Calls for Rep. Conyers to Resign, Rep. Barton to Retire Next Year, Jim Nabors Dead at 87: P.M. Links

  • Rep. ConyersRep. Nancy Pelosi, leader of the Democrats in the House, is now calling for Rep. John Conyers Jr. (D-Mich.) to resign over the sexual harassment claims leveled against him. Conyers was hospitalized overnight, reportedly for stress.
  • Rep. Joe Barton (R-Texas) announced he was going to retire from Congress next year in the wake of stories about him sending nude selfies to women.
  • Sen. John McCain (R-Ariz.) says he’s going to vote in favor of the GOP tax reform package.
  • Legislation to recognize same-sex marriages under the law easily passed Australia’s Senate and heads to the lower house. If it passes, Australia will become the 26th country to legally recognize gay marriages.
  • Prosecutors have dropped all charges against a Virginia mother who had put a recording device in her daughter’s backpack to try to find evidence she was being bullied at her elementary school. The mom faced felony wiretapping charges.
  • Paul Manafort has agreed to an $11 million bail deal where he’ll put up four of the properties he owns as collateral to guarantee that he won’t skip out of the country to escape charges of money laundering and failing to register as a foreign agent.
  • Sources say the White House is planning to dump Rex Tillerson as secretary of state and replace him with current CIA Director Mike Pompeo. Then they may try to move Sen. Tom Cotton to replace Pompeo to run the CIA.
  • Jim Nabors, better known as the actor who portrayed Gomer Pyle, died today at the age of 87.

Follow us on Facebook and Twitter, and don’t forget to sign up for Reason’s daily updates for more content.

from Hit & Run

Hyperinflation: Much Talked About, Little Understood

Professor Liping He from Beijing Normal University has produced a most comprehensive and useful scholarly treatment of world hyperinflation. It is hot off the press. This is a welcomed addition to the literature. Indeed, Hyperinflation: A World History is destined to become a standard reference on the topic. 

My basis for this judgment rests on my own travails in grappling with the literature and data on hyperinflation.  It also rests on my experience with measuring and stopping hyperinflation. The ”Hanke-Krus World Hyperinflation Table” first appeared in the authoritative The Routledge Handbook of Major Events in Economic History (2013). What was the genesis of this Table? 

In 2010, I was invited to write a survey article on hyperinflation for The Routledge Handbook of Major Events in Economic History. I accepted the invitation, thinking it would require routine work on my part, and that I could complete the task in short order. I had already surveyed the literature on hyperinflation. In addition, I had accurately estimated the inflation rates in several countries that had experienced episodes of hyperinflation. These included two relatively recent, dramatic episodes of hyperinflation – Yugoslavia, which peaked at a monthly rate of 313 million percent in the month of January 1994, and Zimbabwe, which peaked at an annual rate of 89.7 sextillion (10^23) percent in November 2008. In addition, I had designed and implemented currency reforms that had stopped episodes of hyperinflation, notably Bulgaria’s, which peaked at a monthly rate of 242% in the month of February 1997.

While reflecting on the hyperinflation literature, I was struck by its lack of uniformity and clarity. The literature was widely scattered in time and space; it had been written by many different researchers, and those researchers had used diverse methods to estimate and analyze the inflation episodes studied.

So, I concluded that the best way to “clean up” the subject of hyperinflation was to create a “World Hyperinflation Table.” In my mind, this table would include all of the world’s hyperinflations. The data would be presented in a uniform and clear manner, so that all episodes of hyperinflation could be compared. But, what criteria would be used for an episode of inflation to qualify as a hyperinflation? I specified the following three criteria:

  1. Following Professor Phillip Cagan’s classic article on hyperinflation, the economics profession adopted the following criterion: to qualify as a hyperinflation, the inflation rate had to be at least 50 percent per month. I adopted this convention. 
  2. In addition, I specified that the 50% rate had to persist for at least 30 consecutive days. 
  3. Lastly, I concluded that the inflation episode had to be fully documented and that inflation estimates had to be replicable.

It turned out that the third criterion was the most difficult one. Fortunately, my chief research assistant at the time, Nicholas Krus, was capable of, and interested in, taking on this research task. Krus and I spent the better part of two years constructing what has come to be known as the Hanke-Krus World Hyperinflation Table. We documented and recalculated the inflation rates for all alleged episodes of hyperinflation in history. The project required the gathering of primary data for each potential case of hyperinflation. This proved to be very difficult and time consuming. For example, primary data for the French episode of hyperinflation of 1795 to 1796 – the first verified hyperinflation – had to be obtained and analyzed. But, that was not the most difficult set of data to obtain. That “prize” was awarded to the Republika Srpska, which experienced a hyperinflation episode in the 1992-1994 period. Fortunately, I was able to use my extensive contacts in the former Yugoslavia to eventually obtain high-quality inflation data. 

