Jeff Flake and the Hated—Yet Vital—Libertarian Center

Jeff Flake's weird Friday. ||| Ron Sachs/SIPA/NewscomIt wasn’t just elevator-activists Ana Maria Archila and Maria Gallagher who were furious at Jeff Flake Friday morning, after the soon-to-retire Republican senator from Arizona began arguably the craziest day of his tumultuous past two years by announcing that he intended to vote “yes” to confirm embattled Supreme Court nominee Brett Kavanaugh.

“I wish I could say I am surprised by Jeff Flake,” Washington lifer Norman Ornstein tweeted. “Sadly, I am not. Party wins again….He failed the moral test.” In blue-checkmark land Flake was a “coward,” a “poisonous jellyfish that looks harmless because it has no spine yet still manages to sting you.” The clickservative right, meanwhile, rallied temporarily to one of its least favorite senators. “I have plenty of disagreements with @JeffFlake but I am so proud that he is taking a stand and voting yes on Brett Kavanaugh,” wrote Candace Owens. “Stay strong!”

As we know, Flake did not stay strong, at least by #MAGA measurements. Instead he played Hamlet, dramatically delaying a Senate Judiciary Committee vote (during which Twitter lit up with cracks like, “Would any serious writer even dare invent a character called Senator Flake who can’t seem to make his mind up whether to back his own side?”), before finally announcing his initially confusing deal to send Kavanaugh’s confirmation to a full Senate vote in exchange for spending up to one additional week on an FBI investigation into existing allegations into Judge Kavanaugh’s alleged sexual assault as a youth.

Now, as Flake prepares for a joint 60 Minutes interview Sunday with his friend and compromise partner Sen. Chris Coons (D-Del.), most partisans on both sides have retreated to their usual position: Hating Jeff Flake. He’s an “out of touch narcissist,” said Fox News Channel host Laura Ingraham. Countered Linda Stasi in the New York Daily News, “While it looks like Sen. Jeff Flake found a backbone, the truth is, he did exactly what every Republican did so successfully during the entire ugly, disgraceful hearing of Supreme Court nominee Brett Kavanaugh—he tried to appear both empathetic and strong while acting every inch the coward.”

There is no place more despised in American politics right now than the center. Not the ideological center, necessarily, but the temperamental center. That space inhabited by people who recoil instinctively from bloody-knuckled partisanship and the collectivist demonization it requires, who lament the erosion of democratic norms and the delegitimization of mediating institutions. At a moment of intense polarization, when the time for choosing was yesterday, who has the patience for such scoldy fence-sitters?

You can find a lot of libertarians in this unhappy camp, averse as they usually are to the tribal political hysterics of the day. Flake is among the most libertarian members of the Senate; in the House, arguably the most temperamentally centrist member is the one who prefers describing himself with the (as-yet lower-case) l-word: Rep. Justin Amash (R-Mich.). Amash’s Twitter feed these days is filled with such cheery observations as, “Political discourse today is driven almost entirely by tribalism and bias and very little by principles and truth. We’ve come to a sad and dangerous place. Liberty cannot survive without virtue.”

But you can find a lot of anti-libertarian people in the temperamental center as well. Bill Kristol. John Kasich. Benjamin Wittes. The late John McCain, and the D.C. establishment that mourned him (and its own receding power) for a week last month. There is a whole cadre of anti-Trump conservatives who have not yet come to grips with the way their support for war, surveillance, spending, bailouts, and wink-nudge populism helped discredit their precious establishment in the first place.

Jeff Flake is coming from a more consistently principled position. In 2006, when many of today’s noisy #NeverTrumpers were in the Bush administration governing poorly and doubling the national debt, Flake, then a congressman, was keeping it real with Reason‘s Katherine Mangu-Ward: “You look at any measure of spending—overall spending, mandatory, discretionary, non-defense discretionary, non-homeland security spending—whichever way you slice it, the record looks pretty bad.”

Pox-on-both-houses centrism, even with some libertarian flavoring, does not always lead to wisdom. Setting your own coordinates by the position of the other two poles is reactive, unsteady, a recipe for squishiness. (This is one of many reasons why, even though there are many of libertarians who can be found in the temperamental center, there are a lot of other, more anarchistic libertarians who positively hate that place and the people associated with it.)

As I recounted in a column last December, “Flake moved to confirm as attorney general Jeff Sessions and, before that, Loretta Lynch. Both are abysmal on civil asset forfeiture, a form of government theft the senator has long decried. He voted in favor of the authorization for use of military force in Iraq, though he later turned against the war. He advocated missile strikes on Syria in September 2013 and again when President Trump lobbed some in April 2017.” His hands are not spotless.

But after a week as ugly as the one America just experienced, there is value in having a sensitive soul near the levers of power. “The U.S. Senate as an institution—we’re coming apart at the seams,” Flake told The Atlantic‘s McKay Coppins. “There’s no currency, no market for reaching across the aisle. It just makes it so difficult.”

