Month: March 2018

In its most pointed criticism of Russia to date, on Wednesday the White House said in a statement that it agreed with the British government’s assessment that Russia was responsible for the poisoning of a former Russian spy and his daughter in the United Kingdom.

“The United States shares the United Kingdom’s assessment that Russia is responsible for the reckless nerve agent attack on a British citizen and his daughter, and we support the United Kingdom’s decision to expel Russian diplomats as a just response,” White House press secretary Sarah Huckabee Sanders said in the statement.

“This latest action by Russia fits into a pattern of behavior in which Russia disregards the international rules-based order, undermines the sovereignty and security of countries worldwide, and attempts to subvert and discredit Western democratic institutions and processes. The United States is working together with our allies and partners to ensure that this kind of abhorrent attack does not happen again.”

Until Tuesday night, the White House had avoided pointing the finger at Russia for the attack, in which a former Russian spy was poisoned with a nerve agent near his home in southern England, and which the UK concluded was orchestrated by the Kremlin, despite offering no proof and refusing to comply with Russian demands that the alleged toxin be produced.

This explicit condemnation of Moscow by the White House, however, was apparently not enough for the NYT, which said that despite Sanders’ statement, “for whatever reason, Mr. Trump avoided saying so personally in public, much as he has generally avoided condemning Russia for its election meddling. He has allowed top advisers to denounce Moscow for its interference in American democracy, but when it comes to his own Twitter posts or comments, he has largely stuck to equivocal language, seemingly reluctant to accept the consensus conclusion of his intelligence agencies and intent on voicing no outrage or criticism of President Vladimir V. Putin of Russia, for whom he has expressed admiration.”

Instead, through early evening, Mr. Trump used his Twitter feed to focus on issues like trade, infrastructure, school safety and his complaints that Senate Democrats are obstructing confirmation of his nominees. His only public comments during the day came at a Boeing plant where he talked about tax cuts.

This apparent unwillingness by Trump to join the chorus prompted US politicians from both parties to urge the president “to speak out personally and possibly take action to back up Mrs. May.”

“Where Prime Minister May has taken bold and decisive initial action to combat Russian aggression, our own president has waffled and demurred,” said Senator Chuck Schumer of New York, the Democratic leader. “Prime Minister May’s decision to expel the Russian diplomats is the level of response that many Americans have been craving from our own administration.”

Senator Ben Sasse, Republican of Nebraska, said the United States should consult with NATO allies about “a collective response,” including the possibility of expelling Russian diplomats from Washington and other alliance capitals or freezing more Russian assets. “We ought to make it inescapably clear to Russia that its shadow war will be met with a coordinated response,” he said.

The legacy neocons were most vocal: Evelyn Farkas, a former Pentagon official who oversaw Russia policy under President Barack Obama, said Trump should offer a range of assistance to Britain to help investigate the episode, prevent further such attacks on British sovereignty and impose punishment. She added that the United States could cite the suspicious death of Mikhail Y. Lesin, a former Russian minister, in a Washington hotel in 2015, in taking joint action. Investigators concluded that he died from a drunken fall but many remain skeptical.

 “Judgment day for Donald Trump,” R. Nicholas Burns, a former ambassador to NATO and an under secretary of state under President George W. Bush, wrote on Twitter. “Will he support Britain unequivocally on the nerve agent attack? Back #NATO sanctions? Finally criticize Putin? Act like a leader of the West?”

After all, what better way to prove to Mueller that you are not a Putin pawn than to lob a couple of nukes over the North Pole and into the Russian capital, in the process sending the stocks of US defense contractors through the roof?

* * *

Joking – we hope – aside the White House’s official statement on the attack came just hours after United States Ambassador to the United Nations Nikki Haley said Russia was responsible for using a nerve agent to poison the ex-spy and his daughter. “The United States believes that Russia is responsible for two people in the United Kingdom using a military-grade nerve agent,” Haley said.

The fearmongering then quickly escalated, with Haley next telling the UN Security Council that aying next that “if we don’t take immediate concrete measures to address this now, Salisbury will not be the last place we see chemical weapons used. They could be used here in New York, or in cities of any country that sits on this Council. This is a defining moment.“

The specter of more Russian attacks – when there still isn’t actual proof of the first one – was raised during an emergency council meeting, held at the request of British officials who have accused Russia of using “a military-grade nerve agent” to target a former military intelligence officer who committed treason. Russian diplomats have denied responsibility for the incident, but British investigators say they have identified the poison as a chemical weapon produced by the Soviet Union during the Cold War.

They have, however, refused to present it to Russia for examination, despite repeated requests. So without the requirement of even a minimal burden of proof, the propaganda flowed:

“Time and time again, member-states say they oppose the use of chemical weapons under any circumstance,” Haley said. “Now one member stands accused of using chemical weapons on the sovereign soil of another member. The credibility of this council will not survive if we fail to hold Russia accountable.”

* * *

Russia, naturally, has repeatedly denied responsibility for the March 4 incident, which left former spy Sergei Skripal and his daughter Yulia hospitalized, and warned British Prime Minister Theresa May against considering a cyber-attack or other aggressive retaliation. “A hysterical atmosphere is being created by London,” Russian Ambassador Visaly Nebenzia told the Security Council. “We would like to warn that this will not remain without reaction on our part.”

