Month: February 2023

Authored by Alexander Zhang via The Epoch Times,

Britain is “on the cusp” of securing a new deal with the European Union on post-Brexit trading terms in Northern Ireland, Deputy Prime Minister Dominic Raab says.

Deputy Prime Minister Dominic Raab arrives at BBC Broadcasting House in London on Feb. 26, 2023. (Stefan Rousseau/PA Media)

The UK has been holding talks with the EU to fix issues with the so-called Northern Ireland Protocol for some time, and speculation has been mounting that the two sides are close to an agreement on the future of the controversial trading arrangement.

Appearing on Sky News on Feb. 26, Raab confirmed that “there is real progress” and suggested “there will be good news in a matter of days, not weeks.”

The Cabinet minister later told the BBC, “If we can get this over the line—we’re on the cusp, we’ve made great progress, we’re not there yet—this would be a really important deal.”

Prime Minister Rishi Sunak addresses participants at the Munich Security Conference in Germany on Feb. 18, 2023. ( Ben Stansall-WPA Pool/Getty Images)

Prime Minister Rishi Sunak has said his administration is “giving it everything we’ve got” to finalise the deal to fix issues with the protocol, which was negotiated and signed by former Prime Minister Boris Johnson.

Sunak, speaking to The Sunday Times newspaper, pledged to work to satisfy the demands from the unionist community in Northern Ireland.

“I’m a Conservative, I’m a Brexiteer, and I’m a unionist and anything that we do will tick all of those boxes, otherwise it wouldn’t make sense to me, let alone anyone else,” he told the newspaper.

‘Inching Towards Conclusion’

Leo Varadkar, the Irish republic’s “Taoiseach” or prime minister, also has expressed optimism over the negotiations.

Varadkar told RTE on Feb. 25 that he believes there is a possibility of an agreement in the next few days.

“Certainly the deal isn’t done yet,” he said. “But I do think we are inching towards conclusion and I really want to thank the UK government and the European Commission and the Northern Ireland parties for the level of engagement that they’ve done in recent months to get us to this point.

“I would just encourage everyone to go the extra mile to come to an agreement because the benefits are huge.

“They allow us to have the Northern Ireland Assembly back up and running in the north and the Good Friday Agreement working properly again, and also to put relations between the United Kingdom and Ireland and the European Union on a much more positive footing.”

But it remains unclear if the Democratic Unionist Party (DUP), the largest unionist party in Northern Ireland, will be satisfied with the deal.

The party has issued seven tests that Sunak’s new pact will have to meet in order to win its backing, including addressing what the DUP calls the “democratic deficit” of Northern Ireland being subject to EU rules while not having a say on them.

DUP MP Sammy Wilson told GB News it is a “red line” for his party that “no EU law” should continue to apply in Northern Ireland.

Mark Francois, chairman of the Conservative Party’s eurosceptic European Research Group, warned that it is a “practical reality” that, if the DUP does not agree with the changes Sunak has secured, then “it is simply not going to fly.”

Brexit Hangover

The Northern Ireland Protocol is part of the Brexit withdrawal agreement that was signed by former UK Prime Minister Boris Johnson and EU leaders to ensure the free movement of goods between Northern Ireland, which is a British province, and the Republic of Ireland, an EU member state.

The arrangements shifted customs and regulatory checks to the Irish Sea and created new red tape on the movement of goods between Great Britain and Northern Ireland, with trade in the region remaining subject to certain EU Single Market rules.

But the protocol has been fiercely opposed by unionists in the British province, who claim it has undermined the region’s standing within the UK.

Northern Ireland hasn’t had a functioning local government since February 2022, when the DUP withdrew from the power-sharing executive in protest against the protocol.

The DUP has pressed the UK government to act on unionist concerns around the effects of the protocol on trade between Great Britain and Northern Ireland, and on the union. The party said it will not reenter the devolved government until its concerns have been addressed.

On June 2022, the UK government published plans to override parts of the protocol, enabling ministers to establish a “green lane” so that trusted traders are allowed to move goods to Northern Ireland from Great Britain without checks, as long as the products remain within the UK.

But the EU has criticised the UK’s actions for breaking international law and undermining trust between the two sides. The bloc has since launched legal actions against the move.

The dispute could have led to a damaging trade war, with tariffs being imposed or even the suspension of the entire Brexit deal between the UK and EU.

Authored by Krishen Mehta via EurAsiaReview.com,

In October 2022, about eight months after the war in Ukraine started, the University of Cambridge in the UK harmonized surveys conducted in 137 countries about their attitudes towards the West and towards Russia and China.

The findings in the study, while not free of a margin of error, are robust enough to take seriously.

These are:

• For the 6.3 billion people who live outside of the West, 66 percent feel positively towards Russia and 70 percent feel positively towards China, and,

• Among the 66 percent who feel positively about Russia the breakdown is 75 percent in South Asia, 68 percent in Francophone Africa, and 62 percent in Southeast Asia.

• Public opinion of Russia remains positive in Saudi Arabia, Malaysia, India, Pakistan, and Vietnam.

Sentiments of this nature have caused some ire, surprise, and even anger in the West. It is difficult for them to believe that two-thirds of the world’s population is not siding with the West.

What are some of the reasons or causes for this?

I believe there are five reasons as explained in this brief essay.