Just these last couple of days—the hearing itself, the aftermath of the hearing, watching pundits talk about it on cable TV, seeing the protesters outside, encountering them in the hall. I told Chris [Coons], “Our country’s coming apart on this—and it can’t.” And he felt the same.

Cue a million cynics playing their tiny violins, and 10 million partisans finding holes in the Flake-brokered settlement. And yet.

Sen. Amy Klobuchar (D-Minn.), one of the few senators on the Judiciary Committee to not completely beclown themselves this week, made a persuasive point Friday. It was this: “The question is not if it’s messy—Senator Flake himself said yesterday, this is not a good process, but it’s all we’ve got. The question is, what do you do when it happens, when you’re in a position of power? What do you do when it happens? You may not like how this came in at the last minute—I would have liked to know about it earlier, too, but I didn’t. The question is, what do you do when it happens?”

The Republican position, until Flake intervened, was the one articulated forcefully by Sen. Lindsay Graham (R-S.C.) on Thursday: Democrats sat on the confidential allegation by Christine Blasey Ford until the last minute, deployed it cynically (and in violation of Ford’s desire for confidentially) only as a last-gasp measure, then used the resulting media storm to delay, delay, and delay some more. “If you vote no,” Graham snarled at his Republican colleagues, “you’re legitimizing the most despicable thing I have seen in my time in politics.”

This was both persuasive argument and ominous warning. It is damn near impossible to view the two-party divide in America right now and imagine it getting anything but much worse. Might, not right, is the rule of the day. Inconvenient individuals will be like cockroaches on a steamroller. Meanwhile—not a small point, this—a lifetime seat on the Supreme Court hangs in the balance less than 24 hours after searing testimony that made the accuser look more credible and the accused somewhat less so, while also underlining that corroborating evidence was practically non-existent (in part because the committee inexplicably ruled out subpoenaing alleged witness Mark Judge).

So what to do?

Commentators in the temperamental center—Timothy P. Carney, Megan McArdle, Ross Douthat—proposed variations on the same theme: Just investigate a bit longer, clear up some of the more soluble disparities, and schedule a prompt vote. The non-grandstanding Democrats on the committee (basically Klobuchar and Coons) articulated a similar bargain.

But it took a haunted-looking Flake, reportedly operating on zero sleep, normally handsome face puffed up with five extra pounds of frown, to make that reasonable and de-escalatory framework a reality. The libertarian wing of the temperamental center delivered a result that at least temporarily forestalled the worst of American smash-mouth politics.

The resulting FBI investigation is already being circumscribed and contested. The chances of votes being significantly changed look preliminarily small (Flake himself has said that he hopes to vote yes). It’s always a safe bet that each new week of American politics will be worse than the last.

Which means only one thing: Sooner rather than later, voters can get back to hating Jeff Flake. And wishing there were more like him.

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Fragility Of Middle-East Alliances Becomes Ever More Apparent

Authored by James Dorsey via MidEastSoccer blog,

Three recent developments lay bare the fragility of Middle Eastern alliances and a rebalancing of their priorities: the Russian-Turkish compromise on an assault on the rebel-held Syrian region of Idlib, thefate of troubled Abu Dhabi airline Ettihad, and battles over reconstruction of Syria.

These developments highlight the fact that competition among Middle Eastern rivals and ultimate power within the region’s various alliances is increasingly as much economic and commercial as it is military and geopolitical. Battles are fought as much on geopolitical fronts as they are on economic and cultural battlefields such as soccer.

As a result, the fault lines of various alliances across the greater Middle East, a region that stretches from North Africa to north-western China, are coming to the fore.

The cracks may be most apparent in the Russian-Turkish-Iranian alliance but lurk in the background of Gulf cooperation with Israel in confronting Iran as well as the unified front put forward by Saudi Arabia and the United Arab Emirates.

Russia, prevented, at least for now, a rupture with Turkey, by delaying an all-out attack on Idlib despite Iranian advocacy of an offensive. Turkey, already home to three million Syrians, feared that a Syrian-Russian assault, would push hundreds of thousands, if not millions more across its border.

If Iran was the weakest link in the debate about Idlib, it stands stronger in its coming competition with Russia for the spoils of reconstruction of war-ravaged Syria.

Similarly, Russia appears to be ambivalent towards a continued Iranian military presence in post-war Syria, a potential flashpoint given Israel’s opposition and Israeli attacks that led earlier this month to the downing of a Russian aircraft.

By the same token, Turkey, despite its backing of Qatar in its 15-month-old dispute with a Saudi-UAE-led alliance that is boycotting the Gulf state diplomatically and economically, poses perhaps the greatest challenge to Qatari efforts to project itself globally by operating one of the world’s best airlines and positioning itself as a sports hub.

Turkey, despite its failure this week to win the right to host Euro 2024 and its lack of the Gulf’s financial muscle, competes favourably on every other front with Qatar as well as the UAE that too is seeking to project itself through soft as well as hard power and opposes Mr. Erdogan because of his Islamist leanings, ties to Iran, and support of Qatar. Turkey wins hands down against the small Gulf states when it comes to size, population, location, industrial base, military might, and sports performance.