Russia has also faulted the United Kingdom for taking action before submitting to a formal investigation brokered by Organization for the Prohibition of Chemical Weapons. “Those experts will not be convinced by their argument,” he predicted. The British representative at the meeting countered that the United Kingdom has invited the OPCW to conduct an independent test, while faulting Russia for ignoring May’s demand for an explanation earlier this week.

“We have received no meaningful response,” deputy ambassador Jonathan Allen said during the meeting. “This council should not fall for their attempt to muddy the waters.”

Doubling down, Haley compared the Skripal attack to North Korea’s use of a nerve agent to assassinate the half-brother of dictator Kim Jong-un — a murder that resulted in the designation of North Korea as a state sponsor of terrorism. She linked the Salisbury incident to the increasingly-regular use of chemical weapons, especially in Syria, and urged Russia to “come clean” about the assassination attempt.

“The Russians complained recently that we criticize them too much,” she said. “If the Russian government stopped using chemical weapons to assassinate its enemies; and if the Russian government stopped helping its Syrian ally to use chemical weapons to kill Syrian children; and if Russia cooperated with the Organization for the Prohibition of Chemical Weapons by turning over all information related to this nerve agent, we would stop talking about them. We take no pleasure in having to constantly criticize Russia, but we need Russia to stop giving us so many reasons to do so.”

Some tried logic: Nebenzia argued Russia had no reason to try to kill Skripal. He described the former double agent as “a perfect victim” for a plot to frame Russian President Vladimir Putin’s government in the run-up to the March 18 presidential elections.

“[T]he most probable source origin for this chemical are the countries which have since the end of the 90s been carrying out intensive research on these kinds of weapons, including the UK,” Nebenzia told the Security Council. “If the UK is so firmly convinced this is a [Soviet-era] Novichok gas, then that means that they have the samples of this and they have the formula for this and they are capable of manufacturing it.”

By then however, with both sides entrenched in factless allegations, any possibility for a rational discussion was long gone.

Instead, we can now look forward to the moment when Colin Powell will again make a grand appearance in the UN, and definitively prove to the world that Russia is guilty by holding a vial of that infamous Russia anthrax, as justification for heating up a few notches the new cold war between Russia and the West.

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Earlier this week, British Prime Minister Theresa May announced in the House of Commons that Russia was “highly likely” to have been involved in the attempted murder of a former Russian spy and his daughter. The incident left Sergei Skripal, 66, and his daughter Yulia, 33, critically ill in hospital. As Statista’s Niall McCarthy notes, The UK has now announced that it will expel 23 Russian diplomats after Russia failed to explain how a military-grade nerve agent was used in the attack in Salisbury.

Even though the Kremlin has vehemently denied any involvement, insiders have said that all signs point to Moscow and if that’s true, it raises some troubling questions ahead of the country’s presidential election on Sunday.

Some observers have suggested that rogue elements of the Russian government could be responsible for the attack while others are pointing their fingers firmly towards Vladimir Putin. 

Even though there is no evidence that Putin gave the order to carry out a high-profile killing in public, the decision to use nerve agents that could be linked to Russia carries considerable risk. Some have claimed that Putin might have arranged the attack to engineer a confrontation with the west in order to improve turnout at the polls.

If the UK goes a step beyond expelling diplomats and imposes sanctions, Russia could find itself more isolated and that has proven deeply unpopular with the country’s electorate.

Putin is expected to win Sunday’s election easily and even if Russian media portrays the events in Salisbury as some kind of western conspiracy to rally voters, the president’s image is still likely to worsen internationally. 

The most recent polling into how Putin is viewed abroad was conducted in August 2017 by the Pew Research Center. Even before the events in Salisbury, Putin was very unpopular across the world.

You will find more infographics at Statista

In Poland where the relationship with Russia has never been easy, 89 percent of Pew’s respondents said they have no confidence in Putin doing the right thing regarding world affairs.

In France, the share was also high at 80 percent.

In the United Kingdom and the United Stated, 76 and 74 percent of people have no faith in the Russian president doing the right thing on the world stage.

At the other end of the scale, Nigeria and India are more confident than not confident in Putin doing the right thing.

It seems the global propaganda machine has not been able to reach there quite yet.

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Authored by Nick Giambruno via InternationalMan.com,

Trump’s steel and aluminum tariffs may set his epitaph in stone… “Herbert Hoover II.”

History remembers Hoover as one of the worst American presidents.

Like Trump, he was a rich international businessman. He was also a political outsider. Hoover hadn’t held public office before his 1929 inauguration. And, like Trump, Hoover faced intense pressure from struggling American workers.

In 1930, he signed the Smoot-Hawley Tariff Act into law, raising tariffs on thousands of imported goods to record levels. This kicked off a tariff war, reducing American exports by half. It was a crushing blow to the American economy.

Nearly a century later, Trump seems determined to make the same mistakes…

Trump Started This Trade War Last Summer

Trump placed tariffs on steel and aluminum last week. China, of course, is the world’s largest producer of both.

The mainstream press called the tariffs “unexpected.” But they didn’t come out of nowhere.

