floor to visit the troops who not only made the firm money trading on the third and fourth floors but who also knew the real estate jig was up as far back as 2006.
Meanwhile, the boss made the mistake of many real estate lenders who believe, during a boom, that earning interest isn’t enough. Why not be a developer and make easy profits?
McAllister Ranch was a project, located southwest of Bakersfield, California, owned and to be developed by Lehman. The two thousand–acre site was to eventually contain six thousand homes surrounding a Greg Norman-designed golf course, boating, fishing, and a fancy beach house. McAllister Ranch by June 2008 was three square miles of fenced-off sand dunes, weeds, and a half-finished clubhouse. Lehman had sunk close to $2 billion in this debacle.
And then there were the credit default swaps. “The issue is the credit default swaps,” Pete Hammack told McDonald said as Lehman failed. “There’s $72 trillion of them out there held by seventeen banks, and Lehman must be sitting on $7 trillion of them.”
An especially enlightening episode was Fuld’s meeting with the ex–Goldman Sachs partner Paulson, who had “been one of the driving forces that made that bank the source of so much irrational envy in the mind of Dick Fuld,” McDonald writes. Fuld’s blind need to grow at any cost was his desire to be bigger than Goldman. Paulson was also personally richer. After the two men dined, Fuld “tried to convince himself and others that the meeting had gone his way.”
The meeting had been anything but friendly, with Paulson telling Fuld to sell the 158-year-old Lehman and its assets. “He wanted the place to deleverage in a big hurry, and he all but accused Fuld of dragging his feet.” Paulson was annoyed that the highly leveraged Lehman was investing in highly leveraged hedge funds. The Korea Development Bank had a deal for Lehman on the table at $23 per share and the Treasury secretary thought Fuld should take it rather than accessing the Fed window for taxpayer cash.
“I’ve been in my seat a lot longer than you were ever in yours at Goldman,” Fuld told Paulson. “Don’t tell me how to run my company. I’ll play ball but at my speed.” Lehman’s goose was cooked at that dinner, with Paulson thinking Fuld “demonstrated something between arrogance and disrespect.”
In the meantime, the Korean Development Bank’s offer per share shrank from $23 to $18 to $6.40, offers that Fuld reportedly never took to his board. McDonald chronicles the real drama as Lehman’s lenders demanded their lines of credit be collateralized with cash, forcing Fuld to look under every seat cushion for something in short supply at Lehman, cash.
Never one to take responsibility, Fuld “blamed intense public scrutiny for causing significant distractions among Lehman’s clients, counterparties, and employees,” McDonald recalled.
Ultimately, Bank of America and the bank from Korea looked to the Treasury for support to buy Lehman. For whatever his reasons, Paulson didn’t blink in the case of Lehman. He saved Merrill Lynch, Bear Stearns, Fannie, Freddie, AIG, and others. Government guarantees totaled $314 billion. McDonald wrote that JPMorgan Chase was the fourth branch of government, Bank of America the fifth. I would squeeze Goldman Sachs in ahead of those two. But Paulson had no love for Lehman and Fuld.
At the eleventh hour, Fuld called Paulson over and over to no avail. A call was placed to Tim Geithner at the New York Fed. He was unavailable. A Lehman executive committee member was a cousin to President George W. Bush. A call was reluctantly placed. “I’m sorry, Mr. Walker. The president is not able to take your call at this time.” Fuld’s delusion is further reflected by the firm's bankruptcy filing. It was a scant fifteen pages, whereas most large bankruptcy filings are hundreds of pages. The law firm of Weil Gotshal was hired at the last minute.
Lehman wasn’t alone. At the bottom of the financial mess, America only had six companies with debt-rated AAA. In 1980 there were ten times as many.
Colossal Failure was published in 2009, so McDonald’s memories were fresh. He closed with “Wall Street will never be the same. Lehman brought it down, as it brought down half the world. And, I say again, it never should have happened.”
In April 2020, a wall of money ($865 billion) flowed into banks, with “[m]ore than two-thirds of the gains [going] to the 25 biggest institutions, according to the FDIC. And that was concentrated at the very top of the industry: JPMorgan Chase, Bank of America, and Citigroup, the biggest U.S. banks by assets, grew much faster than the rest of the industry in the first quarter, according to the company data,” CNBC reported. Citigroup and Bank of America were the primary beneficiaries of the TARP bailout.
Wall Street banks are bigger and more fragile than ever. Wall Street is not the same only in the sense it's more dependent on the government. Janet Yellen has no corporate rivals. She will always say yes.