1. The Global South does not believe that the West understands or empathizes with their problems.

India’s foreign minister, S. Jaishankar, summed it up succinctly in a recent interview: “Europe has to grow out of the mindset that Europe’s problems are the world’s problems, but the world’s problems are not Europe’s problems.” He is referring to the many challenges that developing countries face whether they relate to the aftermath of the pandemic, the high cost of debt service, the climate crisis that is ravaging their lives, the pain of poverty, food shortages, droughts, and high energy prices. The West has barely given lip service to the Global South on many of these problems. Yet the West is insisting that the Global South join it in sanctioning Russia.

The Covid pandemic is a perfect example—despite the Global South’s repeated pleas to share intellectual property on the vaccines, with the goal of saving lives, no Western nation was willing to do so. Africa remains to this day the most unvaccinated continent in the world. Africa had the capability to make the vaccines but without the intellectual property they could not do it.

But help did come from Russia, China, and India. Algeria launched a vaccination program in January 2021 after it received its first batch of Russia’s Sputnik V vaccines. Egypt started vaccinations after it got China’s Sinopharm vaccine at about the same time. South Africa procured a million doses of AstraZeneca from the Serum Institute of India. In Argentina, Sputnik became the backbone of their vaccine program. All of this was happening while the West was using its financial resources to buy millions of doses in advance, and often destroying them when they became outdated. The message to the Global South was clear—your problems are your problems, they are not our problems.

2. History Matters: Who stood where during colonialism and after independence? 

Many countries in Latin America, Africa, and Asia view the war in Ukraine through a different lens than the West. Many of them see their former colonial powers regrouped as members of the Western alliance. The countries that have sanctioned Russia are either members of the European Union and NATO or the closest allies of the United States in the Asia Pacific region. By contrast, many countries in Asia, and almost all countries in the Middle East, Africa, and Latin America have tried to remain on good terms with both Russia and the West, and to shun sanctions against Russia. Could it be because they remember their history at the receiving end of the West’s colonial policies, a trauma that they still live with but which the West has mostly forgotten.

Nelson Mandela often said that it was the Soviet Union’s support, both moral and material, that helped inspire Southern Africans to overthrow the Apartheid regime. It is because of this that Russia is still viewed in a favorable light by many African countries. And once Independence came for these countries, it was the Soviet Union that supported them even though it had limited resources itself. The Aswan Dam in Egypt which took 11 years to build, from 1960 to 1971, was designed by the Moscow based Hydro project Institute and financed in large part by the Soviet Union. The Bhilai Steel Plant in India, one of the first large infrastructure projects in a newly independent India, was set up by the USSR in 1959. Other countries also benefited from the support provided by the former Soviet Union, both political and economic, including Ghana, Mali, Sudan, Angola, Benin, Ethiopia, Uganda, and Mozambique.

On February 18, 2023, at the African Union Summit in Addis Ababa, Ethiopia, the foreign minister of Uganda, Jeje Odongo, had this to say, “We were colonized and forgave those who colonized us. Now the colonizers are asking us to be enemies of Russia, who never colonized us. Is that fair? Not for us. Their enemies are their enemies. Our friends are our friends.”

Rightly or wrongly, present day Russia is seen by many countries in the Global South as an ideological successor to the former Soviet Union. These countries have a long memory that makes them view Russia in a somewhat different light. Given the history, can we blame them?

3. The war in Ukraine is seen by the Global South as mainly about the future of Europe rather than the future of the entire world.

The history of the Cold War has taught developing countries that getting embroiled in great power conflicts generates few benefits for them yet carries enormous risks. And they view the Ukraine proxy war as one that is more about the future of European security than the future of the entire world. Furthermore, the war is seen by the Global South as an expensive distraction from the most pressing issues that they are dealing with. These include higher fuel prices, food prices, higher debt service costs, and more inflation, all of which have become more aggravated because of the Western sanctions that have been imposed on Russia.

A recent survey published by Nature Energy states that up to 140 million people could be pushed into extreme poverty due to the higher energy prices that have come about over the past year.

Soaring energy prices not only directly impact energy bills, but they also lead to upward price pressures on all supply chains and consumer items, including food and other necessities. This hurts the developing countries even more than it hurts the West.

The West can sustain the war “as long as it takes” since they have the financial resources and the capital markets to do so. But the Global South does not have the same luxury. A war for the future of European security has the potential of devastating the security of the entire world.

The Global South is also alarmed that the West is not pursuing negotiations that could bring this war to an early end. There were missed opportunities in December 2021 when Russia proposed revised security treaties for Europe that could have prevented the war and which were rejected by the West. The peace negotiations of April 2022 in Istanbul were also rejected by the West in part to “weaken” Russia. And now the entire world is paying the price for an invasion that the Western media like to call “unprovoked” and which could have been avoided.

4. The world economy is no longer American dominated or Western led and the Global South does have other options.

Several countries in the Global South increasingly see their future tied to countries that are no longer in the Western sphere of influence. Whether this is their perception of how the power balance is shifting away from the West, or wishful thinking as part of their colonial legacy, let us look at some metrics that may be relevant.

The U.S. share of global output declined from 21 percent in 1991 to 15 percent in 2021, while China’s share rose from 4 percent to 19 percent during the same period. China is the largest trading partner for most of the world, and its GDP in purchasing power parity already exceeds that of the United States. The BRICS (Brazil, Russia, China, India, and South Africa) had a combined GDP in 2021 of $42 trillion compared with $41 trillion in the G7. Their population of 3.2 billion is more than 4.5 times the combined population of the G7 countries, at 700 million.

