Month: December 2023

Authored by Mark Tapscott via The Epoch Times,

Key White House and National Security Council and State Department officials were caught by surprise when they learned in January 2016 that then-Vice President Joe Biden had abruptly changed U.S. policy to require the firing of Ukrainian Special Prosecutor Viktor Shokin as a condition for receiving $1 billion in U.S.-backed International Monetary Fund (IMF) loans, according to House Judiciary Committee Chairman Jim Jordan (R-Ohio) citing emails reviewed by The Epoch Times.

“There are State Department emails where they are, like, ‘Oh!’ surprised. There were people in the State Department saying, ‘Oh, Biden says they aren’t getting the money unless Shokin is fired,’ and they are surprised, saying, ‘Why did you do that, we didn’t talk about this; we didn’t plan that.’ So it was a total change from the consensus where the State Department was,” Mr. Jordan told reporters during a Monday question-and-answer session focused on the status of the House impeachment investigation of President Biden.

That probe is technically only an “inquiry,” but it is expected to be upgraded to an official House investigation with a vote next week in the lower chamber. Mr. Jordan told reporters Monday that he is confident the Republican majority will prevail in that vote despite having only a two-vote advantage over Democrats.

Whether the vice president was pushing for Mr. Shokin’s ouster to aid his son Hunter Biden’s business dealings is a focus of the impeachment inquiry. Hunter Biden sat on the board of Ukrainian energy firm Burisma, which was being investigated by Mr. Shokin.

Investigators with Mr. Jordan’s panel and the House Committee on Oversight and Accountability, chaired by Rep. James Comer (R-Ky.), and the House Ways and Means Committee, chaired by Rep. Jason Smith (R-Mo.), are focused on President Biden’s alleged participation in and benefitting from his family’s receipt of millions of dollars of income throughout a period of several decades from individuals, as well as corporate and state entities, in Ukraine, China, Russia, Kazakhstan, and Romania during and after the senior Biden’s years as Vice-President under President Barack Obama.

Surprise From Officials

In one of the State Department emails to which Mr. Jordan referred, Eric Ciaramella, a White House National Security Council (NSC) deputy national intelligence officer for Russia and Eurasia, expressed shock to three colleagues on Jan. 21, 2016, saying, “Yikes. I don’t recall this coming up in our meeting with them on Tuesday.”

Mr. Ciaramella, who did not respond to The Epoch Times’ request for comment, was reacting to an email sent earlier in the day from Elisabeth Zentos, an NSC colleague that was also addressed to Geoffrey Pyatt, U.S. Ambassador to Ukraine from 2013 to 2016, and Anna Makanju, who was then a Special Adviser to Mr. Biden for Europe and Eurasia. Mr. Ciaramella is now a Senior Fellow with the Carnegie Endowment for International Peace.

Mr. Pyatt, who is presently the State Department’s Assistant Secretary for Energy Resources, could not be reached for comment, according to a State Department spokesman, because he is in Dubai attending the COP28 Climate Change International Conference. Ms. Makanju, who is now Vice President for Global Affairs at San Francisco-based OpenAI, did not respond to The Epoch Times request for comment.

Mr. Pyatt responded to the Zentos email, saying, “Buckle in,” and adding, “We also need to readdress all the LG [loan guarantee] anti-corruption conditions … and at this stage, there’s only one that really matters.” Ms. Makanju did not respond in the email thread reviewed by The Epoch Times.

Mr. Jordan said State Department officials were surprised to learn of Mr. Biden’s ultimatum to Mr. Poroshenko because it was previously settled U.S. policy to pressure Ukraine to root out official corruption that had plagued the country since it declared its independence from the former Soviet Union in 1991.

But until Mr. Biden did so, the U.S. had not made Ukraine’s receipt of the IMF loan guarantees conditional upon Mr. Shokin’s removal. Briefing materials reviewed by the vice president during his December 2015 flight to Ukraine included planning for him to sign the U.S. agreement to back the IMF loans, with no reference to firing Mr. Shokin.

The judiciary chairman contends Mr. Biden’s abrupt reversal followed from the fact his son, Hunter Biden, was a member of the board of directors of the Ukrainian energy company Burisma, which was being actively investigated by Mr. Shokin regarding allegations of corruption.

Rep. Jim Jordan (R-Ohio) speaks to the press after coming out of the Hunter Biden special counsel David Weiss’s closed-door testimony to the House Judiciary Committee in Washington on Nov. 7, 2023. (Madalina Vasiliu/The Epoch Times)

‘Called An Audible’

Mr. Jordan noted that during a Dec. 4, 2015, meeting in Dubai between Burisma executives Mykola Zlochevsky and Vadym Pozharsky and Hunter Biden and Devon Archer, one of his business partners, the Ukrainians pleaded with the Americans to do something to relieve the “government pressure” they were receiving from the Shokin investigation of corruptions allegations against Mr. Zlochevsky.

