Global Trade Crashes Back To “Very Old Normal”

“Get used to it” is the message from Goldman Sachs when it comes to the collapse in global trade

What if the last 30 years of exuberant world trade growth was the ‘outlier’ and we are now reverting to the pre-Greenspan normal?

As Goldman’s Goohoon Kwon explains, a low trade beta may be normal:

Finally, another explanation for the trade slowdown is that it simply represents a return to normal.


Historical trade data show that the global trade beta was slightly higher than 1 in the early 1950s before rising gradually due to a series of extraordinary events. In the 1960s-1980s, it rose to around 1.5, boosted by multilateral efforts for trade reforms, which reduced average tariffs from 35% in 1947 to 6.4% at the start of the of the Uruguay Round (1986-94) of global trade negotiations. Thereafter, the breakup of the Soviet Union enabled global trade to expand rapidly in the 1990s, and the WTO entry of China in 2001 helped sustain the trade beta at around 2 in the 2000s.


There is therefore an argument that a series of largely one-off factors drove the trade beta to unusually high levels.

And as Goldman warns, there is limited upside to global trade from here…

Given these structural forces, the outlook for global trade remains weak in our view, though it might rebound somewhat in the short term. Asian trade is likely to recover moderately in coming years, helped by the eventual dissipation of capacity overhangs in China and reductions in internal imbalances in the economy. And further trade liberalization, including in services, presents upside for global trade. However, the restructuring of overcapacity sectors seems to be proceeding slowly so far in Asia, as reflected in low and still-falling capacity utilization in China and Korea. Moreover, the current political backdrops in the major economies suggest that another major push for trade liberalization might be off the table, at least for now.

So don’t blame Trump… this is systemic.

via Tyler Durden

Foreign Policy Magazine Sees Through the Gaffes to Gary Johnson’s Smart, Popular Foreign Policy Vision

Libertarian Party presidential hopeful Gov. Gary Johnson may seem less than erudite when specific targeted questions about foreign hotspots and foreign leaders are dropped on him on live TV. Still, he has an overall foreign policy vision that has impressed even the foreign policy mavens at Foreign Policy magazine.

There, Emma Ashford provides some useful context on Johnson’s foreign policy acumen, focusing not on minutia but on the importance of principles.

She first points out, as Anthony L. Fisher did first here at Reason, that Johnson is far from unique in making ignorant-sounding gaffes about foreign policy. And Ashford notes that:

the foreign-policy approach offered by the Johnson-Weld campaign is not only a compelling alternative to the current orthodoxy, but is increasingly popular among Americans. A more restrained approach to foreign policy would see the United States involved in fewer unnecessary conflicts around the world, and a much stronger emphasis on diplomacy and other non-military solutions to global problems.

In contrast to Clinton’s liberal interventionist approach, it would avoid getting bogged down in civil wars like Libya and Syria. In contrast to Trump’s curiously aggressive isolationism, a restrained foreign policy sees trade as a positive, security-enhancing factor.

She’s exactly right that that is what an intelligent, balanced outside observer should understand and consider about the Libertarian foreign policy option. But she is also right that the salesmen the Party picked need to up their game:

in order to make a coherent case for restraint in America’s foreign policy, you have to explain why it will work better. Johnson, it turns out, is generally correct in his approach to Syria: U.S. intervention to alleviate suffering, in Aleppo or elsewhere, is unlikely to work and may well make the situation worse. ….But without knowledge of detail, he struggles to explain why.

Ashford pulls together some of the facts showing that, rather than a punchline, Libertarian foreign policy should be a great political selling point:

Polling throughout the election campaign suggests that many of these ideas resonate with voters. In one recent Chicago Council survey, only 27 percent of Americans believed that the United States does too little around the world, while 41 percent of respondents think the United States does too much. More than half of respondents think that other countries should solve their own problems rather than relying on the United States.”

Indeed, it’s likely that some of Johnson’s strongest bases of support come from his foreign policy leanings. Polls show that 36 percent of active-duty troops, many of whom have witnessed first-hand the foreign policy follies of the last decade, intend to vote for Gary Johnson, while 29 percent of millennials — a generation with a strong tendencies towards restraint — are planning to vote for him.