Last month, I told readers of my advisory, Crisis Investing, that steel and aluminum tariffs were likely. (Paid-up readers can access the issue here.)

In fact, I’ve been pounding the table about a trade war—specifically a trade war with China—since September.

Frankly, I think Trump fired the first shot in this trade war last summer, when his administration launched an investigation against China using Section 301 of the Trade Act of 1974.

This rarely used provision allows Trump to “take all appropriate action… to obtain removal of any [trade] practice that is unjustified, unreasonable, or discriminatory, and that burdens or restricts U.S. commerce.”

Traditionally, World Trade Organization (WTO) members, including China and the US, have settled trade disputes through it. But Trump, using Section 301, has taken a unilateral approach.

The Financial Times describes it like this:

Under the 301 statute, which has not been widely used since the 1995 creation of the WTO, the US would in effect act as judge, jury and executioner on any grievance that it identifies.

No doubt, the investigation will ultimately show that China is pursuing unfair trade practices. This will give Trump all the justification he needs to further escalate his war.

A Record Trade Deficit With China

The investigation was the start of a major pushback against China.

Trump even said, “This is just the beginning, I want to tell you that. This is just the beginning.” He wasn’t bluffing.

In January, Trump fired another shot. He slapped tariffs on imported solar panels and washing machines. China is by far the largest producer of solar panels.

After that, in his first State of the Union address, Trump said that previous trade deals have “sacrificed our prosperity and shipped away our companies, our jobs and our wealth,” and that the “era of economic surrender is totally over.”

Then embarrassment hit…

In February, the Commerce Department announced that the US had realized its largest ever trade deficit with China during Trump’s first year in office. (He’d repeatedly promised to shrink the deficit.)

Trump sees the trade deficit as an economic scorecard between the US and China. Now, with a record high deficit, he has another convenient excuse to escalate the trade war.

One Promise Trump Can Keep

During his campaign, Trump threatened a 45% tariff on Chinese goods entering the US.

He also said China was sucking “the blood out of the United States” and “we can’t continue to allow China to rape our country, and that’s what they’re doing.”

Getting tough with China on trade is a campaign promise Trump can actually keep. Legally, he doesn’t need anyone’s cooperation, as he demonstrated last week.

It also caters to his base, which believes China is largely responsible for the loss of middle class jobs.

And, as I’ll explain shortly, the new tariffs are part of a much larger and genuinely dangerous conflict with China.

How the American Dream Slipped Off to China

China is displacing the US as the #1 world power.

Its GDP is on track to double compared to US GDP by 2030. In other words, China’s economy will soon be twice as large as America’s.

China has already surpassed the US in more ways than you’d think.

For the first time in modern history, Asia is richer than Europe in terms of private wealth. It will also be richer than North America within the next two years.

China is driving this shift.

The Chinese are some of the most aggressive savers in the world. They save more than 30% of their disposable income.

This is a big reason why more than 700 million Chinese people—the equivalent of nearly twice the entire US population—have risen out of poverty over the past couple of decades.

On top of that, China graduates four times as many STEM students (science, technology, engineering, and mathematics) as the US. And that doesn’t even include the Chinese students enrolled in US universities.

This is a powerful trend in motion. And trends in motion tend to stay in motion, unless something bigger stops them.

In this case, that trend stopper could be a war.

The Biggest Player in World History

There’s a 75% chance the US and China will go to war. That’s according to Graham Allison, a professor at Harvard.

Allison looked at the structural stresses that a rising global power creates when it challenges the ruling power. He studied 16 such cases. In 12 of them, the result was war.

This dynamic played out between Athens and Sparta. It played out between Germany and Britain. And today, it’s playing out between China and the US.

Lee Kuan Yew, the former leader of Singapore, put it this way:

The size of China’s displacement of the world balance is such that the world must find a new balance.

It is not possible to pretend that this is just another big player. This is the biggest player in the history of the world.

Military conflict between the US and China is not inevitable. But if history is any guide, there’s an excellent chance – say, 75% – that the US and China will go to war in the not so distant future.

The US government knows this. Steve Bannon, previously one of Trump’s closest advisers, said, “We’re going to war in the South China Sea… no doubt.”

As China overtakes the US, one or a combination of these three things will happen:

1. The US will do nothing. Current trends will continue. China will displace it as the most powerful country in the world.

2. The US and China will go to war (the traditional kind with troops and bombs).

3. The current economic battle between the US and China will escalate into an all-out economic war.

A full-blown economic war is the most likely and most imminent outcome here. I think it’s almost inevitable under President Trump.

China Won’t Cower in the Corner

Trump knows his supporters are passionate about trade and strongly anti-China. It’s a big reason why he won the election and could be reelected. I don’t see him backing down here.

That said, the Chinese have effective ways to retaliate.

They could dump Treasuries. They could limit imports from the US and reduce exports, like iPhones, to the US. They could also harass US companies operating in China.

China could also restrict access to rare earth elements (REEs). It has a virtual monopoly on REEs, which are absolutely essential to advanced electronics and military equipment. Think electronic cars, flat-screen TVs, drones, and fighter jets.