That, coupled with a determination to undermine Qatar, was likely one reason, why the UAE’s major carriers, Emirates and Etihad that is troubled by a failed business model, have, despite official denials, been quietly discussing a potential merger that would create the world’s largest airline.

Countering competition from Turkish Airlines that outflanks both UAE carriers with 309 passenger planes that service 302 destinations in 120 countries may well have been another reason. Emirates, the larger of the two Emirati carriers, has, a fleet of 256 aircraft flying to 150 destinations in 80 countries.

These recent developments suggest that alliances, particularly the one that groups Russia, Turkey and Iran, are brittle and transactional, geared towards capitalizing on immediate common interests rather than shared long-term goals, let alone values.

That is true even if Russia and Turkey increasingly find common ground in concepts of Eurasianism. It also applies to Turkey and Qatar who both support Islamist groups as well as to Saudi Arabia and the UAE who closely coordinate policies but see their different goals put on display in Yemen.

The fragility of the alliances is further underwritten by Turkish, Russian and Iranian aspirations of resurrecting empire in a 21st century mould and a Saudi quest for regional dominance.

Notions of empire have informed policies long before realignment across Eurasia as a result of the focus of the United States shifting from the Middle East to Asia, the rise of China. increasingly strained relations between the West and Russia, and the greater assertiveness of Middle Eastern states like Saudi Arabia, the UAE and Iran.

Then president Suleyman Demirel told this author already in the 1990s in the wake of the demise of the Soviet Union and the emergence of independent, mostly ethnically Turkic Central Asian republics that “Turkey’s world stretches from the Adriatic to the Great Wall of China.”

In a world in which globalization is shaped by geopolitical zones rather than individual countries, Russia’s imperative is to be a region by defining itself as an Asian rather than a European power that would be on par with China, the European Union, and a US zone of influence.

“Putin does not think along national lines. He thinks in terms of larger blocks, and, ultimately in terms of the world order,” said former Portuguese minister for Europe, Bruno Macaes in a recently published book, The Dawn of Eurasia.

In doing so, Russia is effectively turning its back on Europe as it reinvents itself as an Asian power on the basis of a Eurasianism, a century-old ideology that defines Russia as a Eurasian rather than a European power.

The Eurasian Economic Union, that groups Russia, Kazakhstan. Kyrgyzstan, Belarus and Armenia, is a vehicle that allows Russia to establish itself as a block in the borderland between Europe and Asia.

Similarly, Eurasianism has gained currency in Turkey with President Recep Tayyip Erdogan, who enabled by the demise of the Soviet Union and the re-emergence of a Turkic world, projects his country as a crossroads between Europe, Africa and Asia rather than a European bridge to Asia.

In that vein, Turkish columnist Sinan Baykent projected this week’s fence-mending visit to Germany by Mr. Erdogan and his proposal for a summit on Syria of Turkish, Russian, German and French leaders as a Eurasian approach to problem solving.

The meeting between Mr. Erdogan and German chancellor Angela Merkel was meant “to pave the way for a Eurasian solution for the region… There is a new axis forming today between Berlin, Moscow, Ankara, Tehran and maybe Paris… All of these countries are fed up with American unilateralism and excessive policies displayed by the Trump administration.,” Mr. Baykent said.

If Turkey and Russia’s vision of their place in the world is defined to a large extent by geography, Iran’s topology dictates a more inward-looking view despite accusations that it is seeking to establish itself as the Middle East’s hegemon.

Iran is a fortress. Surrounded on three sides by mountains and on the fourth by the ocean, with a wasteland at its centre,” noted Stratfor, a geopolitical intelligence platform. Gulf fears are rooted not only in deep-seated distrust of Iran’s Islamic regime, but also in the fact that the foundation of past Persian empire relied on control of plains in present-day Iraq.

As a result, the manoeuvring of Gulf states, in contrast to Turkey and Russia, is driven less by a conceptual framing of their place in the world and more by regional rivalry and regime survival. Countries like Qatar, Saudi Arabia and the UAE walk a fine line focusing geopolitically on an increasingly unpredictable United States and economically on China and the rest of Asia, including Russia, Korea and Japan.

What the plight of Idlib, potential change in aviation and competition for reconstruction contracts highlight is the brittleness of Middle Eastern alliances that threatens to be reinforced by economics becoming an increasingly important factor alongside geopolitics.

“Stakes for all parties are starting to divert from each other in Syria and the prospects of cooperation with Russia and Iran are becoming more challenging,” said Turkish columnist Nuray Mert commenting on the situation in Idlib. Her analysis is as valid for Idlib as it for the prospects of many of the Middle East alliances.

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Chinese Air Force Holds Live-Fire War Drill In South China Sea Days After US Exercise

China Central Television, as per the Twitter account of the official People’s Daily newspaper, reported Saturday that the Chinese military deployed fighter jets and bombers to conduct live-fire war drills in the disputed South China Sea, just days after the Japan Air Self-Defense Force and nuclear-capable US B-52 strategic bombers held exercises over the East China Sea and the Sea of Japan on September 27.

