Month: January 2019

Authored by Philip Giraldi via The Strategic Culture Foundation,

The media has a new bit of speculation that fits neatly into the flagging Russiagate narrative. It concerns Paul Whelan, a high school graduate Marine Corps dishonorable discharge, who is currently working in corporate security for a Michigan-based auto parts manufacturer. Whelan, who lives alone, is self-taught in Russian and has engaged in tourist travel to the country a number of times. He was reportedly arrested late last month in Moscow while ostensibly attending a friend’s wedding and charged with espionage. Forty-eight year-old Whelan is clearly an odd duck and is notable for having four passports – Great Britain, Ireland, Canada and that of the United States.

Press coverage of the incident has nearly unanimously decided that the spying charge against Whelan is phony and that he is being held as bait to arrange for an exchange with Maria Butina, who is in jail in Virginia after being charged with acting as an unregistered agent of the Russian government and engaging in conspiracy. The media and the usual pundits base their conclusion on absolutely no evidence whatsoever apart from their conviction that Russian President Vladimir Putin is a bad man who would do almost anything to irritate the United States and overthrow its system of government. Oddly, the press watchdogs fail to note how the current federal government is doing a damned fine job destroying itself without any assistance from the Kremlin. If Putin really wanted to damage the US, he would be best advised to leave it alone and let Congress and the White House do the heavy lifting for him.

Unlike the mainstream media, I rather expect that the charges against Whelan could be more-or-less correct, though not in the way the press has framed the story, which is that Whelan is such a flawed character that he could not possibly meet the requirements to be working for any sophisticated spy organization. The New York Times in its coverage of the story interviewed several former CIA officers who had served in Russia, but asked the wrong questions. The reporter wanted to know if Whelan could possibly be an employee of US intelligence. The ex-Agency officers replied “no” because of his criminal record while a Marine and other oddities in his career, which included some marginal involvement with low-level law enforcement.

The former spooks were correct to state that Whelan would not pass the security hurdles for employment as a staff officer, but there is also a whole other level of possible engagement with the Agency, DIA or JSOC – cooperating as one of the sources which intelligence organizations recruit and run to collect information.

The flawed but nevertheless useful Whelan would be a perfect target for recruitment as an intelligence source, referred to in the business as “agents.”

Unusually for a foreigner, Whelan has a social media account on Vkontakte, the Russian equivalent of Facebook, which is quite likely how he came to the attention of CIA or the Pentagon. And The New York Times, interestingly, describes his friends on the site as “men with some sort of connection to academies run by the Russian Navy, the Defense Ministry or the Civil Aviation Authority.” That alone would be enough to generate considerable interest in American intelligence circles as sources with that kind of access are hard to find.

And the details of Whelan’s arrest, if true, are completely consistent with how a low- to mid-level source might be run and used by a US government case officer. According to Russian accounts published in Rosbalt, a news agency close to the Kremlin, an unidentified intelligence source revealed that Whelan was trying to recruit a Russian citizen to obtain classified information regarding employees at various government agencies when he was caught in flagrante. He was arrested five minutes later in what was clearly a sting operation after having received a USB stick that included a list of all of the employees that he apparently had requested.

It may turn out that Paul Whelan is completely innocent and is merely a pawn in a tit-for-tat chess game being played by Washington and Moscow. If so, it is to be hoped that he will be proven innocent and released, but no one should rule out his having been recruited and exploited by a US government agency. Spying is not a game. It is a dangerous business, with serious consequences for those who are caught.

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Before getting pregnant with her first child, Instagram model-influencer Ruby Tuesday Matthews said she relied on a steady diet of “tapas, cigarettes, black coffee and cocaine” to maintain her svelte 120 lbs. figure, the Daily Mail reported.

Matthews, who hails from the Australian city of Byron Bay, where she runs a successful Instagram account that frequently features images of her two young sons, dished on the unhealthy lifestyle she lived to maintain her glamorous image.

While this might not sound like something that a functional human being could maintain for long, Matthews revealed in the interview that she isn’t alone: Most models and Instagram influencers take drugs to maintain their unrealistic weights.

“I need to be careful what I’m saying here, but in the influencer industry, everyone loves the baggie,” she said during a Q&A with her 200,000 Instagram followers. “This is how most physiques are maintained.”

The 25-year-old model said many of her followers were baffled by her ability to “eat and stay so thin.” But her secret was the fact that she hid her addiction well.

“People don’t realise how easy it is to hide something. Whether it’s addiction, depression, anxiety, it’s easy to hide those things.”

Matthews said she gave up cocaine after learning that she was pregnant. After partying hard the night before, she said she became concerned that her actions would hurt the baby.

“I was so thin and I was partying a lot and no one thought I would be able to fall pregnant,” she said.

The conversation took a dark turn when Matthews recounted how she became suicidal after having a miscarriage when she was 16. Her mother and the baby’s father were relieved when it happened, but she said she couldn’t get over the loss and was eventually sent to Cambodia by her parents to recover, where she “worked for a few years.”

The model said she hoped that talking about her demons would help others struggling with similar issues.

“I have battled with mental health demons on and off for most of my life. It is a topic I am going to be talking about a lot more this year,” she said.

Fortunately, she’s in a better place now and is focused on raising her two young children.

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Authored by Gail Tverberg via Our Finite World blog,

Financial markets have been behaving in a very turbulent manner in the last couple of months. The issue, as I see it, is that the world economy is gradually shifting from a growth mode to a mode of shrinkage. This is something like a ship changing course, from going in one direction to going in reverse. The system acts as if the brakes are being very forcefully applied, and reaction of the economy is to almost shake.

What seems to be happening is that the world economy is reaching Limits to Growth, as predicted in the computer simulations modeled in the 1972 book, The Limits to Growth. In fact, the base model of that set of simulations indicated that peak industrial output per capita might be reached right about now. Peak food per capita might be reached about the same time. I have added a dotted line to the forecast from this model, indicating where the economy seems to be in 2019, relative to the base model.

Figure 1. Base scenario from The Limits to Growth, printed using today’s graphics by Charles Hall and John Day in Revisiting Limits to Growth After Peak Oil with dotted line at 2019 added by author. The 2019 line is drawn based on where the world economy seems to be now, rather than on precisely where the base model would put the year 2019.