Mr. Archer told the oversight committee during a closed-door transcribed interview that in response to those pleas, Hunter Biden “called DC,” referring to his father, the vice president. Three days later, the vice president, according to the Washington Post, “called an audible”—changed his plans—to reverse U.S. policy and demand Mr. Shokin’s firing.

In a summary timeline of the events, the oversight committee observed that “Devon Archer joined the Burisma board of directors in the spring of 2014 and was joined by Hunter Biden shortly thereafter. Hunter Biden joined the company as counsel, but after a meeting with Burisma owner Mykola Zlochevsky in Lake Como, Italy, was elevated to the board of directors in the spring of 2014.

“Both Biden and Archer were each paid $1 million per year for their positions on the board of directors. In December 2015, after a Burisma board of directors meeting, Zlochevsky and Hunter Biden ‘called DC’ in the wake of mounting pressures the company was facing. Zlochevsky was later charged with bribing Ukrainian officials with $6 million in an attempt to delay or drop the investigation into his company.”

The oversight panel has to date documented $6.5 million in income to the Biden family and their associates from their Ukrainian activities.

The Epoch Times has reached out to the State Department and National Security Council for comment.

Authored by Ryan McMaken via The Mises Institute,

Money supply growth fell again in October, remaining deep in negative territory after turning negative in November 2022 for the first time in twenty-eight years. October’s drop continues a steep downward trend from the unprecedented highs experienced during much of the past two years.

Since April 2021, money supply growth has slowed quickly, and since November, we’ve been seeing the money supply repeatedly contract year over year. The last time the year-over-year (YOY) change in the money supply slipped into negative territory was in November 1994. At that time, negative growth continued for fifteen months, finally turning positive again in January 1996. 

Money-supply growth has now been negative for twelve months in a row. During October 2023, the downturn continued as YOY growth in the money supply was at –9.33 percent. That’s up slightly from September’s rate decline which was of –10.49 percent, and was far below October 2022’s rate of 2.14 percent. With negative growth now falling near or below –10 percent for the eighth month in a row, money-supply contraction is the largest we’ve seen since the Great Depression. Prior to this year, at no other point for at least sixty years has the money supply fallen by more than 6 percent (YoY) in any month. 

The money supply metric used here—the “true,” or Rothbard-Salerno, money supply measure (TMS)—is the metric developed by Murray Rothbard and Joseph Salerno, and is designed to provide a better measure of money supply fluctuations than M2. (The Mises Institute now offers regular updates on this metric and its growth.)

In recent months, M2 growth rates have followed a similar course to TMS growth rates, although TMS has fallen faster than M2. In October 2023, the M2 growth rate was –3.35 percent. That’s down from September’s growth rate of –3.35 percent. October 2023’s growth rate was also well down from October 2022’s rate of 1.42 percent. 

Money supply growth can often be a helpful measure of economic activity and an indicator of coming recessions. During periods of economic boom, money supply tends to grow quickly as commercial banks make more loans. Recessions, on the other hand, tend to be preceded by slowing rates of money supply growth. 

It should be noted that the money supply does not need to actually contract to signal a recession and the boom-bust cycle. As shown by Ludwig von Mises, recessions are often preceded by a mere slowing in money supply growth. But the drop into negative territory we’ve seen in recent months does help illustrate just how far and how rapidly money supply growth has fallen. That is generally a red flag for economic growth and employment.

The fact that the money supply is shrinking at all is remarkable because the money supply in modern times almost never gets smaller. The money supply has now fallen by $2.8 trillion (or 13.1 percent) since the peak in April 2022. Proportionally, the drop in money supply since 2022 is the largest fall we’ve seen since the Depression. (Rothbard estimates that in the lead-up to the Great Depression, the money supply fell by 12 percent from its peak of $73 billion in mid-1929 to $64 billion at the end of 1932.)

In spite of this recent drop in total money supply, the trend in money-supply remains well above what existed during the twenty-year period from 1989 to 2009. To return to this trend, the money supply would have to drop at least another $3 trillion or so—or 15 percent—down to a total below $15 trillion.  Moreover, as of October, total money supply was still up 32 percent (or $4.6 trillion) since January 2020. 

