Month: December 2018

From ‘Goldilocks’ To ‘Oh God’ – Equities In 2018 Were A Pandora’s Box

Authored by Peter Garnry via Saxo Bank,

This past year was one long roller-coaster ride for equities with the highs and the lows punctuated by a mishmash of mixed messages, misinterpreted signals and even – wait for it – what could be a gargantuan policy misstep.

As planets orbiting stars, financial markets have gone full circle from a year ago. The headlines of late 2017 and early 2018 headlines were replete with bullish noises about how great the economy had become and how animal spirits had been let loose. From early November 2017 to late January 2018 the S&P 500 gained around 11% as logic was left outside in the cold. We didn’t buy the hype and our Q1 2018 Equity Outlook was coined “The most important year since 2008” and our main point was:

“For Q1 we acknowledge the strong price momentum and upbeat expectations together with what will likely become a strong earnings season reflecting past events. This is causing us to believe equities can push higher very short-term but that in the second half of Q1 macro data will begin to disappoint against expectations causing an equity correction above 7%, something we have not seen since Brexit.” (Q1 2018 Quarterly Outlook)

The word “synchronous” was the buzzword of 2018 as Quartz so eloquently put in on 31 January 2018. While S&P 500 was already down 1.7% from the peak the editors of Quartz had likely not anticipated the next event.

In the first seven days of February the US equity market plunged 10.3% reminding everyone that markets are not and have never been normal. They may be what the Polish-born polymath Benoit Mandelbrot calls “wild randomness” following a Lorentz distribution which is a headache because this distribution has no modes such as mean and variance. At any time, one new observation can arrive and change the whole picture.

On 6 February 2018 the front-end VIX futures made a sigma 21 move which was three times the daily move the day after the Brexit referendum, itself at that time the biggest single-day move since March 2004. The violent move caused a 93% single-day drop in the XIV (short VIX future ETN) and the ETN provider Credit Suisse later liquidated the fund. Because of the catastrophic February, the XIV had delivered 566% in return since February 2016, which had attracted all sorts of investors betting on short volatility strategies; essentially it was the most crowded trade on Wall Street.

So 2018 started crazily with the best January in decades and then swung into mayhem in February. What came next was even more surprising. The US equity market came back with lightning speed, erasing more than half of the losses and looked solid until mid-March when the market sold off again, touching the lows from February. Panic was in the air, but things stabilised and US equities managed to stage a new all-time-high in September despite growing tensions between the US and China over trade, intellectual property rights and market access. Investors had become used to Trump’s wild temperament on Twitter and were paying him less attention. Strong earnings growth and a confident Fed were bolstering sentiment.

However, under the surface cracks were spreading in emerging markets as China’s equities slipped into bear market territory and the stronger USD and oil price hammered the consumer in emerging markets.

Europe was going nowhere and saw its leading indicators getting worse and worse on top of a financial sector that was looking very fragile.

Then came the now famous words “a long way” from the Fed Chairman Jerome Powell on 3 October 2018. While many factors obviously played a role in the following months this stands as one of the catalysts. Literally the day after equities sold off and interest rates went higher.

Sentiment accelerated to the downside taking down the S&P 500 by 10.7% at the low point. Trump’s aggressive stance against China also played its part in souring sentiment. After much volatility and nervousness over the US-China relationship investors got in late November what we thought were early Christmas presents as Powell flipped on his earlier remarks and the G20 meeting looked like a road to a deal between US-China.

A few days into December a lot of questions were flying around about what was actually agreed between the US and China at the G20 meeting. It seemed from the two countries’ statements that they had different views. That kick-started renewed nervousness and new leading indicators were sending worse and worse signals on the market. Credit was deteriorating, housing was clearly slowing, stocks in cyclical industries were being slammed and the Fed Funds Futures were beginning to price an increasing likelihood of a no-rate hike decision on 19 December 2018.

However, the Federal Open Market Committee meeting in December turned out to be historic as it’s likely that the Fed made a policy mistake. Investors were not pleased about two things: 1) The autopilot on quantitative tightening, and 2) the high weight on economic data/models.

QT is currently on autopilot, which the Fed chairman noted was sensible, but it’s withdrawing $50bn of liquidity from the financial system every month. To make things worse, this monetary tightening of the balance sheet will coincide with the US budget deficit becoming bigger in 2019 creating an ugly supply/demand situation for US Treasuries. In the press conference the Fed Chairman constantly talked about economic indicators such as GDP, employment, fixed investment etc., but all these economic indicators are either lagging or coincident.

