Six Narratives On The Ascendancy Of Trump

Submitted by Charles Hugh-Smith via OfTwoMinds blog,

Perhaps the masses have (finally!) reached the point where the pain of maintaining the status quo now exceeds that of breaking it.

A remarkably diverse array of "explanations" of Donald Trump's presidential election victory have been aired, representing both the conventional political spectrum and well beyond.

Let’s start with the conventional mainstream media “explanations”:

 

#1: Trump was elected by intolerant Americans, i.e. “deplorables” who are intolerant of immigrants, Muslims, women’s rights, gays, etc. while being overly attached to firearms and the Christian religion.

This sort of broad-brush slander is emotionally appealing to those who lost the election, as it enables the losing party to claim the high moral ground. (It’s also classic propaganda, a topic Chris addressed in a recent series.) But it overlooks the many Progressives who voted for Trump but did not dare announce their choice to their hysterically intolerant Democratic loyalist friends. For example, consider this female voter’s account: Liberals Should Stop Ranting And Seek Out Silent Trump Voters Like Me.

This "explanation", though satisfying in terms of self-righteousness, has no credible explanatory value.

 

#2: Trump didn’t win the election, Hillary Clinton lost it.

This “explanation” constructs a narrative from polling data: African-American voters did not turn out for Hillary in the same high percentages as they did for President Obama, a surprising number of higher income households voted for Trump, etc.  If Hillary had drawn the expected percentages of voters, she would have won.

This “explanation” explains nothing, as it ignores the larger issues that drove voters to vote or not vote.

 

#3: The unprotected Americans (to use Peggy Noonan’s term) who have seen their incomes and security decline in the age of neoliberal globalization voted for Trump to reject globalism, unfettered immigration and free trade.

This narrative is ably dissected in this 5-part series from Spiegel.de: Inequality, Market Chaos and Angry Voters: A Turning Point for Globalization

In the U.S. media, this narrative is typically characterized as a sports event: the “losers” of neoliberal globalization struck back at the “winners.”

This explanation draws upon well-established economic trends: sharply rising inequality, the hollowing out of the Rust Belt and rural economies in “flyover” America, etc.

 

#4: Trump’s victory is another manifestation of the global revolt against elites.  

Defenders of the status quo—broadly speaking, neoliberalism’s financial “winners” and the ruling elites—are quick to equate outbreaks of populism with the dreaded scourge of fascism. In the defenders’ accounts, the rightist, nationalistic populism of the 1930s led directly to fascism.

The article titles in the December 2016 issue of Foreign Affairs summarize the conventional characterization of populism as reactionary and dangerous–never mind that populism can also be leftist (look at the anti-globalist movement) or largely apolitical:

Populism on the March: Why the West Is In Trouble

Trump and American Populism: Old Whine, New Bottles

Populism Is Not Fascism, But It Could Be a Harbinger

There are few if any positive words for populist movements in these essays, and precious little recognition of populism’s potential to upend a grossly corrupt, inefficient and self-serving global elite—an elite that richly deserves to be cashiered.

While the mainstream media grudgingly admits that the ruling elites paid little attention to soaring income and wealth inequality, or to globalism’s “losers,” the answer to defenders of the status quo is the usual grab-bag of policy tweaks that leave the ruling elites and their media apologists firmly in charge.

 

#5: Trump has been set up as the fall-guy for an economy that is teetering on the edge of recession or even depression. The coming recession/depression will discredit Trump and the populist/nationalist movement, setting the stage for the neoliberal globalists to return triumphantly to power in four years.

While many of us wouldn’t put such nefarious scheming past the globalist elites, this doesn’t quite align with the reality that virtually everyone, mainstream or alternative, left or right, dismissed Trump’s presidential campaign as a media-circus sideshow staged by a narcissist.

Since virtually no one expected him to win when he entered the race, why would globalists support him when their candidate, Hillary Clinton, was a shoo-in? Rather than pick him as a fall-guy for an economic depression, the claim that he was picked by globalists as an easy target for defeat (another alternative media narrative) makes more sense.

But the reality is nobody could predict Trump’s victory, and theories based on the idea that he was set up as a fall-guy presume the globalists rigged the election for their candidate (Hillary) to lose.  Why install a “dangerous” populist when you could install your candidate?

 

#6: The Clinton campaign was a “quiet coup” of corrupt elites intent on solidifying the merger of private-sector/philanthro-capitalist pay-for-play and government functions.  A “counter-coup” staged by elements of the Deep State (i.e. the unelected permanent government that remains in power regardless of which party is in office) foiled Clinton’s quiet coup.

As farfetched as this might sound, Clinton insider Sidney Blumenthal accused the FBI of staging a “coup” by reopening the investigation into Clinton’s emails.

