Month: December 2019

Authored by Jonathan Turley via JonathanTurley.org,

While the media has been quick to call developments as “vindication” for figures like Comey, it is largely silent on the poor treatment shown Page and the lack of evidence against him (and supporting the Russian investigation as a whole). Page has emerged as the Richard Jewell of the Russian investigation.

After he was acquitted in a major fraud trial, former Labor Secretary Ray Donovan asked, “Which office do I go to to get my reputation back?” The trial was ruinous for Donovan, personally and financially, and the question was a fair one. Donovan, however, at least received a trial. Former Trump campaign adviser Carter Page has never been given a fair hearing, let alone a trial, to clear his name. As the two political parties spin the results of a report by Justice Department Inspector General Michael Horowitz, one matter remains unaddressed. Someone needs to apologize to Page.

I do not know Page and have had only one conversation with him that I can recall. Indeed, my only impression of him was shaped by the image, repeated in endless media segments, of a shady character who was at worst a Russian spy and at best a Russian stooge. Page became the face and focus for the justification of the Russia collusion investigation. His manifest guilt and sinister work in Moscow had to be accepted in order to combat those questioning the allegations of Trump campaign collusion with the Russians. In other words, his guilt had to be indisputable in order for the Russia collusion investigation to be, so to speak, unimpeachable.

Ultimately, special counsel Robert Mueller found no evidence of collusion or conspiracy by Trump associates or the campaign with those Russians intervening in the election. However, Horowitz found that the FBI never had any real evidence against Page before beginning its investigation, codenamed Operation Crossfire Hurricane. Soon after the investigation was opened, it became clear that Page had been wrongly accused and was, in fact, working for the CIA, not the Russians. Page himself later said he was working with the CIA, yet the media not only dismissed his claim but was very openly dismissive while portraying him as a bumbling fool.

Horowitz found that FBI investigators and lawyers had determined that the allegations involving Page fell short of a case for probable cause to open a secret warrant under the Foreign Intelligence Surveillance Act. Those investigators were then told by the eventually fired FBI Deputy Director Andrew McCabe to look at the Steele dossier, which was actually funded by the Clinton campaign and the Democratic National Committee. The Clinton campaign denied repeatedly that it funded the dossier but finally admitted doing so after being confronted by media with new information.

Despite warnings about the credibility of Steele and red flags over the unreliability of the dossier, Horowitz found that “FBI leadership” used the dossier to justify its application for a FISA warrant. Democratic members of Congress and a wide array of media outlets have long told the public that the dossier was just one part of the FISA application. That is false. Horowitz states that the dossier played the “central and essential role” in securing the secret surveillance of the Trump campaign, including four investigations with both electronic surveillance and undercover assets.

Early on, Horowitz found that an unnamed government agency, widely acknowledged to be the CIA, told the FBI that it was making a mistake about Page and that he was working for the agency as an “operational contact” in Moscow. Indeed, he was working as an asset for the CIA for years. While it was falsely reported that Page met with three suspicious individuals there, he had no contact with two of those individuals. More importantly, Page did the right thing and told American officials about being contacted by the third person, because he felt they should know.

It gets even worse. Throughout Operation Crossfire Hurricane, evidence continued to flow into the FBI that Christopher Steele, the former British spy who wrote the infamous dossier, was unreliable and working against the election of Trump. Not only was he known to be trying to get this false information to the press, but evidence mounted that he misrepresented sources and stated false information. While it took long, someone at the Justice Department finally decided to act on the FISA matter regarding Page. The official in charge of FISA applications, Kevin Clinesmith, was told to ask the CIA again about whether Page had been working for the agency. He was again told that Page in fact was, yet Clinesmith allegedly changed the CIA response to describe Page as not working for it. He is now being criminally referred by Horowitz for falsifying that information.