After a long and onerous research effort, the Hanke-Krus World Hyperinflation Table was published. It is contained in “World Hyperinflations,” a chapter in The Routledge Handbook of Major Economic Events in History (2013), which I co-authored with Nicholas Krus.

I recount these reflections because I thought there would not be too much to say about hyperinflation after the publication of the Hanke-Krus World Hyperinflation Table. However, Prof. Liping He has proven me wrong. 

I would also add that new developments in Venezuela have proven me wrong, too. Venezuela became the 57th episode of hyperinflation in history on December 3, 2016. At present (10/28/2017), the annual inflation rate in Venezuela, which I regularly measure, is 2800%. This now stands as the world’s highest rate of annual inflation, but it has not surpassed the 50% per month for 30 consecutive days, hyperinflation threshold. Accordingly, Venezuela, although it has the world’s highest annual inflation rate, is not hyperinflating. 

It turns out that Zimbabwe, recently, has also proven me wrong. On October 17, 2017, Zimbabwe entered its second episode of hyperinflation in less than 10 years. The chart below shows what the annual inflation rate for Zimbabwe is today (11/28/17): 37%. 

Unfortunately, many journalists and writers play fast and loose with the term “hyperinflation” – a term that has a very specific meaning. Not only is the meaning of the “word” specific, but also its measurement, if properly conducted, can be just as precise. 

via Steve H. Hanke

“Huge Bag Of Sex Toys”: At Least 8 Women Now Accuse Lauer Of Harassment

It’s been just over a day since a shaken Savannah Guthrie informed Today Show viewers that her former co-host Matt Lauer had been fired due to allegations of sexually inappropriate behavior – the latest, and one of the highest-profile casualties in the widening national reckoning with sexual harassment in the workplace. And now, NBC’s top brass, which said they fired Lauer after an employee filed a complaint about inappropriate behavior that reportedly began during NBC’s coverage in Sochi (and who claim they were blissfully unaware of what was going on) are saying that the number of women accusing Lauer of harassment has risen to eight.

According to Fox, NBC’s Stephanie Gosk revealed to Megyn Kelly during the 9 am  hour of “Today” that there could be up to eight accusers, as details surfaced about the star's alleged lewd behavior and old video clips back in circulation raised eyebrows.

There was also this 2012 clip where the former Today co-host Katie Couric told Andy Cohen that Lauer’s most annoying habit was his fondness for pinching her ass.

Somewhat humorously, NBC said it has reached out to area police departments, and the network can "safely report" that there are no open criminal investigations involving Lauer at this time.

“We have reached out to New York City police; we have reached out to police departments in Long Island. We know of no open criminal investigation against Matt Lauer,” Gosk said.

That could change.

One of the most disturbing stories about Lauer’s conduct emerged yesterday when a former NBC employee told the New York Times about a  2001 incident where Lauer called her into his office, asked her to unbutton her blouse, then bent her over his desk and violated her. During the middle of the act, she apparently passed out. He then had one of his assistants take her to a nurse.

The former NBC employee told the Times that Lauer sexually assaulted her, but that she didn’t report it for fear of losing her job.

Another woman told Variety that Lauer had gifted her a sex toy with a graphic description, while another said he exposed himself to her in his office, which reportedly had a door that locked via a button under his desk. A video also surfaced of Lauer telling Meredith Vieira to "keep bending over like that" back in 2006.

In another cringeworthy moment, Meredith Vieira brought up a "huge bag of sex toys" she once found in Matt Lauer's office when Lauer and fellow Today host Savannah Guthrie were guests on Vieira’s talk show. To be sure, Matt was "quick on his feet", and blamed a sex therapist who had appeared on "Today", although his co-hosts don't seem to recall that particular encounter.  In light of the latest developments, this anecdote takes on a whole different meaning.

Lauer broke his silence on Thursday morning, and issued a public apology admitting that “there is enough truth to these stories to make me feel embarrassed and ashamed."

In an interesting twist to the familiar sexual-harasser script, the New York Times is reporting that the reverberations from Lauer’s firing have made it all the way to New Zealand.