The BRICS are not imposing sanctions on Russia nor supplying arms to the opposing side. While Russia is the biggest supplier of energy and foodgrains for the Global South, China remains the biggest supplier of financing and infrastructure projects to them through the Belt and Road Initiative. And now Russia and China are closer than ever before because of the war. What does it all mean for developing countries?

It means that when it comes to financing, food, energy, and infrastructure, the Global South must rely more on China and Russia more than on the West. The Global South is also seeing the Shanghai Cooperation Organization expanding, more countries wanting to join the BRICS, and many countries now trading in currencies that move them away from the dollar, the Euro, or the West. They also see a deindustrialization taking place in some countries in Europe because of higher energy costs, along with higher inflation. This makes quite apparent an economic vulnerability in the West that was not so evident before the war. With developing countries having an obligation to put the interests of their own citizens first, is it any wonder that they see their future tied more to countries that are not Western led or American dominated?

5. The “rule based international order” is lacking in credibility and is in decline.

The “rule based international order” is a concept that is seen by many countries in the Global South as one that has been conceived by the West and imposed unilaterally on other countries. Few if any non-Western countries ever signed on to this order. The South is not opposed to a rule-based order, but rather to the present content of these rules as conceived by the West.

But one must also ask, does the rule based international order apply even to the West?

For decades now, for many in the Global South, the West is seen to have had its way with the world without regard to anyone else’s views. Several countries were invaded at will, mostly without Security Council authorization. These include the former Yugoslavia, Iraq, Afghanistan, Libya, and Syria. Under what “rules” were those countries attacked or devastated, and were those wars provoked or unprovoked? Julian Assange is languishing in prison, and Ed Snowden is in exile, for having the courage (or perhaps the audacity) to expose the truths behind these actions.

Sanctions imposed on over 40 countries by the West impose considerable hardship and suffering. Under what international law or “rules-based order” did the West use its economic strength to impose these sanctions? Why are the assets of Afghanistan still frozen in Western banks while the country is facing starvation and famine? Why is Venezuelan gold still held hostage in the UK while the people of Venezuela are living at subsistence levels? And if Sy Hersh’s expose is true, under what “rules-based order” did the West destroy the Nord Stream pipelines?

There appears to be a paradigm shift that is taking place away from a Western dominated world and into a more multipolar world. And the war in Ukraine has made more evident those differences or chasms that are part of this paradigm shift. Partly because of its own history, and partly because of the economic realities that are emerging, the Global South sees a multipolar world as a preferable outcome in which their voices are more likely to be heard.

President Kennedy ended his American University speech in 1963 with the following words: “We must do our part to build a world of peace where the weak are safe and the strong are just. We are not helpless before that task or hopeless for its success. Confident and unafraid, we must labor on towards a strategy of peace.”

That strategy of peace was the challenge before us in 1963 and they remain a challenge for us today. And the voices for peace, including those of the Global South, need to be heard.

Investment migration consultancy firm “Henley & Partners” published a comprehensive overview of the private wealth sector in the USA, including trends among centi-millionaire. One key trend that piqued our interest was the revelation of where these affluent people have been buying second homes. 

“Beachfront areas feature prominently in the top holiday home hotspots for centi-millionaires in the USA shown here, as do towns in the Rocky Mountains. Peak-month figures include centi-millionaire residents and second home owners but exclude those staying in hotels,” the report said.

Here are the top cities and towns, including Miami, Florida; The Hamptons, New York; West Palm Beach, Florida; Napa, California; and Aspen, Colorado, to name a few, of where centi-millionaires have bought second homes in the last few years. 

“The pandemic prompted many Americans to turn their second homes into primary residences, which had both lifestyle and taxation benefits,” Henley & Partners analysts pointed out. We noted this in the early pandemic as many of these folks panic left the Northeast region and other high-tax metro areas for places with either warmth, fewer taxes, and or vast amounts of land around them. 

The report continued:

The trend of hybrid living was evident in vacation home hotspots in naturally beautiful settings such as Aspen, the Hamptons, and Jackson Hole. It also arose in emerging tech hubs such as Austin and Miami, which attracted wealthy buyers working in tech. The cities’ business-friendly environments and the influx of superior talent attracted major corporates and they reinvented themselves as new tech industry capitals.

With no state income tax and abundant space, Austin has been a growth market for luxury real estate, with the metro in particular gaining from internal migration due to tech firms such as Amazon, Google, Meta, SpaceX, and Tesla expanding their presences, and Apple investing USD 1 billion in a new campus. Crypto-friendly Miami has attracted cryptocurrency businesses and has also seen a spate of technology and real estate headquarters opening. These developments appeared to signal a new era for the two cities.

It’s no secret that rich folks have shifted around the country in a post-Covid world. Many fled to rural and suburban areas and warm climate areas. It’s important to know this because, as the old saying goes, “follow the money.” 

Authored by Allen Mendenhall via The Mises Institute,

“It’s an important part of society whether you like it or not,” lexicologist Tony Thorne, referring to “wokeness,” told The New Yorker’s David Remnick in January. That’s an understatement.