We would argue that late into a business cycle a central bank should put more weight on market signals than coincident economic indicators. The financialisation of our economy also means that the feedback loop from markets into the economy is larger than ever and as a result, ignoring market signals 10 years into an expansion might be an almighty policy mistake that the Fed will regret in 2019.

The reaction was swift with US equities extending their declines being down 6% for the year as of 21 December 2018.

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Here’s How Congress Can End The Shutdown As It Enters Its 10th Day

As the partial government shutdown enters its 10th day – half as long as the longest shutdown ever, a divided Congress is still at an impasse with President Trump, who is demanding $5 billion for his southern border wall. 

As Bloomberg‘s Erik Wasson notes, there are three ways the shutdown can go: “Trump gives up the $5 billion he wants for the wall, Democrats give Trump his wall money, or both sides come up with a face-saving deal.“

And how would a face-saving deal look? Likely House Speaker Nancy Pelosi claims that the Democrat-majority house will pass legislation to fund affected federal agencies as soon as she assumes control on Jan. 3 – a plan which is not expected to contain any funding for the wall. 

Senate Republicans have vowed not to vote on any bill that Trump opposes – however Moderate republicans may pressure Majority Leader mitch McConnell to put the House proposal on the floor for amendments. Congress – with the aid of moderate GOP, could back a bill to reopen the government and possibly override a Trump veto. 

According to Bloomberg, here are some of the possible face-saving scenarios. 

Democrats Win

Pelosi and Senate Minority Leader Chuck Schumer offered options to Trump during a heated Oval Office meeting on Dec. 11, including a six-bill spending package with a stopgap for Homeland Security and a full-year stopgap spending bill for all the closed federal departments. A House Democratic aide said the most likely is the six-bill package based on bipartisan draft Senate spending bills. It would give new spending totals through September for the departments of Agriculture, Interior, Transportation, Housing and Urban Development, Treasury, State, Commerce and Justice, as well as related agencies. Under the second option, funding would stay at current levels through September with some negotiated exceptions, such as adding aid for hurricane and wildfire relief.

Trump is dug in and isn’t likely to accept either option. Both would provide $1.3 billion for border security, though it couldn’t be used for new fencing.

Stopgap Spending Into February

A stopgap bill opening the government through Feb. 8 passed the Senate on a voice vote earlier this month before being scuttled in the House by outgoing Speaker Paul Ryan and the threat of a veto from Trump. As the pain of the federal shutdown increases and workers miss their Jan. 11 paychecks, this option could become more attractive. Lawmakers could also keep current spending levels into March or later.

Senate Compromise Revived

Lawmakers could revive a deal reached in August by Senate Appropriations Chairman Richard Shelby and top committee Democrat Patrick Leahy to provide $1.6 billion for border barriers, including about 65 miles (105 km) of pedestrian fencing near the Rio Grande River. “I think $1.6 billion has a nice ring to it,” said outgoing Senate Majority Whip John Cornyn just prior to the shutdown.

“A lot of people in retrospect will say we should have accepted that,” Leahy told reporters on Dec. 19. The money could have been used only to build existing designs such as steel bollard fencing, and the barriers couldn’t be built in the Santa Ana National Wildlife Refuge in Texas along the banks of the Rio Grande. This plan would let Trump claim the shutdown gained $300 million more in funding for border security than Democrats’ $1.3 billion offer.

Pence Offer Tweaked

Vice President Mike Pence told Schumer on Dec. 22 that Trump could accept $2.1 billion for border barriers, plus a $400 million flexible fund for the president’s “immigration priorities.” Democrats dismissed the $400 million as a “slush fund” that could be used to mistreat migrants, and they called the offer hollow because Trump hadn’t publicly endorsed it.

Still, this offer could become the seed for a deal if Trump endorsed it. Language could be added to limit the money to barriers that Trump could call a wall and Democrats could call a fence. Limits on the $400 million could direct the money to mutually agreeable uses. Trump met with Pence, White House budget director Mick Mulvaney and senior adviser Jared Kushner Friday night at Pence’s residence for about two hours.