Investigators also found an array of messages against Trump on the social media accounts of Clinesmith, including one declaring “vive le resistance” after Trump won. Meanwhile, throughout this period, the FBI was leaking aplenty but no one leaked the Page was actually a CIA asset. Instead, he was left to twist slowly in the wind. Media reports all but convicted Page of being a Russian spy. Evan Hurst wrote about him last year asking, “Why the hell are Republicans dying on this hill to defend Carter Page,” whom Hurst described, in all caps, as “a literal actual Russian intelligence asset.”

Natasha Bertand later wondered why anyone would question the case against Page. After all, she wrote, Senator Mark Warner, who is ranking member of the Senate Intelligence Committee, had warned reporters to “be careful what you wish for” and one of his aides told her that is is “simply impossible to review the documents” on Page and conclude anything other than that the FBI “had ample reason” to investigate him. Her article was published long after the FBI had been told that Page was working with the CIA, but many other stories ran with similar comments from senators suggesting that anyone defending Page would be ridiculed after the release of some damning evidence. Mueller and Horowitz have now confirmed that there was never such evidence showing Page was a Russian asset. Indeed, the evidence showed he was an American asset.

As Horowitz has now stressed, there is a difference between starting an investigation based on mere allegations and continuing the investigation based on known falsehoods. His report documents how direct exculpatory information was quickly shared with the FBI. I do not know anything about Page other than what I have read in these reports. All I know is that he is an American citizen put under a secret surveillance operation based on a dossier shown to be both unfounded and unreliable. He then remained under surveillance with three renewals of secret warrants, even though the FBI was told repeatedly that Page was working with the CIA and that the dossier used to obtain those warrants was considered unsupported. Finally, Page was the subject of an alleged falsification of a document presented to the FISA court to obscure that exculpatory information.

At what point does someone apologize to Page? He is, in fact, the victim of this criminal referral. He is the victim of what Horowitz describes as a “misleading” basis presented to the FISA court. He is a victim of media “groupthink” that portrayed him as the sinister link proving collusion with Russia, an allegation rejected by the FBI, by the inspector general, and by the special counsel. Of course, Washington does not work this way. Page served his purpose and the trashing of his reputation was a cost of doing business with the federal government for many members of Congress and the media. In recalling the question by Donovan, there is no such office. Page is simply supposed to disappear and leave his reputation behind.

We are about to enter the 2020s with a record 90% of Global Fund Manager Survey investors saying the global economy is late cycle. This is because we leave the 2010s stuck in an economic regime characterized by low growth and low inflation. Real GDP has averaged just 2% in the US, 1% in the EU and Japan, and halved from 12% to 6% in China as the world’s most populous nation rebalances towards a consumer rather than export-led economy. This is despite historic levels of monetary accommodation since 2009: 768 central bank cuts, US$12.4tn of financial asset purchases and interest rates at 5,000-year lows.

As BofA notes in a recent report, “the combination of globalization, lower interest rates and a policy and macro backdrop of maximum liquidity and minimal growth have served to exacerbate wealth inequality, and create a surplus of global savings relative to investment, i.e. extremely low “animal spirits”. Higher debt has also failed to deliver higher growth (note corporations and governments global debt up from US$105tn in 2008 and US$255tn in 2019).”

Instead, the record debt load enabled by the monetary policy largesse of the 2010s has induced significant upside (and polarization) in asset prices, but the economic spoils went to holders of capital not workers. A portfolio of bonds and stocks rose from US$100 to US$223, while US$100 of wages rose to US$125. Reliance on monetarism has also meant modern economic expansions are now driven by booms and busts in financial cycles.

And according to most market watchers, the trends that started in the 2010s are set to continue into the 2020s. Yet ironically, even as debates rage if the US will enter a recession next year, central banks are acting as if a full-blown financial crisis has already erupted. As Bank of America observes, the past 6 months have seen 51 rate cuts, the most since the Global Financial Crisis, meaning “central banks are cutting like it’s a crisis.”