While I didn’t use the inflammatory word “coup,” I have outlined the possibility that more forward-looking elements of the Deep State concluded neoliberalism, neoconservative intervention (i.e. endless wars of choice) and institutionalized pay-to-play corruption threatened the security of the nation and had to be thwarted at the ballot box: Why the Deep State Is Dumping Hillary.

While there is little public evidence of this power struggle—the Deep State doesn’t operate in the public gaze—there are plenty of circumstantial clues that the Deep State is not a monolith of neocon neoliberalism.

 

Conclusion (to Part 1)

Can we summarize these narratives (some competing, some overlapping) in any instructive fashion? I think we can roughly divide them into three categories:

1. Moral claims: the neoliberal “progressives” are morally superior to the “deplorables” and so the neoliberals (the remarkably intolerant “tolerants”) deserved to win on moral grounds; alternatively, the pay-to-play Clinton camp is ethically bankrupt and its claims to the moral high ground are hypocritical.

2. Elite machinations: insiders either set up Trump as the easy-to-beat opponent or as the fall-guy for the coming depression; alternatively, the Deep State was split into two camps, the neocons who backed Hillary and the insurgents who saw Hillary as a threat to national security.

3. Structural economic/social issues: rising wealth/income inequality and the decline of the bottom 95% finally had political consequences.

 

In Part 2: Why The Ruling Elite Are Becoming Frightened, we examine a hybrid argument that synthesizes these categories into a single narrative that explains what is likely truly going on: The masses have (finally!) reached the point where the pain of maintaining the status quo now exceeds that of breaking it. A People's Coup has been set in motion, of which the election of Trump is just an early example of the unexpected and jarring surprises that lie ahead.

What will this coup look like? Will it succeed?

Click here to read Part 2 of this report (free executive summary, enrollment required for full access)

This essay was first published on peakprosperity.com, where I am a contributing writer.

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Carrier Issues Statement On Trump Deal: “Incentives Offered Were An Important Consideration”

In the first major political accomplishment by Donald Trump, yesterday the Trump team announced that he had reached a deal with Carrier to keep its air conditioning plant in Indiana, and prevent an outsourcing of some 1000 jobs to Mexico. Understandably, Trump wasted no time to deliver the good news to his Twitter followers.


However, shortly after the deal, questions emerged as to what the motive behind Carrier’s decision may have been. Was Carrier pressured into doing a deal that was not in the best interest of shareholders of its parent, United Technologies? Was strongarming involved? Did Trump make a major concession as part of a political deal or did Carrier simply bend over backwards to appease the President-elect?

We now know the answer: moments ago the company issued a statement in revealed that that real motive for the change in tactic was that “the incentives offered by the state were an important consideration” and quickly added that “this agreement in no way diminishes our belief in the benefits of free trade and that the forces of globalization will continue to require solutions for the long-term competitiveness of the U.S. and of American workers moving forward.”

What happens next? As some have suggested, it is a distinct possibility that this outcome may in fact backfire, and in order to extract the same “state incentives”, US companies will proceed to announce comparable outsourcing arrangements in hopes that the Trump administration will approach them next in order to avoid the replacement of US workers with Mexcians, or other foreign nationals. It remains to be seen how the Trump administration will respond to such pressure from domestic corporations who may end up using their US workers as leverage to extract more concessions. .

Below is the full Carrier statement Regarding Indianapolis Operations

30 November 2016

Carrier has had very productive conversations in recent days with President-elect Trump and Vice President-elect Pence.

 

We have negotiated an agreement with the incoming administration that we believe benefits our workers, the state of Indiana and our company.

 

We are announcing today that Carrier will continue to manufacture gas furnaces in Indianapolis, in addition to retaining engineering and headquarters staff, preserving more than 1,000 jobs.

 

Carrier will also designate its Indianapolis manufacturing facility as a Center of Excellence for gas furnace production, with a commitment to making significant investments to continue to maintain a world-class furnace factory.

 

Today’s announcement is possible because the incoming Trump-Pence administration has emphasized to us its commitment to support the business community and create an improved, more competitive U.S. business climate. The incentives offered by the state were an important consideration.

 

This agreement in no way diminishes our belief in the benefits of free trade and that the forces of globalization will continue to require solutions for the long-term competitiveness of the U.S. and of American workers moving forward.

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UBS Warns “One-Sided” Sentiment Is Pure Contrarian Indicator, Upside Limited

In their latest technical analysis report, UBS' Michael Riesner and Marc Muller warn that, it’s been a long time since we had such a relatively clear and one-sided picture on the sentiment side, which we can just describe as tactical contrarian and too complacent.

With the vertical post-election rally, the reflation trade with the relevant consequences on sector performance got a quite obvious and consensual theme. It caused significant spikes in our sentiment work and a big decline in the put/call ratio as well as in the market volatility, as the basis for a relatively high SKEW/VIX ratio, which has been moving into a contrarian sell territory.