The Foreign Policy writer’s takeaway for Johnson is similar to Matt Welch’s here: that he has a powerful and resonant foreign policy message, and should try harder in the future to not give opponents or the general public a cheap, easy reason to doubt that.

from Hit & Run

The Situation In Syria Is Very, Very Dangerous

Submitted by Mike Krieger via Liberty Blitzkrieg blog,

In case you haven’t been paying attention, the recent Syria ceasefire lasted barely a week. While all sides engaged in the conflict were accusing the other of violating the agreement from the beginning, it really unraveled when U.S. forces bombed Syrian government forces, killing at least 62.

As CNN reported at the time:

Hours after US-led coalition airstrikes reportedly killed dozens of Syrian troops, the US and Russian ambassadors to the United Nations chastised each other outside an emergency Security Council meeting.


The strike occurred Saturday in an eastern part of Syria that is not a part of a delicate and nearly week-old ceasefire. The US military said it was targeting ISIS militants and if it hit Syrian troops, it was an accident.


Russia and Syria said the strikes prove Washington and its allies are sympathetic to ISIS.


The Russian military said 62 Syrian soldiers were killed near Deir Ezzor Airport, according to state media. The UK-based Syrian Observatory for Human Rights put the death toll at 83 and said at least 120 soldiers were wounded.

A fews day after this, Syrian forces launched an attack on the city of Aleppo, and we now find ourselves in an extraordinarily dangerous situation.

Reuters reports:

Obama administration officials have begun considering tougher responses to the Russian-backed Syrian government assault on Aleppo, including military options, as rising tensions with Moscow diminish hopes for diplomatic solutions from the Middle East to Ukraine and cyberspace, U.S. officials said on Wednesday.


The new discussions were being held at “staff level,” and have yet to produce any recommendations to President Barack Obama, who has resisted ordering military action against Syrian President Bashar al-Assad in the country’s multisided civil war.


But the deliberations coincide with Secretary of State John Kerry threatening to halt diplomacy with Russia on Syria and holding Moscow responsible for dropping incendiary bombs on rebel areas of Aleppo, Syria’s largest city. It was the stiffest U.S. warning to the Russians since the Sept. 19 collapse of a truce they jointly brokered.


But the heavy use of Russian airpower in Syria has compounded U.S. distrust of Russian President Vladimir Putin’s geopolitical intentions, not only in the 5-1/2 year civil war, but also in the Ukraine conflict and in what U.S. officials say are Russian-backed cyber attacks on U.S. political targets.


The U.S. officials said the failure of diplomacy in Syria has left the Obama administration no choice but to consider alternatives, most of which involve some use of force and have been examined before but held in abeyance.


These include allowing Gulf allies to supply rebels with more sophisticated weaponry, something considered more likely despite Washington’s opposition to this until now. Another is a U.S. air strike on an Assad air base, viewed as less likely because of the potential for causing Russian casualties, the officials told Reuters, speaking on condition of anonymity.

And now we have the latest escalation:


If full fledged war breaks out with Russia, it’s very likely to begin in Syria. The only good news here is I doubt Obama will begin any major escalation with only a few months left in his Presidency.

The bad news is that if Hillary Clinton is elected President, all hell is likely to break loose in short order.

I outlined my reasoning for this forecast in the following posts:

More Troubling Evidence That Hillary Clinton Will Start WW3

More Troubling Evidence That Hillary Clinton Will Start WW3 – Part 2

Is the Syrian War About to Experience a Major Escalation?

via Tyler Durden

‘Big One’ Looms As Quake Swarm Strikes Southern California “In The Worrry Zone”

Just five months ago, experts warned that “the springs on the San Andreas system have been wound very,
very tight. And the southern San Andreas fault, in particular, looks
like it’s locked, loaded and ready to go.”
And now, as The LA Times reports, a rapid succession of more than 200 small earthquakes began rupturing near Bombay Beach, at the southern tip of the San Andreas fault, continuing for more than 24 hours.

The temblors were not felt over a very large area, but, as The LA Times continues, they have garnered intense interest — and concern — among seismologists.

It marked only the third time since earthquake sensors were installed there in 1932 that the area had seen such a swarm, and this one had more earthquakes than the events of 2001 and 2009.


The quakes occurred in one of California’s most seismically complex areas. They hit in a seismic zone just south of where the mighty San Andreas fault ends. It is composed of a web of faults that scientists fear could one day wake up the nearby San Andreas from its long slumber.