And with no less than $700 billion (and potentially much more) of G4 central bank QE expected in 2020, a potential economic crisis is precisely what president Trump the doctor ordered for the stock market. The result: an S&P which is trading just shy of 3,200 as of this moment, and which BofA’s expects to melt up in the first quarter of 2020.

As BofA’s Chief Investment Strategist, Michael Hartnett, writes, “the market is primed for a Q1 2020 risk asset melt-up” as i) Fed & ECB are still adding liquidity, ii) the two main global macro risks, Brexit and a Phase One US-China trade deal, appear to have been resolved for the time being, in the process removing lingering USD & 10Y TSY risk premiums.  As a result, BOfA expects returns to be front-loaded in 2020, with the S&P500 hitting 3,333 by March 3rd, and the 10Y Treasury rising to 2.2% by 2/2 (Feb 2).

Is there anything on the horizon that can spoil this late cycle melt-up fun for the bulls? Just one thing according to BofA:

As Hartnett writes, “the biggest vulnerability for markets in the 2020s will come from today’s bond market bubble: >US$13tn negative yielding debt (of which c.US$1tn corporate), negative German/Swiss curves, Austria 100-year bond yields <1%, global bond yields just off record lows of only 19bp."

Whether it is in 2020, or in the coming years, a policy mistake (inflation targeting/MMT) and/or the start of policy impotence (central banks pushing on a string) “will likely cause a jump in interest rate volatility, end the decade-long bullish combo of minimum rates-maximum profits, and signal the big top in asset prices”, according to Hartnett.

It is this disorderly rise in bond yields that would “likely cause extreme pain” as Wall Street deleverages, inevitably leading to pain quickly thereafter for the real economy. This is why the Fed policy pivot on weak credit markets was so aggressive in December 2018/January 2019, and is why Powell is now on hold indefinitely as the Fed prepares to unveil its “symmetric” policy revision, where even inflation rates of 3% or higher will not be sufficient for the US central bank to hike rates. In fact, it is unclear what, if anything, can force the Fed to ever again tighten financial conditions after the bull market’s near death experience in Q4 2018.

And yet, central planning inevitably always fails, and it is time to start thinking what the policy response will be to the next recession, which according to BofA will “seek to correct the excesses of the 2010s that led to widespread wealth inequality and financial engineering”… which we doubt, but here goes anyway:

• Corporate sector leverage: global corporate debt has risen by 62% 2008-18.
• Wall St too big to fail: US private sector financial assets at record 5.6x GDP
• Private equity: private equity and venture capital AUM to reach US$4.2tn with 2019 on track to be a new record for fundraising (US$624bn) and AUM a record 5.3% of global equity market cap.
• Share buybacks: since 2009, US corporates have spent US$5.4tn on stock buybacks (US corporates have spent US$114 on buybacks since 2018 for every US$100 invested in the real economy vs US$60 from 1998-2017) and issued US$15.0tn debt.
• Shadow banking assets: US$28.1tn (in 2010) to US$45.2tn (61%), not including US$2.8tn of private equity assets; shadow banking assets = 73% of global GDP.
• Zombie companies: the number of OECD zombie companies (those with an interest coverage ratio below 1) is at new post-GFC highs (548).

As BofA concludes, electorates are already voting for War on Inequality policies and the 2020 US election is likely to be framed as Protectionist (Trump) vs Keynesian (Biden) vs Redistributionist (Sanders/Warren). While Trump is likely to win the 2020 election, the even greater wealth inequality that will be unleashed in the 2020-2024 period virtually assures a progressive/socialist/redistributionist agenda wins in 2024.

BofA also believes that upcoming policy actions will also involve higher US taxes in the 2020s, coupled with “Occupy Silicon Valley” policies to target tech profits, regulation of stock buybacks and a combination of rental price controls, living wages, and student debt forgiveness financed by wealth taxation. If necessary – and it will be – governments will begin to issue debt (MMT) until inflation rises, and eventually culminates in hyperinflation to wipe away the world’s untenable debt load.