The report said dozens of jet fighters from the People’s Liberation Army Naval Air Force from the Southern Theater Command on early Saturday conducted “live-fire drills to tests pilots’ assault, penetration and precision-strike capabilities at sea,” said The Japan Times.

Beijing on Thursday blasted the US and Japan exercise over the East China Sea, calling them a “provocation.”

“China’s principle and standpoint on the South China Sea are always clear,” Defense Ministry spokesman Ren Guoqiang said, according to Chinese state-run media. “China firmly opposes U.S. military aircraft’s provocation in the South China Sea, and will take all necessary measures.”

Japan’s Mainichi Shimbun News said the joint drills between the US and Japan were highly “unusual,” as what we pointed out last week, a China-Japan maritime crisis is inevitable over the disputed Senkaku Islands.

It seems that Thursday’s move was aimed at keeping China in check amid increasing tensions between Beijing and Washington, including an intensifying trade war. 

But in a tit-for-tat effort, China hit back with war drills of their own on Saturday.

Chinese Foreign Ministry spokesman Geng Shuang criticized unnamed countries (US, United Kingdom, and France) for using freedom of navigation and overflight as excuses to disrupt other countries’ sovereignty and security, disturbing regional peace and stability.

In August, US bombers conducted similar exercises over the South China Sea. In addition to those exercises, the warplanes integrated with the Yokosuka, Kanagawa Prefecture-based Ronald Reagan Carrier Strike Group in the region.

In June, China’s Foreign Ministry said no military in the world could scare China from the South China Sea when the US flew planes in the heavily disputed waters miles from its militarized islands.

Washington and Beijing have unleashed a series of war drills over the militarization of the South China Sea, where China, Taiwan, Vietnam, Malaysia, Brunei, and the Philippines all have active claims.

Washington and Beijing have yet to clash over the region — the area includes critical shipping lanes through which over $3 trillion in global trade passes each year — and where China has constructed a series of militarized islands. China claims the area with its so-called nine-dash line, which encompasses most of the economic zones. 

At a moments notice, the region could become unstable and war break out. All eyes on the East Asian maritime region.

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Elizabeth Warren Hints At 2020 Presidential Run

Pocahontas is almost ready to make it official.

Massachusetts Sen. Elizabeth Warren said Saturday during a town hall meeting that she would consider a run for the Democratic nomination in 2020 once the midterms are over.

“After Nov. 6, I will take a hard look at running for president,” Warren told the crowd in Holyoke, Mass., provoking uproarious applause.

During the meeting, the Democrat shared her views on President Trump’s agenda and the state of the country in the Trump era, while also weighing in on the controversy surrounding Trump’s SCOTUS pick, Brett Kavanaugh and the allegations of sexual misconduct that have forced the postponement of his confirmation vote pending the outcome of a limited FBI background-check probe, as USA Today reported.

“I watched powerful men helping a powerful man make it to an even more powerful position,” Warren said, according to the newspaper. “And I thought, ‘Times up'”. “It’s time for women to go to Washington and fix our broken government and that includes a woman at the top.”

After she declared what was essentially a soft declaration of her 2020 campaign, the crowd responded with a standing ovation, as video of the event showed.

Previously, Warren had stayed quiet on her 2020 plans, telling NBC’s “Meet the Press” back in March that she wanted to focus on her current job, and denied wanting to run (though her name has consistently been ranked among the likely contenders for the Democratic nom in what remains a wide-open field).

“I am in this fight to retain my Senate seat in 2018. That’s where I’m focused. That’s where I’m going to stay focused,” Warren told MTP. “I’m not running for president.”

However, Warren refused to “pledge” to serve out her full six-year term.

Watch the video below:

According to RealClearPolitics, Warren, who will be defending her seat in 2018, currently boasts a double-digit lead over her Republican challenger, Beth Lindstrom.

Warren

The Boston Globe pointed out that Warren has been campaigning for Democrats in battleground states and making other moves that could presage a presidential run. According to federal filings, she has $15.6 million in her campaign war chest.

Meanwhile, at a rally in West Virginia, President Trump urged the crowd to vote for Republicans on Nov. 6, saying Warren is “conservative” compared with the new base of the Democratic Party.

“They’ve gone crazy. They’ve gone loco.”

 

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CNN Founder Ted Turner: Network “Sticking With Politics A Little Too Much”

In a rare interview on CBS Sunday Morning with CNN founder Ted Turner, the billionaire and former media mogul said his former network now focuses “too much” on politics, and that he wishes the company would strive for more “balanced” programming between politics and other news.

Turner told veteran anchor Ted Koppel that he rarely follows the news, and only watches his former news channel occasionally.

Echoing many complaints that CNN has become a left-wing echo chamber with a clear political bias and agenda, Turner told Koppel that “I think they’re sticking with politics a little too much. They’d do better to have a more balanced agenda. But that’s, you know, just one person’s opinion.”