The economy is a self-organizing structure that operates under the laws of physics. Many people have thought that when the world economy reaches limits, the limits would be of the form of high prices and “running out” of oil. This represents an overly simple understanding of how the system works. What we should really expect, and in fact, what we are now beginning to see, is production cuts in finished goods made by the industrial system, such as cell phones and automobiles, because of affordability issues. Indirectly, these affordability issues lead to low commodity prices and low profitability for commodity producers. For example:

• The sale of Chinese private passenger vehicles for the year of 2018 through November is down by 2.8%, with November sales off by 16.1%. Most analysts are forecasting this trend of contracting sales to continue into 2019. Lower sales seem to reflect affordability issues.

• Saudi Arabia plans to cut oil production by 800,000 barrels per day from the November 2018 level, to try to raise oil prices. Profits are too low at current prices.

• Coal is reported not to have an economic future in Australia, partly because of competition from subsidized renewables and partly because China and India want to prop up the prices of coal from their own coal mines.

The Significance of Trump’s Tariffs

If a person looks at history, it becomes clear that tariffs are a standard response to a problem of shrinking food or industrial output per capita. Tariffs were put in place in the 1920s in the time leading up to the Great Depression, and were investigated after the Panic of 1857, which seems to have indirectly led to the US Civil War.

Whenever an economy produces less industrial or food output per capita there is an allocation problem: who gets cut off from buying output similar to the amount that they previously purchased? Tariffs are a standard way that a relatively strong economy tries to gain an advantage over weaker economies. Tariffs are intended to help the citizens of the strong economy maintain their previous quantity of goods and services, even as other economies are forced to get along with less.

I see Trump’s trade policies primarily as evidence of an underlying problem, namely, the falling affordability of goods and services for a major segment of the population. Thus, Trump’s tariffs are one of the pieces of evidence that lead me to believe that the world economy is reaching Limits to Growth.

The Nature of World Economic Growth

Economic growth seems to require growth in three dimensions (a) Complexity, (b) Debt Bubble, and (c) Use of Resources. Today, the world economy seems to be reaching limits in all three of these dimensions (Figure 2).

Figure 2.

Complexity involves adding more technology, more international trade and more specialization. Its downside is that it indirectly tends to reduce affordability of finished end products because of growing wage disparity; many non-elite workers have wages that are too low to afford very much of the output of the economy. As more complexity is added, wage disparity tends to increase. International wage competition makes the situation worse.

A growing debt bubble can help keep commodity prices up because a rising amount of debt can indirectly provide more demand for goods and services. For example, if there is growing debt, it can be used to buy homes, cars, and vacation travel, all of which require oil and other energy consumption.

If debt levels become too high, or if regulators decide to raise short-term interest rates as a method of slowing the economy, the debt bubble is in danger of collapsing. A collapsing debt bubble tends to lead to recession and falling commodity prices. Commodity prices fell dramatically in the second half of 2008. Prices now seem to be headed downward again, starting in October 2018.

Figure 3. Brent oil prices with what appear to be debt bubble collapses marked.

Figure 4. Three-month treasury secondary market rates compared to 10-year treasuries from FRED, with points where short term interest rates exceed long term rates marked by author with arrows.

Even the relatively slow recent rise in short-term interest rates (Figure 4) seems to be producing a decrease in oil prices (Figure 3) in a way that a person might expect from a debt bubble collapse. The sale of US Quantitative Easing assets at the same time that interest rates have been rising no doubt adds to the problem of falling oil prices and volatile stock markets. The gray bars in Figure 4 indicate recessions.

Growing use of resources becomes increasingly problematic for two reasons. One is population growth. As population rises, the economy needs more food to feed the growing population. This leads to the need for more complexity (irrigation, better seed, fertilizer, world trade) to feed the growing world population.

The other problem with growing use of resources is diminishing returns, leading to the rising cost of extracting commodities over time. Diminishing returns occur because producers tend to extract the cheapest to extract commodities first, leaving in place the commodities requiring deeper wells or more processing. Even water has this difficulty. At times, desalination, at very high cost, is needed to obtain sufficient fresh water for a growing population.

Why Inadequate Energy Supplies Lead to Low Oil Prices Rather than High

In the last section, I discussed the cost of producing commodities of many kinds rising because of diminishing returns. Higher costs should lead to higher prices, shouldn’t they?

Strangely enough, higher costs translate to higher prices only sometimes. When energy consumption per capita is rising rapidly (peaks of red areas on Figure 5), rising costs do seem to translate to rising prices. Spiking oil prices were experienced several times: 1917 to 1920; 1974 to 1982; 2004 to mid 2008; and 2011 to 2014. All of these high oil prices occurred toward the end of the red peaks on Figure 5. In fact, these high oil prices (as well as other high commodity prices that tend to rise at the same time as oil prices) are likely what brought growth in energy consumption down. The prices of goods and services made with these commodities became unaffordable for lower-wage workers, indirectly decreasing the growth rate in energy products consumed.

Figure 5.

The red peaks represented periods of very rapid growth, fed by growing supplies of very cheap energy: coal and hydroelectricity in the Electrification and Early Mechanizationperiod, oil in the Postwar Boom, and coal in the China period. With low energy prices,  many countries were able to expand their economies simultaneously, keeping demand high. The Postwar Boom also reflected the addition of many women to the labor force, increasing the ability of families to afford second cars and nicer homes.

Rapidly growing energy consumption allowed per capita output of both food (with meat protein given a higher count than carbohydrates) and industrial products to grow rapidly during these peaks. The reason that output of these products could grow is because the laws of physics require energy consumption for heat, transportation, refrigeration and other processes required by industrialization and farming. In these boom periods, higher energy costs were easy to pass on. Eventually the higher energy costs “caught up with” the economy, and pushed growth in energy consumption per capita down, putting an end to the peaks.

Figure 6 shows Figure 5 with the valleys labeled, instead of the peaks.

Figure 6.

When I say that the world economy is reaching “peak industrial output per capita” and “peak food per capita,” this represents the opposite of a rapidly growing economy. In fact, if the world is reaching Limits to Growth, the situation is even worse than all of the labeled valleys on Figure 6. In such a case, energy consumption growth is likely to shrink so low that even the blue area (population growth) turns negative.

In such a situation, the big problem is “not enough to go around.” While cost increases due to diminishing returns could easily be passed along when growth in industrial and food output per capita were rapidly rising (the Figure 5 situation), this ability seems to disappear when the economy is near limits. Part of the problem is that the lower growth in per capita energy affects the kinds of job that are available. With low energy consumption growth, many of the jobs that are available are service jobs that do not pay well. Wage disparity becomes an increasing problem.