A New Zealand government agency said on Thursday that it was in discussions with Lauer’s representative over his purchase of a 16,000-acre farm there. Foreigners must pass a good-character test to be allowed to buy New Zealand land, and while Lauer’s purchase was approved earlier this year, the country’s Overseas Investment Office is revisiting his case in light of his firing.

Officials from that agency “are seeking further information,” said Lisa Barrett, a spokeswoman for the agency. The agency can require buyers to dispose of the property if it believes the rules have been violated.

We expect more disturbing stories of Lauer’s workplace conduct will emerge in the near future.

via Tyler Durden

McCain Mania Sends Dow Soaring To Record Highs As Yield Curve Collapse Continues

The longest short-squeeze streak in history continues…


John McCain's "Yes" at 1051ET seems to have been the catalyst that extended overnight gains into melt-up mania… (Small Cap smanaged to scramble back green on the day as Trannies rose 2%)


But the Nasdaq remains red on the week…


Futures show the crazy moves best…


The market is convincing itself that tax reform is going to happen as high-tax stocks soar relative to low-tax…


And bookies' odds are soaring to 80%…


The short-squeeze continues for a record 10th day in a row (the biggest percentage squeeze since the election)

Financials and Retailers are ripping higher…


But even Bloomberg notes that this looks a lot like a short squeeze…“There’s a short squeeze here,” said Eric Balchunas, ETF analyst at Bloomberg Intelligence. “XRT is being lent by people who borrowed it, so the release valve when that happens is they have to create new shares.”


But while everyone was excited about The Dow, Tech stocks barely managed a blip in context to yesterday's turmoil…


On the month, FANG and SOX were lower…


On the month, Trannies were best – roaring higher in the last week…


The Momo vs Value chaos this week seems to have normalized the month's moves…


Here's the month in bonds/stocks… equities rally, bonds ignore it, then stocks plunge back to reality and they both squeeze higher…


HYG (high yield bonds) fell for the 2nd straight month – the biggest drop since October 2016 and remain below the 200DMA…


While bonds were all sold on the day, the short-end underperformed…


Once again flattening the yield curve in the face of the equity market melt up…5s30s -3bps!


On the month, yields are very mixed with the short-end higher and long-end lower…


In fact the 2s30s yield curve collapse in November is the biggest flattening since Sept 2011


While on the topic of rates, very few mainstream media types have commented on the massive spike in EONIA the last two days!!

European money markets were shaken by an unexpected jump in the Eonia benchmark rate for the second time Thursday, that left the overnight interbank rate 12.1 basis points higher and traders looking for answers. The move spurred heavy selling across front-end euribors. Bund and Treasury futures were also weighed, extending earlier losses. Traders had few explanations for the sudden move, the scale of which would normally be justified by a shift in the European Central Bank’s benchmark rate. One potential reason is month-end related flows, such as an account locking in funding for the turn of the month a day early, a trader in New York said. Thursday’s fix was higher by 6bps at -0.241%, highest since March 9 2016 and comes after Wednesday’s 6.1bp move higher; the European Money Markets Institute (EMMI), which publishes Eonia, said that Wednesday’s fixing data was correct.


The Dollar Index ended November lower – the first drop since July…


On the month, gold managed to cling to green as Crude led the gains with copper and silver lower…


Gold tumbled once again but managed to scramble and close abovee its 200DMA (blue dotted line)…


Finally, we note that Bitcoin was up 49% in November (slightly less than the 52% gain in October)…


Bonus Chart: Your Fun-durr-mental driven equity markets…

via Tyler Durden

Donate to Reason, Your Antidote to Political Hysteria!

At the 48-hour mark of Reason’s annual webathon, you wonderful co-champions of “Free Minds and Free Markets” had made a whopping 380 gifts, worth a combined $56,000, far outpacing last year’s already robust haul. As that orange bar to the right keeps climbing, and as the value of your hoarded Bitcoin keeps spiking, please consider making even more libertarian journalism and commentary possible.

Won’t you please give a tax-deductible donation to Reason right around now?

OK, let’s acknowledge the elephant in the room: In a year like 2017, with a presidency like Donald Trump’s, against a backdrop where anything that can be politicized probably already has been, and in a week like this damned week, many people are reacting to the news of the day/hour/minute with a lot of, shall we say, emotion.

Being at least half-human, we here at Reason are no exceptions to various strains of Derangement Syndrome. But we’re also mindful that our founding editor‘s first-issue promise was to deliver “logic, not legends,” while refusing “to smear the issues with irrelevancies and falsifications.” The magazine’s damn name is Reason (drink!). Imperfectly, and to the sporadic annoyance of even some of our oldest friends, we try to keep our heads clear of hate and our feet grounded in fact, particularly in moments when others have become completely unmoored.