Both the AAII Bullish Consensus and the Investor Intelligence Bullish Consensus have reached 50%, which is contrarian.

The CBOE put/call ratio has been deteriorating to contrarian low levels, which means there are no more hedges in the market.

Again, this does not necessarily mean that the market has to break down tomorrow. It just means that the market is vulnerable for any kind of negative surprise, from wherever it comes.

Furthermore interesting is the big decline in the neutral camp of US retail investors, where the number of neutral/undecided investors has been deteriorating to the lowest level since September 2014, which was prior to the washout into October 2014 before resuming the underlying bull trend.

Translated, it means that retail investors have a very high conviction, which makes the high bullish consensus to a pure contrarian indicator.

Conclusion: Our sentiment work has reached contrarian territory, which minimum limits further upside and more likely leaves the market vulnerable for a pullback, which can last several weeks to bring down the sentiment towards levels that have a better risk/reward for calling/expecting the next bigger tactical rally.

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How Bitcoin Is Undermining Socialism in Latin America

“People are driven by their self-interest [which is why] they’re always going to use the best tool [at their disposal],” says bitcoin entrepreneur Rodrigo Souza. “And that’s why I think technology is going to drive us to a freer society.”

Souza has played an important role in the growing popularity of bitcoin in Latin America. In addition to being an outspoken libertarian and a popular YouTube personality, he’s the founder and CEO of BlinkTrade, which operates the largest bitcoin exchanges in Vietnam, Pakistan, Venezuela, Brazil, and the second largest in Chile.

In the U.S., bitcoin is used mainly by libertarians and tech geeks, but, as Souza explains, it’s catching on in Latin America solely for practical reasons. Venezuelans are using bitcoins to buy food and medicine from abroad, routing around the government capital controls that make it virtually impossible to spend government-issued bolivars outside the country. In Brazil, bitcoin users are escaping tariffs that can run as high as 60 percent.

In our latest podcast, Souza and I discuss how bitcoin is being used in Venezuela and Brazil, Souza’s personal experience with inflation in Latin America, his libertarianism, and more.

Souza is also featured in my recent article, “The Secret, Dangerous World of Venezuelan Bitcoin Mining” from our January 2017 issue, and the video, “3 Ways Bitcoin Is Promoting Freedom in Latin America.”

Click below to listen to that conversation—or subscribe to our podcast at iTunes.

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A Tale Of Two Job Markets (Or Why The Elites Couldn’t See A Trump Win Coming)

Via The Economic Cycle Research Institute,

With the economic expansion in its eighth year, over 15 million jobs added since the post-recession low in employment, and a steady decline in the jobless rate from its recessionary high of 10% to under 5%, many mainstream economists were convinced that the U.S. economy was in good shape. That misconception, at least where jobs are concerned, is a key reason so many were stunned by this month’s election verdict.

Looking beneath the headlines, it is important to appreciate how unevenly distributed the job gains have been during the current business cycle. We pointed out nearly five years ago that, over the first two years of the jobs recovery, Whites accounted for less than 59% of the job gains, even though they made up over 81% of the labor force. Meanwhile, Blacks and Hispanics, who made up “about a quarter of the labor force, accounted for around five out of every eight jobs added” (USCO, February 2012).

Last month, we again emphasized the skewed nature of this jobs recovery, noting that, “for seven long years, the majority of less-educated non-Hispanic White adults has not been employed. No wonder there is such angst in the lead-up to this presidential election” (USCO Essentials, October 2016).

A striking picture of this lopsided reality is evident from the shares of the total job gains since the November 2007 pre-recession peak in employment. As the chart shows, of the five-million-plus net jobs added since that high-water mark nine years ago, some 56% went to Hispanics (rightmost green bar), about quadruple their 14% share of the labor force at the time (rightmost blue bar). Meanwhile, 29% of those job gains went to Asians, i.e., about six times their 5% share of the labor force (second set of bars from left). Moreover, 25% of those job gains went to Blacks, i.e., more than double their 11% share of the labor force (third set of bars from left).

In sharp contrast, Whites, who made up over 81% of the labor force in 2007 (leftmost blue bar) accounted for negative 9% of the net job gains (red bar). While the percentage shares for these four groups add up to more than 100% because White Hispanics are double-counted as both White and Hispanic, and Black Hispanics are double-counted as both Black and Hispanic, the reality is stark. Whites actually have fewer jobs than nine years ago, while Hispanics, Blacks and Asians together gained all of the net jobs added, and more.

Part of the reason may be that these jobs, predominantly in services, were created in metropolitan areas, rather than in rural areas and small towns where factories were shuttered as the manufacturing jobs disappeared. There is little reason to expect that those jobs will come back to those areas away from the urban centers.