When wage disparity grows, the share of low wage workers rises. If businesses try to pass along their higher costs of production, they encounter market resistance because lower wage workers cannot afford the finished goods made with high cost energy products. For example, auto and iPhone sales in China decline. The lack of Chinese demand tends to lead to a drop in demand for the many commodities used in manufacturing these goods, including both energy products and metals. Because there is very little storage capacity for commodities, a small decline in demand tends to lead to quite a large decline in prices. Even a small decline in China’s demand for energy products can lead to a big decline in oil prices.

Strange as it may seem, the economy ends up with low oil prices, rather than high oil prices, being the problem. Other commodity prices tend to be low as well.

What Is Ahead, If We Are Reaching Economic Growth Limits?

1. Figure 1 at the top of this post seems to give an indication of what is ahead after 2019, but this forecast cannot be relied on. A major issue is that the limited model used at that time did not include the financial system or debt. Even if the model seems to provide a reasonably accurate estimate of when limits will hit, it won’t necessarily give a correct view of what the impact of limits will be on the rest of the economy, after limits hit. The authors, in fact, have said that the model should not be expected to provide reliable indications regarding how the economy will behave after limits have started to have an impact on economic output.

2. As indicated in the title of this post, considerable financial volatility can be expected in 2019 if the economy is trying to slow itself. Stock prices will be erratic; interest rates will be erratic; currency relativities will tend to bounce around. The likelihood that derivatives will cause major problems for banks will rise because derivatives tend to assume more stability in values than now seems to be the case. Increasing problems with derivatives raises the risk of bank failure.

3. The world economy doesn’t necessarily fail all at once. Instead, pieces that are, in some sense, “less efficient” users of energy may shrink back. During the Great Recession of 2008-2009, the countries that seemed to be most affected were countries such as Greece, Spain, and Italy that depend on oil for a disproportionately large share of their total energy consumption. China and India, with energy mixes dominated by coal, were much less affected.

Figure 7. Oil consumption as a percentage of total energy consumption, based on 2018 BP Statistical Review of World Energy data.

Figure 8. Energy consumption per capita for selected areas, based on energy consumption data from 2018 BP Statistical Review of World Energy and United Nations 2017 Population Estimates by Country.

In the 2002-2008 period, oil prices were rising faster than prices of other fossil fuels. This tended to make countries using a high share of oil in their energy mix less competitive in the world market. The low labor costs of China and India gave these countries another advantage. By the end of 2007, China’s energy consumption per capita had risen to a point where it almost matched the (now lower) energy consumption of the European countries shown. China, with its low energy costs, seems to have “eaten the lunch” of some of its European competitors.

In 2019 and the years that follow, some countries may fare at least somewhat better than others. The United States, for now, seems to be faring better than many other parts of the world.

4. While we have been depending upon China to be a leader in economic growth, China’s growth is already faltering and may turn to contraction in the near future. One reason is an energy problem: China’s coal production has fallen because many of its coal mines have been closed due to lack of profitability. As a result, China’s need for imported energy (difference between black line and top of energy production stack) has been growing rapidly. China is now the largest importer of oil, coal, and natural gas in the world. It is very vulnerable to tariffs and to lack of available supplies for import.

Figure 9. China energy production by fuel plus its total energy consumption, based on BP Statistical Review of World Energy 2018 data.

A second issue is that demographics are working against China; its working-age population already seems to be shrinking. A third reason why China is vulnerable to economic difficulties is because of its growing debt level. Debt becomes difficult to repay with interest if the economy slows.

5. Oil exporters such as Venezuela, Saudi Arabia, and Nigeria have become vulnerable to government overthrow or collapse because of low world oil prices since 2014. If the central government of one or more of these exporters disappears, it is possible that the pieces of the country will struggle along, producing a lower amount of oil, as Libya has done in recent years. It is also possible that another larger country will attempt to take over the failing production of the country and secure the output for itself.

6. Epidemics become increasingly likely, especially in countries with serious financial problems, such as Yemen, Syria, and Venezuela. Historically, much of the decrease in population in countries with collapsing economies has come from epidemics. Of course, epidemics can spread across national boundaries, exporting the problems elsewhere.

7. Resource wars become increasingly likely. These can be local wars, perhaps over the availability of water. They can also be large, international wars. The timing of World War I and World War II make it seem likely that these wars were both resource wars.

Figure 10.

8. Collapsing intergovernmental agencies, such as the European Union, the World Trade Organization, and the International Monetary Fund, seem likely. The United Kingdom’s planned exit from the European Union in 2019 is a step toward dissolving the European Union.

9. Privately funded pension funds will increasingly be subject to default because of continued low interest rates. Some governments may choose to cut back the amounts they provide to pensioners because governments cannot collect adequate tax revenue for this purpose. Some countries may purposely shut down parts of their governments, in an attempt to hold down government spending.

10. A far worse and more permanent recession than that of the Great Recession seems likely because of the difficulty in repaying debt with interest in a shrinking economy. It is not clear when such a recession will start. It could start later in 2019, or perhaps it may wait until 2020. As with the Great Recession, some countries will be affected more than others. Eventually, because of the interconnected nature of financial systems, all countries are likely to be drawn in.

Summary

It is not entirely clear exactly what is ahead if we are reaching Limits to Growth. Perhaps that is for the best. If we cannot do anything about it, worrying about the many details of what is ahead is not the best for anyone’s mental health. While it is possible that this is an end point for the human race, this is not certain, by any means. There have been many amazing coincidences over the past 4 billion years that have allowed life to continue to evolve on this planet. More of these coincidences may be ahead. We also know that humans lived through past ice ages. They likely can live through other kinds of adversity, including worldwide economic collapse.

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18 years after becoming one of America’s largest bankruptcies, the writing is on the wall for California’s utility giant after its cash-collateral-call triggering second downgrade to junk has led to reports that PG&E may notify employees as soon as Monday that it’s preparing a potential bankruptcy filing, according to people familiar with the situation.

California passed legislation last year in the aftermath of the deadly Wine Country fires requiring utilities to post public notices for employees at least 15 days before a change of control, including a bankruptcy filing.

This potential bankruptcy announcement comes after PG&E’s AIG moment hit late on Thursday, when Moody’s did precisely what S&P did two days earlier, and cut the utility’s credit rating to junk citing the electric company’s potential wildfire liabilities.

“We see a much more challenging environment for PG&E,” Moody’s analyst Jeff Cassella said in a statement. “The company is increasingly reliant on extraordinary intervention by legislators and regulators, which may not occur soon enough or be of sufficient magnitude to address these adverse developments.”

As Bloomberg reports, a notice may signal that the company has accelerated plans to make a Chapter 11 filing as way of dealing with crippling liabilities from wildfires that tore through California in 2017 and 2018, killing over 100 people and destroying hundreds of thousands of acres.