Since 2009, the TMS money supply is now up by nearly 186 percent. (M2 has grown by 141 percent in that period.) Out of the current money supply of $18.9 trillion, $4.6 trillion—or 24 percent—of that has been created since January 2020. Since 2009, $12.2 trillion of the current money supply has been created. In other words, nearly two-thirds of the total existing money supply have been created just in the past thirteen years. 

With these kinds of totals, a ten-percent drop only puts a small dent in the huge edifice of newly created money. The US economy still faces a very large monetary overhang from the past several years, and this is partly why after eighteen months of slowing money-supply growth, we are only now starting to see a slowdown in the labor market. (For example, job openings have fallen 22 percent over the past year, but have not yet returned to pre-covid levels.) The inflationary boom has not yet ended. 

Nonetheless, the monetary slowdown has been sufficient to considerably weaken the economy. The Philadelphia Fed’s manufacturing index is in recession territory. The Leading Indicators index keeps looking worse. The yield curve points to recession. Temp jobs were down, year-over-year, which often indicates approaching recession. Default rates are rising. 

Money Supply and Rising Interest Rates

An inflationary boom begins to turn to bust once new injections of money subside, and we are seeing this now. Not surprisingly, the current signs of malaise come after the Federal Reserve finally pulled its foot slightly off the money-creation accelerator after more than a decade of quantitative easing, financial repression, and a general devotion to easy money. As of early December, the Fed has allowed the federal funds rate to rise to 5.50 percent, the highest since 2001. This has meant short-term interest rates overall have risen as well. In October, for example, the yield on 3-month Treasurys reached 5.6 percent, the highest level measured since December 2000. 

Without ongoing access to easy money at near-zero rates, banks are less enthusiastic about making loans, and many marginal companies will no longer be able to stave off financial trouble by refinancing or taking out new loans. Commercial bankruptcy filings increased sizably during 2023, and continue to surge into the last quarter of the year. As reported by Monitor Daily: 

The bankruptcy filing by WeWork in November propelled November commercial Chapter 11 filings to 842, an increase of 141% compared with the 349 filings registered in November 2022, according to data provided by Epiq Bankruptcy.

The case filed by WeWork on Nov. 6 included 517 related filings, according to analysis from the American Bankruptcy Institute, representing the third-most related filings in a case since the U.S. Bankruptcy Code became effective in 1979.

Overall commercial filings increased 21% to 2,252 in November, up from the 1,864 commercial filings registered in November 2022. Small business filings, captured as Subchapter V elections within Chapter 11, increased 79% to 181 in November, up from 101 in November 2022.

There were 37,860 total bankruptcy filings in November, a 21% increase from the November 2022 total of 31,187. Individual bankruptcy filings also registered a 21% year-over-year increase, as the 35,608 in November represented an increase over the 29,323 filings in November 2022. There were 20,250 individual Chapter 7 filings in November, a 23% increase compared with the 16,421 filings recorded in November 2022, and there were 15,280 individual Chapter 13 filings in November, a 19% increase compared with the 12,862 filings last November.

Lending for private consumption is getting more expensive also. In October, the average 30-year mortgage rate rose to 7.62 percent, the highest point reached since November 2000. 

These factors all point toward a bubble that is in the process of popping. The situation is unsustainable, yet the Fed cannot change course without reigniting a new surge in price inflation. Although some professional economists insist that price inflation has all but disappeared, the sentiment on the ground is clearly one in which most workers believe their wages are not keeping up with rising prices. Any surge in prices would be especially problematic given the rising cost of living. Ordinary Americans face a similar problem with home prices. According to the Atlanta Fed, the housing affordability index is now the worst it’s been since 2006, in the midst of the Housing Bubble. 

If the Fed reverses course now, and embraces a new flood of new money, prices will only spiral upward. It didn’t have to be this way, but ordinary people are now paying the price for a decade of easy money cheered by Wall Street and the profligates in Washington. The only way to put the economy on a more stable long-term path is for the Fed to stop pumping new money into the economy. That means a falling money supply and popping economic bubbles.

But it also lays the groundwork for a real economy – i.e., an economy not built on endless bubbles – built by saving and investment rather than spending made possible by artificially low interest rates and easy money. 

Following bombshell censorship revelations exposed over the last year, beginning with the Twitter Files, the state of Texas, The Daily Wire, and The Federalist have filed a lawsuit against the US State Department on Tuesday, alleging that the government agency funded censorship technology designed to bankrupt domestic media outlets which have disfavored political opinions.  Read the 67-page complaint here.

According to the Daily Wire‘s Luke Rosiak;

The State Department is tasked with foreign relations and has no authority over domestic affairs, yet it took a government office designed for countering foreign terrorist propaganda, the Global Engagement Center (GEC), and unleashed it against Americans engaged in what it claimed was “disinformation,” according to the lawsuit, filed in federal court in the Eastern District of Texas on Tuesday night by the New Civil Liberties Alliance.