Last week’s announcement by Federal Communications Chair Ajit Pai that “net neutrality” regulations will be on the chopping block this month, for example, was greeted with creepstalking of Pai’s children, at least one threat to kill a congressman and his family, and roughly a cajillion tweets like this (from a law/technology journalist, no less):

We not only interrogated Pai and engaged in much explanatory chewing of the regulatory and technical issues underneath, but Ed Krayewski pointed out how a viral infographic from a Democratic congressman actually made the argument against his own side. If you wanted logic, not legends, about Pai’s move—even if you disagreed with it—Reason was your oasis.

Good cover. ||| ReasonThe same has been true over President Donald Trump’s persistently misleading, inflammatory, and occasionally false statements having to do with Muslims, immigrants, and violence, particularly in the wake of terrorist attacks. When the president earlier this year warned, “You look at what happened last night in Sweden. Sweden! Who would believe this!” we commissioned a piece from actual Swede Johan Norberg (who had done such a brilliant job in 2016 debunking Bernie Sanders’ bass-ackward notions about Scandonomics), under the headline “Trump’s Fake News Attack on Sweden, Immigrants, and Crime.” Science Correspondent Ronald Bailey, in reaction to Trump’s assertion that the Islamic nature of terrorism was being underreported, looked at the actual research. “Do Muslims Commit Most U.S. Terrorist Attacks?” was the question in Bailey’s headline. The answer? “Nope. Not even close.”

Already, these two examples scramble the usual political tribes, but that’s a feature, not a bug. A quick tour of our hysteria-debunking headlines from the past year will give partisans whiplash, but not y’all:

Gorsuch Is More Liberal Than Garland

No, the AHCA Doesn’t Make Rape a Preexisting Condition

The House Passes a Gun Measure Supported by the ACLU and Mental Health Advocates. Media Hysteria Ensues.

Anti-Trumpers Hyperventilate Over Nothingburger Story About U.S. Ambassadors Leaving After Inauguration Day

Seniors Won’t Starve if Meals on Wheels Loses Government Grants

No, the Solar Eclipse Will Not Cause a Spike in Sex Trafficking

America's Mr. Smirky-pants ||| ReasonAnd so on. As we try reminding people, then and now, the boy who keeps crying wolf eventually stops being listened to. Which is unhelpful when the wolf shows up. Speaking of which, one of the side benefits of trying to fend off our own inner hysteric is that we can treat issues and political personalities on a case-by-case basis, rather than working our way back from a conclusion. So it is that consecutive covers of the magazine can have a persuasive case against Trump’s signature campaign issue of building a wall, and a breakdown of the president’s potentially revolutionary deregulatory agenda. As CBS News anchor John Dickerson told, uh, Charlie Rose earlier this year about the latter story,

[I]f the FDA starts changing the way in which they evaluate new drugs, that is a big deal….The people [Trump] has named are changing things in a way that they are going largely unnoticed. And [it] is going to make a real change in things that really affect people, and that`s another big thing that he has accomplished even though he may not even cite that as the things he has accomplished. It is quite, you know, when Reason magazine can give him credit for being a real deregulating president because of the people he has named, that is a surprise: Reason was not a big fan of the president when he was a candidate.

Look, we have biases and strong opinions. (Mine toward the president has not improved much since my original assessment.) But unlike 99.9 percent of media outlets you read, we actually show you who our staffers and contributors plan to vote for every four years, including how they mentally approach the task (or in Katherine Mangu-Ward’s case, don’t). Honest journalism relies on and champions transparency; we actually believe that stuff begins in the home.

Every day we’re out here correcting media misnomers, advocating core principles even/especially when they have gone out of political favor, and trying to come up with our own crude systems for navigating this weird new political world. It’s a journey, not a destination. Won’t you take it with us?

Please donate to Reason approximately right now!

from Hit & Run

This Has Never Happened Before In Global Equity Markets

Unless the world comes to a very serious end overnight, global equity markets are about to do something they have never done before… rise for 13 consecutive months.

Not one losing month so far in 2017…


The global equity gauge was on course to finish November with its 13th straight monthly gain – the longest monthly winning streak in the index’s 30-year history. The total gain over the 13 months nears 23 percent.