Turner left Time Warner, the company that owns CNN, in 2006 after the company bought the cable network 10 years earlier. Turner launched CNN in 1980, and grew it to become a global news network viewed in hundreds of countries.

In the interview that is set to air on Sunday, the 79-year-old Turner also  said he’s suffering from Lewy body dementia, a progressive brain disease similar in effects to Alzheimers and which leaves him tired and forgetful.

“It’s a mild case of what people have as Alzheimer’s,” Turner told Ted Koppel in an interview due to air on CBS. “It’s similar to that. But not nearly as bad. Alzheimer’s is fatal.”

Turner, who was interviewed on his 113,000-acre ranch near Bozeman, Montana, told Koppel that symptoms previously blamed on manic depression were in fact caused by Lewy body dementia. The late comic Robin Williams also is believed to have suffered from the disease.

He also discussed his past deliberations about running for president, which he said occurred during his marriage to then-wife Jane Fonda: “Well, the closest I came to running for office was when I was married to Jane Fonda. And when I discussed it with her – she was married to one politician,” Turner says in the interview. “And she said, you know, ‘If you run for, for office, you run alone.'”

 

 

 

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One Step Closer To Recession, And Jay Powell’s Looming Whiplash

Authored by James Rickards via The Daily Reckoning,

As you know by now, the Federal Reserve raised interest rates again this week, its eighth increase since the rate hike cycle began in 2015.

In his post-announcement press conference, Jerome Powell cited a strong economy, low unemployment, solid growth, etc. He said that “It’s a particularly bright moment” for the economy.

Barring significant developments, the Fed may raise rates again in December and perhaps three times next year.

Meanwhile, the Commerce Department announced that second quarter U.S. GDP expanded at a 4.2% annualized rate, confirming the earlier estimate.

On the surface it might look everything is great, that it is a particularly bright moment for the economy. But if you take a hard look behind the numbers, a different picture emerges.

A lot of the cheerleaders say Trump’s programs of tax cuts and deregulation will produce persistent trend growth of 3–4% or higher.

Such growth would break decisively with the weak growth of the Obama years. It would also make the U.S. debt burden, currently at 105% of GDP, more sustainable if GDP were to grow faster than the national debt.

There’s one problem with the happy talk about 3–4% growth. We’ve seen it all before.

  • In 2009, almost every economic forecaster and commentator was talking about “green shoots.”

  • In 2010, then-Secretary of the Treasury Tim Geithner forecast the “recovery summer.”

  • In 2017, the global monetary elites were praising the arrival (at last) of “synchronized global growth.”

None of this wishful thinking panned out. The green shoots turned brown, the recovery summer never came and the synchronized global growth was over almost as soon as it began.

Any signs of trend growth have been strictly temporary (basically moving growth from one quarter to another through inventory and accounting quirks) and are quickly followed by weaker growth. In the first quarter of 2015, growth was 3.2%, but by the fourth quarter that year growth had fallen to a near-recession level of 0.5%.

In the third quarter of 2016 growth was 2.8%, but it fell quickly to 1.2% by the first quarter of 2017. In the third quarter of 2017 growth was 3.2% but then returned to 2.0% by the first quarter of 2018, about the average for the past nine years.

This pattern of temporarily strong growth followed by weak growth has been characteristic of the entire recovery that began in June 2009 and entered its 10th year a few months ago. In fact, we’ve seen even more extreme reversals in the recent past.

In the third quarter of 2013, growth was 4.5%. But by the first quarter of 2014, just six months later, growth was actually negative, -2.1%, comparable to some of the worst quarters in recent recessions.

Growth was 5.0% in the third quarter of 2014, but then fell off a cliff and was barely positive, 0.2%, in the first quarter of 2015.

You get the point. Strong quarters have been followed by much weaker quarters within six months on six separate occasions in the past nine years. There’s no reason to believe this trend will end now.

The longer-term view of the entire recovery is more revealing. The recovery is currently 109 months old, the second-longest since the end of the Second World War. The average recovery since 1980 (a period of longer-than-average expansions) is 83 months.

So this expansion has been extraordinarily long — far longer than average — indicating that a recession should be expected sooner rather than later.

But the current expansion has also been the weakest recovery on record. Average annual growth during this expansion is 2.14%, compared with average annual growth for all expansions since 1980 of 3.21%. That 3.21% figure is what economists mean by “trend” growth.

Even with the latest GDP numbers, the current expansion does not even come close to that trend. The “wealth gap” (the difference between 3.2% trend growth and 2.1% actual growth) is now over $4 trillion. That’s how much poorer the U.S. economy is due to its inability to achieve sustainable trend growth.

As for the Trump bump, growth in the first quarter of 2018 was 2.0%, slightly below the average since June 2009. Growth for all of 2017, Trump’s first year in office, was 2.6%, slightly above the 2.14% average in this recovery but not close to the 3.5% growth proclaimed by Trump’s supporters.

In short, growth under Trump looks a lot like growth under Obama, with no reason to expect that to change anytime soon. In fact, the head winds caused by the strong dollar, the trade wars and out-of-control deficit spending may slow the economy and bring future growth down below the average of the Obama years.