It was “one of the most audacious, manipulative, secretive, and gravest abuses of power and infringements of First Amendment rights by the federal government in American history,” said the suit, which also names Secretary of State Antony Blinken and five other officials as defendants.

Of note, the GEC, founded in 2011 under a different name to combat foreign propaganda in a counterterrorism capacity. In establishing the entity, Congress made clear that “none of the funds authorized” for the program “shall be used for purposes other than countering foreign propaganda.”

They of course ignored all that, and turned its focus on Americans according to the complaint, using taxpayer funds to finance and promote censorship shops such as NewsGuard and the Global Disinformation Index (GDI), which target conservative outlets – ZeroHege included – with the stated goal of killing ad revenue.

“Through its Global Engagement Center, the State Department actively intervened in the news-media market to limit the reach and business viability of domestic news organizations by funding censorship technology and private censorship enterprises,” reads a Wednesday press release from Texas Attorney General Ken Paxton.

Congress authorized creation of the Global Engagement Center expressly to counter foreign propaganda and misinformation. Instead, the agency weaponized this authority to violate the First Amendment and suppress Americans’ constitutionally-protected speech.

— Texas Attorney General (@TXAG) December 6, 2023

“The State Department’s mission to obliterate the First Amendment is completely un-American. This agency will not get away with their illegal campaign to silence citizens and publications they disagree with.”

As the lawsuit explains, The Daily Wire, The Federalist, and other conservative news organizations were “branded ‘unreliable’ or ‘risky’ by the government-funded and government-promoted censorship enterprises… starving them of advertising revenue and reducing the circulation of their reporting and speech—all as a direct result of [the State Department’s] unlawful censorship scheme.”

The outlets are being represented by The New Civil Liberties Alliance’s Mark Chenoweth, who said that “the federal government cannot do indirectly what the First Amendment forbids it from doing directly.“

As Rosiak notes in the Wire, GDI’s primary product is a “Dynamic Exclusion List” of media outlets that it warns presents a “high risk for disinformation.” For example:

‘Totally Inappropriate’: Government-Funded Entities Are Working to Drive Revenue Away from Disfavored Publications to the Ones They Favor

Michael Shellenberger: “NewsGuard and the Disinformation Index are both US government-funded entities who are working to drive advertiser… pic.twitter.com/UVfVXusR25

— Sayer Ji (@sayerjigmi) March 12, 2023

It then licenses that list to advertisers, who use it to avoid boycotts from the left.

That playbook was deployed last month against Elon Musk, when blue-chip advertisers were persuaded to stop advertising on the platform because the Left-wing Media Matters group claimed that big companies’ ads occasionally appeared near objectionable content.

GDI says it aims to destroy “the incentive to create [disinformation] for the purpose of garnering advertising revenues.”

GDI keeps its main blacklist secret, but publicly published its top 10 “riskiest” outlets, which was essentially a list of America’s most prominent and mainstream conservative media publications, including both The Daily Wire and The Federalist, as well as the New York Post, and Reason Magazine. -Daily Caller

According to the lawsuit, GDI “was funded and promoted by State Department Defendants,” which adds that the “State Department Defendants’ active intervention in the news media market to make disfavored media unprofitable thus had devastating consequences to Media Plaintiffs.”

NewsGuard

The State Department also funded the for-profit entity NewsGuard, which says its goals is to “cut off revenues to fake news sites” via a whitelist that purports to promote only ‘legitimate’ news outlets. NewsGuard ranks The Federalist as “unreliable,” and the Daily Wire as “credible with significant exceptions.”

Last month, journalist Lee Fang uncovered that NewsGuard’s largest investor is a Pfizer partner.

As Fang writes;

Founded in 2018 by Crovitz and his co-CEO Steven Brill, a lawyer, journalist and entrepreneur, NewsGuard seeks to monetize the work of reshaping the Internet. The potential market for such speech policing, NewsGuard’s pitch to Twitter noted, was $1.74 billion, an industry it hoped to capture.

Instead of merely suggesting rebuttals to untrustworthy information, as many other existing anti-misinformation groups provide, NewsGuard has built a business model out of broad labels that classify entire news sites as safe or untrustworthy, using an individual grading system producing what it calls “nutrition labels.” The ratings – which appear next to a website’s name on the Microsoft Edge browser and other systems that deploy the plug-in – use a scale of zero to 100 based on what NewsGuard calls “nine apolitical criteria,” including “gathers and presents information responsibly” (worth 18 points), “avoids deceptive headlines” (10 points), and “does not repeatedly publish false or egregiously misleading content” (22 points), etc. 