Stepping back from the current outlook, as students of the business cycle, we are well-positioned to discern what is cyclical and, by elimination, what is not cyclical but structural. Digging deep into data that do not conform to cyclical patterns, we have been able to promptly highlight structural anomalies that economists wielding fancy macroeconomic models overlook for extended periods. The details of the data, properly scrutinized, have long revealed the sources of anger and despair with the way the 21st century has sorted winners and losers.

President-elect Trump’s proposed tax cuts, along with major infrastructure spending, could well invigorate business activity, but are unlikely to take effect for at least a year or so. Thus, they are unlikely to affect the economy’s prospects over the coming months. To that extent, our cyclical outlook remains unchanged.

Of course, a reduction in regulations could have a nearer-term impact. The President also has the power to make major changes with regard to trade and tariffs in relatively short order. All in all, these could have positive or negative effects, though it is too soon to tell. But in any case, we will keep a close eye on our cyclical leading indexes for early objective indications of a shift in the outlook.

In any event, it will be difficult to change the plight of Mr. Trump’s supporters from outside the metropolitan areas. They remain at the mercy of powerful winds of structural change that continue to sweep the globe.

 

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A Tale Of Two Job Markets (Or Why The Elites Couldn’t See A Trump Win Coming)

Via The Economic Cycle Research Institute,

With the economic expansion in its eighth year, over 15 million jobs added since the post-recession low in employment, and a steady decline in the jobless rate from its recessionary high of 10% to under 5%, many mainstream economists were convinced that the U.S. economy was in good shape. That misconception, at least where jobs are concerned, is a key reason so many were stunned by this month’s election verdict.

Looking beneath the headlines, it is important to appreciate how unevenly distributed the job gains have been during the current business cycle. We pointed out nearly five years ago that, over the first two years of the jobs recovery, Whites accounted for less than 59% of the job gains, even though they made up over 81% of the labor force. Meanwhile, Blacks and Hispanics, who made up “about a quarter of the labor force, accounted for around five out of every eight jobs added” (USCO, February 2012).

Last month, we again emphasized the skewed nature of this jobs recovery, noting that, “for seven long years, the majority of less-educated non-Hispanic White adults has not been employed. No wonder there is such angst in the lead-up to this presidential election” (USCO Essentials, October 2016).

A striking picture of this lopsided reality is evident from the shares of the total job gains since the November 2007 pre-recession peak in employment. As the chart shows, of the five-million-plus net jobs added since that high-water mark nine years ago, some 56% went to Hispanics (rightmost green bar), about quadruple their 14% share of the labor force at the time (rightmost blue bar). Meanwhile, 29% of those job gains went to Asians, i.e., about six times their 5% share of the labor force (second set of bars from left). Moreover, 25% of those job gains went to Blacks, i.e., more than double their 11% share of the labor force (third set of bars from left).

In sharp contrast, Whites, who made up over 81% of the labor force in 2007 (leftmost blue bar) accounted for negative 9% of the net job gains (red bar). While the percentage shares for these four groups add up to more than 100% because White Hispanics are double-counted as both White and Hispanic, and Black Hispanics are double-counted as both Black and Hispanic, the reality is stark. Whites actually have fewer jobs than nine years ago, while Hispanics, Blacks and Asians together gained all of the net jobs added, and more.

Part of the reason may be that these jobs, predominantly in services, were created in metropolitan areas, rather than in rural areas and small towns where factories were shuttered as the manufacturing jobs disappeared. There is little reason to expect that those jobs will come back to those areas away from the urban centers.

Stepping back from the current outlook, as students of the business cycle, we are well-positioned to discern what is cyclical and, by elimination, what is not cyclical but structural. Digging deep into data that do not conform to cyclical patterns, we have been able to promptly highlight structural anomalies that economists wielding fancy macroeconomic models overlook for extended periods. The details of the data, properly scrutinized, have long revealed the sources of anger and despair with the way the 21st century has sorted winners and losers.

President-elect Trump’s proposed tax cuts, along with major infrastructure spending, could well invigorate business activity, but are unlikely to take effect for at least a year or so. Thus, they are unlikely to affect the economy’s prospects over the coming months. To that extent, our cyclical outlook remains unchanged.

Of course, a reduction in regulations could have a nearer-term impact. The President also has the power to make major changes with regard to trade and tariffs in relatively short order. All in all, these could have positive or negative effects, though it is too soon to tell. But in any case, we will keep a close eye on our cyclical leading indexes for early objective indications of a shift in the outlook.

In any event, it will be difficult to change the plight of Mr. Trump’s supporters from outside the metropolitan areas. They remain at the mercy of powerful winds of structural change that continue to sweep the globe.