The San Andreas fault’s southernmost stretch has not ruptured since about 1680 — more than 330 years ago, scientists estimate. And a big earthquake happens on average in this area once every 150 or 200 years, so experts think the region is long overdue for a major quake.

The swarm actually increased the likelihood of a much more major quake in Southern California, at least temporarily.

According to the U.S. Geological Survey, for the seven-day period following Tuesday, the chances of a magnitude-7 or greater earthquake being triggered on the southern San Andreas fault are as high as 1 in 100 and as low as 1 in 3,000. The chances diminish over time.

Experts said it’s important to understand that the chance of the swarm triggering a big one, while small, was real.

“This is close enough to be in that worry zone,” seismologist Lucy Jones said of the location of the earthquake swarm. “It’s a part of California that the seismologists all watch.”

via Tyler Durden

Jerry Brown Just Signed a Tough-on-Rape Bill That’s So Bad, Even Feminists Hate It

Brock TurnerCalifornia Gov. Jerry Brown signed into law Assembly Bills 2888 and 701 on Friday, which create mandatory minimum sentences for people convicted of sex crimes.

The bills came in response to the outcry over Brock Turner’s lenient sentence. As I’ve argued previously, that outcry was largely justified—Turner did get a comparatively light prison sentence, though the fact that he has to register as a sex offender is no small thing.

But mandatory minimums are a terrible policy in general. Indeed, there’s a growing bipartisan consensus among policy experts and politicians on the right and the left that reforming mandatory minimum sentencing is something that needs to happen if the country is ever going to fix its costly and immoral mass incarceration problem.

The California bill flies in the face of this consensus. That’s not just my opinion: as Elizabeth Nolan Brown notes, even many leftist-feminists are vocally opposed to mandatory minimums for sex crimes because there’s no evidence they reduce crime.

In a letter explaining why he was signing the bill, Gov. Brown insisted that “as a general matter, I am opposed to adding more mandatory minimum sentences. Nevertheless, I am signing AB 2888, because I believe it brings a measure of parity to sentencing for criminal acts that are substantially similar.”

The new law specifically prohibits judges from letting perpetrators get off with probation if they have been convicted of sexually assaulting an unconscious or intoxicated person. While this may have produced a better outcome in the Turner case, forcing judges to send more people to prison is bad public policy. It will exacerbate all kinds of problems with the criminal justice system.

from Hit & Run

New Poll Puts Mayor Of Cormorant, Minnesota Ahead Of Hillary & Trump

Submitted by Charles Hugh-Smith via OfTwoMinds blog,

For goodness sakes, people–ignore the rigged polls and vote for the candidate you believe in.

A new national poll has found that 54% of potential voters favor the mayor of Cormorant, Minnesota over either Hillary Clinton or Donald Trump. The poll surveyed a spectrum of potential voters and has a statistical margin of error of -3/+3%.

Here is the mayor of Cormorant, Minnesota: Duke, a nine-year-old Great Pyrenees. Duke has been re-elected twice, most recently at the end of August.(source: Zero Hedge)

The point being made here is polling is easily gamed. First, pick your goal: you want the poll to find Duke is favored above Hillary and Trump.

Next, select groups that are likely to vote in line with your goal. For example, start with subscribers to the Bark, Dog Fancy and other dog-owner magazines.

Then select leading questions:

1. If you could select a candidate other than Hillary Clinton or Donald Trump, would you do so?


2. Would you be willing to take a chance on an elected official from small-town America, despite his/her lack of national experience?


3. Given that more Americans believe in BigFoot than believe the mainstream media is fair and accurate, are you open to an "outsider" candidate for the presidency?


4. Given the choice between the twice-re-elected mayor of Cormorant, Minnesota, and either Hillary Clinton or Donald Trump, who would you likely vote for?

And that's how you rig a poll to find that more Americans would vote for Duke the mayor than for either Hillary or Trump.

Please read this 17-page PDF explanation of a recent poll carefully and tease apart how it was carefully engineered to get the desired result. OK, I didn't want to invest all the time and energy, either, but fortunately for us, correspondent Mark G. has done the heavy lifting.

Ipsos Poll Conducted for Reuters (17 page PDF)

Here is Mark's analysis:

"This one with Hillary +6% is a good example.


First, the sample on page two is very uninformative.