Critics note that such ratings are entirely subjective – the New York Times, for example, which repeatedly carried false and partisan information from anonymous sources during the Russiagate hoax, gets a 100% rating. RealClearInvestigations, which took heat in 2019 for unmasking the “whistleblower” of the first Trump impeachment (while many other outlets including the Times still have not), has an 80% rating. (Verbatim: the NewsGuard-RCI exchange over the whistleblower.) Independent news outlets with an anti-establishment bent receive particularly low ratings from NewsGuard, such as the libertarian news site Antiwar.com, with a 49.5% rating, and conservative site The Federalist, with a 12.5% rating.

…

Publicis Groupe, NewsGuard’s largest investor and the biggest conglomerate of marketing agencies in the world, which has integrated NewsGuard’s technology into its fleet of subsidiaries that place online advertising. The question of conflicts arises because Publicis represents a range of corporate and government clients, including Pfizer – whose COVID vaccine has been questioned by some news outlets that have received low scores. Other investors include Bruce Mehlman, a D.C. lobbyist with a lengthy list of clients, including United Airlines and ByteDance, the parent company of much-criticized Chinese-owned social media platform TikTok.

*  *  *

NewsGuard was sued in October by Consortium news.

Leftist “NewsGuard” is Microsoft partner. https://t.co/qfPwJNy69E

— Tom Fitton (@TomFitton) February 14, 2023

Read more here via the Daily Wire. We will be following this closely.

For those who are confused why the US has spent tens of billions to keep the Ukraine-Russia war going on and on (setting aside of course money-laundering by the Biden crime family) here is your answer: as  FreightWaves’ Greg Miller reports, the unstated mission of the US military-industrial complex in the lead up and following the Ukraine war, was to unseat and replace Russia as the largest source of European energy, both crude and nat gas, and in the process push US crude exports to record highs, driven by a surge in European exports.

Indeed, as diplomats convene at the United Nations’ COP 28 climate change summit, fossil fuel production and consumption are hitting new highs, and tanker owners are in prime position to profit from rising trade flows.

The Biden administration is a leading proponent of decarbonization, yet the U.S. is pumping out record volumes of hydrocarbons. America is on track to be the world’s largest producer and exporter of natural gas this year, as well as the leading exporter of refined products and liquefied petroleum gas.

There are also big wins — for energy producers and shipowners, not decarbonization advocates — on the crude oil front.

The U.S. produced 13.2 million barrels per day (b/d) of crude oil in September, according to data released Thursday by the Energy Information Administration. That is the country’s highest monthly production level ever.

And not only is America producing more crude, it is exporting a larger share of the crude it produces, further boosting volumes aboard tankers bound for Europe and Asia.

Seaborne crude exports up 19% vs. 2022

Exports of U.S. crude were banned between 1975 and 2015. For 40 years, U.S. production could only be sold overseas if it was refined first, then exported as petroleum products.

The end of the ban dramatically increased market opportunities for U.S. production, thereby stimulating higher output — creating more business for oil companies and tanker owners.

That upward momentum continues. Seaborne crude exports are tracked by commodity intelligence provider Kpler. In January-November, its data shows that U.S. seaborne crude exports averaged 4 million b/d, an all-time high and up 19% year on year.

Exports in November averaged 4.45 million b/d, the second-highest monthly average on record, just slightly below the peak of 4.46 million bpd in March.

Volumes rise sharply to both Europe and Asia

The Panama Canal is wreaking havoc on many cargo supply chains, but it has virtually no effect on U.S. crude exports.

U.S. crude exports to Asia are loaded on very large crude carriers (VLCCs; tankers that carry 2 million barrels) via ship-to-ship transfers in the U.S. Gulf. VLCCs are too large to transit either the Panama or Suez canals; they use the Cape of Good Hope.

U.S. exports to Europe are shipped aboard Aframaxes (750,000-barrel capacity), Suezmaxes (1 million-barrel capacity) and VLCCs.

Since the invasion of Ukraine, Europe has hiked its purchases of U.S. crude to help offset banned Russian supply. According to Kpler data, an average of 1.83 million b/d of U.S. crude flowed to Europe in January-November, up 26% from the 2022 full-year average.

Europe’s share of total U.S. crude exports has risen to 46% this year compared to 37% in 2021, the year prior to the invasion, while Asia’s share is 41%, down from 47% in 2021.