At this point, a full-scale economic war is pretty much baked into the cake. And as we’ve seen in the past week, it’s also imminent.

Unfortunately, this probably won’t end well for Trump or the US.

As Chinese commerce minister Zhong Shan said on Sunday, “There are no winners in a trade war. It will only bring disaster to China and the United States and the world.”

*  *  *

Nick Giambruno’s Note: My team just released an urgent briefing… It includes background details on the tiny rare earth element producer set to soar in the coming months as US-China tensions escalate. As you’ll see, it could hand you as much as 10 times your money… even more. Learn more right here.

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After introducing the list last year, Bloomberg has published its second iteration of the “100 Richest” list – its analysis of the 100 wealthiest towns in America, based off data compiled by the Census bureau. The data is released with a delay, so data from this year’s list stretch back to 2016.

And perhaps the most interesting takeaway from this year’s data is the gains made by midwestern towns – notably suburban Chicago and St. Louis – which are finally making headway against towns along the West and East Coasts that typically comprise the bulk of the towns on the list.

The Silicon Valley suburb of Atherton, Calif. claimed the top spot again. As Bloomberg explains, the six-square-mile town is near Palo Alto, Menlo Park and Stanford University.

Atherton’s average household income was $443,403 in 2016, more than $50,000 higher than second-place Cherry Hills Village, Colorado.

See the list in full below:

Newcomers to the list include three areas in suburban Chicago. The average income in Clarendon Hills, Illinois, about 25 miles west of downtown Chicago, jumped 15% in 2016 from the prior year, breaking into the top 100 for the first time with a tally of $199,325. Three other western Chicago suburbs made the top 100: Burr Ridge, Oak Brook and Hinsdale. All four showed gains in household earnings from between 4% and 15% to 15 percent from the prior year.

The biggest mover on the list was Highland Park, Texas, which moved up to No. 9 from No. 14 the previous year as a zero state income tax and relatively low overall tax burden made it more attractive (since the data is from 2016, the impact of last year’s increase in energy prices isn’t reflected). Another big mover was Los Altos Hills, Calif., which climbed three spots to No. 4. Los Altos Hills is home to tech billionaires, including Google’s Sergey Brin and entrepreneur Yuri Milner.

Another notable entry was Palm Beach, Fla. – home to President Trump’s Mar-a-Lago.

Bloomberg also calculated something called the Gini Index, which is a measure of the homogeneity of incomes. For example, the more incomes are clustered around the median, the lower the Gini reading. 

And the prize for top Gini Index reading was Greenwich, Connecticut, while Darnestown, Maryland scored the lowest. Their scores were 0.37 and 0.65, respectively.

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Authored by Chris Hamilton via Econimica blog,

In 2010, Brookings Institute offered a report stating that the global “middle class” was set to explode, almost entirely from the transition of China’s and India’s urban poor populations to the middle class (middle class meaning annual incomes per household of four from $14,600 to $146,000 in PPP (purchasing power parity)).

In 2017, the Institute updated the original work (HERE) reiterating that from 2015 to 2030, China, India, and the remainder of Asia-Pacific would add 2.1 billion or 89% of the new entrants to the already 3.2 billion person global middle class.  To round out Brookings’ estimate for the middle class from ’15 to ’30; Europe would add just 9 million (less than 0.4%), N. America 19 million (about 0.8%), Central & S. America about 50 million (2.1%), MENA (Middle East/N. Africa) 90 million (3.9%), and sub-Saharan Africa adding 100 million (4.1%).

I have a major problem with the Brooking Institute’s estimates.  Generally, I have major issues with the assumptions but specifically regarding China, I believe the Institute is somewhere from significantly wrong to totally wrong regarding future estimates for China’s middle class…which is likely to reduce or undo the estimated growth throughout.

Births in China:

Let’s begin with China’s births, on an average basis per five years, since 1950 (chart below).  Peak births took place in the 1965-70 period at just over 30 million annually.  But with the introduction of the one-child policy in ’71, the UN data makes it plain that China’s births continued declining in spite of a continually larger childbearing population (aged 15-45 years old).  Even now with the one-child rollback, births are only set to further decline (detailed HERE).

China Childbearing Population:

Of course, after decades of declining births, the annual growth of the child bearing population (15-45yrs/old) began decelerating (chart below).  And after 20 years of deceleration, the population began declining as of 2007.  Slowly at first but by 2017, the childbearing population was had fallen by 88 million with only huge further declines to come.

China Working Age Population:

So it should be no surprise that the annual growth of the working age population (those aged 18-60yrs/old) would begin decelerating as of 1988 (chart below).  Then in 2013, the working age population (those aged 18-60 years old) began shrinking.  In a nation with mandatory retirement at age 60, this matters.  So far, the working age population has “only” declined by 9 million.  However, in a nation with net emigration, we know the maximum possible workforce.  And it is set to decline…massively.  By 2035, there will be about 120 million fewer potential workers…or a 15% decline in potential workers, consumers, tax payers, home buyers.

However, as the chart below highlights, now the pace of working age population decline really begins picking up (chart below).