And, as we detailed previously, with two junk ratings, PG&E will now be required to use cash as collateral to guarantee power contracts, according to the company’s latest quarterly filing, which estimates the utility will have to fully collateralize as much as $800 million of positions.

That… is a problem because PG&E had only $430 million of cash on its books in September, precipitating what now appears to be an imminent liquidity crisis, one which as a result of some $30 billion in wildfire legal liabilities will quickly escalate into a solvency inferno, to use a term closely associated with California utility companies.

PG&E declined to provide a statement, saying the company doesn’t comment on rumor or speculation.

During its 2001, bankruptcy, California governor Gray Davis used the state’s treasury to bail out the utility, provoking a controversy that eventually contributed to his ouster. PG&E emerged from bankruptcy in April 2004 after returning $10.2 billion to creditors.

Newly appointed California Governor Gavin Newsom said during a press conference Thursday that his office would be making an announcement related to PG&E within the next few days and that the issue was at the top of his agenda. He said in a later interview that the announcement would involve appointments to the California Public Utilities Commission, the state’s grid operator and to a commission established by legislature to explore wildfire issues.

Newsom’s office didn’t immediately respond to a request for comment on Saturday.

Citigroup Inc. called it a “a crisis of confidence.” Guggenheim Securities analysts likened the dilemma PG&E poses to investors and lawmakers as “a falling knife.”

As we pointed out previously, with relation to the last financial crisis, while Lehman was the spark, its was the bailout of AIG that really precipitated the most violent part of the 2008 crisis. While most analysts see PG&E as an isolated case, now that the biggest California utility is on the verge of bankruptcy, and is about to have its own AIG moment, one wonders just how “contained” this particular shock to the system will be.

One thing is clear, however: the shock to California residents, or rather their wallets, will be most unpleasant, as their rates are about to surge one way or another.

Think it couldn’t happen? Think again, as Bloomberg reports, PG&E’s deepening financial crisis has already spread to the companies that supply its natural gas and generate electricity for its customers. At least two small gas suppliers have restricted sales to PG&E out of concern that the company won’t be able to pay, people with direct knowledge of the situation said earlier this week.

Some banks are taking a long look at a potential $2 billion debt financing for the Geysers, the world’s largest geothermal complex, because it supplies the utility, people familiar with the matter also said this week.

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Authored by CJ Hopkins via The Unz Review,

Remember when the War on Terror ended and the War on Populism began? That’s OK, no one else does.

It happened in the Summer of 2016, also known as “the Summer of Fear.” The War on Terror was going splendidly. There had been a series of “terrorist attacks,” in Orlando, Nice, Würzberg, Munich, Reutlingen, Ansbach, and Saint-Étienne-du-Rouvray, each of them perpetrated by suddenly “self-radicalized” “lone wolf terrorists” (or “non-terrorist terrorists“) who had absolutely no connection to any type of organized terrorist groups prior to suddenly “self- radicalizing” themselves by consuming “terrorist content” on the Internet. It seemed we were entering a new and even more terrifying phase of the Global War on Terror, a phase in which anyone could be a “terrorist” and “terrorism” could mean almost anything.

This broadening of the already virtually meaningless definition of “terrorism” was transpiring just in time for Obama to hand off the reins to Hillary Clinton, who everyone knew was going to be the next president, and who was going to have to bomb the crap out of Syria in response to the non-terrorist terrorist threat. The War on Terror (or, rather, “the series of persistent targeted efforts to dismantle specific networks of violent extremists that threaten America,” as Obama rebranded it) was going to continue, probably forever. The Brexit referendum had just taken place, but no one had really digested that yet … and then Trump won the nomination.

Like that scene in Orwell’s 1984 where the Party switches official enemies right in the middle of the Hate Week rally, the War on Terror was officially canceled and replaced by the War on Populism. Or … all right, it wasn’t quite that abrupt. But seriously, go back and scan the news. Note how the “Islamic terrorist threat” we had been conditioned to live in fear of on a daily basis since 2001 seemed to just vanish into thin air. Suddenly, the “existential threat” we were facing was “neo-nationalism,” “illiberalism,” or the pejorative designator du jour, “populism.”

Here we are, two and a half years later, and “democracy” is under constant attack by a host of malevolent “populist” forces …. Russo-fascist Black vote suppressors, debaucherous eau de Novichok assassins, Bernie Sanders, the yellow-vested French, emboldened non-exploding mail bomb bombers, Jeremy Corbyn’s Nazi Death Cult, and brain-devouring Russian-Cubano crickets.

The President of the United States is apparently both a Russian intelligence operative and literally the resurrection of Hitler. NBC and MSNBC have been officially merged with the CIA. The Guardian has dispensed with any pretense of journalism and is just making stories up out of whole cloth. Anyone who has ever visited Russia, or met with a Russian, or read a Russian novel, is on an “Enemies of Democracy” watch list (as is anyone refusing to vacation in Israel, which the Senate is now in the process of making mandatory for all U.S. citizens). Meanwhile, the “terrorists” are nowhere to be found, except for the terrorists we’ve been usingto attempt to overthrow the government of Bashar al Assad, the sadistic nerve-gassing Monster of Syria, who illegally invaded and conquered his own country in defiance of the “international community.”

All this madness has something to do with “populism,” although it isn’t clear what. The leading theory is that the Russians are behind it. They’ve got some sort of hypno-technology (not to be confused with those brain-eating crickets) capable of manipulating the minds of … well, Black people, mostly, but not just Black people. Obviously, they are also controlling the French, who they have transformed into “racist, hate-filled liars” who are “attacking elected representatives, journalists, Jews, foreigners, and homosexuals,” according to French President Emmanuel Macron, the anointed “Golden Boy of Europe.” More terrifying still, Putin is now able to project words out of Trump’s mouth in real-time, literally using Trump’s head as a puppet, or like one of those Mission Impossible masks. (Rachel Maddow conclusively proved this by spending a couple of hours on Google comparing the words coming out of Trump’s mouth to words that had come out of Russian mouths, but had never come out of American mouths, which they turned out to be the exact same words, or pretty close to the exact same words!) Apparently, Putin’s master plan for Total Populist World Domination and Establishment of the Thousand Year Duginist Reich was to provoke the global capitalist ruling classes, the corporate media, and their credulous disciples into devolving into stark raving lunatics, or blithering idiots, or a combination of both.