“In volumetric terms, the story has been all about Europe this year,” Reid I’Anson, senior commodity analyst at Kpler, told FreightWaves. “Europe continues to grow increasingly reliant on U.S. energy — not just LNG [liquefied natural gas] but across the board.”

Despite the pull of Europe, U.S. crude exports to Asia have also continued to escalate. According to Kpler data, exports to Asia are averaging a record-high 1.65 million b/d year to date, up 15% from last year and up 26% from 2021.

Rising volumes to Asia translate into profitable business for VLCC owners. Brokerage True North Chartering counted 40 spot VLCC cargoes loading in the U.S. Gulf in both October and November, matching the prior monthly high in April.

By Michael Every of Rabobank

Black Sea, Red Sea… spot the pattern?

Markets focused on the US JOLTS labour data yesterday… because it was weaker than expected. It’s a questionable series that few have ever taken seriously, but if it’s moving in the right direction for lower bond yields and (if not on the day, surely soon) higher asset prices, then let’s look! However, as the Financial Times ran beneath their main headline about job openings being the lowest in over two years: ‘the jobs market is still tight. And bitcoin is booming again.’ Indeed, as the FT’s Janan Ganesh op-eds that ‘Voters don’t want to hear the fiscal truth’, it’s markets who don’t want to hear the macroeconomic truth. The US economy is not going to need generous rate-cuts in the near future when the ISM services survey is 52.7 and new orders are 55.5; such cuts will only be via a deep downturn that smashes equities and credit.

Markets also don’t want to hear the geopolitical truth as ‘Houthi attacks on vessels in Red Sea sound alarm for global trade’. Indeed, missile and drone fire at shipping –and the US Navy(!)– if continued, will see trade divert away from the Suez Canal round the Cape of Good Hope. The market’s blasé attitude shows that trading floors have learnt nothing about the real world of supply chains over the past few years.

If 30% of global shipping has to go via Africa rather than Suez, delivery times are going to be extended by weeks, and ocean carrier pricing is going to rise substantially. In parallel, the Panama Canal is so clogged up that a shipping company paid $4 million to jump the line, when a year ago a slot cost $173,000. That means inflation is already rising upstream, though with winners and losers in terms of who can now export what most easily. Overall, it’s a supply shock. At the same time, Middle East energy supplies could also yet be hit. Markets clearly don’t see those risks now, with oil prices so low that Russia is stating it and OPEC+ could cut output more if needed – another round in the ‘Fed and US dollar vs. BRICS commodities’ looms, it seems. Watch this space.

In response, there is already talk of the US Navy task force chaperoning merchant ships through the Red Sea: the US cannot escort non-US flagged ships without a remit, just assist after an attack, which is hardly going to reassure insurance companies. Yet if the US Navy steps up to an expensive and open-ended patrol, it raises a problem flagged by me in 2021: why should the US protect Chinese shipping? Especially when the perception is of a China-Russia-Iran-North Korea axis emerging, within which Iran is backing the Red Sea attacks. Perhaps it’s only Western, or Israeli, shipping that is vulnerable: in which case global dividing lines are again clear – and that’s as a maritime expert suggests China might even use the crisis to try to offer cheap insurance for ocean carriers, increasing its role in this vital area of global commerce.

The usual way out of this mess is the US flexing its muscles to stop Houthi action – which also means stopping Iran arming the Houthis. However, there is an election in 11 months, and a regional war which the White House is determined not to see escalate: so it won’t act. Politico notes US officials are frustrated by the Biden administration’s response to the attacks in the Red Sea, and @Charles_Lister tweets: “Two DOD insider sources told me today that the #Biden White House has placed (in the words of one) “every possible handcuff” on the DOD’s ability to respond to #Iran proxy attacks. The scale & scope of these attacks are unprecedented — and we’re just taking the hits. Dangerous.”

It’s ok, Iran is illegally exporting record amounts of embargoed oil to China so nothing will happen. If it stopped, oil would hit $120 overnight https://t.co/905bjoFGfT
— zerohedge (@zerohedge) November 18, 2023

It is dangerous. If the US is not going to calm this situation by a show of strength, it will be taken as weakness, which will ensure a grinding escalation in attacks – and then possibly a tipping point hit. Global trade will have to deal with massive disruption once again: and as the maritime chokepoints of Panama, Hormuz, Bab-el-Mandeb, and Suez all come under threat, how long until the Cape of Good Hope (in BRICS), and Malacca (as tensions rise in the South China Sea) do too? At least the Danish and British are behaving themselves in Oresund, the English Channel, and Gibraltar.  