I’ve said repeatedly that the Fed is tightening into weakness. But it’s more than the rate hikes. The Fed is also winding down its balance sheet, and the pace is scheduled to accelerate next year.

Far from printing money, the Fed is destroying base money at a rapid pace. The Fed is basically burning money. They’re doing this by not rolling over maturing Treasury and mortgage securities they hold on their balance sheet. That’s a “double whammy” of tightening.

When a security held by the Fed matures and the issuer pays it off, the money sent to the Fed just disappears. It’s called quantitative tightening, or QT.

When the Fed started QT in late 2017, they urged market participants to ignore it. They said the QT plan was on autopilot, the Fed was not going to use it as an instrument of policy and the money burning would “run on background” just like a computer program that’s open but not in use at the moment.

It’s fine for the Fed to say that, but markets have another view. Analysts estimate that QT is the equivalent of two–four rate hikes per year over and above the explicit rate hikes.

Bearing in mind that monetary policy works with a 12–18-month lag, this extraordinary tightening policy in a weak economy is almost certainly a recipe for a recession.

And expected results are beginning to show up in the markets. Mortgage interest rates are up, mortgage refis are sinking like a stone and housing affordability is suffering.

This will eventually result in fewer new home purchases, slower household formation and a weakening economy. The Fed will have to reverse course and cut rates, or at least “pause” in raising rates much sooner than they think.

The Fed knows a recession will happen sooner rather than later and is desperate to acquire some dry powder (in the form of higher rates and a reduced balance sheet) so it can use it when the time comes.

The problem, of course, is that by pursuing these policies, the Fed will cause the recession it is preparing to cure.

The single most important factor in my analysis is that when the Fed realizes its mistake of tightening into economic weakness, it will have to turn on a dime and shift to an easing policy.

Easing will come first through forward guidance and pauses in the rate hike tempo, then possibly actual rate cuts back to zero and finally reversing their balance sheet reductions by expanding the balance sheet through QE4 if needed.

Jay Powell seems determined to continue rate hikes on an aggressive path and possibly to accelerate the hikes. But he might be in for a severe case of whiplash when he has to make a hard pivot to easing.

But by then, the damage will have been done.

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UT Professor’s Laptop Plays Porn In Front Of Packed Lecture Hall With 500 Students

A professor at the University of Toronto’s Scarborough Campus accidentally played a porno to a lecture hall filled with approximately 500 students last week, according to multiple reports. 

On September 24, a video surfaced that appears to show UTSC psychology professor Steve Joordens playing a pornographic video on the projector screen by accident.

The incident, which apparently took place at the start of the lecture, was recorded by one of the students in the class via a Snapchat video and subsequently posted onto Reddit, where, along with many memes made about the event, it instantly went viral.

The class, which was reportedly PSYA01: Introduction to Biological and Cognitive Psychology, had about 500 students in the lecture hall. As seen in the video posted by the student, many students in the class were laughing, though others could be seen walking out of the room.

“When I saw the [pornographic] video, I was surprised,” the original poster, a first-year student studying Philosophy, wrote. –The Varsity

“I was not expecting that especially this early in the morning… I found the whole situation funny and he made a lot of people laugh,” said the student. 

Professor Steve Joordens – who joined UTSC in 1995, responded to the incident – telling The Varsity: “With respect to the event that happened prior to my class on Monday the 24th, I want to be clear that what happened was completely unintentional and I feel absolutely terrible about it,” adding “I have apologized to my class and now I want to move on. Thanks to my students, colleagues and my amazing family for their support and understanding.”

Surprisingly, the professor didn’t cancel the lecture or really do anything apart from taking the video down and, according to students, said “well that was awkward” and resumed teaching. At face value, it seemed that was the end of the story. Though many students are convinced it’s actually a part of something bigger. –Narcity

“Everyone makes mistakes so I can’t blame him,” said the student who posted the video. “I hope nothing bad happens in the future and this can just be a thing to laugh about, I hope his job isn’t affected or anything in his personal life either.”

That said, not everybody think the porn was an accident… 

One Reddit user who claims they were a student of the professor’s back in 2008 believes the whole thing was staged. This is because a similar odd instance had happened in their own class with the professor, that had been part of a skit meant to enhance the lesson that was being taught that day: 

Surprisingly enough, it turns out that using pornography as lecture material isn’t a foreign concept. It’s actually been used as educational material in Psychology, Sociology, Gender Studies and sexuality-based courses. But, when you start including that kind of media in your lecture, it is common practice to give students the option not to participate. –Narcity

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Your Semi-Annual Golden Week Reminder…”They Are Really Pushing It”

Authored by Jeffrey Snider via Alhambra Investment Partners,

It’s that time of year. September, the leaves start to turn and the air grows crisp. Autumn smells arrive; the Chinese prepare for their nationalist Golden Week. Ever since 2014 and the dollar’s rise, that is, eurodollar tightening especially in Asia, these holiday bottlenecks are never boring. To be shut down for an entire week in early October, the banking system in China builds up a liquidity stockpile in September.