But, seriously, all that actually happened back in the Summer of 2016 was the global capitalist ruling classes recognized that they had a problem. The problem that they recognized they had (and continue to have, and are now acutely aware of) is that no one is enjoying global capitalism … except the global capitalist ruling classes. The whole smiley-happy, supranational, neo-feudal corporate empire concept is not going over very well with the masses, or at least not with the unwashed masses. People started voting for right-wing parties, and Brexit, and other “populist” measures (not because they had suddenly transformed into Nazis, but because the Right was acknowledging and exploiting their anger with the advance of global neoliberalism, while liberals and the Identity Politics Left were slow jamming the TPP with Obama and babbling about transgender bathrooms, and such).

The global capitalist ruling classes needed to put a stop to that (i.e, the “populist” revolt, not the bathroom debate). So they suspended the Global War on Terror and launched the War on Populism. It was originally only meant to last until Hillary Clinton’s coronation, or the second Brexit referendum, then switch back to the War on Terror, but … well, weird things happen, and here we are.

We’ll get back to the War on Terror, eventually … as the War on Populism is essentially just a temporary rebranding of it. In the end, it’s all the same counter-insurgency. When a system is globally hegemonic, as our current model of capitalism is, every war is a counter-insurgency (i.e., a campaign waged against an internal enemy), as there are no external enemies to fight. The “character” of the internal enemies might change (e.g., “Islamic terrorism,” “extremism,” “fascism,” “populism,” “Trumpism,” “Corbynism,” et cetera) but they are all insurgencies against the hegemonic system … which, in our case, is global capitalism, not the United States of America.

The way I see it, the global capitalist ruling classes now have less than two years to put down this current “populist” insurgency. First and foremost, they need to get rid of Trump, who despite his bombastic nativist rhetoric is clearly no “hero of the common people,” nor any real threat to global capitalism, but who has become an anti-establishment symbol, like a walking, talking “fuck you” to both the American and global neoliberal elites. Then, they need to get a handle on Europe, which isn’t going to be particularly easy. What happens next in France will be telling, as will whatever becomes of Brexit … which I continue to believe will never actually happen, except perhaps in some purely nominal sense.

And then there’s the battle for hearts and minds, which they’ve been furiously waging for the last two years, and which is only going to intensify. If you think things are batshit crazy now (which, clearly, they are), strap yourself in. What is coming is going to make COINTELPRO look like the work of some amateur meme-freak. The neoliberal corporate media, psy-ops like Integrity Initiative, Internet-censoring apps like NewsGuard, ShareBlue and other David Brock outfits, and a legion of mass hysteria generators will be relentlessly barraging our brains with absurdity, disinformation, and just outright lies (as will their counterparts on the Right, of course, in case you thought that they were any alternative). It’s going to get extremely zany.

The good news is, by the time it’s all over and Trump has been dealt with, and normality restored, and the working classes put back in their places, we probably won’t remember that any of this happened. We’ll finally be able to sort out those bathrooms, and get back to paying the interest on our debts, and to living in more or less constant fear of an imminent devastating terrorist attack … and won’t that be an enormous relief?

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The People’s Liberation Army (PLA) is equipping its special forces with futuristic combat weapons like CornerShot-like pistols, knife guns, and grenade-launching assault rifles.

PLA special forces are being groomed into “super soldiers” to meet the requirements of the modern battlefield, according to Global Times.

The wide variety of advanced guns are being deployed with the Xuefeng Special Operation Brigade under the PLA 76th Group Army, CGTN News reported on Monday.

The CornerShot-like pistol system allows its operator to both see and attack the enemy, without exposing them to a counterattack. In dangerous urban warfare, the new system allows the operator to accurately shoot around a wall without exposing them to hostile threats, the report said.

China has manufactured three CornerShot-like weapons to date: the HD-66, which is a replica of the CornerShot, and the CF-06. Both models were unveiled at the 4th China Police Expo by Chongqing Changfeng Machinery and Shanghai Sea Shield Technologies. 

The third one, known as the CS/LW9, was developed and manufactured by the China Ordnance Industry Research Institute in 2005. It has a handle at the bottom that can be used to turn the LW9 around corners. 

All three systems use the QSZ-92 as the primary pistol.

Neither Global Times or CGTN News clarified which CornerShot-like pistol was deployed to PLA special forces. 

Another futuristic combat weapon PLA forces are using is the knife gun. It hides the bullets inside what seems to be a knife, which can be fired in close combat environments, the report said.

The last weapon is the grenade-launching assault rifle, also known as the Individual Comprehensive Operation System QTS-11, is an air burst grenade launcher integrated with the QBZ-03 assault rifle that has been in service with the PLA since 2015, according to the report.

“With these weapons, super soldiers capable of 1 vs. 10 will be created,” Wei Dongxu, a Beijing-based military analyst, told the Global Times on Tuesday.

CGTN News said it is rare for these advanced weapons to be broadcasted on television. 

“Training using these sci-fi weapons shows that related technologies are very mature,” Wei said.

“The weapons are made for special forces… Some standard troops will also use them in the future,” he added, adding that these high-tech weapons will remain exclusive to special forces due to high costs. 

For now, these weapons are being used in special force combat units to further the PLA’s modernization efforts, CGTN News concluded. 

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One day after the New York Times resurrected the dying Trump-Russia narrative with a report that the FBI supercharged their collusion investigation after President Trump fired F.B.I. director James Comey (on the recommendation of Deputy AG Rod Rosenstein), the Washington Post has tossed another match on the pyre – reporting that Trump went to lengths to conceal his communications with Russian President Vladimir Putin. 

President Trump has gone to extraordinary lengths to conceal details of his conversations with Russian President Vladi­mir Putin, including on at least one occasion taking possession of the notes of his own interpreter and instructing the linguist not to discuss what had transpired with other administration officials, current and former U.S. officials said. –WaPo

The Post says that Trump concealed the details of a 2017 meeting in Hamburg attended by former Secretary of State Rex Tillerson, which was only discovered when a senior State Department official queried the interpreter for information beyond a readout shared by Tillerson. 

According to the Post, Trump engaged in a “broader pattern” of shielding his communications with Putin from public scrutiny “and preventing even high-ranking officials in his own administration from fully knowing what he has told one of the United States’ main adversaries.” 

Perhaps Trump – who has been subject to unauthorized leaks of sensitive discussions ever since he took office – including a phone call with the former President of Mexico, grew distrustful of his inner circle and has been trying to manage the flow of information throughout the White House. On the other hand, any President meeting with an adversarial world leader at five locations over the past two years and then actively working to shield those conversations from his own inner circle is bound to attract suspicion. 

I’d only emphasize that, whatever you think about the topic of the Mueller investigation, for any president to meet substantively with a foreign leader without his own aides, or other leaders, as witnesses is a very bad idea, simply for the effective conduct of US foreign policy.