Meanwhile, as one can see online chatter among logistics experts discussing the pros and cons of the US reintroducing letters of marque, i.e., finders-keepers state-sanctioned piracy, one other way to square the West’s circle is being floated:

A US Senator wants illegal immigrants to be given the opportunity to join the military in return for citizenship. “Do you know what the recruiting numbers are at the Army, Navy, and the Air Force? They can’t reach their quotas each month. They can’t find enough people to join our military forces. And there are those who are undocumented who want the chance to serve and risk their lives for this country. Should we give them a chance? I think we should,” said Senator Durbin. How very late-stage Rome. Or Starship Troopers (“Service guarantees citizenship”). For those very reasons, among others, I strongly suspect that this kind of idea has real sea-legs – and not just in the US.

To bring this all back to the landlubbers who liked the JOLTS report, the last thing that Western economies need if a weaker US hegemon means logistics and goods prices rise again is lower rates that boost asset prices and consumer demand, especially when firms have shown they will pass on any upstream shocks.

But of course markets will focus on JOLTS, not real-world jolts. Or Aussie Q3 GDP undershooting at 0.2% q-o-q vs. 0.5% consensus –with 0.4ppts being contributed by inventories, so contraction without it– even as somehow GDP was still up 2.1% y-o-y vs. 1.9% expected.

Also worth noting is that Aussie GDP per capita fell 0.5% even as the local press is full of stories of how obscenely high property prices are (“Home buyers would need to earn up to $90,000 more than they did early last year to afford to buy a median-priced house as rising interest rates slash buyer budgets.”). Regardless, ‘let them eat The Block’ policy remains firmly in place, as does a net migration flow which comfortably exceeds net house building each year. Look up at Europe or the US to spot the potential political pattern building there: Black Sea, Red Sea, The Block, see?

After getting his ass handed to him in a historic ouster, former Rep. Kevin McCarthy (R-CA) – whose speakership was the shortest in more than 140 years – is quitting Congress.

In a Wednesday WSJ Op-Ed, McCarthy tooted his own horn over having “helped lead Republicans to a House majority—twice,” and having “passed legislation to secure the border, achieve energy independence, reduce crime, hold government accountable and establish a Parents’ Bill of Rights.” 

We kept our eyes on America’s long-term global challenges by restoring the Intelligence Committee to its original charter and establishing a bipartisan Select Committee on the Chinese Communist Party.

We reduced the deficit by more than $2 trillion, revamped work requirements for adults on the sidelines, cut red tape for critical domestic energy projects, and protected the full faith and credit of the U.S. We kept our government operating and our troops paid while wars broke out around the world. –WSJ

After congratulating himself, McCarthy then announced that he’s outta there…

“It is in this spirit that I have decided to depart the House at the end of this year to serve America in new ways,” adding (of course), I know my work is only getting started.“

McCarthy has vowed to “continue to recruit our country’s best and brightest to run for elected office,” and “helping entrepreneurs and risk-takers reach their full potential.”

So he’ll essentially be a lobbyist / life-business coach?

That’s it! Kevin McCarthy announcing he’s leaving Congress and headed back to Bakersfield. Most of the ex-Republican Speakers leave DC with their reputation ruined…some to jail, others into obscurity. Not a normal departure among them. The GOP majority dwindles even further. pic.twitter.com/S60P147PA6

— Russell Drew (@RussOnPolitics) December 6, 2023

In October, Politico reported that McCarthy would resign before the end of his term – which the former speaker denied. 

“No, I’m not resigning. I’m staying, so don’t worry,” McCarthy told reporters at the time. “We’re going to keep the majority, I’m going to help the people I got here and we’re going to expand it.”

McCarthy’s term was set to end in Jan. 2025.

Today in “more money than God” news, Exxon Mobil announced it was going to hike its share buybacks by 14% upon consummating its $60 billion acquisition of Pioneer Natural Resources Co.

Exxon plans to repurchase $20 billion of its shares next year, on a par with its main competitor, Chevron Corp., which also increased buybacks following its $53 billion acquisition of Hess Corp. in late October, Bloomberg reported on Wednesday.

Exxon said it intends to invest between $23 billion and $25 billion in capital projects in the upcoming year and that this investment aims to enhance its presence in North America’s most productive oilfields and explore new reserves in areas like Guyana. Additionally, Exxon is also boosting its investment in low-carbon initiatives, the report says. 

The company aims to reduce structural costs by $6 billion by 2027, adding to the $9 billion saved since 2019, the report says. It will also invest $20 billion in low-carbon initiatives, including lithium, carbon-capture, and hydrogen, by 2027. The acquisition of Pioneer significantly boosts Exxon’s Permian Basin output, as we have noted.

And the buybacks come at a time when ESG and “green” investing are seeing major pushback.