Democrats 752

Republicans 570

Independents 216

Total 1538


These affiliations don't sum to the stated survey size (1705), or the number of registered voters (1411), or "likely voters" (1041). We can note the political affiliations recorded exceed the number of those registered. How you can be affiliated without registering…? If this were the case, why were all 1,705 in the survey assigned to a group?


However, of the political affiliations that are disclosed, Democrats were 48.89% (752/1538) = 0.4889. in other words, 12 to 16 points higher than actual identification in the US population.


This is the composted manure these "polls" consist of now.


I think their sole purpose at this point is to game the poll averages and thus support a predetermined narrative in the MSM."

Thank you, Mark. Dear reader, do you notice the similarity of these polls to the rigged numbers for unemployment, median household incomes and inflation that I have dismantled?

Fun with Fake Statistics: The 5% "Increase" in Median Household Income Is Pure Illusion (September 19, 2016)

What's the Real Unemployment Rate? That's the Wrong Question (September 14, 2016)

Revealing the Real Rate of Inflation Would Crash the System (August 3, 2016)

Inflation Hidden in Plain Sight (August 2, 2016)

The Burrito Index: Consumer Prices Have Soared 160% Since 2001 (August 1, 2016)

How Reuters "Tweaked" Its Latest Poll (Again) To Show A Clinton Lead (Zero Hedge)

Polls engineered to manage perceptions are of a piece with statistics engineered to manage perceptions: both are designed to convince us that the status quo is unstoppable and everything is fine–really really fine.

This is what the status quo has devolved to: since it can't/ won't fix the real problems, it settles for perception management to keep the elites in power. I've laid bare this devolution in several books:

Why Things Are Falling Apart and What We Can Do About It

Why Our Status Quo Failed and Is Beyond Reform

If the status quo is so very very fine, why do I envy the township of Rabbit Hash, Kentucky, which had an unmatched spectrum of choices in their mayoral race?

“In Rabbit Hash, Ky., a Border Collie named Lucy Lou defeated 10 dogs, a cat, a possum, a jackass and even one human to become the town’s third animal mayor– all dogs–since 1998, says Bobbi Kayser, the current mayor’s owner.”

It's a tough call, but I think my vote goes to the possum. I like the way he/she makes the rounds at night, consuming all the left-over dog and cat food; you have to admit, that is a useful service to the town's cleanliness and hygiene.

For goodness sakes, people–ignore the rigged polls and vote for the candidate you believe in: Hillary, Trump, Stein, Johnson, or write in Duke or Lucy Lou, if your state allows write-ins.

As near as I can tell, Duke will not declare war on Russia or ensnare the nation in yet another "war of choice," and Lucy Lou's even willing to work with cats. What more can you ask for?

Granted, Duke and Lucy Lou are underdogs, but don't count them out just yet.

via Tyler Durden

Congressman: DEA May Extend Comment Period on Kratom Ban Amid Public Pressure

Amid pressure from the public and Congress, the Drug Enforcement Administration (DEA) may delay it’s decision to put the subtance Kratom on the federal government’s list of Schedule I drugs and allow for an extended public comment period, according to a U.S. Congressman who met with the acting DEA administrator on Friday.

Democratic Rep. Mark Pocan of Wisconsin met with acting DEA Administrator Chuck Rosenberg over the proposed ban on Kratom—a leaf from Southeast Asia that has been used for pain-relief for centures—that was expected to go into effect on Friday. “It appears the DEA will instead open up a modified comment process before a final decision will be made,” Pocan’s office said in a statement. “While we do not know the exacting timing or details of the new comment period for kratom, Acting Administrator Rosenberg assured Congressman Pocan that we will find out more in the near future.”

On Aug. 30, the DEA announced it would be temporarily placing Kratom on the list of Schedule I drugs “to avoid an imminent hazard to public safety.” As Reason’s Jacob Sullum explained, it was a bad and totally predictable decision:

Kratom is a pain-relieving leaf that acts as a stimulant or a sedative, depending on the dose. But the most important thing to know about kratom, if you want to understand the DEA’s reasoning, is that it’s not from here. Kratom comes from a tree, Mitragyna speciosa, that is native to Thailand, Malaysia, Indonesia, Myanmar, and Papua New Guinea. It has gained a following in the United States only recently, hawked by online merchants and head shops as an herbal medicine, “dietary supplement,” or legal high. As far as the DEA is concerned, the fact that people in other countries have used kratom for centuries to ease pain, boost work performance, and wean themselves from opiate addiction counts for nothing. All the DEA needs to know is that our shores have been invaded by a foreign drug that is increasingly popular among Americans as a home remedy and recreational intoxicant. From the DEA’s perspective, that is intolerable, regardless of the drug’s hazards or benefits.