There were actually three Golden Weeks up until 2007. The middle one, surrounding Communists’ infatuation with May Day, was quietly dismissed on the recommendation of the Chinese People’s Political Consultative Conference (CPPCC). These long holiday breaks were being viewed as disruptive to economic flow.

In September 1999, the State Council devised the original Golden Week holiday system as a way to standardize vacation time (Communists’ infatuation with sameness, which is very different from equality). It was also intended to boost tourism and economic activity. Economists are the same whether Communist or Western; they all think they can increase spending by changing the most arbitrary factors.

The biggest factor in the December 2007 elimination of the third week was obvious interruption. Cai Jiming, the project leader for the CPPCC in 2007, told government officials that (translated):

There are data showing that since the implementation of the Golden Week Vacation system, the pulling effect on consumption has not been great, but it has brought a series of negative effects, such as increasing short-term costs for businesses, declining service quality, and increasing government public management costs.

China’s National Tourism Administration agreed, so on December 16, 2007, the Chinese Central Government announced a revised Regulation on Public Holidays for National Annual Festivals and Memorial Days. There would now be just the pair in China, two economic disturbances better than three.

The banking system felt them as much as the real economy, but adjusted well enough. When money was plentiful, no big deal. But as things have really tightened the last four years, the Golden Weeks have become eventful. China’s weeklong New Year every January has tended to be the greater of the two, but October’s celebration of the Communist takeover has contributed its share of interesting behaviors.

These haven’t been limited to mainland China. Tightening and volatility ahead of the October festival has been witnessed in Hong Kong, too. It’s one of the most obvious changes to the interconnection between CNY and eurodollars.

September 2018 has taken it one step further still.

The overnight HIBOR rate, the cost of borrowing Hong Kong dollars unsecured by collateral, spiked higher nearly two weeks ago – right on schedule. On September 13, it was almost 2% and remained at that elevated level through yesterday. Today, the overnight rate fixed at nearly double that, 3.85%.

The Hong Kong Monetary Authority, the city’s currency board, which has acted as a de facto central bank this year given what’s happened with HKD, refused to comment publicly. They would only note privately, in emails obtained by several local media outlets, that “market participants” were watching “elevated interbank rates.”

They would have to given what’s happened to the currency:

A reverse from the bottom range of the allowed band should be a welcome sign to Hong Kong’s beleaguered monetary officials. The HKMA has really struggled this year in ways it wasn’t expecting.

But a surge all at once isn’t what anyone in Hong Kong wants to see. Volatility is always and everywhere the real killer for anything in the banking system. It doesn’t discriminate. Risk perceptions were already challenged by HKD’s sharp decline earlier this year.

As a technical matter, the dearth of liquidity in the city has apparently brought a rush of funds into the area to take advantage of the surge in rates – HIBOR though unsecured being viewed universally as still at least a low risk if not as before completely risk-free. Near 7.85, sure. But all the way to 7.80?

The real question is where those funds are coming from. There haven’t been any similar moves in any major currency partners, especially CNY. The closest thing has been the euro’s rebound, though it began back in mid-August (with CNY’s stabilizing).

Instead, we are left to suspect China’s latest approaching Golden Week. Banks in the hoarding stage can only become more desperate if hoarding is hard to accomplish.

These holidays have always been disruptive, but the last few years they are really pushing it.

“They.”

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48% Of US Residents In Top 5 Cities Don’t Speak English At Home; 67 Million Overall

Almost half of all US residents in the top five largest cities, or 48%, do not speak English at home according to the latest Census Bureau data. 

The Washington Examiner reports that the new report, conducted by the Center for Immigration Studies (CIS), also reveals that “As a share of the population, 21.8 percent of U.S. residents speak a foreign language at home — roughly double the 11 percent in 1980.” Overall, roughly 67 million residents don’t speak English at home

In New York City and Houston it is 49 percent; in Los Angeles it is 59 percent; in Chicago it is 36 percent; and in Phoenix it is 38 percent. –CIS

In terms of population, Spanish is the most commonly spoken language at home at 41 million residents in 2017, up from 37 million in 2010. Chinese is the next most common language at 3.4 million using it primarily at home. 

In terms of the fastest growing non-English languages spoken at home, Telugu experienced the most rapid growth, followed by Bengali, Tamil, Arabic, Hindi, Urdu and Punjabi.

Ranking non-English speakers by state, California leads the pack, followed by Texas, New Mexico, New Jersey, Nevada and New York.

In terms of percentage growth by state, Washington D.C. experienced the largest percent growth in non-English speaking homes between 2010 and 2017, followed by Wyoming, North Dakota, Utah, Delaware, Nevada, Maryland and Nebraska. 

The study comes amid several reports of altercations over the use of English, such as last week’s report about a couple who was refused service at a Florida Taco Bell because they did not have any English speaking employees. 

In another case last May, a New York man threatened to call immigration police if customers and employees didn’t stop speaking English in a restaurant. 