And to offer some perspective on the size of the working age population declines, the chart below.  In 2014, the decline was a paltry 150k or about the size of Syracuse, NY.  In 2015, China’s potential workforce fell by almost an additional million, or about the size of Delaware.  And then it was Nebraska, and then Nevada, and in 2018 the additional decline will be equivalent to the lose of Oklahoma.  In 2019, China will lose the equivalent of Louisiana, then Virginia, North Carolina, and by 2025 China will be losing the equivalent of New Jersey.  It doesn’t get better…from 2026 through 2028, China will lose the equivalent of Texas.  And over the next seven years, China will lose California.

China Working Age vs. Employees
In a best available “guesstimate” of China’s total employees versus its working age population, the chart below points to a strange crossover by 2024.  Assuming China just continues to add about a third the employees they have been adding, China’s working population will be greater than its potential workforce?  Now in most places, you would say that is impossible…and you would be right.

China Working Age vs. Retirees:

For perspective, consider China’s working age population vs. those 60+ years old.  From 2013 to 2035, the working age population will decline by <124> million versus retirees growing in number by +218 million (chart below).

China’s Importers:
But that’s not the whole story, as there really are only two regions with growth among their under 65yr/old populations (Africa and India (primarily Northern India)).  However, these two account for less than 10% of China’s exports.  The other 90% of China’s export markets are experiencing a rapid deceleration in population growth of their under 65yr/old populations and will likely cease growing prior to 2030.  This is in contrast the importing population growth was but is now just a third that…and set to turn negative in a decade.

Debt…The Final Frontier:

The final chart below shows the now declining annual change among China’s under 65yr/old population (columns), GDP (dark blue line), and the substitution of far faster rising total debt (red line) in lieu of the missing organic growth.  Up to 2000, China had undertaken just $2 trillion in total debt as population growth was robust, driving demand higher.  However, since ’00, when China’s under 65yr/old population growth dramatically slowed, China has pushed out $38 trillion in new debt (primarily to its corporations) that has (and still is), in turn, built massive new debt fueled capacity for a collapsing domestic and global consumer base…what could go wrong?  And now that the consumer base is shrinking, the debt issuance and resultant further build out in new capacity, apartment blocks, shopping malls, etc. etc. is likely set to go into a final mal-investment overdrive.

Conclusion:

So, China’s births have been collapsing for decades, China’s child bearing population is now collapsing, and so it follows that China’s domestic markets have begun shrinking and this shrinkage will only continue to accelerate.  Add to this now their export markets for 90%+ of their exports are hardly growing, and in about a decade, will likewise begin shrinking.  Somehow, none of this was even mention worthy in the Brookings Institute report, let alone problematic for a massive increase in a middle class population.

From my viewpoint, no way in hell does this add up to 350 million Chinese moving into the “middle class”, regardless how many trillions China throws away building new factories, roads, apartment blocks, and infrastructure for a population that is never coming!  As for India, unfortunately, the estimates for middle class growth are every bit as ludicrous, but that is for another day.

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Stephanie Clifford, the former adult-film star better known as Stormy Daniels, is proving to be a much more durable antagonist to President Trump than anybody would’ve guessed when the Wall Street Journal first introduced us to her.

Since first appearing on scene, Daniels has appeared on Jimmy Kimmel, taped a “60 Minutes” interview with CNN’s Anderson Cooper and greenlighted the publication of an interview with a supermarket tabloid where she discussed her affair with President Trump in explicit details (describing the sex as textbook generic).

Somewhere along the way, she became embroiled in a heated legal battle with President Trump, who has yet to acknowledge her. However, he has hired a lawyer specifically to handle the ongoing arbitration and court battles.

Most recently, Daniels – through her lawyer, Michael Avenatti – is offering to return the $130,000 in “hush money” that Trump lawyer Michael Cohen paid her (purportedly on his own initiative) back in October 2016, when she was toying with the idea of going public by sharing her story with “Good Morning America” and Slate.com.

And according to the latest update on the ongoing saga, Daniels will likely remain in the headlines at least through the spring. As AFP reports, Daniels will go to court on July 12 to try and officially have the gag (no pun intended) order thrown out.

Avenatti filed a lawsuit on behalf of Daniels last week seeking to toss out the confidential settlement she signed just days before the November 2016 election. This action came after Daniels lost an arbitration hearing forcing her to adhere to the agreement after Cohen filed a restraining order against her.

The lawsuit alleges that Daniels began an “intimate relationship” with Trump during the summer of 2006. It continued into the following year, ending after – as Daniels tells it – Trump failed to secure a spot for her on his TV show “The Apprentice”.

But what once appeared to be a nuisance suit is getting serious now that Daniels is also asking to be allowed to publish text messages, photos and videos relating to the president. At least, that’s what Avenatti said in a letter to Cohen.

“I think it’s time for her to tell her story and for the public to decide who’s telling the truth,” Avenatti said last week.

Daniels has also argued that she shouldn’t be bound by the agreement because Trump never signed it.  Daniels and Trump were to sign the agreement using the pseudonyms Peggy Peterson and David Dennison.

Daniels’ arch so far has featured more than its fair share of “stunt journalism” pieces as reporters have trepidatiously (not really) ventured out to strip clubs where Daniels has been performing to support herself. Unfortunately, the crowds she had probably been banking on failed to materialize.