News of the impending ban infuriated U.S. consumers of Kratom, who have lit up phone lines on Capitol Hill to complain. Members of Congress have responded in suit. On Friday, Democratic Senators Cory Booker, Kirsten Gillibrand, and Ron Wyden sent a letter to the DEA espressing concern that the agency’ did not leave “a sufficient amount of time for public comment on a drug that, according to recent scientific studies, may actually be an effective substance to help combat the opioid epidemic.”

“While we understand there are times when public safety demands that your agency act quickly on scheduling decisions, we believe that in this instance additional time for the scientific community, public health officials, and other members of the public to comment is warranted and may prove to be in the interest of public health and safety,” the senators added. “Since 1980, our federal prison population has exploded by nearly 800 percent. This increase is a result of draconian drug policies that continue to place nonviolent drug offenders behind bars. We should not, in haste and without adequate opportunity for comment and analysis, place substances in categories that may be inconsistent with their medical value and potential for abuse.”

from Hit & Run

A Furious Rick Santelli Rages At Janet’s Jawboning: “Please, Don’t Help Anymore”

CNBC’s Rick Santelli turned it up to ’11’ today as The Fed’s Janet Yellen joined the world’s central planners in suggesting intervention directly in the stock markets would ‘help’ the average joe.

Santelli exclaims “don’t help anymore!!” How has any of their ‘help’ helped in the last 7 years?


“Central banks buying in the [stock] market… you really think that’s a good idea?” Raging about picking winners, buying Deutsche Bank, and keeping stocks “steady” around elections, the veteran pit trader exploded, “is that the world we really want to live in?”


The Fed’s buying stocks “will completely and utterly and in every possible way destroy and value in the marketplace…”

3 minutes of brutal reality slapped into the face of a ridiculous rumor-driven day…

via Tyler Durden

Illinois Suspends “Billions Of Dollars” Of Investment Activity With Wells Fargo

Just when you thought you could relax into the weekend knowing that the US (and world) banking system was ‘fixed’ again thanks to a rumor from French press, Wells Fargo take another hit. Following California’s decision to sever all banking ties with the bank, Illinois State Treasurer Michael Frerichs has confirmed his state’s plans to suspend billions of dollars of investment activity with Wells Fargo.

As Bloomberg reports,

  • News conference will be held on Monday at 10:00 a.m. at the James R. Thompson Center in Chicago to share details about the moratorium
  • Treasurer’s office comments in a statement


We estimate the score now to be Wells Fargo 0 – 4 Elizabeth Warren (clawbacks, soldier car repo fines, California sanctions, and now Illinois suspending banking)

via Tyler Durden

Fall TV Season Gets Time Travel Type Shows Based on Older Shows and Films: New at Reason

If you like time travel shows, shows that look like time travel shows, and shows based on older shows and films, this could be the TV season for you.

Glenn Garvin reviews five of them:

In 1966, when CBS unveiled a show called It’s About Time in which a pair of astronauts pierce the space-time continuum and discover that the human race is descended from a couple of cavemen played by Joe E. Ross and Imogene Coca, the old Philadelphia Bulletin was so unhinged that it called for congressional hearings. While I certainly share the conventional civic wisdom that TV critics should have subpoena power, not to mention droit du seigneur, I believe the Bulletin was a little bit ahead of the curve. A congressional investigation of time-travel shows wasn’t probably warranted until 1992, when the characters of NBC’s Qauntum Leap jumped back to the 1950s to put the idea of real estate into the head of a 12-year-old Donald Trump. If that didn’t call for a “Have you no decency, sir?” moment…

Anyway, I wonder what the folks at the Bulletin would have made of television this week, which is mostly one long orgy of time travel, both literal and metaphorical. As William Faulkner might have said if he’d had any Nielsen smarts, the past is never dead, it’s not even in reruns yet.

View this article.

from Hit & Run