But then again.. the world has also never seen so many central banks, printing so much money, for so long a time…

Just don't stop!!

via Tyler Durden

Adam Schiff Says Sessions Refused To Say If Trump Asked Him To Hinder Russia Probe

Adam Schiff, the ranking member of the Intelligence Committee, has accused Attorney General Jeff Sessions of refusing to disclose information of vital importance to his committee’s probe into collusion between the Russians and the Trump campaign by relying on a loose interpretation of executive privilege.

To wit, following the attorney general's closed door testimony before the House Intel Committee, Schiff told reporters that Sessions declined to answer whether President Trump ever asked him to obstruct the ongoing investigation into Russian inference in the 2016 presidential election, the Hill reported.

"I asked the attorney general whether he was ever instructed by the president to take any action that he believed would hinder the Russia investigation and he declined to answer the question," Rep. Adam Schiff told reporters after the closed-door meeting concluded.

"If the president did not instruct him to take any action that he believed would hinder the Russia investigation, he should say so. If the president did instruct him to hinder the investigation in any way, in my view, that would be a potentially criminal act and certainly not covered by any privilege," the California lawmaker continued.

Unsurprisingly, a spokeswoman for Sessions pointed out that the attorney general has already made it clear that he would refuse to divulge the details of any of his conversations with President Trump, a position he has adhered to since becoming attorney general in February.

However, Schiff told reporters that he believes Sessions’s reasoning for not answering the question is suspect, calling the attorney general’s defense a “weak argument.”

“That, under any conceivable idea, is not privileged, so I think that is even a weaker argument to make than with respect to a particular conversation that he may have had with the president,” he added.

Schiff opined that the Republican lawmakers on the committee decided “in a unilateral fashion” against releasing the AG’s testimony, pointing to previous agency heads who have openly appeared before the panel.

"The Congress has the need to know and so do the American people," Schiff said, adding that he feels the committee should "compel" Sessions to answer the questions he did not answer during the meeting.

During Sessions’ testimony, Schiff said the panel “extensively” covered the interactions he had with former Trump campaign officials like Carter Page and the interactions that he had with George Papadopoulos, adding “that was certainly a big focus of our interview today.”

Sessions's appearance on Thursday comes as the panel continues to investigate Russian interference in the 2016 presidential election and possible collusion between Moscow and Trump campaign staff. Over the next week, the committee will also be interviewing Erik Prince, former CEO of Blackwater and brother of Education Secretary Betsy DeVoes, and, later, Donald Trump Jr.

The meeting comes two weeks after Sessions, during a public appearance before the Judiciary Committee, clarified that he didn’t remember Papadopoulos raising the possibility of setting up a meeting between Trump and the Russians. He was also grilled by a Republican lawmaker about why he didn’t appoint a special prosecutor to investigate the Clintons.

Of course, even former FBI Director James Comey – whose firing has been cited by Democrats as an example of Trump possibly trying to obstruct an FBI investigation – has said he didn’t feel Trump’s behavior in firing him could be considered obstruction of justice. And given reports that Trump still resents Sessions for recusing himself from the DOJ’s Russia investigation, thereby handing the reins to Bob Mueller, it seems like Schiff is senselessly seizing on another opportunity to attack the Trump administration. 

via Tyler Durden

Stockman: “Bitcoin Is The Poster-Boy For An Unhinged Financial System”

Authored by David Stockman via Contra Corner blog,

The lemmings are now in full stampede toward the cliffs. You can literally hear the cold waters churning, foaming and crashing on the boulders far below.

From bitcoin to Amazon, the financials, the Russell 2000 and most everything else in between, the casinos are digesting no information except the price action and are relentlessly rising on nothing more than pure momentum. The mania has gone full retard.

Certainly earnings have nothing to do with it. As of this morning, the Russell 2000, for instance, was trading at 112X reported LTM earnings.

Likewise, Q3 reporting is all over except for the shouting and reported LTM earnings for the S&P 500 came in $107 per share. That's of signal importance because fully 36 months ago, S&P earnings for the September 2014 LTM period posted at $106 per share.

That's right. Three years and $1 of gain. They talking heads blather about "strong earnings" only because they think we were born yesterday.

What happened in-between, of course, was the proverbial pig passing through the python.

First, the global oil, commodities and industrial deflation after July 2014 took earnings to a low of $86.44 per share in the March 2016 LTM period.

After that came the opposite—the massive 2016-2017 Xi Coronation Stimulus in China. The new Red Emperor and his minions pumped out an incredible $6 trillion wave of new credit, thereby artificially stimulating a global rebound and a profits recovery back to where it started three years ago.

The difference of course is that $106 of earnings back then were priced at an already heady (by historical standards) 18.6X, whereas $107 of earnings today are being priced at a truly lunatic 24.6X.