 

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A Second Look At The OPEC Deal: Here’s What Can Go Wrong

Defying numerous skeptics, today’s historic OPEC decision to cut production, a first since 2009, marks a clear turning point in cartel, and especially Saudi Arabian, politics: individual country quotas have been allocated to all members, a third-party production verification process has been established, and the world’s largest crude oil producer Russia has committed to freeze production.At least, that’s what the deal looks like on paper.

For those who missed today’s fireworks, which saw oil soar as much as 10%, here are the key details.

The OPEC deal features explicit country level production adjustments that target a reduction in OPEC crude production to 32.7 mb/d, down 1.2 mb/d from October (as measured from secondary sources). Libya, Nigeria and Indonesia (an oil importer) are exempt from any adjustment and apart from Iran, the remaining country production decline is 4.6% vs. October (September for Angola). Iran’s participation, while essential to this deal, still leaves questions unanswered with the agreement allowing for a 90 kb/d increase in production when compared to October OPEC secondary sources, but requiring a 180 kb/d cut from October production when measured through direct communication. While no details were provided, non-OPEC countries are expected to join this deal with a target of reducing supply by 0.6 mb/d and Russia expected to commit to a 0.3 mb/d production cut.  While Russia embraced the deal, it made it clear it would be very slow in cutting production due to “technical issues”, and refused to explain from what level it would make the 0.3mb/d cut – Russia previously suggested it may cut from a projected budget output level for 2017, suggesting Russia won’t actually cut production at all.

OPEC and Russia have agreed to cut production to 32.5 mb/d and 0.3 mb/d respectively

The ultimate goal of the OPEC production cut is to normalize excess inventory levels but not to target outright high prices, as that would prompt a surge of shale production. As the Nigerian oil minister Kachikwu admitted in Vienna today, OPEC sees $60/bbl as the “perfect” price for oil as at this price “it would not bring too much shale oil.” As Goldman further explains, normalization of inventories is key to low-cost producers as: (1) it generates backwardation which removes hedging gains from high-cost producers and helps low-cost producers grow market share, and (2) it reduces oil price volatility which increases the valuation of the debt and equity they are issuing. In our view, the goal of normalizing inventories should however not target elevated oil prices as the flattening of the oil cost curve and the unprecedented velocity of the shale supply response would likely make such an endeavor rapidly self-defeating above $55/bbl. This is consistent with today’s OPEC press conference and official statement which focused on rebalancing the oil market and explicitly mentioned excess inventories, but not higher prices.

In other words, OPEC is hoping for higher prices, but not too high: anything above $55 defeats the purpose of today’s deal. This is the first risk, because should the latent short interest in the future trading community continue its panicked covering, there is a distinct possibility oil may spike above $55 merely on technicals, precipitating a much faster than expected arrival of shale oil. To be sure, US production has been rising for 6 of the past 7 weeks as is, however a spike in price will accelerate it notably.

* * *

Another key risk to emerge to the deal, as revealed in a statement issued moments ago by Mexican oil company Pemex, which according to Bloomberg said it isn’t planning further output cuts in 2017, in stark refutation of a comment by the abovementioned Nigerian oil minister that Mexico would cut production by 150k b/d after the OPEC deal. Earlier in the day, Nigerian Minister of State for Petroleum Resources Emmanuel Ibe Kachikwu told reporters in Vienna that Mexico is expected to reduce by 150k b/d, however this is clearly not the case. This suggests that OPEC has been parading non-OPEC production cuts without any actual verification, and since the Russian production cut will likely be mostly a myth, there is risk that the follow up meeting in Doha next week could be a material disappointment in which OPEC and non-OPEC nations (which now include Indonesia) fail to reach an agreement.

There is further risk of non-OPEC compliance. While Russia is expected to cut production by 0.3 mb/d production, Russia’s track record in participating in OPEC production cuts is mixed. It complied well in 1998 to the two proposed cuts but instead increased production in April 1999 and January 2002. As a result, Goldman’s base case remains that Russian crude oil production will be flat.

Other non-OPEC participants likely include Oman, which has stated that it would match the OPEC cut (implying a 46 kb/d cut). Other past participants to non-OPEC cuts include Mexico, which we now know will not participate, and Norway which has also stated that it would not participate this time. Kazakhstan could be another contributor although it is currently expected to increase production by 140 kb/d. As a result Goldman says that it views details on this non-OPEC 0.6 mb/d additional cut as necessary for prices to meaningfully rally from here.

* * *

Further jeopardising the deal is actual implementation. With the deal agreed to in principle and country level quotas established, focus will now shift to implementation. As Goldman explains, the deal is effective as of January and it will take three weeks of shipping data to get a sense of how well the deal is implemented, suggesting that the full upside to oil prices will likely only materialize by late January.