In the latest example of the media undermining its own credibility, CNN – in a piece that’s sure to win a Peabody – ventured to Fort Lauderdale, Florida, where Daniels was performing at the Solid Gold gentleman’s club. During an interview after her set, Daniels said that, while the crowds haven’t been as large, she has been getting far more bookings.

But apparently the money hasn’t been good enough, because Daniels recently started a crowd-funding venture on CrowdJustice.com to raise money to fund her lawsuit (as it turns out, Avenatti isn’t working pro bono).

Her goal? $100,000. But as of Wednesday night, she had raised a paltry $2,500.

In a blurb accompanying the post, Daniels outlines the circumstances behind her lawsuit, and accused Trump and Cohen of trying to “silence her.”

I am attempting to speak honestly and openly to the American people about my relationship with now President Donald Trump, as well as the intimidation and tactics that he, together with his attorney Michael Cohen, have used to silence me.

In order to tell my story, I have had to file a public lawsuit in Los Angeles, California in an effort to void a non-disclosure agreement (NDA) that Mr. Trump never signed and yet is trying to use to intimidate me.

Rather than agree that the NDA is invalid, thus allowing me to talk, Mr. Trump and Mr. Cohen have instead attempted to hide the facts from the public using a bogus arbitration proceeding and have threatened me with millions of dollars in damages ($1M each time I speak out) if I tell the truth about what happened.

I recently made an offer to return the $130,000 I was previously paid if it was agreed that I could simply tell the truth publicly.  Mr. Trump and Mr. Cohen did not even bother to respond.

I need funds to pay for:  attorneys’ fees; out-of-pocket costs associated with the lawsuit, arbitration, and my right to speak openly; security expenses; and damages that may be awarded against me if I speak out and ultimately lose to Mr. Trump and Mr. Cohen.

I am more fortunate than many, many people in this country.  And for that I am grateful.  But unfortunately, I do not have the vast resources to fight Mr. Trump and Mr. Cohen alone.  Thank you for supporting me.

Don’t worry, Stormy. If all else fails, maybe some enlightened liberal billionaire intent on antagonizing the president – maybe a Tom Steyer or a George Soros – will finance her lawsuit, Peter Thiel-style, and eventually succeed in getting Trump to acknowledge something everybody already knows is true – but doesn’t care.

 

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Authored by Ryan McMaken via The Mises Institute,

One of the reasons that Donald Trump gives for slapping new protectionist tariffs on steel and aluminum is that it will create manufacturing jobs, and by extension, greatly enhance income growth and standards of living in the United States. 

Trump is capitalizing on an enduring myth of American economic history in which it is believed that declines in manufacturing jobs are accompanied by drops in standards of living as well.

What is often forgotten, however, is that manufacturing jobs, in proportion to the population overall, dropped significantly from the end of World War II through the 1950s and 1960s. And yet, during this time, real median incomes in the United States increased.

Incomes stagnated somewhat during the 1970s, but then grew substantially again during the 1980s and 1990s. And, of course, during the 1980s and 1990s, manufacturing jobs continued a fast downward slide. 

In other words, it is not at all clear that falling manufacturing jobs lead to falling incomes or falling standards of living.

Now, pointing out some correlations — or lack thereof — in the data doesn’t prove that manufacturing jobs have no connection at all to incomes and wealth. To understand that, we need good economic theory. And, on this point sound economics is clear. Higher taxes — i.e., tariffs — are not the way to economic growth. But, when this is pointed out, proponents of higher tariffs say “but history proves that tariffs are great for America!” Well, history “proves” no such thing.

Jobs or Output?

When we talk about manufacturing jobs, though, it’s important to note that we’re not necessarily talking about manufacturing output. 

It’s entirely possible for manufacturing output to increase even while manufacturing jobs are falling. 

This should be obvious, of course, to anyone familiar with the history of agriculture in the United States. In the 18th century, nearly all Americans were involved in the production of agricultural products. By 2008, only two percent of Americans worked in the Agriculture sector, even though American agricultural output is now many times larger than what it was in the 19th century, or even during the mid 20th century. 

Similarly, if we look at manufacturing and industrial output, firms in the United States produce far more today than they did during the mid 20th century, which was allegedly the good ol’ days of manufacturing jobs.

Although manufacturing jobs per capita declined again and again throughout the late 1960s, the 1970s, 1980s and 1990s, we see actual manufacturing and industrial output increasing. 

Indeed, the continued growth of manufacturing and industrial production — with “industrial” output including mining, and energy production — shows that the old saw that “we don’t make things in America anymore” is simply a false statement.

Firms in the United States are making things, and making things of higher value, than was the case in the past. What is different is that fewer and fewer human being are necessary to make these things. 

Thanks to automation and other improvement in productivity, it now takes fewer people to make more things. 

All things being equal, more output per person means more productivity, and less expensive goods. This, in turn leads to rising real incomes.

Now, as I’ve noted in the past, we do start to encounter problems with real incomes in the United States after 2001. Even if we look at three different measures of median incomes, we do see that median incomes stagnated from 2001 to 2015. It’s only been in the last two or three years that we’ve finally begun to see median incomes surpass where they reached in 2007, before the last financial crisis. It took more than eight years for incomes to recover after the last boom.