After all, nothing says earnings bust ahead better than an aging business cycle, a cooling Red Ponzi, an epochal shift toward central bank QT (quantitative tightening) and a massive Washington Fiscal Cliff. Yet every one of those headwinds are self-evident and have made their presence known with a loud clang in the last few days.

Self-evidently, we are now 36 months closer to the next recession in a business cycle which at 101 months is already approaching the 1990s record of 118 months and facing far greater headwinds. Foremost among these is the unprecedented but unavoidable turn of the central banks—after two decades of relentless expansion— toward interest rate normalization, QT (quantitative tightening) and trillions of debt and other securities sales (demonetization or balance sheet shrinkage).

The new Janet Yellen in tie and trousers made that perfectly clear at yesterday's confirmation hearing:

Powell said he expected the balance sheet to shrink to about $2.5 trillion to $3 trillion over the next three to four years under a program set in motion by Yellen……On interest rates, Powell said: "I think the case for raising interest rates at our next meeting is coming together."

Actually, the promised balance sheet shrinkage process is going to rapidly escalate from $10 billion per month of Fed bond sales now, to $30 billion by spring and $50 billion by next October. That amounts to a $600 billion annual run rate; and when the ECB and other banks join the "normalization" party in 2019 and beyond total central bank bond sales will pierce through the $1 trillion per year level.

And that's a very big deal because the law of supply and demand has not yet been abolished, meaning prices and yields in the global bond market are heading for a big reset. For instance, if the UST 10-year benchmark note normalizes to a yield of 4.0%, its price will fall by more than 40% from current levels (2.35%).

Needless to say, the entire market for risk assets including equities, junk bonds, corporates and real estate is predicated upon current ultra low yields and historically unprecedented leverage. So smash the price of the benchmark bond by 40% and you have a cascading chain of downward valuation adjustments that will reach the tens of trillions.

But that's not all. The 19th Party Congress is over, but the Red Suzerains of Beijing wasted no time throttling down China's red hot credit bubble and hyperventilating housing market. The chart below is the smoking gun—-and puts the lie to the foolish Wall Street meme of the moment that the world economy is in the midst of an outburst of "synchronized growth".

Actually, it's puffing on the exhaust fumes of a veritable housing hysteria during the run-up to China's 19th Party Congress, which saw home mortgage issuance soar by nearly 60% in 2016.

Now, however, Beijing's clampdown is giving Ross Perot's famous "sucking sound to the south" an altogether new definition. In the most recent period, year over year mortgage growth actually turned negative—-meaning China's gigantic apartment construction and building materials complex will be cooling rapidly, too.

Needless to say, what happens in the Red Ponzi does not stay in the Red Ponzi. The modestly rebounding global figures for industrial production, trade and GDP reported recently were just feeding off the massive credit impulse evident in the red line below.

When S&P earnings were peaking back in September 2014, China's total credit growth from all sources—including its $15 trillion shadow banking system—had slowed to a 15% annual run rate, but then was gunned to upwards of 30% during the Coronation Boom from early 2016 onwards.

But now that Mr. Xi's very thoughts have been enshrined in the Communist Party constitution—check-by-jowl with the wisdom of the Great Helmsman, Mao Zedong—-credit growth is plummeting. Even China's new Red Emperor recognizes that $40 trillion of debt on a purported $12 trillion economy (actually far lower when massive malinvestments are deleted from the reported GDP "flows") is a recipe for collapse.

Xi Jinping may well be delusional about the capacity of centralized bureaucrats–even ones with all the guns— to tame and stabilize the greatest Ponzi-style digging, constructing, borrowing, spending and speculating scheme in recorded history. But his goal is a third term in 2022, and in the interim he means to mop down China's fevered borrowing and building spree with alacrity.

Accordingly, the global commodity and CapEx cycle will rapidly weaken as the red line in the chart heads toward the flat-line. The talking heads will not be gumming about synchronized global growth much longer.


But what they will be talking about soon is a US Fiscal Cliff like none before. It now seems that the desperate GOP politicians of Capitol Hill have come up with so many fiscal gimmicks that they may actually cobble together 51 votes in the Senate.

But the emerging Rube Goldberg Contraption, which sunsets all of the individual tax cuts after 2025, and then piles on top a "trigger tax", which most surely would turn the whole things into massive ($350 billion) tax increase after a 2024 "growth" test, is actually a giant debt trap.