Wokeness is poisoning the Western workplace and constraining small and family businesses, midsized banks, and entrepreneurs while enriching powerful corporations and billionaires. It’s eating away at the capitalist ethos and killing the bottom-up modes of economic ordering and exchange that propelled the United States of America to prosperity during the nineteenth and twentieth centuries. It’s infecting Gen Z and millennials, who, suffering high depression rates and prone to “quiet quitting,” are not as well off as their parents and grandparents, and who feel isolated and alone even as they enjoy a technological connectivity that’s unprecedented in human history.

What, exactly, is wokeness, and how does it impact business and the wider society?

The term as it’s widely used today differs from earlier significations. “Woke,” which plays on African American vernacular, once meant “awake to” or “aware of” social and racial injustices. The term expanded to encompass a wider array of causes from climate change, gun control, and LGTBQ rights to domestic violence, sexual harassment, and abortion.

Now, wielded by its opponents, it’s chiefly a pejorative dismissing the person or party it modifies. It’s the successor to “political correctness,” a catchall idiom that ridicules a broad range of leftist hobbyhorses. Carl Rhodes submits, in Woke Capitalism, that “woke transmuted from being a political call for self-awareness through solidarity in the face of massive racial injustice, to being an identity marker for self-righteousness.”

John McWhorter’s Woke Racism argues that wokeness is religious in character, unintentionally and intrinsically racist, and deleterious to black people. McWhorter, a black linguist, asserts that “white people calling themselves our saviors make black people look like the dumbest, weakest, most self-indulgent human beings in the history of our species.” Books like Stephen R. Soukup’s The Dictatorship of Woke Capital and Vivek Ramaswamy’s Woke, Inc. highlight the nefarious side of the wokeism adopted by large companies, in particular in the field of asset management, investment, and financial services.

Wokeism, in both the affirming and derogatory sense, is predicated on a belief in systemic or structural forces that condition culture and behavior. The phrases “structural racism” or “systemic racism” suggest that rational agents are nevertheless embedded in a network of interacting and interconnected rules, norms, and values that perpetuate white supremacy or marginalize people of color and groups without privilege.

Breaking entirely free from these inherited constraints is not possible, according to the woke, because we cannot operate outside the discursive frames established by long use and entrenched power. Nevertheless, the argument runs, we can decenter the power relations bolstering this system and subvert the techniques employed, wittingly or unwittingly, to preserve extant hierarchies. That requires, however, new structures and power relations.

Corporate executives and boards of directors are unsuspectingly and inadvertently—though sometimes deliberately—caught up in these ideas. They’re immersed in an ideological paradigm arising principally from Western universities. It’s difficult to identify the causative origin of this complex, disparate movement to undo the self-extending power structures that supposedly enable hegemony. Yet businesses, which, of course, are made up of people, including disaffected Gen Zs and millennials, develop alongside this sustained effort to dismantle structures and introduce novel organizing principles for society.

The problem is, rather than neutralizing power, the “woke” pursue and claim power for their own ends. Criticizing systems and structures, they erect systems and structures in which they occupy the center, seeking to dominate and subjugate the people or groups they allege to have subjugated or dominated throughout history. They replace one hegemony with another. 

The old systems had problems, of course. They were imperfect. But they retained elements of classical liberalism that protected hard-won principles like private property, due process of law, rule of law, free speech, and equality under the law. Wokeism dispenses with these. It’s about strength and control. And it has produced a corporate-government nexus that rigidifies power in the hands of an elite few.

Consider the extravagant spectacle in Davos, the beautiful resort town that combined luxury and activism at the recent meeting of the World Economic Forum, perhaps the largest gathering of self-selected, influential lobbyists and “c suiters” across countries and cultures. This annual event occasions cartoonish portrayals of evil, conspiratorial overlords—the soi-disant saviors paternalistically preaching about planetary improvement, glorifying their chosen burden to shape global affairs. The World Economic Forum has become a symbol of sanctimony and lavish inauthenticity, silly in its ostentation.

The near-ubiquitous celebration of lofty Environmental, Social, and Governance (ESG) strategies at the World Economic Forum reveals a seemingly uniform commitment among prominent leaders to harness government to pull companies—and, alas, everyone else—to the left.

ESG is, of course, an acronym for the nonfinancial standards and metrics that asset managers, bankers, and investors factor while allocating capital or assessing risk. A growing consortium of governments, central banks, nongovernmental organizations (NGOs), asset management firms, finance ministries, financial institutions, and institutional investors advocates ESG as the top-down, long-term solution to purported social and climate risks. Even if these risks are real, is ESG the proper remedy?

Attendees of the World Economic Forum would not champion ESG if they did not benefit from doing so. That plain fact doesn’t alone discredit ESG, but it raises questions about ulterior motives: What’s really going on? How will these titans of finance and government benefit from ESG?

One obvious answer involves the institutional investors that prioritize activism over purely financial objectives or returns on investment (for legal reasons, activist investors would not characterize their priorities as such). It has only been a century since buying and selling shares in publicly traded companies became commonplace among workers and households. The U.S. Securities and Exchange Commission (SEC), created in response to the Great Depression, isn’t even 100 years old.

Until recently, most investors divested if they owned stock in a company that behaved contrary to their beliefs. They rarely voted their shares or voted only on major issues like mergers and acquisitions. In 2023, however, institutional investors such as hedge funds and asset management firms engage boards of directors, exercise proxy voting, and issue shareholder reports with the primary goal of politicizing companies. As intermediaries, they invest pension funds, mutual funds, endowments, sovereign wealth funds, 401(k)s and more on behalf of beneficiaries who may or may not know what political causes their invested assets support.