McConnell, prior to the shutdown, offered Democrats a deal allocating $1.6 billion for border barriers plus $1 billion for a flexible fund. A compromise could be reached by shrinking or eliminating the flexible fund and providing between $1.6 billion and $2.1 billion for barriers.

Grand Bargain

Trump Wins

The name of the game in shutdown fights is avoiding blame. Trump said in the widely televised Oval Office meeting on Dec. 11 that he would accept blame for any shutdown, but since it began, he’s insisted that Democrats are at fault. On Sunday, he tweeted about a “SchumerShutdown.” Democrats are in no mood to give in, making a capitulation to Trump the least likely scenario.

Slightly less implausible: Shelby floated a compromise in which Trump’s $5 billion would be split into $2.5 billion for each of two years. Trump was said to privately back the idea, but Democrats rejected it because the money could be used for a concrete wall. Because Pence’s Dec. 22 offer was lower than the $2.5 billion level, returning to this solution seems unlikely.

On CBS’s “Face the Nation” on Sunday, Shelby urged both sides to stop the blame game and said Democrats should articulate what kind of border security they can support. Montana Democrat Jon Tester, on the same program, said he prefers technology and more manpower at the border to a wall. –Bloomberg 

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The Crisis Of Capital

Authored by Charles Hugh Smith via OfTwoMinds blog,

These three dynamics render capital increasingly vulnerable to catastrophic losses as backstops and distorted markets fail.

The undeniable reality of the 21st century economy is that capital has gained while labor has stagnated. While various critics quibbled about his methodology, Thomas Piketty’s core finding–that capital expanded faster than GDP and wages/salaries (i.e. earned income from labor)–is visible in these charts.

Real wages have gone nowhere for decades. Only the top 5% of wage earners have outpaced inflation’s erosion of the purchasing power of their earnings.

Household net worth has soared $60 billion while GDP expanded by $9 trillion.Compare the relative growth trajectories of the economy and net worth of assets. Clearly, capital has expanded at rates far above the expansion rate of the economy.

Assets (capital) have exploded higher while real-world inflation (including wages) has remained in line with GDP growth: modest at best.

Courtesy of Lance Roberts and Real Investment Advice, here is a chart of total leverage and the S&P 500 stock index. Leverage / debt hasn’t pushed wages higher, but it’s certainly pushed stock valuations to the moon.

While labor / earned income is clearly in a systemic crisis, so too is capital, though it may seem as if capital is far from danger.

Capital’s crisis has several sources. One is the financial system, from pension funds to passive index-fund investors to hedge funds to government tax revenue projections, has become dependent on outsized capital gains for its stability.

Any extended period of low growth rates for capital or–perish the thought, sustained losses– will destabilize every financial structure that is counting on a projection of current returns far into the future.

A second crisis is brewing as central bank-goosed risk-on assets become too risky to hold. Risk-on assets include stocks, high-yield bonds, real estate and leveraged derivatives such as futures. Over the past decade, central banks effectively pushed capital into these risk assets by reducing the return on safe havens such as government bonds to near-zero.

To qualm capital’s fears of the risks embedded in such asset classes, central banks established a floor under these assets, the so-called Fed put: should these assets start declining, central banks implicitly promised to open the flood gates of liquidity and start buying these assets directly to shore up markets and restart the upward ascent of valuations.

Now that central banks are reducing this implicit backstop, capital is naturally becoming wary of being trapped in illiquid markets (i.e. markets where bids disappear and positions cannot be sold as buyers have vanished) and Bear Markets in which risk-on assets lose value despite the occasional sharp rally.

The third crisis is malinvestment and low returns on long-term investments: by favoring short-term gains in risk-on assets, central bank policies have created perverse incentives to buy empty commercial buildings and flats and borrow stupendous sums to fund stock buy-backs–completely unproductive uses of capital that generate zero gains in productivity, which is the ultimate source of “wealth” and widespread prosperity.

Put another way: instead of seeking moderate gains via long-term investments in new materials, new industrial processes and new efficiencies, capital has been “trained” (incentivized) to flow into speculative markets for quick gains, or into markets backstopped by central banks, rather than into productive investments that benefit the economy and citizenry.

In other words, capital should be a key source of gains in productivity that benefit everyone. Trained to seek outsized returns in backstopped (i.e. distorted) markets stripped of price discovery and quasi-monopolies defended by central states, capital has lost the appetite and the knowledge base needed to pursue long-term productive investments.