— Patrick Chovanec (@prchovanec) July 3, 2018

As a result of Trump’s actions, US officials say there is no detailed record, even in classified files, of Trump’s face-to-face meetings with Putin. And the left is already running with this as a case of Kremlin leverage – much as they did with the Steele Dossier’s unverified claims that the Kremlin had tapes of Trump engaging in deviant sexual behavior in a Moscow hotel room. 

Correction: There is one detailed classified record of Trump’s numerous conversations with Vladimir Putin. It’s in the Kremlin.

Trump is desperate to keep the details of his conversations with Putin secret. To what lengths would he go for Putin not to make them public? https://t.co/5g2FaGIhbH

— John Aravosis 🇺🇸 (@aravosis) January 12, 2019

According to former Bill Clinton’s former deputy secretary of state and former Brookings Institution president Strobe Talbott, Trump’s secrecy surrounding his interactions with Putin “is not only unusual by historical standards, it is outrageous.” Talbot participated in over a dozen meetings with Clinton and then-Russian President Boris Yeltsin in the 1990s. “It handicaps the U.S. government — the experts and advisers and Cabinet officers who are there to serve [the president] — and it certainly gives Putin much more scope to manipulate Trump,” added Talbott. 

White House Responds

Responding to the Post, the White House said that the Trump administration had only sought to “improve the relationship with Russia” after the Obama administration “pursued a flawed ‘reset’ policy that sought engagement for the sake of engagement.”

The Trump administration “has imposed significant new sanctions in response to Russian malign activities,” said the spokesman, who spoke on the condition of anonymity and noted that Tillerson in 2017 “gave a fulsome readout of the meeting immediately afterward to other U.S. officials in a private setting, as well as a readout to the press.”

Trump allies said the president thinks the presence of subordinates impairs his ability to establish a rapport with Putin, and that his desire for secrecy may also be driven by embarrassing leaks that occurred early in his presidency. –WaPo

Trump launched an internal leak hunt after the Post reported in May of 2017 that he revealed classified information about a terror plot to Russian officials in the Oval Office, and called former FBI director James Comey a “nut job,” whose firing had removed “great pressure” on his relationship with Russia. 

In addition to the leak hunt, the White House sharply curtailed the distribution of memos within the National Security Council on Trump’s interactions with foreign leaders. 

“Over time it got harder and harder, I think, because of a sense from Trump himself that the leaks of the call transcripts were harmful to him,” said one WaPo source. 

Democrats frothing at the mouth

Congressional Democratic leaders have described the secrecy surrounding Trump’s meetings with Putin as “unprecedented and disturbing,” and have vowed to investigate. 

Rep. Eliot L. Engel (D-N.Y.), the chairman of the House Foreign Affairs Committee, said in an interview that his panel will form an investigative subcommittee whose targets will include seeking State Department records of Trump’s encounters with Putin, including a closed-door meeting with the Russian leader in Helsinki last summer.

“It’s been several months since Helsinki and we still don’t know what went on in that meeting,” Engel said. “It’s appalling. It just makes you want to scratch your head.” –WaPo

The Post suggests that the concerns have been compounded by pro-Russia positions Trump has taken; dismissing Russian election interference as a “hoax,” and suggesting that Russia was entitled to annex Crimea.

That said, the Post fails to mention the vast sanctions Trump has slapped Russia with, the weapons Trump has sold to Ukraine that the Obama administration wouldn’t (for which WaPo commended him ) – and more recently, Trump’s threat to sanction European businesses that buy energy from Russia, which drew a harsh rebuke from the German Committee on East European Relations.

Trump generally has allowed aides to listen to his phone conversations with Putin, although Russia has often been first to disclose those calls when they occur and release statements characterizing them in broad terms favorable to the Kremlin.

In an email, Tillerson said that he “was present for the entirety of the two presidents’ official bilateral meeting in Hamburg,” but declined to discuss the meeting and did not respond to questions about whether Trump had instructed the interpreter to remain silent or had taken the interpreter’s notes.

In a news conference afterward, Tillerson said that the Trump-Putin meeting lasted more than two hours, covered the war in Syria and other subjects, and that Trump had “pressed President Putin on more than one occasion regarding Russian involvement” in election interference. “President Putin denied such involvement, as I think he has in the past,” Tillerson said. –WaPo

Meanwhile, Trump’s interpreter has refused to discuss Trump’s interactions with Putin – though he conceeded that Putin denied any Russian involvement in the US election, and that Trump said “I believe you.” 

“We were frustrated because we didn’t get a readout,” said a former senior administration official. “The State Department and [National Security Council] were never comfortable” with Trump’s interactions with Putin, the official said. “God only knows what they were going to talk about or agree to.” 

 

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Authored CCRider via Jim Quinn’s Burning Platform blog,

I offer here an idea to drive a stake into the heart of the ruling elite while requiring no effort, no rallies, no demonstrations and no violence.  It can be done sitting on our asses, in fact that’s a requirement.  We hijack the non voting majority.  There are many well reasoned articles for not voting.  One of my favorites is by Doug Casey.

I stopped voting after Reagan grew the government by 30%.  If he couldn’t stem the malignant growth of the federal government I reasoned, no one could.  Like any parasite government would grow until it killed off the host.  I did vote for Ron Paul in the two republican primaries but I knew it was merely symbolic.  Not only was he not allowed to win, if he came close they would have killed him, like Jack Kennedy, another reason I gave up on the evil that is voting in a corrupt democracy.

It was sort of hard sticking to it early on, not getting sucked into the red/blue bullshit hype.  In time I grew to love my non voting status.  It gave me a perspective that wound up being refreshing and enlightening.  I became a spectator in the bleachers emotionally detached from the outcome which I could not affect in any case.  I became bullet proof to nitwits like W Bush.  I could see through the dapper, skin rash deep facade of Obama and the horny carnival barker who followed him.  I wasn’t being played.  The big picture came gradually into focus.  I could see through the ruling elite’s machinations and tricks to lead the voting wildebeests down their desired path.  I became a proud non voter.  It’s not a fashionable position I know but that can change.

There is a new paradigm perhaps worth developing which could radically reset the equation.  In the last presidential election out of 230 million eligible voters, almost half, 97 million did not vote.  That left 130 million who did.  Split that number in half to represent the 2016 percentages of democratic and republican voters and you have about 65 million each.  So the vast majority of eligible voters stayed home rather than join the red-blue circle jerk.