Looking at the last 17 production cuts (1982-2009), observed production cuts have typically come in at 60% of the announced cuts, as measured by the change in secondary source production vs. the decline announced as calculated by the difference between pre-cut production levels and the announced quota levels. Assuming the historical 60% compliance by OPEC members means the cut declines to just over 700,000 barrels from what are already record production levels.

The key to the remaining upside in oil prices will be determined by the compliance to the announced quotas

 

Historically, observed production cuts have fallen short of initial targets

* * *

Another risk emerges not on the supply but demand side. As Bank of America writes, we continue to expect annual global oil demand growth to average 1.2 mn b/d, but we are concerned about higher US interest rates and a disorderly CNY depreciation. BofA also points out what we noted above, namely that it is also possible that non-OPEC ex Russian crude oil production recovers faster than we are currently expecting. Whether it is easier regulations in the US or continued production efficiency gains, it is worth keeping in mind that technology is at the heart of this oil price war. Despite the deal that OPEC just agreed to, technological  advances will keep the members of this unlikely alliance on their toes. As a reminder, Goldman expects healthy US production growth at $55/bbl.

Goldman’s scenarios for US oil production under various annual oil prices (5% lower reinvestment rate at $45/bbl

* * *

In sum, OPEC has so far managed to fool the market, and send the price of oil surging off all time lows hit in early 2016 even as OPEC output has reached record highs, and the just concluded deal may end up eliminating just a small fraction of this excess supply. There is also risk that demand – most notably out of China – will continue to decline, delaying the so-called market equilibrium even assuming full OPEC and non-OPEC compliance. And, courtesy of Modi’s ridiculous “demonetization” attempt, India’s economic outlook is suddenly in jeopardy: should Indian oil import demand decline as a result, OPEC will have to double its daily production cuts just to catch up to the drop in global demand.

In any case, it will take at least 3-4 months – some time in February – before the world has a sense of how OPEC is implementing and supervising its own production cuts, even as non-compliant non-OPEC members, especially shale, scramble to steal OPEC’s market share. Perhaps the best forecast at this point is that the price of oil will remain rangebound between $45 and $55. Below that and more jawboning will emerge; above it and concerns about shale output will dominate.

Finally, it is safe to say that this is OPEC’s final attempt to prove it is still relevant in a shale-driven world after the “2014 Thanksgiving massacre” when Saudi Arabia essentially unilaterally crushed the organization, and the price of oil. Should OPEC blow this, it will likely be game over for any future attempts to artificially prop up the oil price by the world’s oil exporters.

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That Moment Mitt Romney Realized He Wasn’t Invited TO Dinner…

During the presidential campaign, no mainstream GOP figure was more outspoken in his criticism of Donald Trump than Mitt Romney. The 2012 Republican Party standard-bearer called Trump, among other things, a “fraud,” a “phony,” and a poseur who had inherited his wealth. Romney, who publicly flirted with the idea of voting Libertarian due to the presence of fellow former Massachusetts Gov. Bill Weld on the ticket, counseled anyone thinking about voting for Trump to remember “the bullying, the greed, the showing off, the misogyny, the absurd third grade theatrics” of the reality-TV personality.

And then Mitt Romney sat down to dinner with Donald Trump and Republican National Committee chairman Reince Priebus last night. Here’s a picture of the gathering, as distributed CNN’s Chris Mooney. I like to caption this “The Moment Mitt Romney Realized He Wasn’t Invited TO Dinner but that He WAS Dinner.” Many folks, with no real evidence, are theorizing that Trump is toying with Romney, who’s been named as a possible secretary of state, the better to humiliate him publicly when Romney is dismissed as a candidate.

Will this be one more shiv from Donald Trump? Who knows.

So far, he’s been more than happy to fill his cabinet with insiders rather than outsiders and there doesn’t seem to be any real method to his madness. But whatever happens in the end, Romney’s willingness to entertain joining Trump’s cabinet further erodes all of our beliefs that sometimes principles are more important than partisanship and personal gain. A few months ago, Gallup released its annual survey of confidence in major U.S. institutions and found that we trust such things at historically low rates. For the third year in a row, in fact, the average trust in 14 major institutions (churches, government, the military, etc.) was below 33 percent.

The reason for that isn’t because Americans have suddenly become incapable of or unwilling to trust authority. It’s because authority, especially as it relates to government, has relentlessly driven down expectations through rotten behavior. Romney’s dinner with the president-elect—”main course, Priebus & PEOTUS had prime sirloin a citrus glaze and carrots. Romney lamb chops with mushroom bolognese sauce” according to New York Times’ reporter Eric Lipton—will only help keep the number of Americans who trust the government to do the right thing for the right reasons at or near historical lows. If that simply turns the United States into a low-trust nation that demands more and more regulation, we’ll be sorry.