It would be supremely simplistic however, to look at this malaise in incomes since 2001 then declare that the answer must lie in ginning up manufacturing employment. 

Things become especially dangerous once policymakers begin turning to government interventions to increase manufacturing employment in order to “make America great again.” But that is what we’re now facing from the Trump administration. The Trump has legally justified his tariff increase on national security, because that’s how he can get away with imposing new taxes via executive order. 

However, the administration relies on public misconceptions about the history of manufacturing jobs and incomes in order to gain enhance political support for the move. 

In practice, however, the central premise of the Trump tariff strategy results in an increase in the cost of doing business in the United States, while increasing the cost of living. By raising tariffs on steel and aluminum, the administration is creating new hurdles for most firms seeking to increase industrial and manufacturing output. This is true because only a tiny portion of firms and workers actually benefit from tariffs. The overwhelming majority of workers are in industries that benefit from lower-priced steel and aluminum. The tariff policy is more likely to hurt manufacturing than help it. 

Through press releases from the White House and its friends, we will no doubt hear about the small handful of firms that benefit from tariffs. But we may not hear anything from the firms that scale back employment or output as a result of higher costs.

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Speaking at a roundtable discussion on tax reform and tax cuts on Wednesday evening at Boeing in Missouri alongside Treasury Secretary Steve Mnuchin, President Trump hinted at his intention to eventually begin a “phase two” of his new tax plan.

“We’re actually going for a phase two, which, additionally to the middle class, will help companies. It’s going to be something, I think, very special”, Trump said.

Underscoring the biggest accomplishment of his administration, Trump touted his tax reform plan as something “bigger than anything ever passed in the history of our country” and also went at Democrats for not having a single vote in favor of the tax reform plan. “Now they’re regretting it,” he said.

Meanwhile, speaking on CNBC, Trump’s new chief economic advisor Larry Kudlow shone some more light on what this next iteration of Trump’s plan will be, saying that tax cuts for individuals should be made permanent under “phase two” of the tax overhaul.

“Individuals deserve a permanent break,” Kudlow told a CNBC audience on Wednesday afternoon following Trump’s earlier comments that a second phase of tax changes would be coming, although he didn’t expect a phase two to cut the corporate rate further.

“Talk about capital gains, possibly lowering the rate, but possibly indexing them for inflation, which is something many of us argued for years. We index, the individual code for inflation, because of the 70s experience, index capital gains because you are paying taxes on illusionary or inflationary profits, which is unfair to investors and its anti-entrepreneurship” Kudlow explained.

CNBC’s Ylan Mui countered with a question whether this is a policy proposal or a political proposal ahead of the 2018 midterm elections:

The question here is whether this is going to be a policy proposal or a political proposal. Democrats have already put out their own plan for what tax bill would look like post-2018, including raising the corporate rate to 25%, reinsating things like the alternative minimum tax to individuals and corporations. Now you are seeing republicans hitting democrats on their plan going forward, but they also want their own plan going forward. They don’t want to just run on past accomplishments, so I think that what you’ll see in phase two is really something that’s more geared towards a 2018 midterm messaging rather than something that’s going to actually pass before November.

Kudlow responded that “Phase Two” is not just a political straw man but real policy: “Look, there’s always politics in this stuff, I get it you’re reporting is always great, but I will tell you this, Kevin Brady was really the instigator and he sold president Trump on it, and Trump acknowledged it in a meeting or a speech someplace, and as I spoke to president Trump in recent days, he’s referred to it a number of times. I’ll just say I understand politics and election years, but these are serious proposals, trust me whether they get them or not remains to be seen they are serious proposals.”

Under the GOP tax overhaul passed in December, tax changes for individuals are set to expire at the end of 2025, while the corporate rate cut to 21% from 35% is permanent. Republicans had to comply with Senate budget rules that dictated the tax bill couldn’t add more than $1.5 trillion to the deficit over the next decade.

Trump has previously referenced a so-called phase two of tax cuts – sometimes in a joking manner. As Bloomberg adds,  earlier this week, he said he was “serious” about asking House Ways and Means Chairman Kevin Brady to get it done.

There is just one problem with a permanent tax cut, however. Or 500 billion problems rather, as making the tax changes permanent would add $500 billion to the budget deficit. At the same time, this change would also triple the amount of economic growth, according to a paper earlier this month from Harvard economists, however many disagree. The nonpartisan Joint Committee on Taxation estimated in December that the tax cuts would add about $1 trillion to the deficit after economic growth was taken into account. It was not immediately clear how much greater the US budget deficit would be under a permanent tax cut.

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Via Greg Hunter’s USAWatchdog.com,

Precious metals expert David Morgan says the prolonged sideways price of silver is what bottoms look like in the precious metals market.

Morgan explains, “This market has not moved for a very long time…

“Silver bottomed in December of 2015, and, yes, we have gone up and down and up and down, but the overall lows have been higher lows, which is the definition of an uptrend.  Silver and gold have started a subtle uptrend from the bottom in 2015, but it certainly has been slow and tedious and back and forth.  I coined a phase, ‘silver will either scare you out or wear you out.’  We are in the wear-you-out phase.  A lot of people who were believers at one time have become non-believers.  The markets have worn them out, and they have moved on to something else.”