Together, these three dynamics render capital increasingly vulnerable to catastrophic losses as backstops and distorted markets fail and productive investments go begging because they can’t promise the outsized returns from speculation capital has come to expect as its birthright.

*  *  *

My new book Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic is discounted ($5.95 ebook, $10.95 print): Read the first section for free in PDF format. My new mystery The Adventures of the Consulting Philosopher: The Disappearance of Drake is a ridiculously affordable $1.29 (Kindle) or $8.95 (print); read the first chapters for free (PDF). My book Money and Work Unchained is now $6.95 for the Kindle ebook and $15 for the print edition. Read the first section for free in PDF format. If you found value in this content, please join me in seeking solutions by becoming a $10/month patron of my work via patreon.com.

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What Else Was Going on in That Retracted Title IX Stalking Story?

MizzouNational Review has retracted an article it ran last week. The piece claimed the University of Missouri had disciplined a male student, Jeremy Rowles, for seeking a date with a significantly smaller female student, Annalise Breaux. In the university’s view, Rowle’s size meant that he “was perceived as having power over her,” wrote NR.

As many complained, the article omitted details that complicated the picture. Rowles is currently suing Mizzou for wrongfully suspending him; according to his own version of events, he had taken increasingly elaborate steps to woo Breaux, even though she had clearly communicated her lack of interest. Eventually, she complained to her supervisors at the Mizzou Rec Center that his written declaration of love had made her feel uncomfortable. This complaint was referred to the university’s Title IX office, which handles sexual misconduct, and administrators eventually found Rowles guilty of sexual harassment and stalking.

NR‘s post has been criticized by other conservative news sites: The Daily Caller brands it “fake news,” and The Daily Wire says the issues at stake had been misrepresented. NR sensibly withdrew the report, noting that “the male student had made repeated, unwelcome advances toward the female student and was found in violation of Title IX for stalking her.”

BuzzFeed News‘ Tyler Kingkade, who reports on campus sexual misconduct issues, describes the mistake as a “classic example of how inaccurate some of the Title IX coverage is when done by people who don’t bother doing their own reporting” and called out other outlets for doing the same, including The Daily Mail and The Daily Wire.

But the Daily Wire piece didn’t claim that Rowles’ size was the reason he got kicked off campus. Reporter Ashe Schow merely noted that a Mizzou administrator, Vice Chancellor for Student Affairs Cathy Scroggs, had claimed Rowles’ “power” over Breaux could perhaps be due in part to his stature. This detail comes from Rowles’ recent motion for summary judgment, which cites remarks made by Mizzou administrators in a deposition. According to the motion, Scroggs said the following:

Interviewer: The allegations against Jeremy Rowles, do you believe that they’ve satisfied subsection 1 of sexual harassment?

Scroggs: I think he was perceived as having power over her.

Interviewer: And what was the nature of his power over her? Was it just his size?

Scroggs: His physical size.

Interviewer: OK. So, this part 1 doesn’t require him to be a teacher. When it says person of authority, it doesn’t mean, like, teacher or boss?

Scroggs: Well, I suppose it could; but in this case, no, I didn’t interpret it that way.

The “part 1” referred to above is the university’s sexual harassment policy, which defines sexual harassment in part as “unwelcome sexual advances or requests for sexual activity by a person or persons in a position of power or authority to another person.” It would seem obvious, then, that Scroggs did believe Rowles’s size could give him power over her. This strikes me as notable: As far as I am aware, power imbalance typically refers to the nature of a relationship—teacher and student, for instance—rather than a person’s intimidating size.

Mizzou’s policy also defines sexual harassment as “other unwelcome verbal or physical conduct of a sexual nature when…such conduct creates a hostile environment by being sufficiently severe or pervasive and objectively offensive that it interferes with, limits or denies the ability of an individual to participate in or benefit from education programs or activities or employment access, benefits, or opportunities.” (Emphasis mine.) This was the basis upon which Rowles was found guilty of sexual harassment, according to his own version of events.

Rowles “violated the sexual harassment policy by engaging in unwelcome verbal and physical conduct of a sexual nature towards [Breaux] and that…created a hostile environment by being sufficiently pervasive that it interfered with her ability to do her job,” wrote Ellen Eardley, the administrator who initially found Rowles responsible.