In fact, between 2018 and 2024 the emerging Senate "compromise" would generate upwards of $1.4 trillion of new debt including interest on the added borrowing. That's because as we explained yesterday the Senate tax bill is front-loaded with the annual revenue loss peaking at $250 billion in 2020 and diminishing steadily thereafter to just $145 billion in 2025 and a slight surplus in 2027.

Consequently, the public debt builds up rapidly in the early years—long before any added growth could possibly move the needle. We will provide more detailed calculations on this crucial point tomorrow and completely debunk the "growth will pay for it" story.

But suffice it to say here that the massive front-loaded borrowing embedded in the Senate tax bill would come on top of the $6.1 trillion already built into the CBO baseline for the 2018-2024 period and another $1 trillion that will be needed for disaster relief and the Donald's massive defense build-up and dramatically heightened pace of global military operations.

In a word, we do not think you can finance $8.5 trillion of new Federal debt in an environment in which the Fed and its convoy of fellow traveling central banks are also selling bonds by the trillions. That is, without triggering a "crowding out" effect of the kind that has been in hibernation every since Greenspan's cranked up the Eccles Building printing presses after the 22% stock market plunge in October 1987.

The irony is that the GOP is setting up a fiscal cliff which will exceed $1 trillion per year of new borrowing as early as 2020 ($775 billion baseline plus $225 billion of revenue losses and added interest from the tax cut) based on the erroneous view that domestic economic growth is being stunted by high corporate taxes.

This chart below should put the lie to that confusion once and for all. Even as the effective corporate tax rate has been marching down hill for decades, the trend rate of economic growth has been steadily falling.

Notwithstanding today's GDP blip, real final sales have grown at just 1.2% per year over the last decade or by only one-third of the rate extant when the effective corporate tax rate was more than double the current 20% level.

Image result for images of effective us corporate tax rate

So today's lemming actually are marching toward a Fiscal Cliff—- oblivious to the true meaning of the Senate tax bill maneuvers. But by definition, at the blow-off peak of a great financial bubble markets are oblivious to everything except the price action.

In that context, Bitcoin is neither an outlier nor a one-off freak; it's a poster boy for an unhinged financial system where honest price discovery, two-way markets, fear of risk and financial discipline have been completely destroyed by the central banks.

Whatever its eventual merits as a private money and payment system away from the grasping hand of the Deep State, bitcoin (and the mushrooming slate of other cryptos) at the moment is in the throes of the kind of mania that reminds us of why runaway bubbles eventually generate their own demise.

Image result for bitcoin chart in last year

For want of doubt, Zero Hedge early today calculated out bitcoin's accelerating rate of rise.

Needless to say, the sequence below is not the birthing throes of a new money being born; it's just another iteration of the same old lemmings stampeding toward the cliff:

  • $0000 – $1000: 1789 days
  • $1000- $2000: 1271 days
  • $2000- $3000: 23 days
  • $3000- $4000: 62 days
  • $4000- $5000: 61 days
  • $5000- $6000: 8 days
  • $6000- $7000: 13 days
  • $7000- $8000: 14 days
  • $8000- $9000: 9 days
  • $9000-$10000: 2 days
  • $10000-$11000: 1 day

Big dip overnight was bought and as US equity markets prepare to open, Bitcoin just topped $11,000…

via Tyler Durden

Are Brain Implants to Control Moods Ethical?

BrainImplantMopicDreamstimeWill it be possible someday to tweak your mood with a machine? And if such mood organs ever do appear, will it be ethical to use them?

This month’s Society for Neuroscience conference featured two teams of researchers who want to use brain-machine interfaces to treat mood disorders. One group, based at the University of Southern California in Los Angeles, recorded the brain activity of six people who’d had electrodes implanted in their heads as a treatment for epilepsy. The scientists then correlated the subjects’ brain activity with their reported moods. “By comparing the two types of information, the researchers could create an algorithm to ‘decode’ that person’s changing moods from their brain activity,” reports Nature. Once the neural pattern for an upbeat mood has been identified, the researchers want to see whether implanted electrodes could stimulate a subject’s brain cells in a way that reproduces that sunny mood.

The Columbia University neuroscientist Christine Denny has already achieved just that result in mice. Denny is able to record the neural pattern of a mouse that feels safe and is in an apparently good mood. When she puts the mouse into a situation where it feels fearful, Denny replays the neural pattern and the mouse engages in behaviors that suggest that it is remembering its earlier feeling of being safe and happy.