The Lehman lesson is everyone gets bailed out from now on, and what’s left of capitalism is the worse for it.
Author:
Doug French
Douglas French is a former president of the Mises Institute, author of Early Speculative Bubbles & Increases in the Money Supply, and author of Walk Away: The Rise and Fall of the Home-Ownership Myth. He received his master's degree in economics from UNLV, studying under both Professor Murray Rothbard and Professor Hans-Hermann Hoppe.
- Post #10,160
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- Nov 9, 2021 7:57pm Nov 9, 2021 7:57pm
- | Commercial Member | Joined Dec 2014 | 11,978 Posts
John Durham Is Getting Close To The Jugular
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BY TYLER DURDEN
TUESDAY, NOV 09, 2021 - 07:45 PM
Authored by Charles Lipson via RealClearPolitics.com,
Last week, John Durham’s grand jury issued its third criminal indictment in the Trump-Russia collusion hoax. The person who was arrested may be obscure; the news may have been buried after Virginia’s bombshell election results, but Durham’s move is a big deal. It shows that the special counsel’s probe is methodically unraveling a huge conspiracy, seemingly engineered by Hillary Clinton’s 2016 campaign and implicating James Comey’s FBI, either as a willing participant or as utterly incompetent boobs.
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The latest indictment also damages the mainstream media, which is why so many news outlets have ignored or underplayed it. After all, they broadcast a false story for years and are none too eager to revisit it. Other losers are the prosecutors assembled by Robert Mueller, most of them Democrats, who had reams of this damaging information and ignored it.
What Durham and a few intrepid reporters are uncovering may well be the most ambitious dirty trick pulled in an American election and its aftermath.
The question now is whether Durham can expose the full extent of this malfeasance and charge those who planned and executed it.
Durham’s latest indictment charges Igor Danchenko (pictured) with lying multiple times to the FBI. Danchenko, who worked at the Brookings Institution as a Russian expert, may not be a household name, but he was a crucial player in concocting the false story that Donald Trump was collaborating with the Kremlin to win the White House. The real conspiracy, it turns out, was aimed at Trump and was conducted by the Clinton campaign and her longtime associates. It was financed jointly by Clinton’s campaign and the Democratic National Committee. Some leaked emails suggested it was approved by the candidate herself. The FBI continued running with it long after it had ample evidence to know it was a concoction. House Democrats ran with it even longer, basking in fulsome, uncritical media coverage. All of it was false.
The Danchenko indictment matters because his bogus information was the heart of the “Steele dossier,” which, in turn, was the heart of the anti-Trump investigation. The dossier was compiled by a former British spy, Christopher Steele, who had been hired by people working for Clinton. Steele claimed his information about Trump, including salacious sexual allegations, came from Russian sources. It didn’t. It came from Danchenko, who was working at a Washington think tank. As Danchenko admitted to the FBI, much of what he told Steele was old rumors or exaggerations. Some of it appears to have been simply fabricated. Steele incorporated it, and the Democrats deployed it.
The FBI interviewed Danchenko multiple times in January 2017, around the time Trump was taking office. Comey’s FBI had already received the dossier and his agents were trying to verify its allegations. They couldn’t do so, and Danchenko’s admissions told them why. His interrogation should have immediately stopped the FBI from using the dossier to investigate Trump. So should a warning from Bruce Ohr, the highest-ranking career official in the Department of Justice, that Steele was strongly biased. The FBI blew right through these red lights.
The bureau continued to use the bogus information in applying for secret warrants from the Foreign Intelligence Surveillance Court to spy on Carter Page and, through him, on others connected with Trump. Officials told the court, falsely, that the warrant information was reliable and verified when they knew it was neither.
What the warrants say, in essence, is, “We need to spy on Carter Page because we think he’s an enemy agent.” But the FBI already knew he wasn’t. That means they were trolling for other information. How did the FBI know Page was on our side? Because they asked the CIA and were told, quite explicitly, that Page was helping them, not the Kremlin. The CIA gave that exculpatory information to FBI lawyer, Kevin Clinesmith, who altered the message to say Page was not working for the CIA. His alternation was criminal, and he plead guilty after Durham charged him.
The story gets worse. Although Clinesmith altered the CIA message for FBI use, he also gave his superiors the CIA’s true communication. So, his bosses knew the real story. They weren’t interested in the truth, which they kept secret from the FISA court to continuing spying on Page. If there is any justice left in Washington, those responsible for this travesty will be held criminally liable. Page may well have a civil case against them, too.