But according to the deposition, Eardley and Scroggs have somewhat different understandings of this definition. This matters, since Scroggs reviewed Rowles’ appeal of Eardley’s initial decision and reached the same result, though she reduced his suspension from four years to two. Eardley believed that hostile environment harassment needed to satisfy one of two criteria: 1) severe, or 2) pervasive and objectively offensive. But in Scroggs’ view, harassment needed to satisfy only one of the following three criteria: 1) severe, 2) pervasive, or 3) objectively offensive. This is an important difference: If Rowles’ conduct was pervasive—a point he essentially conceded, as he had made overtures more than once—but not severe or pervasive, he would be guilty under Scroggs’ definition, but not guilty under Eardley’s.

Rowles was also found responsible for stalking. For what it’s worth, the university defines stalking as “following or engaging in a course or conduct on the basis of sex with no legitimate purpose that puts another person reasonably in fear for his or her safety or would cause a reasonable person under the circumstances to be frightened, intimidated or emotionally distressed.” Rowles disputes that his actions meet this definition, because Breaux did not claim he had done any of these things, but rather that he made her “uncomfortable.” Whether a reasonable person would have found his behavior frightening, intimidating, or distressing is beyond the scope of this post, since the document under review here—Rowles’ motion—presents the facts in the light most favorable to Rowles.

Based on Rowles’ own characterization of what happened, I do not blame Breaux for seeking help. But when the people with the authority to make life-altering judgments like banning a student from campus don’t have clear and consistent definitions for terms like power imbalance, hostile environment, and stalking, we should be concerned that such decisions are being made fairly. That holds true even if the initial outrage-bait headline was wrong.

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Leaked Louis C.K. Set Puts Comedian Back in Outrage Spotlight: Reason Roundup

Comedian Louis C.K. is back in bad graces with would-be culture cops, after joking in a leaked set that teens today—including survivors of Parkland school shooting—are boring and making cracks about young people asking to be called by particular pronouns. In response, C.K. has been declared “alt-right,” “canceled,” and an old fart who just doesn’t get it.

A disheartening number of critics have focused on the comedian’s age. He’s only 51, but to hear Twitter tell it, C.K. is basically a doddering old fool who should be put out to pasture and proof that no one older than 40 has any worthwhile perspective. While bashing C.K.’s embrace of stereotypes, non-inclusive language, and other unfashionable tropes, they’ve been quick to declare more than half the population to be intellectually and artistically useless.

But perhaps—and I hope you’ll hear me out here even though I’m more than a couple years past Logan’s Run doom—some entertainers, artists, or pundits might just be bad, boring, or whatever you don’t like about them because they’re them, not because their brains have been melted by age and everyone Gen X and up should just die.

Another critical refrain has been to point out that C.K. promised to listen more after being accused by multiple women of making them uncomfortable with requests to masturbate in front of them. Though his 2017 comments on that front were related to women, sexual activity, and boundaries, some seem to have took it as a promise to shut up always and about everything.

As many have pointed out, C.K.’s latest stand-up routine sounds a lot like his previous work—which was never perfectly in line with “P.C.” values even when he was younger. So, no, C.K. didn’t emerge from his masturbation-reckoning a totally changed person, but this likely has nary to do with aging or a lack of commitment to consent.

Still, “dude’s out here doing stand-up as if he’s somehow impervious to the repercussions of [his] actions,” states Paste, making explicit the undercurrent of so much current outrage culture. The goal is to prevent people whom the appropriate online factions have deemed doomed from finding work, expressing themselves, or participating in public spheres in perpetuity.

None of this is especially novel at this point, alas, so let’s at least note the irony: C.K.’s set was private. A tiny group of people paying to be there could have been the only witnesses to this allegedly wicked man’s words. Now the internet is abuzz about C.K.’s set and his name is back atop headlines.

The “dude’s out here” being heard because of those allegedly aghast at him being allowed to speak.

QUICK HITS

• Good news for the First Amendment and engineers in Oregon.

• New York is banning cigarette sales at any store that includes a pharmacy section.

• Hemp companies are finding trouble on Facebook.