If a publicly traded company “goes woke,” consider which entities hold how much of its shares and whether unwanted shareholder pressure is to blame. Consider, too, the role of third-party proxy advisors in the company’s policies and practices.

Big companies go woke to eliminate competition. After all, they can afford the costs to comply with woke regulations whereas small companies cannot. Institutional investors warn of prospective risks of government regulation while lobbying for such regulation. In the United States, under the Biden Administration, woke federal regulations are, unsurprisingly, emerging. Perhaps publicly traded companies will privatize to avoid proposed SEC mandates regarding ESG disclosures, but regulation in other forms and through other agencies will come for private companies too.

The woke should question why they’re collaborating with their erstwhile corporate enemies. Have they abandoned concerns about poverty for the more lucrative industry of identity politics and environmentalism? Have they sold out, happily exploiting the uncouth masses, oppressing the already oppressed, and trading socioeconomic class struggle for the proliferating dogma of race, sexuality, and climate change? As wokeness becomes inextricably tied to ESG, we can no longer say, “Go woke, go broke.” Presently, wokeness is a vehicle to affluence, a status marker, the ticket to the center of the superstructure.

ESG helps the wealthiest to feel better about themselves while widening the gap between the rich and poor and disproportionately burdening economies in developing countries. It’s supplanting the classical liberal rules and institutions that leveled playing fields, engendered equality of opportunity, expanded the franchise, reduced undue discrimination, eliminated barriers to entry, facilitated entrepreneurship and innovation, and empowered individuals to realize their dreams and rise above their station at birth.

When politics is ubiquitous, wokeness breeds antiwokeness. The right caught on to institutional investing; counteroffensives are underway. The totalizing politicization of corporations is a zero-sum arms race in which the right captures some companies while the left captures others.

Soon there’ll be no escaping politics, no tranquil zones, and little space for emotional detachment, contemplative privacy, or principled neutrality; parallel economies will emerge for different political affiliations; noise, fighting, anger, distraction, and division will multiply; every quotidian act will signal a grand ideology. For the woke, “silence is violence”; there’s no middle ground; you must speak up; and increasingly for their opponents as well, you must choose sides.

Which will you choose in this corporatized dystopia? If the factions continue to concentrate and centralize power, classical liberals will have no good options. Coercion and compulsion will prevail over freedom and cooperation. And commerce and command will go hand in hand.

Amid the mounting speculation of a soft landing, and even chatter of a “no landing” (see here and here), one strategist is laughing at the market’s renewed sense of optimism and hope, which he counters simply by observing the latest economic and Fed developments and says that “a typical end-cycle environment is coming into place — mixed economic signals with a downward bias combining with a Fed laser-focused on corralling inflation by reducing labor demand.”

Yes, for TS Lombard economist Steven Blitz, there is no thesis drift (or rather elevation) and his big picture assessment refuses to budge: “recession will result.” Here’s why: “Forget the Fed stopping to wait and watch and hope that inflation bends towards 2% without a recession. That horse has left the barn. A key question is where the funds rate is when the Fed realizes recession is already underway.“

Blitz’s base case is “this summer” with the funds rate around 5.25%, or about 2 more hikes. That said, the TS Lombard analyst hedges and warns that if he is wrong, the funds rate can easily move up to 6.5%, which will make the coming recession that much more brutal.

Here a quick compare and contrast: according to Blitz, the policy tack in 2005-07 is the one the Fed are communicating: “get to a spot and stay there”, but of course the problem with 2007 was that “it was not the idealized recession” as everyone still remember what happened in 2008.

The policy approach in this cycle has been quite different because the Fed started so late, and the economy’s underlying dynamics are very different from 04-07, so too the Fed’s balance sheet policy. At this stage, they keep hiking until recession begins – even though they continue to advertise that getting to spot and sticking is the intention.

Looking at Chart 2, the TSL strategist says that it was good to read in the latest Fed Minutes that the FOMC sees the funds rate only now “moving toward a sufficiently restrictive stance of monetary policy”. As Blitz has repeatedly argued, rates have just gotten to the starting gate in terms of restricting activity. He also notes that in his view, the economic slowdown to date has little to do with Fed policy (though they took their bows), it had to with the economy naturally slowing from the unsustainable 6% pace in 2021– created by fiscal transfer, reopening, and Fed underwriting. Chart 1 above also suggests “why the Fed thinks they have a much longer road of hikes ahead before inflation bends back to 2%, but they are probably wrong on this too.”

With this 2005-2007 idealized tack (which, again, ended in disaster) as the Fed’s focus, it makes allowing financial conditions to ease by slowing the pace of hikes an incredibly counterproductive move, according to Blitz: “they seem to now understand that — “[a] number of participants observed that financial conditions had eased in recent months, which some noted could necessitate a tighter stance of monetary policy”, and in the strategist’s view, “if they had to do it again, especially given the run of data after the meeting, they would’ve hiked rates 50BP, as some wanted to.” Although, as Mester noted last week, after going 25, they are now pretty much stuck with that, unless they feel like risking another major communications disaster.