Authored by Brandon Smith via Birch Gold Group,

The pension system in the United States isn’t healthy by any stretch of the imagination. It has been underfunded for quite some time.

The newest pension system “report card” was released in June this year. It reveals the latest official data (as of 2017), and shows that things aren’t much better since the previous version we reported on back in January:

When comparing the funding ratios of the top three state pension programs to the bottom three, things get even more disturbing.

According to the latest report, the top three programs (South Dakota, Tennessee, and Wisconsin) remain virtually unchanged since 2013, hovering around 100%.

But the bottom three (Illinois, Kentucky, and New Jersey) are even more underfunded, dropping from ~50% funding in 2013 down to only ~38% in 2017.

A disturbing fact about the three worst funded state pensions is that they have been receiving more money, yet are more underfunded. According to the report, these states “had an average employer contribution rate of more than 31 percent of payroll in 2017—a 22 percentage point increase since 2007.”

Even more disturbing, the majority of all 50 states resemble the worst-funded:

For example, only eight states were at least 90 percent funded in 2017, while 20 states were less than two-thirds funded.

Overall, the entire system is suffering from a widening “trillion dollar gap between their liabilities and their assets,” according to ZeroHedge.

But if that weren’t bad enough, talk of a taxpayer-funded federal bailout is beginning to surface as a potential way out of this mess.

The Potential Solution May Be a Taxpayer-Funded Nightmare

Marc Levine, the former chairman of the Illinois Board of Investment, is famous for deploying the strategy of firing hedge funds and managers to close the funding gap.

Illinois is ironically one of the bottom three state-funded pensions, but nonetheless, Levine offered the radical idea of a federal bailout:

“I think the federal government is going to have to do something about this […] I think ultimately there will be some kind of grand bargain where they freeze benefits in exchange for federal money in some kind of grand bargain.[…] ‘Like a bailout?’ asked MarketBrief’s Caroline Woods. ‘Exactly,’ Levine replied.”

The idea of another taxpayer-funded pension bailout isn’t likely to sit well with Americans who are already having a challenging time saving for retirement in the first place.

The U.S. government already tried that after the 2008 recession, and the jury is still out as to whether or not it created a “permanent bailout state.”

According to a Rolling Stone piece by Matt Taibbi, with that bailout lawmakers may have fueled a perpetual nightmare:

What we actually ended up doing was the exact opposite: committing American taxpayers to permanent, blind support of an ungovernable, unregulatable, hyperconcentrated new financial system that exacerbates the greed and inequality that caused the crash, and forces Wall Street banks like Goldman Sachs and Citigroup to increase risk rather than reduce it.

So “buyer beware” if these shenanigans are proposed as a way to save an already crumbling pension system.

Make Sure Your Retirement Doesn’t Need a Bailout

Even if it turns out pensions don’t get bailed out by taxpayers this time, the possibility looms that state governments may attempt extreme measures to recover losses and make up pension funding gaps.

You don’t want your savings to be confiscated by some desperate lawmaker’s plan. So start examining ways to protect your financial future.

Physical assets such as gold and silver are known for their growth potential and security during times when lawmakers can’t make up their minds about how to fix pensions.

*  *  *

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President Trump on Monday slammed the Commission on Presidential Debates, which he says is “stacked with Trump Haters & Never Trumpers” and were “forced to publicly apologize for modulating my microphone in the first debate against Crooked Hillary.”

In a trio of Monday tweets, Trump said “I look very much forward to debating whoever the lucky person is who stumbles across the finish line in the little watched Do Nothing Democrat Debates,” however he suggested that instead of going through the “very biased Commission,” he may explore other options – including “doing them directly” in order to avoid the commission’s “nasty politics.”

….The problem is that the so-called Commission on Presidential Debates is stacked with Trump Haters & Never Trumpers. 3 years ago they were forced to publicly apologize for modulating my microphone in the first debate against Crooked Hillary. As President, the debates are up…

— Donald J. Trump (@realDonaldTrump) December 16, 2019

….to me, and there are many options, including doing them directly & avoiding the nasty politics of this very biased Commission. I will make a decision at an appropriate time but in the meantime, the Commission on Presidential Debates is NOT authorized to speak for me (or R’s)!