The establishment press, ever the teacher’s pets, labeled non voters lazy and apathetic giving them cover to ignore the other obvious reason; that the abstainers regard voting as a hopeless and pointless exercise, two paths to the same cage.  Is my confirmation bias showing or are disillusioned trumpsters getting wise to the democracy scam in increasing numbers?  Consider what would happen if we take the republican voters off the table.  That would give the democratic party 65 million votes and the “None Of The Above” party 162 million.

Of course that’s unrealistic because the real apathetic people are the brain dead automatic Repo voters-think John McCain.  But even if we could convince half of them, say 33 million to stay home on election day, that would still overwhelm the Dummos 65 million to 130 million.  One third joining the movement and it’s 120 million to 65 million-twice their number.  What would our masters do?  I have no idea but those relying on the bogus concept of “consent of the governed” would be made a laughing stock-something they can’t stand-humiliation.  That’s what all that “The Honorable” bullshit is about.  Like we owe Rashida Tlaib respect.

If you believe in Liberty and cherish your American birthright to be a sovereign individual there is no good reason to reject this wonderful form of completely nonviolent and legal civil disobedience.  Even if Trump builds his partial wall/fence/barrier/whatever, unless chain migration is stopped (which he could have done on day one) that alone will be enough to push Texas, Georgia and Florida over the blue wall in short order.  At that point we have one party rule.  See what John Adams had to say about the fate of all democracies .  We’re there.  What’s left to save?  Why play in a rigged game?  Let’s go in a different direction.  The irreverent, ‘Blow Me’ attitude of TBP seems a great vehicle to sponsor such an effort.

Think of the fun we could have driving the non voting bandwagon.  Maybe we could call ourselves the Former Unionists or FU Party.  Lets do what the ruling elite would fear and loathe:  Give the ‘None of the Above’ majority a persona.  Brand the movement.  Hand out “I Didn’t Vote” stickers.  Or “Hope is for dopes” ball caps.  Maybe our anthem could be a rewrite of the lyrics  “Take This Job( Vote) and Shove it”.  If it caught fire it could ignite the decentralized explosion of creative fire of the Ron Paul presidential campaigns.

Think of the phonies; Biden, Harris, Graham, Rubio, etc. voicing outrage at the very idea of rejecting their ‘leadership’.  Think of the Chris Cuomos and Hannitys begging you to once again  fall for the regularly scheduled “Most Important Election Of Our Lifetimes” scam.  Many Dummos may even join in.  Think of Bernie followers after he was screwed out of the nomination by the DNC.  Might they not join in?  And the best part is that this movement requires no leaders.  No political positions. No campaign promises.  No quorums.  No conventions.  We have no platform, offer no issue statements and no legislative agendas.  We don’t give a shit about the fucking deficit or ‘regime change’ .  We stay home and mind our own business.  We’re sick and tired of the game and we no longer wish to participate in our own destruction.  We’ve shrugged.

Vote, my ass.

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In a now-legendary interview given almost exactly one year ago, Artemis Capital’s Chris Cole appeared on the MacroVoices podcast to elaborate on a paper he had written titled the “Volatility and Alchemy of Risk”, where Cole laid the risks posed by what he estimated to be $2 trillion in global explicit and implicit short-volatility exposure, and how the unwinding of this massive position could usher in an era of instability across asset classes as markets were forced into a devastating reevaluation of systemic risk.

And as fate would have it, barely a week later on Feb. 5, markets exploded in a massive short-vol squeeze that vindicated Cole’s warnings and led to the death of one of the most popular short-vol ETPs – eroding years of profits accrued by amateur day traders who had reaped millions in profits off the short-vol trade.

Fortunately for legions of American retirees and retail investors, the February blowup proved to be an isolated incident. Markets staged a surprisingly swift recovery, and by the summer, had returned to all time highs. But Cole persisted with his warnings that what we saw in February was merely the weakest hands getting pushed out of the short-vol trade, and that more chaos would follow.

And so, with markets sloughing off a brutal fourth quarter, prompting some in the financial press to speculate about whether the bulls are back in charge, Cole is making his triumphant return to MacroVoices to offer his take on the volatility that gripped markets during the fourth quarter, along with a word to the wise:  The unwind of the massive short-vol trade that Cole predicted more than a year ago isn’t over.

Rather, it’s just beginning.

But first, a quick refresher: In Cole’s view, traders have massively underestimated the risks associated with the short volatility trade by using it as a source of return and an input for taking risk. Counterintuitively, the more volatility goes down, the more risk rises. The more volatility goes up, the more risk is taken off. This sets up a regime of self-reflexivity that creates massive systemic risk.

I think what we saw last February actually just was the weak hand of the table being taken out by the short-vol trade. A lot of people read my paper. They came to me, and they said congratulations on getting it so right because there is this blowup of the short VIX ETP products that occurred, actually, literally within a couple of days after the interview.

And I said, you know what, that’s not what I was referring to. Those short-vol products, those VIX ETPs, the weak hands of the table, that was just the first phase of what is going to be a multi-year cycle and rebalance in the vol regime as many of these institutional short volatility strategies come unwound.

Looking back to the beginning of last year, Cole touches on one aspect of the vol-pocalypse that has been widely misunderstood: That rather than being an “all at once” volatility explosion, volatility as measured by the absolute move in fixed strike volatility options on the S&P 500, actually rose more in January than it did in February, suggesting that the first rumblings of the February vol explosion could be felt weeks before.

Cole followed that up with a step-by-step analysis of how a repricing in interest rates led to a liquidity crisis that ultimately drove the blowup in equities.

Yeah, I think 99% of the people would say February volatility rose more. Actually, if you look at the absolute move in implied vol, fixed strike vols of the S&P 500, vol actually moved more in January than it moved in February of last year. A lot of that was actually right-tail movement in volatility. I think that is quite shocking to most people. The bond spike in February was widely misunderstood. The media talked about this as a volatility event. But this was not a true vol event.

It was a liquidity crisis as a result of a rapid repricing and tail risk. You had a lot of very weak hands at the table that were shorting volatility in the form of these VIX ETPs on the expectation of continued stability. And it was, put quite simply, there was a point where many of these strategies had never been tested in a true volatile environment.

And when we had a revaluation, volatility higher. These weak hands at the table were taken out. And what we saw, actually, was not a fundamental repricing in vol driven by the credit cycle or fundamentals as much as it was the weakest hands at the table scrambling to buy tail risk insurance. Not to hedge their portfolios. To hedge their careers. They were forced to buy tail risk insurance or face insolvency. This is analogous to some of the subprime lenders that blew out in the late 2006–2007, the dumb, dumb, dumb money that was over-levered and was out of control and got taken out early. Of course that dumb money gets taken out first.