In the bond market, Morgan fears low interest rates spell danger. Morgan says, “The most important commodity in the world is oil, but the most important financial asset is the U.S. Treasury market…

“…this is key, and what is so unbelievable if you think about it, the one asset class that is supposed to be the safest is the  U.S. Treasury market, and it’s the least safest. 

Something that is supposed to be unsafe like silver and gold are the safest.  The Treasury market does not have several thousand years of history of being money.  All fiat currencies have failed in the long run…

The dollar has lost 98% of its buying power since 1913, and the Fed is supposed to have a stable currency policy.  Well, they have failed miserably.”

On the success of President Trump and the ongoing war with the so-called “Deep State,” Morgan contends:

“If the “Deep State” gets pushed into a corner much further, they can basically pull the plug. That means the stock market could come tumbling down, and then they could blame the Trump Administration…

If you are losing the chess game, you just get up and turn the table over and the pieces go flying everywhere.  That is a metaphor for a war.  That’s a metaphor for crashing the stock market.  That’s a metaphor for crashing the bond market, and it’s a metaphor for it happening on its own.  I am concerned that if you win, you lose.  This is why the unraveling is being done extremely carefully…

I am not saying it is going to happen.  I am saying it could happen.  These people are so used to winning a rigged game, if they start being caught, and they have been caught, then they are going to do things that are not necessarily predictable.  They are not going to act in a rational manner. 

They are going to do anything possible to protect themselves.  You cannot rule out the possibility that they will turn the table over and that’s it.”

This, along with many other reasons, is why Morgan says,

“You have to have physical gold and silver in your portfolio to be truly diversified and protected.”

Join Greg Hunter as he goes One-on-One with David Morgan of TheMorganReport.com.

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In a disturbing echo of the runup to the housing crisis, a recent study has revealed that the practice of flipping homes in the US is back in vogue – with the number of houses flipped rising to its highest level in 11 years.

If that doesn’t spook residential real-estate speculators, we’re not sure what would. Hundreds of thousands of American homebuyers have apparently forgotten how, 11 years ago, a Mexican immigrant working as a strawberry picker in Bakersfield, California, making $14,000 per year, was lent every single penny he needed to purchase a $720,000 home.  And as crazy as that might sound, stories such as that were alarmingly common during the period before the 2008 housing crash (though, of course, few, if any, alarm bells actually went off).

Last year, we noted that investors had started flipping homes as if it were 2006 all over again, with the number of homes flipped accounting for 6.1% of all US home sales. Back in 2006, the figure rose to a record 7.3%.

What’s worse, we pointed out that the cities with the highest rates of home-flipping were essentially the same cities that were the hardest hit by the crisis.

Now, data provided by ATTOM Data Solutions – which maintains the largest database of US home sales – showed the home flipping reached a new peak, with 207,088 single family homes and condos flipped in 2017, up 1% from the 204,167 homes flipped during 2016. Again, that’s the highest rate since 2006. That’s 5.9% of all single family home sales.

Meanwhile, a total of 138,410 entities (which includes both individuals, who typically buy and sell under the cover of an LLC, and institutions) flipped homes in 2017, up 4% from the 133,407 entities that flipped in 2016 to the highest level since 2007. That’s a 10-year high.

However, an executive at ATTOM Data Solutions assured readers that home-flipping today is “built on a more fundamentally sound foundation than the flipping frenzy that we witnessed a little more than a decade ago.

Home flip lending volume up 27 percent to 10-year high

The total dollar volume of financed home flip purchases was $16.1 billion for homes flipped in 2017, up 27% from $12.7 billion in 2016 to the highest level since 2007 — a 10-year high.

Meanwhile, the total dollar volume of financed home flip purchases was $16.1 billion for homes flipped in 2017, up 27% from $12.7 billion in 2016 to the highest level since 2007 — a 10-year high.

Average home flipping returns pull back from all-time high

Sales of flipped homes in 2017 yielded an average gross profit of $68,143 (the difference between median purchase price and median flipped sale price) – a 5% increase from an average gross flipping profit of $64,900 in 2016 to a new all-time high for as far back as data is available (2000).

That profit represented a nearly 50% ROI, which is actually down from an all-time gross ROI of 51.9% ROI in 2016.

Among 52 metro areas analyzed in the report with at least 1 million people, those with the highest home flipping rate in 2017 were Memphis, Tennessee (12.8%); Las Vegas, Nevada (9.1%); Tampa-St. Petersburg, Florida (9%); Birmingham, Alabama (8.6%); and Phoenix, Arizona (8.5%). While the cities with the biggest increase in home flipping rates were Buffalo, New York-Northern New Jersey, Dallas-Fort Worth, Louisville Kentucky.

Homes on average took 182 days to flip in the US last year, tied with 2016.

With US home prices having finally surpassed their pre-crisis peak, and, in 80% of US cities, valuations are growing faster than wages…

And as credit card, student loan and auto debt swell to record highs, we imagine millennials – who are perhaps the most indebted generation in recent history – will swiftly pick up the slack and keep pushing these prices higher…

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