— Donald J. Trump (@realDonaldTrump) December 16, 2019

In 2016, Trump argued that debate organizers “gave me a defective mic” – a claim which Hillary Clinton mocked as an excuse to cover for a poor debate performance. The commission later acknowledged, however, that there had been “technical issues” with Trump’s audio “that affected the sound level in the debate hall.”  

While Trump made clear that he looks “very much forward to debating,” the New York Times‘ Maggie Haberman suggested last week that Trump is privately discussing the possibility of sitting out the general election debates in 2020 over the commission.

According to The Hill, the Commission on Presidential Debates has already announced the dates and locations for three general election debates next year – the first of which is slated for Sept. 29, 2020. One Vice Presidential debate is also on the calendar.

As Upton Sinclair is believed to have said,

“It is difficult to get a man to understand something, when his salary depends on his not understanding it.”

And today’s almost record-breaking surge in homebuilder sentiment (to its highest since June 1999) perhaps highlights Sinclair’s comment best of all…

New Home Sales are still 47% below their peak in 2005 and the buying climate for homes (based on UMich’s sentiment survey) has collapsed to its weakest since 2008 (all despite mortgage rates at or near record lows)

Source: Bloomberg

The National Association of Home Builders/Wells Fargo Housing Market Index jumped 5 points to 76, the biggest monthly increase since the end of 2017, and the November figure was revised higher.

• The NAHB’s gauge of the traffic of prospective buyers climbed 4 points to 58, matching the highest level since 1998.

• The index of current sales surged by 7 points to 84, the best reading since 1999.

The December reading caps a 20-point gain for the index this year, the biggest since 2012.

“While we are seeing near-term positive market conditions with a 50-year low for the unemployment rate and increased wage growth, we are still underbuilding due to supply-side constraints like labor and land availability,” Robert Dietz, NAHB’s chief economist, said in a statement.

“Higher development costs are hurting affordability.”

Will new home sales, construction, and buying climate ever catch up to the optimism of those who make their livings based on all of this magical thinking?

Senate Majority Leader Chuck Schumer (D-NY), who staunchly opposed witnesses in the 1999 impeachment trial of Bill Clinton, announced on Sunday that he wants to summon witnesses to appear at a Senate trial if the House votes to impeach President Trump.

Just not Hunter Biden.

In a Sunday letter to Senate Majority Leader Mitch McConnell, Schumer called for subpoenas to compel testimony from acting White House Chief of Staff Mick Mulvaney, his senior adviser Robert Blair, former National Security Adviser John Bolton and associate director for national security in the White House budget office, Michael Duffy, according to the Washington Times.

Hunter Biden – whose lucrative board seat on a Ukrainian gas company is at the heart of corruption allegations against he and his father Joe Biden – would be a “distraction,” according to Schumer.

“I think we should focus on having a fair trial,” said Schumer in a Monday appearance on CNN‘s “New Day,” adding “Hunter Biden doesn’t add to that.”

“I’m not going to negotiate here in public, but the bottom line is I haven’t seen a scintilla of evidence that Hunter Biden would add anything other than show, circus, distraction,” Schumer added. “If President Trump is so certain that he did nothing wrong, what is he afraid of?”

Schumer, who opposed witnesses in Clinton’s impeachment, says that things were different then.

“The Republicans could not negotiate a fair bunch of witnesses with the Democrats,” he said. “It wasn’t a bipartisan negotiation. It should be now.”

House Democrats have accused President Trump of abusing his office by improperly withholding military aid to Ukraine in exchange for the country announcing investigations into the Bidens and other matters.

Ukraine, meanwhile, had no idea the aid was being withheld at the time of a July 25 phone call in which President Trump made the requests of President Volodomyr Zelensky.