There is an initial panic. And then we begin to see a fundamental regime shift in volatility that comes later, after that dumb money is taken out. This is what we’ve begun to see in the fourth quarter of 2018 heading into this year. And my point here is that, in February, traders were not buying options because they thought volatility would increase. They were buying options because they were facing insolvency. And that bid on tail risk insurance is what caused the vol in the VIX to shoot up so dramatically.

Ultimately, the chaos from February was largely contained within the VIX ETP space, which represents only a sliver of the overall $2 trillion monster short-vol trade…which means there’s still $1.95 trillion that Cole expects will unwind over the next 1-3 years.

In other words, “the Big one” – a blowup on par with Black Monday – could be in the offing,

And it was a blowout of this teeny portion of the global short vol trade. I talk about this Ouroborus, $2 trillion worth of short-vol exposure. These VIX ETPs were only about $5 billion – $5 billion of $2 trillion. We still have the much larger $2 trillion unwind in the global short-vol trade that has just begun to start. And this is a fundamental regime shift in volatility that, if history is any guide, will last anywhere between one to three years and presents tremendous opportunity for different strategies that profit from change and coincides with not only quantitative tightening but also the evolution of the debt and leverage cycle.

Particularly if resurgent inflation forces the Federal Reserve to keep hiking interest rates. Cole argues that signs of these stressors are already appearing in the form of rising interbank lending rates and widening credit spreads. These risks have been amplified by the record levels of corporate debt that is only one notch above speculative grade – creating the potential for a wave of newly minted fallen angels to produce a reaction that blows up the entire market…

Indeed, Black Monday 1987, most people think about the one day where the stock market dropped 20%. They don’t think about the fact that in early 1987 inflation was actually lower than where it is today and how rates shot up 300 basis points.

And that caused liquidity seize-up that initially started to show through in interbank lending and higher credit spread, then spread to a 20% drawdown in equity markets, all before Black Monday occurred.

…a process that Cole likened to a fire setting off a barrel of nitroglycerine…

So I like to sort of point out this idea that these short-vol strategies and these institutional strategies – many institutions seeking to use financial engineering to apply leverage to get extra yield because they’re not getting it on their fixed income portfolio – these strategies are a little like a barrel of nitroglycerine sitting in the office.

I could go to your offices – I don’t know where you guys are located – but I could sit there and say, oh, what’s in that barrel?

These are beautiful office, but what’s in that barrel? And you’re like, oh, it’s it a barrel of nitroglycerine. I’m like, oh my god, what’s it doing there? That could blow up three city blocks!

And you’d be like, oh, it’s no big deal. The bank pays me to keep it here. And I’m like, that’s terrifying. All it takes is a small fire for that thing to explode.

We couln’t have put it better ourselves.

Listen to the full interview below:

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Authored by Chris Hamilton via Econimica blog,

The floor under the East Asia neighborhood (consisting of China, Japan, South / North Korea, Taiwan, & Mongolia) is about to fall away.  These nations (combined) equal slightly more than 20% of the global population and consume 27% of total global energy.  From 2000 through 2016, this region (spearheaded by China) represented 48% of the global growth in total energy consumption.  So, when I tell you these countries are economically entering long-term domestic declines (or perhaps outright collapses), the impacts will reverberate everywhere.

Why domestic economic decline or collapse?  This is simply following a massive population decline which has already taken place (past tense).  The chart below details the 44% fall in births since the double peaks seen in East Asia in ’67 and ’89.  This is an ongoing birth dearth of over 14 million fewer annually, since 1995.  Now this birth dearth will be compounded by the rapidly falling childbearing population of 15 to 39yr/olds, represented by the red line below (I exclude the 40+yr/olds because they simply have so few children as to simply create distraction).  By 2035, the East Asia child bearing population will decline by 30% or -202 million (no estimation, this population is already born and will just shift forward).  Absent some seismic shift (or turning away from the inflationary urbanization underway?), births will continue to tumble and national populations will ultimately likewise crumble.

Noteworthy above is the low water mark of just 15 million births in 1996…and the muted L shaped aftermath.  Those born in 1996 will be 23 years old in 2019, or generally entering adulthood.  On an annual basis, this is a relatively sudden 50%+ decline in new adults, new potential employees, new potential parents, new potential consumers entering the economy…and this is just the start of the “new normal”.  Every year, from here forward, a 50% decline (relative to just five years ago) in potential demand and potential employees will leave the regions economies reeling.  All the economic overcapacity, housing overcapacity, and bad debt will be left “swimming naked” among the ongoing collapsing demand.

The situation, nation by nation, is detailed below…showing both annual births (blue columns) and childbearing populations (maroon line).

Taiwan

• Annual Births: 58% decline or -250 thousand births annually from 1980 peak 
• Child bearing population: -37% or -3.5 million by 2035 from 1995 peak

Japan

• Annual births: 62% decline or -1.5 million births annually from 1950 peak
• Childbearing population: -40% or -18 million by 2035 from 1974 peak

South Korea

• Annual births: 69% decline or -730k births annually from 1960 peak
• Child bearing population: -31% or -8.3 million by 2035 from 1995 peak

China

• Annual births: 45% decline (as of 2018) or -13.7 million births annually from 1989 peak
• Child bearing population: -31% or -177 million by 2035 from 2005 peak

Childbearing vs. Elderly Populations

East Asia working age population (15-59yr/olds) vs. 60+yr/old population, chart below.  Surging elderly against falling working age population.

Below, the decade over decade change basis, working age versus elderly.  The 2020 through 2030 decade will be demographic hell.  60+ year olds will increase by 122 million against a decline in the working age population of nearly 80 million.  This will break all the bad promises made in the good times and bring an economic / financial firestorm.

Conclusion:

Unfortunately, I don’t have any solutions to resolve what is about to take place.  I could show similar demographic issues among East Asia’s primary export markets; in Europe (a population that consumes 14% of global energy), Eurasia (consuming 8%) or N. America (consuming 21% of global energy).  But growth in these regions is in the past tense, and it was only East Asia (China) that was able to delay the ultimate economic fall via the greatest debt gambit in history.  Unfortunately, it was always doomed to fail and an indefinite period of outright global decline is now underway.  Interest rate cuts, deficit spending, and central bank buying of assets will not fix or ameliorate the declining demand nor allow adequate growth to sustain the current system.  It’s time to stop pretending we can grow our way out of the debt hole / asset bubble we are in amid a long term decline which is just getting started.

There may still be time to rethink the whole system, salvage the good, jettison the bad, and acknowledge the pain of reality…before this is chosen for us, likely at the worst time and place possible.

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