But maybe, just maybe, what the Trump era will usher in is righteous indignation at pols who have no scruples and a movement to limit government control over our lives, our futures, and our pocketbooks. The two legacy parties have near-record low rates of voter identification and Americans generally refused to come out in large numbers to back either candidate (indeed, it seems to be the case that while Trump only pulled around as many votes as blah Mitt Romney did four years ago, Democrats just couldn’t be bothered to hustle to the polls for Hillary Clinton). Beyond lack of voter enthusiasm, there are grounds for cautious optimism that some aspects of a Trump presidency will be OK to better-than-OK. Education, transportation, regulation, health-care, and even foreign policy look somewhat promising, even as the bad stuff (immigration, trade, and more) look truly terrible.

All those outcomes, though, ultimately are in our hands and are on our shoulders, as we will ultimately pay for them, literally and figuratively. Which reminds me: This is Reason’s annual webathon, during which we ask people who read our website and watch our videos and listen to our podcasts to consider supporting our efforts with a tax-deductible donation. If you like the way we think about and cover the world, please help us stay strong during 2017.

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In Apology Letter to Reddit Users, Huffman Calls The Donald Users ‘Toxic’, ‘Behaving Badly’, Threatens Action and Outright Ban

A little more than a week ago, it was revealed that the CEO of Reddit, Steve ‘Cannibal’ Huffman edited user comments that were mean to him. While he might’ve thought his actions were cute and funny, the community, especially in the very popular and active The_Donald subreddit, went apeshit and the people turned on him, in the most acrimonious ways possible.

cannibal

For those unfamiliar, The_Donald subreddit has grown into a community of truth seekers, delving into all sort of topics, ranging from John Podesta’s alleged child trafficking ring (Pizzagate) to Donald Trump’s cabinet appointments. In many ways, it has become ground zero for news and information — often scooping stories first before the legendary Matt Drudge.

Head Cuck and Chief of Reddit, Steve Huffman, isn’t interested in any of that success and in a letter out today threatened an outright ban on The_Donald, in addition to announcing the corporate overlords at Reddit have identified many ‘troublesome users’ and will be taking action soon.

Additionally, The_Donald will no longer enjoy the privilege of having their content featured on the r/all page — due to uncivil and troll like behavior.

tl;dr: I fucked up. I ruined Thanksgiving. I’m sorry. I won’t do it again. We are taking a more aggressive stance against toxic users and poorly behaving communities. You can filter r/all now.

Hi All,

I am sorry: I am sorry for compromising the trust you all have in Reddit, and I am sorry to those that I created work and stress for, particularly over the holidays. It is heartbreaking to think that my actions distracted people from their family over the holiday; instigated harassment of our moderators; and may have harmed Reddit itself, which I love more than just about anything.

The United States is more divided than ever, and we see that tension within Reddit itself. The community that was formed in support of President-elect Donald Trump organized and grew rapidly, but within it were users that devoted themselves to antagonising the broader Reddit community.

Many of you are aware of my attempt to troll the trolls last week. I honestly thought I might find some common ground with that community by meeting them on their level. It did not go as planned. I restored the original comments after less than an hour, and explained what I did.

I spent my formative years as a young troll on the Internet. I also led the team that built Reddit ten years ago, and spent years moderating the original Reddit communities, so I am as comfortable online as anyone. As CEO, I am often out in the world speaking about how Reddit is the home to conversation online, and a follow on question about harassment on our site is always asked. We have dedicated many of our resources to fighting harassment on Reddit, which is why letting one of our most engaged communities openly harass me felt hypocritical.

While many users across the site found what I did funny, or appreciated that I was standing up to the bullies (I received plenty of support from users of r/the_donald), many others did not. I understand what I did has greater implications than my relationship with one community, and it is fair to raise the question of whether this erodes trust in Reddit. I hope our transparency around this event is an indication that we take matters of trust seriously. Reddit is no longer the little website my college roommate, u/kn0thing, and I started more than eleven years ago. It is a massive collection of communities that provides news, entertainment, and fulfillment for millions of people around the world, and I am continually humbled by what Reddit has grown into. I will never risk your trust like this again, and we are updating our internal controls to prevent this sort of thing from happening in the future.

More than anything, I want Reddit to heal, and I want our country to heal, and although many of you have asked us to ban the r/the_donald outright, it is with this spirit of healing that I have resisted doing so. If there is anything about this election that we have learned, it is that there are communities that feel alienated and just want to be heard, and Reddit has always been a place where those voices can be heard.

However, when we separate the behavior of some of r/the_donald users from their politics, it is their behavior we cannot tolerate. The opening statement of our Content Policy asks that we all show enough respect to others so that we all may continue to enjoy Reddit for what it is. It is my first duty to do what is best for Reddit, and the current situation is not sustainable.