Additionally, in the latest FOMC minutes, we also read that “Participants observed that a restrictive policy stance would need to be maintained until the incoming data provided confidence that inflation was on a sustained downward path to 2 percent, which was likely to take some time.” And “stressed that substantially more evidence of progress across a broader range of prices would be required to be confident that inflation was on a sustained downward path.” To that point, “as long as the labour market remained very tight, wage growth in excess of 2 percent inflation and trend productivity growth would likely continue to put upward pressure on some prices in this component. A couple of participants observed that changes in wages tend to lag changes in prices, which can complicate the assessment of inflation pressures.”

Taking all this in, Blitz concludes that the Fed may well hike 50BP in March (overriding Fed concerns about reversing to a 25bps cadence) if there is a large enough upside surprise to February employment (that said, Blitz agrees with us that the January number was a grotesque outlier and that “the employment surprise will be weakness”). Otherwise, we get a 25BP hike and the data watch begins for May, although according to TS Lombard, “the Fed keeps hiking until unemployment hits 4.5%, at least. As for when that occurs, it depends on one’s start date for recession. I still believe there is a 55% probability of a mid-year recession, so they stop in Q3.”

But what if the “no landing” narrative ends up being right, and how high for the funds rate if there is no recession?

According to Blitz, very dovish inputs in a Taylor Rule model produce a 6.5% rate. Somewhat less dovish inputs deliver a 7.2% rate, and more traditional inputs (including 2% neutral real rate) produce a 9.7% rate. In other words, the longer it takes to weaken employment, the higher the rate, which means that if the unemployment rate has been artificially sustained lower as per Biden admin instructions we may see a Fed Funds rate on the edge of double digits, which would presage a great depression.

One final point brought up by Blitz who notes that the latest FOMC Minutes had a brief discussion of QT which noted the potential for private money-market rates to “experience some temporary pressures as reserves declined if use of the Federal Reserve’s ON RRP facility continued to remain high.” This facility is about 25% of the Fed balance sheet – up from zero two years ago.

The Fed has repeatedly assumed that these pressures on RRP work themselves out as wide spreads pull MMMF monies from ON RRP and move them into CP, CDs, etc. The Fed would love this result because banks have pretty much hit their desired bottom for reserve/asset ratios – banks began reducing reserves on their own in mid-2021 and flipped them into loans. Going forward, the balance sheet shrinks with ON RRP dropping, something the Fed can do arbitrarily, but they appear unlikely to “just say no”.

With rising real returns on cash, and increased recession risk, banks are buying T-bills along with the Fed and MMMFs may not rescue private money market disruptions (i.e., lower usage of the Reverse Repo facility) as the Fed hopes. According to Blitz, “disruption, or even a credible threat, plus sharply rising marginal funding costs for banks, will eventually curtail credit extensions and, in turn, bring forward recession’s start date” who notes that “this dynamic alone makes unlikely the idealized policy tack of getting the funds to a spot and staying there for an extended period.”

In conclusion, between the upcoming reserve crunch, and the continued Fed hikes, Blitz holds that the coming “asset crunch” will be enough to create a mild recession mid-year. And if it doesn’t, “steadily rising real funding costs deliver a “credit crunch” at some point. Recession is inevitable. And once it occurs, the cutting begins.”

Authored by Bret Swanson via The Brownstone Institute,

Elon Musk’s purchase of Twitter may have capped the opening chapter in the Information Wars, where free speech won a small but crucial battle.

Full spectrum combat across the digital landscape, however, will only intensify, as a new report from the Brookings Institution, a key player in the censorship industrial complex, demonstrates.

First, a review.

Reams of internal documents, known as the Twitter Files, show that social media censorship in recent years was far broader and more systematic than even we critics suspected. Worse, the files exposed deep cooperation – even operational integration – among Twitter and dozens of government agencies, including the FBI, Department of Homeland Security, DOD, CIA, Cybersecurity Infrastructure Security Agency (CISA), Department of Health and Human Services, CDC, and, of course, the White House. 

Government agencies also enlisted a host of academic and non-profit organizations to do their dirty work. The Global Engagement Center, housed in the State Department, for example, was originally launched to combat international terrorism but has now been repurposed to target Americans.

The US State Department also funded a UK outfit called the Global Disinformation Index, which blacklists American individuals and groups and convinces advertisers and potential vendors to avoid them. Homeland Security created the Election Integrity Partnership (EIP) – including the Stanford Internet Observatory, the University of Washington’s Center for an Informed Public, and the Atlantic Council’s DFRLab – which flagged for social suppression tens of millions of messages posted by American citizens.

Even former high government US officials got in on the act – appealing directly (and successfully) to Twitter to ban mischief-making truth-tellers. 

With the total credibility collapse of legacy media over the last 15 years, people around the world turned to social media for news and discussion. When social media then began censoring the most pressing topics, such as Covid-19, people increasingly turned to podcasts. Physicians and analysts who’d been suppressed on Twitter, Facebook, and YouTube, and who were of course nowhere to be found in legacy media, delivered via podcasts much of the very best analysis on the broad array of pandemic science and policy. 

Which brings us to the new report from Brookings, which concludes that one of the most prolific sources of ‘misinformation’ is now – you guessed it – podcasts. And further, that the underregulation of podcasts is a grave danger.