• #MeToo has the Bernie Sanders campaign:

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Anti-ISIS Coalition Airstrikes Killed Over 1,100 Civilians

While it has been reported previously that Saudi airstrikes in Yemen have led to the deaths of over 10,000 inncoent civilians, a finding which according to Reuters suggested the US could be found guilty of war crimes for supporting the Saudi assault, it is time to shift attention to what is taking place a few hundred miles north.

The reason: U.S.-led coalition airstrikes against the Islamic State have killed over 1,000 civilians in Iraq and Syria since 2014.

In its latest monthly civilian casualty report, the Coalition detailed confirmed deaths of 1,139 civilians in airstrikes conducted since the beginning of Operation Inherent Resolve between August 2014 and November 2018, VoA reports.

“The Coalition conducted a total of 31,406 strikes between August 2014 and end of November 2018. During this period, based on information available, CJTF-OIR assesses at least 1,139 civilians have been unintentionally killed by Coalition strikes since the start of Operation Inherent Resolve,” the report read, however noting that nearly eight million Iraqis and Syrians have been liberated from IS-rule during that time (many of which have since fled to Europe thanks to Angela Merkel’s disastrous “open door” policy which was the key catalyst in spawning Europe’s populist wave).

An additional 184 reports of other unintended civilian casualties are still being evaluated.

Damascus skies erupt with surface to air missile fire as the U.S. launches an attack on Syria targeting different parts of the Syrian capital Damascus, Syria, April 14, 2018

The dramatic figures were only first revealed in July, when the Coalition admitted that 1,059 civilians had been killed in airstrikes since 2014, amid calls for updated figures from rights organizations, which have long accused the coalition of significantly undercounting the number of civilians it has killed during years of fighting against Islamic State.

 

The latest report reflects the updated total number of civilian deaths, including confirmed reports from the past six months, and comes just weeks after Trump’s dramatic announcement to withdraw US forces from Syria.

Still, even as regional forces race to position themselves for the imminent withdrawal of U.S. troops from the region, U.S. military officials caution nothing on the ground has changed yet, and on Friday, the U.S. dismissed claims Syrian forces were taking control of the northeastern city of Manbij, a key flashpoint between U.S.-backed Kurdish militias and Turkey, at the request of the Syrian Kurds.

It is unclear if the US departure will result in fewer civilian casualties or if the number will only rise should Turkey, Iran, Russia and other regional players scramble to occupy Syrian territory, potentially resulting in a far worse escalation in hostilities as what until recently was a (relatively) targeted operation morphs into a land grab free for all.

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Surprise! Looks Like Elizabeth Warren Is Running for President!

Sen. Elizabeth Warren (D–Mass.) announced today that she’s forming an exploratory committee for a 2020 presidential run.

In a video emailed to supporters and posted to YouTube, Warren describes herself as an average American who came from a working-class family that often struggled to make ends meet. “America’s middle class is under attack,” she says. “How did we get here? Billionaires and big corporations decided they wanted more of the pie. And they enlisted politicians to cut them a bigger slice.”

The announcement itself is in no way surprising—though as The Washington Post notes, the timing (on New Year’s Eve) is somewhat curious. But it does make a certain amount of sense. There are many major potential Democratic candidates for 2020, but so far only Rep. John Delaney (D–Md.) and former Housing and Urban Development Secretary Julián Castro have said they’ll likely run. Warren could now have an early advantage over other possible high-profile contenders, including Sens. Bernie Sanders (I–Vt.) and Cory Booker (D–N.J.), former Vice President Joe Biden, and outgoing Rep. Beto O’Rourke (D–Texas).

Warren still isn’t officially running for president. The formation of an exploratory committee simply means that she’s testing the waters for a potential run. But exploratory committees usually lead to an official announcement later on. Barring a big scandal, it’s hard to imagine a scenario where the Massachusetts Democrat decides not to run.

As president, Warren would likely champion a variety of progressive causes. You can read more about her policy views here.

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2018 – The Year That “Russia Did It”-ism Took Over The World

Authored by Tim Black via Spiked-Online.com,

In 2018, there were few things Western elites didn’t blame on Russia…

Over the summer, Sweden’s defence commission warned that ‘a larger European conflict could start with an attack on Sweden’. Politicians and military planners clearly agreed – in June, 22,000 Swedish volunteer soldiers were called up for the largest surprise exercise since 1975.