Among the top findings from the CIS report: 

  • In 2017, a record 66.6 million U.S. residents (native-born, legal immigrants, and illegal immigrants) ages five and older spoke a language other than English at home. The number has more than doubled since 1990, and almost tripled since 1980.
  • As a share of the population, 21.8 percent of U.S. residents speak a foreign language at home — roughly double the 11 percent in 1980.
  • In America’s five largest cities, 48 percent of residents now speak a language other than English at home. In New York City and Houston it is 49 percent; in Los Angeles it is 59 percent; in Chicago it is 36 percent; and in Phoenix it is 38 percent.
  • In 2017, there were 85 cities and Census Designated Places (CDP) in which a majority of residents spoke a foreign language at home. These include Hialeah, Fla. (95 percent); Laredo, Texas (92 percent); and East Los Angeles, Calif. (90 percent). Perhaps more surprisingly, it also includes places like Elizabeth, N.J. (76 percent); Skokie, Ill. (56 percent); and Germantown, Md., and Bridgeport, Conn. (each 51 percent).
  • Nearly one in five U.S. residents now lives in a city or CDP in which one-third of the population speaks a foreign language at home. This includes Dale City, Va. (43 percent); Norwalk, Conn., and New Rochelle, N.Y. (each 42 percent); and Aurora, Colo., and Troy, Mich. (each 35 percent).
  • In contrast to many of the nation’s cities, in rural areas outside of metropolitan areas just 8 percent speak a language other than English at home.
  • The data released thus far indicates that nationally nearly one in four public school students now speaks a language other than English at home. In California, 44 percent of school-age (5-17) children speak a foreign language at home, and it’s roughly one-third in Texas, Nevada, New Jersey, New York, and Florida.
  • Of school-age children (5-17) who speak a foreign language at home, 85 percent were born in the United States. Even among adults 18 and older, more than one-third of those who speak a foreign language at home are U.S.-born.
  • Of those who speak a foreign language at home, 25.9 million (39 percent) told the Census Bureau that they speak English less than very well. This figure is entirely based on the opinion of the respondent; the Census Bureau does not measure language skills.

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The Pentagon Is Building Technology Allowing Troops To Control Machines With Their Minds

Authored by Ethan Huff via NaturalNews.com,

Transhumanism is well on its way to becoming a reality in the United States military, as the Pentagon has announced that it’s working on a new “neural interface” technology that would connect human brains directly to machines as a way to control them.

The Defense Advanced Research Projects Agency, also known as DARPA, says the technology, known as Next-Generation Non-Surgical Neurotechnology, or N3, will allow troops to connect to special military control systems using just their brainwaves. The technology will allow for humans to not only control military machines with their minds, but also the inverse – military machines would be able to transmit information to users’ brains as well.

The goal is to combine “the speed and processing power of computers with humans’ ability to adapt to complex situations,” according to DARPA. It will allow people to “control, feel and interact with a remote machine as though it were a part of their own body.”

“From the first time a human carved a rock into a blade or formed a spear, humans have been creating tools to help them interact with the world around them,” says Al Emondi, the program manager at DARPA’s Biological Technologies Office.

“The tools we use have grown more sophisticated over time … but these still require some form of physical control interface – touch, motion or voice. What neural interfaces promise is a richer, more powerful and more natural experience in which our brains effectively become the tool.

Mark of the beast: melding humans with machines

DARPA claims that the technology is completely innocent, as similar iterations of it for disabled veterans are already in use. “Revolutionizing Prosthetics,” as it’s called, is a program by DARPA that implants electrodes into disabled veterans’ brains, allowing them to control prosthetic limbs simply by thinking about it.

But isn’t that always how egregious new forms of transhumanism typically start? Positive anecdotes about how invasive technologies are “helping people” almost always functions as the gateway to more government control over humans – in this case, military servicemen who are being told that implantable technologies stand to benefit humanity.

DARPA’s rhetoric would have us all believe that combining man with machine is somehow beneficial and even “natural,” even though its true implications are more “mark of the beast” than they are revolutionary breakthrough.

Consider that with N3, able-bodied members of the military would need to ingest “different chemical compounds,” according to reports, in order to activate external sensors that both read and write information to the brain. This technology has to be “bidirectional,” claims DARPA, though the agency has not fully revealed precisely why this is the case.

It’s the type of thing one might expect to see in a sci-fi movie, except it’s now happening in real life. In the future, as openly admitted by DARPA, members of the military will be able to control attack drones with their brains, or deploy robot warriors using just brain motor signals and thoughts.

The technology is even being designed to provide real-time feedback about events happening in the world, such as cyber attacks. Users will purportedly be able to “feel” these events inside their bodies through “sensations.”

“We don’t think about N3 technology as simply a new way to fly a plane or to talk to a computer, but as a  tool for actual human-machine teaming,” Emondi admits.

“As we approach a future in which increasingly autonomous systems will play a greater role in military operations, neural interface technology can help warfighters build a more intuitive interaction with these systems.”

For more information about the agenda of the military-industrial complex to combine man with machine, be sure to see Transhumanism.news.

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