In “Audible reckoning: How top political podcasters spread unsubstantiated and false claims,” Valerie Wirtschafter writes:

Due in large part to the say-whatever-you-want perceptions of the medium, podcasting offers a critical avenue through which unsubstantiated and false claims proliferate. As the terms are used in this report, the terms “false claims,” “misleading claims,” “unsubstantiated claims” or any combination thereof are evaluations by the research team of the underlying statements and assertions grounded in the methodology laid out below in the research design section and appendices. Such claims, evidence suggests, have played a vital role in shaping public opinion and political behavior. Despite these risks, the podcasting ecosystem and its role in political debates have received little attention for a variety of reasons, including the technical difficulties in analyzing multi-hour, audio-based content and misconceptions about the medium.

To analyze the millions of hours of audio content, Brookings used natural language processing to search for key words and phrases. It then relied on self-styled fact-checking sites Politifact and Snopes – pause for uproarious laughter…exhale – to determine the truth or falsity of these statements. Next, it deployed a ‘cosine similarity’ function to detect similar false statements in other podcasts. 

The result: “conservative podcasters were 11 times more likely than liberal podcasters to share claims fact-checked as false or unsubstantiated.”

One show Brookings misclassified as “conservative” is the Dark Horse science podcast hosted by Bret Weinstein and Heather Heying. Over the past three years, they meticulously explored the complex world of Covid, delivering scintillating insights and humbly correcting their infrequent missteps. Brookings, however, determined 13.8 percent of their shows contained false information. 

What would the Brookings methodology, using a different set of fact checkers, spit out if applied to CNN, the Washington Post, the FDA, CDC, or hundreds of blogs, podcasts, TV doctors, and “science communicators,” who got nearly everything wrong? 

Speaking on journalist Matt Taibbi’s podcast, novelist Walter Kirn skewered the new AI fact-checking scheme. It pretends to turn censorship into a “mathematical, not Constitutional, concern” – or, as he calls it, “sciency, sciency, sciency bullshit.” 

The daisy chain of presumptuous omniscience, selection bias, and false precision employed to arrive at these supposedly quantitative conclusions about the vast, diverse, sometimes raucous, and often enlightening world of online audio is preposterous. 

And yet it is deadly serious. 

The collapse of support for free speech among Western pseudo-elites is the foundation of so many other problems, from medicine to war. Misinformation is the natural state of the world. Open science and vigorous debate are the tools we deploy to become less wrong over time. Individual and collective decision-making depend on them.

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Reposted from the author’s Substack

By Eric Peters, CIO of One River Asset Management

Dark Forest

“Sorry to tell you, but there are no aliens,” said the intelligence analyst.

“The Tic Tac videos, balloons, UFOs – they’re not aliens,” he said. “We’re all alone here, it’s just us.”

For those of us who read Cixin Liu, China’s brilliant Sci-Fi author, the notion that we are alone is extremely comforting. Cixin turned me onto the Dark Forest hypothesis, which postulates that while there may be many alien civilizations out there, we see no sign of them because they are silent and paranoid, lest they alert others to their existence and invite invasion, annihilation. 

“What we see is our next generation military technology,” continued the intelligence analyst.

“We all see what the Ukrainians did to Russia’s military using battlefield technology that we would generally consider obsolete relative to our state of the art,” he said. “But America’s actual state of the art is one or two generations ahead of what the public sees today,” he said, which was simultaneously comforting and terrifying.

“It is not in our interest to show our adversaries how far advanced our capabilities have grown.”

“Look carefully at this chart,” said the technology investor.

It was the kind of curve I’ve seen often, an upward sloping trend that accelerates through time. On the vertical axis was the computing power used to train artificial intelligence systems. The horizontal axis was time, going back to the early 1950s. “I know you’re thinking you’ve seen this kind of chart before, it’s a classic hockey stick. But here’s the thing, it’s a logarithmic chart, it should not curve upward. This kind of growth is almost impossible for the human brain to comprehend.”

ChatGPT has had the steepest adoption of any technology in history. It hit 1mm users in five days. Within 2mths, it crossed 100mm users. It is estimated to have 1bln users by the end of the year. It is a remarkable technology, and while we can have no certainty about how it will change the world, there is no doubt that the arc of its influence is only just starting. Governments will lag far behind in regulating it. We don’t yet know what will happen when it gets connected to the internet. And ChatGPT is 2-3 generations behind state-of-the-art AI.

“Time is the one thing that can’t be stopped. Like a sharp blade, it silently cuts through hard and soft, constantly advancing. Nothing is capable of jolting it even the slightest bit, but it changes everything,” wrote Cixin Liu, in The Dark Forest. “Staying alive is not enough to guarantee survival. Development is the best way to ensure survival,” said Cixin. “Do you know what the greatest expression of regard for a race or civilization is? Annihilation. That’s the highest respect a civilization can receive. They would only feel threatened by a civilization they truly respect.”

A silly feature introduced with iOS 16.1 called “Clean Energy Charging” has upset some iPhone users as their devices will only charge when lower carbon-emission electricity on the grid is available. 

Some iPhone users reported when iOS 16.1 was installed — their devices were automatically selected for Clean Energy Charging. Charging when the grid is ‘green’ has its disadvantages for the user experience, who might incur slower charge times. 

Twitter is a buzz this morning with frustrated Apple users. Some complained about ‘slower iPhone charging’ and encouraged others to turn off the setting. 