The other mood-machine team at the meeting is mapping the brain activity associated with different behaviors, such as concentration and empathy. Based on these neural maps, the researchers, based at Massachusetts General Hospital, have developed algorithms designed to guide the application of electrical pulses in subjects’ brains. The goal is to improve their performance on test tasks, such as identifying emotions on faces. “The researchers found that delivering electrical pulses to areas of the brain involved in decision-making and emotion significantly improved the performance of test participants,” reports Nature.

Both teams ultimately want to learn how to stimulate the brain without having to implant electrodes. The machine-brain interfaces being developed Facebook’s Mark Zuckerberg and Elon Musk’s Neuralink startup may be an appropriate model.

Both teams’ work is being funded by the Defense Advanced Research Project Agency. One salutary goal of such research would be to use machine-brain interfaces to lift the mental burden of veterans and active soldiers suffering from post-traumatic stress disorder. On the other hand, it is not too far a stretch to imagine the military using the technology to dampen the neural patterns for empathy and fear.

Nature also cites the concerns of Baylor College of Medicine psychiatrist Wayne Goodman, who worries about “overcorrecting emotions to create extreme happiness that overwhelms all other feelings.” This fear is reminescent of “wireheading,” a phenomenon in Larry Niven’s Known Space science-fiction stories where people use electronic brain implans to stimulate the pleasure centers of their brains.

Niven was inspired by the work of psychologists James Olds and Peter Milner, who in the 1950s discovered the mammalian pleasure center by implanting electrodes into the brains of rats. The rats could activate the electrodes by pushing a lever. “Some rats would self-stimulate as often as 2000 times per hour for 24 hours, to the exclusion of all other activities. They had to be unhooked from the apparatus to prevent death by self-starvation,” notes HuffPost.

It is entirely appropriate to be on alert for governments misusing machine-brain interface technologies to manipulate people. But when it comes to people voluntarily altering their own minds, the authorities should butt out. If it is ethical to use neuropharmaceuticals to treat depression or anxiety, surely it is also acceptable to use a machine-brain interface to accomplish the same therapeutic goals more effectively.

from Hit & Run

Michigan Candidate: Vote for Me, I Don’t Have A Penis

Dana Nessel, a former prosecutor and current criminal defense/civil rights lawyer, wants to be the Democrats’ nominee for attorney general of Michigan. She released an ad this week touting her lack of a penis as a qualification:

“If the last few weeks have taught us anything, it’s that we need more women in positions of power, not less,” Nessel explains in the spot. “So when you’re choosing Michigan’s next attorney general, ask yourself this: Who can you trust most not to show you their penis in a professional setting? Is it the candidate who doesn’t have a penis? I’d say so.”

It’s a deft ad, capitalizing on one of the largest news stories of the year to highlight a perceived advantage and to earn some free media. But it’s also a symptom of a broken two-party system, where the choice so often comes down to selecting the lesser of two evils. Just how low has the bar been set when you can run on a promise not to be a male sexual harasser?

Where do such false choices lead? To enthusiastic defenses of candidates accused of sexual misconduct with minors. Alabama Republican Senate candidate Roy Moore seems to have recovered much of the support he may have lost when he was first accused of molesting a teen. One big reason for that may be how many Democrats have been reticent to force out people accused of sexual misconduct in their own ranks. By covering for their colleagues, they offered Moore voters a fresh model of excusing a politician’s abuses.

It’s stunning, but not surprising, how quickly the clarity of judgment on such misconduct was lost when the accusations spread to the political world. Partisans’ tribal instincts have fueled a kind of whataboutism that hasn’t really taken off in Hollywood, making the cost of inaction comfortably low. As my colleague Elizabeth Nolan Brown explained in The New York Times, “corporations are susceptible to the moral suasion of the public” in a way the public sector is not. So the jig is up for sex predators in Hollywood and the media a lot faster than for those attracted to the halls of government.

Sadly, Nessel’s lack of a penis doesn’t mean she’ll be unable to perpetuate a system that protects and promotes predators. The former prosecutor’s preliminary platform doesn’t even include an obligatory nod to substantive criminal justice reform in its Civil Rights Enforcement section.

In the last few years, Democratic candidates have become skilled in appropriating the language of criminal justice reform without offering much substantive in the way of actual policies. They earn the votes of many people who say they are concerned with the criminal justice system anyway, because “the other side” often doesn’t even bother to pretend to care about the issue. (President Trump, the other side’s boss, actively promotes police brutality.)

If it comes to it, Republicans can appropriate Nessel’s vote-for-someone-without-a-penis pitch too. At least one woman, state Sen. Tonya Schuitmaker, is running on the Republican side.

from Hit & Run