Historically, we have relied on our relationship with moderators to curb bad behaviors. While some of the moderators have been helpful, this has not been wholly effective, and we are now taking a more proactive approach to policing behavior that is detrimental to Reddit:
We have identified hundreds of the most toxic users and are taking action against them, ranging from warnings to timeouts to permanent bans. Posts stickied on r/the_donald will no longer appear in r/all. r/all is not our frontpage, but is a popular listing that our most engaged users frequent, including myself. The sticky feature was designed for moderators to make announcements or highlight specific posts. It was not meant to circumvent organic voting, which r/the_donald does to slingshot posts into r/all, often in a manner that is antagonistic to the rest of the community.

We will continue taking on the most troublesome users, and going forward, if we do not see the situation improve, we will continue to take privileges from communities whose users continually cross the line—up to an outright ban.

Again, I am sorry for the trouble I have caused. While I intended no harm, that was not the result, and I hope these changes improve your experience on Reddit.

Steve

PS: As a bonus, I have enabled filtering for r/all for all users. You can modify the filters by visiting r/all on the desktop web (I’m old, sorry), but it will affect all platforms, including our native apps on iOS and Android.

The_Donald users aren’t happy at all by Huffman’s ‘coming together’ letter of healing.

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The War On Cash Is Happening Faster Than We Could Have Imagined

Submitted by Simon Black via SovereignMan.com,

It’s happening faster than we could have ever imagined.

Every time we turn around, it seems, there’s another major assault in the War on Cash.

India is the most notable recent example– the embarrassing debacle a few weeks ago in which the government, overnight, “demonetized” its two largest denominations of cash, leaving an entire nation in chaos.

But there have been so many smaller examples.

In the US city of New Orleans, the local government decided earlier this month to stop accepting cash payments from drivers at the Office of Motor Vehicles.

As I wrote to you recently, several branches of Citibank in Australia have stopped dealing in cash altogether.

And former US Treasury Secretary Larry Summers published an article last week stating that “nothing in the Indian experience gives us pause in recommending that no more large notes be created in the United States, Europe, and around the world.”

In other words, despite the India chaos, Summers thinks we should still curtail the $100 bill.

The conclave of the high priests of monetary policy almost invariably sings the same chorus: only criminals and terrorists use high denominations of cash.

Ken Rogoff, Harvard professor and former official at the International Monetary Fund and Federal Reserve, recently published a book blatantly entitled The Curse of Cash.

Ben Bernanke’s called it a “fascinating and important book”.

And, shockingly, a number of reviews on Amazon.com praise “brilliant” Rogoff’s “visionary concepts” in his “excellent book”.

Rogoff, like most of his colleagues, contends that large bills like the $100 or 500 euro note are only used in “drug trade, extortion, bribes, human trafficking. . .”

In fact they jokingly refer to the 500-euro note as the “Bin Laden” since it’s apparently only used by terrorists.

Give me a break.

My team and I did some of research on this and found some rather interesting data.

It turns out that countries with higher denominations of cash actually have much lower crime rates, including rates of organized crime.

The research was simple; we looked at the World Economic Forum’s competitive rankings that assesses countries’ levels of organized crime, as well as the direct business costs of dealing with crime and violence.

Switzerland, with its 1,000 Swiss franc note (roughly $1,000 USD) has among the lowest levels of organized crime in the world according to the WEF.

Ditto for Singapore, which has a 1,000 Singapore dollar note (about $700 USD).

Japan’s highest denomination of currency is 10,000 yen, worth $88 today. Yet Japan also has extremely low crime rates.

Same for the United Arab Emirates, whose highest denomination is the 1,000 dirham ($272).

If you examine countries with very low denominations of cash, the opposite holds true: crime rates, and in particular organized crime rates, are extremely high.

Consider Venezuela, Nigeria, Brazil, South Africa, etc. Organized crime is prevalent. Yet each of these has a currency whose maximum denomination is less than $30.

The same trend holds true when looking at corruption and tax evasion.

Yesterday we wrote to you about Georgia, a small country on the Black Sea whose flat tax prompted tax compliance (and tax revenue) to soar.

It’s considered one of the most efficient places to do business with very low levels of corruption.

And yet the highest denomination note in Georgia is the 500 lari bill, worth about $200. That’s a lot of money in a country where the average wage is a few hundred dollars per month.

Compare that to Malaysia or Uzbekistan, two countries where corruption abounds.

Malaysia’s top cash note is 50 ringgit, worth about $11. And Uzbekistan’s 5,000 som is worth a paltry $1.57.

Bottom line, the political and financial establishments want you to willingly get on board with the idea of abolishing, or at least reducing, cash.

And they’re pumping out all sorts of propaganda to do it, trying to get people to equate crime and corruption with high denominations of cash.

Simply put, the data doesn’t support their assertion. It’s just another hoax that will give them more power at the expense of your privacy and freedom.

Do you have a Plan B?

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