If you noticed your iPhone is charging a little slower recently it may be due to a new setting Apple added in iOS 16.1 — Clean Energy Charging

With it turned on, iOS will only recharge the iPhone’s battery when the electrical grid uses cleaner energy sources like solar or wind… https://t.co/r35GkgivQl pic.twitter.com/ANW3GZwYSd

— Chief Nerd (@TheChiefNerd) February 26, 2023

The Climate Change Cult at it again. No thank you. Just switched the Clean Energy Charging off.

— Company of Champions (@CompanyChampion) February 26, 2023

If you noticed your iPhone is charging a little slower, it may be due to the new update: Clean Energy Charging

You can disable it under Settings > Battery > Battery Health & Charging at which point you are lectured & asked if you’re sure pic.twitter.com/sIAFT6MnVm

— Matthew Gregoire (@BreakngNewsPhtg) February 26, 2023

If you noticed your iPhone is charging a little slower recently, it’s likely due to a new setting Apple added in iOS 16.1 update— Clean Energy Charging

When turned on, iOS will only recharge the iPhone’s battery when the electrical grid uses cleaner energy sources like solar or… https://t.co/QoDdBPeNTT pic.twitter.com/GKRjrhhxJU

— Adam Pokornicky ∞/21M (@callmethebear) February 26, 2023

While Apple is forcefully trying to reduce the carbon footprint of iPhone users to fight climate change, don’t bring up the sobering reality about all the carbon emissions it takes to mine lithium and other rare Earth metals for Apple products. Also, don’t bring up company execs, such as Tim Cook, who fly on private jets. 

What irks the average person is that corporate elites and governments impose life-altering climate change measures on the working poor while the rules don’t apply to the rich. Recall the Biden administration is trying to ban gas stoves. 

Authored by Zachary Stieber via The Epoch Times (emphasis ours),

Staffers at Project Veritas have released a new statement as whistleblowers say they support ousted founder James O’Keefe.

In a Feb. 24 video statement, Project Veritas staffers said they “are at a crossroads” due to the dispute between O’Keefe and the organization’s board of directors.

O’Keefe departed Project Veritas this week after being suspended and stripped of his authority. The board has said it uncovered signs of “financial malfeasance” but that it did not terminate O’Keefe. Staffers said Thursday that supporters should “give us a chance” as they work to continue O’Keefe’s mission.

“We want James back,” staffers said in the new video. “But we have a duty to our generous supporters, to all of you, and to our journalistic integrity to break record stories, which impact our culture, and most importantly, the future of our country.”

Staffers said they’re committed to continuing working to expose waste, fraud, and abuse, and that “no board or donor ever tells us what to report.

“We will never replace James O’Keefe. But for now, we see it as our job to hold the torch for him while keeping the door wide open for his return. We will keep the spirit of James’s mission alive for as long as we are able. We have investigations underway and stories to release. Our reporters are in the field,” they said. “As James has always told us, content is king. Our visionary may not be with us right now, but the Project Veritas mission is vital. We will produce stories and break news until a day may come when we can’t.”

The group acknowledged that many supporters are disenchanted with O’Keefe’s ouster.

“We don’t want to see a Project Veritas without James O’Keefe,” they said. “Due to decisions made outside of our control, it’s possible we may never earn back the trust of this audience. But we owe it to all of you to try.”

O’Keefe has said that, after board members rebuffed his request for them to resign, he could not return to the company. In a farewell message to staffers at the group’s headquarters, he said he was planning to “start anew” and that he hoped to see some of the staffers soon.

O’Keefe has since posted several times on Twitter, sharing a new email address for tips.

“Those who are crazy enough to think they can change the world are the ones who actually do,” he said in his last update on Feb. 24.

Former Treasury Secretary under Bill Clinton, Larry Summers, joins Bloomberg to answer questions on persistent inflation indicators despite Federal Reserve tightening measures and rising interest rates.  Summers, with some carefully chosen words, essentially admits what alternative economists have been warning about all along – That short term positive indicators are misleading and that longer term indicators show impending recession and a sharp decline in the US. 

After $8 trillion+ in fiat helicopter money pumped into the economy during the pandemic lockdowns, an impressive spike in retail and service sector activity was the result, spurring a hiring blitz in mostly low wage jobs.  The lockdowns led to over 25 million job losses and the covid stimulus bought 12 million jobs back.  This heightened activity, however, has been fleeting.  Equally impressive has been the aggressive spike in stagflation.  High prices continue to hang on and the Fed has little choice but to roll forward on increased interest rates. 

The central bank has expressed steady hawkish sentiments in the past few weeks, which have run contrary to media and political claims of easing inflation and an inevitable “soft landing.” 

In a somewhat similar dynamic to the early-1980s under former Fed chairman Paul Volcker (inflation stats today are calculated far differently from the 80s in an attempt to hide true inflation), the mainstream economic media is starting to realize that interest rates will have to go much higher than they expected and a hard landing is an inevitable outcome. 

Summers then hints at what he thinks the solution will be, which of course involves global policy makers and global banking institutions like World Bank.  If we were to run Summer’s comments through a truth translator, here is what we would likely hear:

“A soft economic landing is not going to happen and the negative data is becoming too obvious to deny.  Inflation signals are not relenting and the Fed will continue hiking rates.  This will lead to a recessionary crash, so we’re going to admit to the issue now in order to avoid looking like complete fools later.  In the meantime, we’re going to use the ongoing crisis to promote more globalism, which was our intention all along.”

A message to Larry – You can’t hit the brakes on the car when you’ve already driven off a cliff.