As the FBI blundered forward on its political mission, it made other revealing missteps. The most important was Director Comey’s meeting with the incoming president in early January 2017. Comey told Trump the FBI had acquired some damning materials about him but emphasized they were still unverified. As Comey’s own aides warned him, that communication could be seen as a kind of blackmail threat, the kind that marked J. Edgar Hoover’s tenure.
Comey’s meeting with the president had another major consequence. Until then, even anti-Trump news outlets had been wary about mentioning the dossier (which the Clinton team had been shopping to them) because they couldn’t actually verify any of the vital details. That reticence changed with Comey’s briefing, which was news in its own right. The story now became, “FBI chief briefs president-elect Trump about the salacious dossier, revealing damning info Kremlin could use to blackmail Trump.” One online outlet, BuzzFeed, went further. It published the full Steele dossier, and the media frenzy began.
Remember, this whole story was concocted and paid for by Hillary Clinton’s campaign and fed to the FBI and the media by her attorneys and associates. The FBI, which should have been able to quickly prove the story was false, plodded on with its investigation and fed the frenzy.
Although the dossier was commissioned to sink Trump in November, it was still useful after he won the election. Trump’s adversaries could exploit it to hamstring his embryonic administration, and that’s exactly what they did. With the wholehearted backing of House Speaker Nancy Pelosi, House Intelligence Committee Chairman Adam Schiff spent three years beating the drum of the “Russia collusion” hoax. Schiff’s constant media appearances claiming he had conclusive evidence of Trump-Russia collaboration continued long after he had received classified briefings that demolished his story. The briefer was former Director of National Intelligence John Ratcliffe, and he has confirmed those meetings with Schiff and his Senate counterpart, Mark Warner. No matter to Schiff, who kept repeating his claims and pursuing his full-scale investigation. First the verdict; then the inquiry. It was all part of a four-year-long battle, first to prevent Trump’s election, then to undermine his presidency, and finally to damage his chances for reelection.
The Clinton team launched this operation with professional expertise. The goal was to produce a powerful anti-Trump story, using whatever materials they could, then share it with the media (to smear Trump) and the FBI (to launch a major investigation and ensnare Trump). Ideally, the campaign’s involvement would be hidden, removed from the damning report by several layers of lawyers, opposition researchers, camp followers, and flacks.
To provide that insulation, the campaign used attorney Marc Elias, then at Perkins Coie law firm in Washington (where the recently indicted Michael Sussmann was a colleague), to hire an opposition-research firm, Fusion GPS. That firm, headed by former reporters Glenn Simpson and Peter Fritsch, in turn, hired Steele, a Brit who had formerly worked for his country’s intelligence services, to produce the damning dossier. To translate some Russian materials, Fusion GPS hired Nellie Ohr, whose husband, Bruce, learned how biased Steele was and told the FBI to treat Steele and his information warily.
Bureau agents ignored that early warning and all the others. They quickly learned Steele’s material was a mirage, thanks to their interviews with Danchenko. They also confirmed that Steele’s dossier depended on Danchenko, so its claims of “Russian sourcing” were false. By interviewing Danchenko’s own sources, they learned that their third-hand statements, which were used in the dossier, were mainly rumors and “bar talk.”
The prosecutorial team assembled by Robert Mueller should have known all this, too. They had complete access to this exculpatory FBI material on day one and ignored it. A year and a half later, when Mueller himself finally testified before Congress, he didn’t even know what Fusion GPS was. By that point, Mueller seemed to have genuine difficulty remembering the details of his own investigation. His team of attorneys had no such excuse. Hired by Mueller’s top deputy, Andrew Weissmann, they were among the country’s sharpest and toughest prosecutors — and the most partisan. The more Durham uncovers, the worse the Mueller team will look.
Reviewing this evidence, Kimberly Strassel of the Wall Street Journal has concluded the Steele dossier is misnamed. It should be called the “Clinton dossier,” she says, since Hillary commissioned it, paid for it, and had her aides feed it to the media, the State Department, and the FBI. It was a full-scale disinformation campaign — coherent, well-organized, and well-funded. It was rotten to the core.
The question now is whether John Durham can find enough evidence to charge the ones who planned and executed it. The charging documents he filed for Danchenko and Sussmann are far more extensive than the necessary minimum. They suggest that Durham has compiled extensive evidence about a broader conspiracy. Will he settle for the capillaries now that he has the jugular in view?