The protagonist of this European conflict wasn’t named as such, but it didn’t need to be. Because every politician and civil servant, every pundit and broadcaster, just knows that the protagonist is Russia. Because that is the function ‘Russia’ – alongside associated dread words such as ‘Vladimir Putin’ or ‘Russian oligarchs’ – now plays in the political imagination of Western elites. It is the catch-all, go-to explanation for their travails. The assumed military demiurge of global instability. The real, albeit dark and hidden, source of populist discontent.

Yet while Russia-mania is widespread among today’s political and cultural elites, it is not uniform.

For an older, right-wing section of the Western political and media class, otherwise known as the Cold War Re-Enactment Society, Russia looms large principally as a military, quasi-imperial threat. Jim Mattis, the former US marine and general, and now US defence secretary, said Russia was responsible for ‘the biggest attack [on the world order] since World War Two’. Whether this is true or not is beside the point. What matters is that Russia appears as a military aggressor. What matters is that Russia’s actions in Ukraine – which were arguably a defensive reaction to NATO and the EU’s expansion into Russia’s traditional ally – are grasped as an act of territorial aggrandisement. What matters is that Russia’s military operations in Syria – which, again, were arguably a pragmatic intervention to stabilise the West-stoked chaos – are rendered as an expression of imperial aggression. What matters is that Russian state involvement in the poisoning of the Skripals in Salisbury – which, given its failure, proved Russian incompetence – is presented as ‘part of a pattern of Russian aggression against Europe and its near neighbours, from the western Balkans to the Middle East’, to quote Theresa May.

And it matters because, if Russia is dressed up as the West’s old Cold War adversary, just with a new McMafia logo, then the crumbling, illegitimate and increasingly pointless postwar institutions through which Western elites have long ordered the world, suddenly look just that little bit more solid, legitimate and purposeful. And none more so than NATO.

This is why NATO has this year been accompanying its statements warning Russia to ‘stop its reckless pattern of behaviour’ with some of the largest military exercises since the fall of the Berlin Wall nearly three decades ago. Including one in November in Norway, involving 50,000 troops, 10,000 vehicles, 250 aircraft and 60 warships.

Then there is the newer form of Russia-mania. This has emerged from within the political and cultural elite that came to power after the Cold War, ploughing an uninspiring third way between the seeming extremes of the 20th century’s great ideologies. Broadly social democratic in sentiment, and elitist and aloof in practice, this band of merry technocrats and their middle-class supporters have found in ‘Russia’ a way to avoid having to face up to what the populist revolt reveals – that the majority of Western citizens share neither their worldview nor their wealth. Instead, they use ‘Russia’ to displace the people as the source of discontent and political revolt.

We have seen this play out in the US in the continuing obsession, fronted by Troll-Finder General Robert Mueller, over alleged Russian meddling in the 2016 US presidential election. And the same obsession has emerged in the UK, too, with politicians and pundits claiming that a shadowy network of Russian influence tipped the EU referendum in favour of Leave.

It is never quite clear how the ‘Russians’ or ‘Putin’ did all this, beyond Facebook ads and decidedly dubious talk of so-called dark money. But then clarity is not the point for this stripe of Russia-maniac. He or she simply wants to believe that Trump or Brexit were not what they were. Not expressions of popular will. Not manifestations of popular discontent. Not democratic exercises.

No, they were the result, as one Tory MP put it, of ‘the covert and overt forms of malign influence used by Moscow’.

Or, in the words of an Observer columnist, ‘a campaign that purported to be for the “left behind” was organised and funded by men with links across the global network of far-right American demagogues and kleptomaniac dictators such as Putin’.

Such has been the determination to blame ‘Russia’ or ‘Putin’ for the political class’s struggles, that in August Tom Watson, Labour’s conspiracy-theory-peddling deputy leader, called for a public inquiry into an alleged Russian Brexit plot. ‘[Voters] need to know whether that referendum was stolen or not’, he said.

Such a call ought to be mocked. After all, it is absurd to think ‘Russia’, ‘Putin’ and the trolls are the power behind every populist throne. But the claims aren’t mocked – they’re taken as calls to action. Think of anything viewed as a threat to our quaking political and cultural elites in the West, and you can bet your bottom ruble that some state agency or columnist is busy identifying Putin or one of his legion of bots and trolls as the source. The gilet jaunes protests in France? Check. Climate change? Check. Italy’s Five Star Movement? Check.

And all this from a nation with a GDP equivalent to Spain, an ageing, declining population, and a failing infrastructure. The reality of Russia is not that of a global threat, but of a struggling state. Russia is weak. Yet in the minds of those clinging desperately to the status quo, ‘Russia’ has never been more powerful.

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California Women’s March Canceled for Being ‘Overwhelmingly White’

WMOrganizers of a planned Women’s March in Eureka, California, cancelled an event due to concerns that too many white people would show up—which is a pretty damning indictment of intersectionality, the ubiquitous yet contradictory philosophy of the modern activist left.

A rally had been scheduled for January 19, but Women’s March leaders aborted their plans because “up to this point, the participants have been overwhelmingly white, lacking representation from several perspectives in our community,” according to a press release. “This decision was made after many conversations between local social-change organizers and supporters of the march.”

This news attracted much derision, and deservedly so. For one thing, the disproportionate white involvement might simply reflect the fact that Eureka is about 75 percent white, according to U.S. Census data. For another, leftists often claim that white people are responsible for President Donald Trump’s victory in 2016—inexplicably, white women are held in particular contempt, even though they vote Democratic more often than white men—and need to change their attitudes. But here’s some white folks expressing enthusiasm about joining their comrades of color in the #Resistance, only to be told, Well, maybe you should stay home.

The Eureka incident lends itself to a kind of Eureka! insight about the problems with intersectionality, which has become the dominant intellectual theory of the left in the three decades since sociologist Kimberle Crenshaw first proposed it. According to intersectionality, various forms of oppression are distinct yet interrelated, and these forms stack: A black man is more oppressed than a white man, a black woman is more oppressed than a black man, a gay black woman is even more oppressed, and so on.

There’s nothing innately wrong with such analysis, but adherents of intersectionality also tend to believe that the oppressed are the sole experts on the subject of their own oppression. At the same time, it is not their job to educate you—a line parroted by many activists, particularly on college campuses, when they are questioned. As a result, intersectionality in practice often means that some activists expect well-intended liberals to sit down, step back, and defer to the expertise of the most marginalized people. But those people might not be well-positioned to lead a mass #Resistance movement—they may have disabilities, poor mental health, or lack of access to financial means, which are all stackable categories of oppression—and they might even expect the cis white hetero males to take a turn doing the work. It’s really hard to square all these circles.

That’s one important conclusion of my book, Panic Attack: Young Radicals in the Age of Trump, which I am pleased to announce will be released in 2019. (It’s already available for preorder here.) I interviewed tons of activists about their goals, motivations, and beliefs, and one of the most common recurring themes was infighting caused by intersectionality. As one young activist woman told me, she absolutely hated the 2017 Women’s March that occurred the day after Trump’s inauguration, in which half a million people took to the streets of Washington, D.C., to protest the president. Why? You guessed it: too white.

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Elizabeth Warren Announces Plans For Presidential Run

In a video announcement and email to supporters sent Monday morning, Massachusetts Sen. Elizabeth Warren announced that she was officially launching an exploratory committee to seek the 2020 Democratic nomination, making her the first candidate to officially announce in what’s expected to be a “long and crowded” primary, according to the New York Times.

In her video, Warren leaned on the anti-Wall Street themes that have become a hallmark of her political career since she was elected to the Senate in 2013 after defeating moderate Republican incumbent Scott Brown. Prior to that, she had been a bankruptcy law professor at Harvard.

“I’ve spent my career getting to the bottom of why America’s promise works for some families, but others, who work just as hard, slip through the cracks into disaster,” she said in the video. “And what I’ve found is terrifying: these aren’t cracks families are falling into, they’re traps. America’s middle class is under attack.”

“But this dark path doesn’t have to be our future,” she continued. “We can make our democracy work for all of us. We can make our economy work for all of us.”

Watch the video below:

Warren’s announcement comes after reports surfaced over the weekend that she and a handful of other prominent contenders woud likely announce by the end of January.

The race for the 2020 nomination is expected to be the most wide open for Democrats since 1992. Oddly enough, the most popular candidates according to public opinion polls are Joe Biden and Bernie Sanders, both of whom are still debating whether to run because of their advanced age.

By forming the committee, Warren can begin filling key staff roles and raising money for her primary bid. More than three dozen Democratic senators, governors, mayors and business leaders are also weighing bids

 

 

 

 

 

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