Recall, just 3 weeks ago we wrote about how CEO Darren Woods argued that attacking oil and gas would only slow the push to net zero. The head of the oil supermajor argued that turning big oil companies into “villains” would trap millions of people in the developing world in poverty, according to a Bloomberg report.

At the Asia Pacific Economic Cooperation CEO Summit in San Francisco in November, Woods said: “The solutions to climate change have been too focused on reducing supply. That’s a recipe, for human hardship and a poorer world.”

Instead he urged governments to “harness the industry’s capabilities for change”, Bloomberg reported. He suggested providing government funding for technologies that reduce emissions, such as carbon capture, until they become viable through market dynamics.

Meanwhile, in other “green investing” news, Jeff Ubben’s Inclusive Capital, which sought to make investments in sustainable companies, shut down. 

In a new Bloomberg report, Ubben spoke out about what he is calling the “echo chamber” of traditional climate summitry. After shuttering his sustainability fund, which he said was not “rewarded” by markets, Ubben has joined a chorus of voices speaking out about “green” energy advocates who, in the name of virtue, the climate and the environment, are creating more division than they solve. 

“It’s been this echo chamber of diplomats going to these conferences and putting out flowery language and goals, but it doesn’t have traction,” Ubben said, talking about climate conferences. 

And now we await the Biden administration and Liz Warren’s forthcoming freakout.

Authored by Nick Giambruno via InternationalMan.com,

Bitcoin confuses many people, including prominent investment professionals.

Recently, I debunked the top ten most pervasive misunderstandings.

Today, I’ll continue by debunking another five.

Misconception #11—Bitcoin Is Vulnerable to Nuclear War and Utility Outages

Even if the US and Russia engaged in an all-out nuclear war, destroying most of the Northern Hemisphere, Bitcoin wouldn’t miss a beat in the Southern Hemisphere.

To even have a chance to stop Bitcoin, every government in the world would have to successfully coordinate simultaneously to shut down the entire Internet everywhere and then keep it off.

Even in that improbable scenario, the Bitcoin network can be communicated over radio signals and mesh networks. At the same time, small portable solar panels can power the computers running the network if the regular grid is unavailable.

Further, a network of satellites is constantly beaming the Bitcoin network down to Earth.

In short, all aspects of Bitcoin are genuinely decentralized and robust.

Barring an inescapable, global return to the Stone Age, Bitcoin appears unstoppable.

Misconception #12—Bitcoin 2.0 or a “Better Bitcoin”

As a practical matter, anyone can try to make a “better Bitcoin” whenever they want.

All you have to do is take the open-source code—available to anyone—and make your desired changes.

But that doesn’t mean anyone will follow your lead or value your new cryptocurrency.

For example, I can easily make a new Bitcoin that adds some bells and whistles and tout it using the latest buzzword. Let’s call it Bitcoin 2.0.

But that doesn’t mean I can inherit the superior monetary properties of the original Bitcoin, which depends on its supply’s credibility, which depends on its extreme resistance to change, which I’ve just undermined by adding some bells and whistles and thus demonstrating that someone can change it.

That’s why the market is unlikely to assign any value to Bitcoin 2.0.

Here’s another way to think of it.

Imagine someone wanting to change the rules of chess so pawns could move backward. Let’s call it Chess 2.0.

Of course, anyone could do so anytime, but that doesn’t mean Chess 2.0 will gain traction.

Remember, anyone can make a cryptocurrency in minutes.

That’s the easy part.

Making one that nobody controls is the hard part.

Simply put, no other cryptocurrency comes even close to challenging Bitcoin’s immutability, decentralization, resistance to debasement, liquidity, economic incentives, network effects, and, most importantly, the credibility of its supply.

But suppose a new cryptocurrency came along that was a genuine competitor to Bitcoin.

To disrupt Bitcoin’s established dominance as a monetary network, it would have to be not just a little bit better, but orders of magnitude better.

According to renowned author Jeff Booth, a new competitor to an established network must be at least 10x better to convince enough people to leave the existing one and join the new network.

There have been dubious claims of a “better Bitcoin” for many years, usually from people who simply don’t understand Bitcoin or disreputable altcoin promoters.

I am not inclined to believe such claims until there is solid evidence that something could potentially have much better monetary properties than Bitcoin.

So far, nothing has come close.

Misconception #13—The SEC Will Go After Bitcoin

Given their statements, it’s clear that the Securities and Exchange Commission (SEC) views almost all cryptocurrencies as unregistered securities, making them vulnerable to enforcement actions.

That has led many to incorrectly believe that the SEC will go after Bitcoin.

The reality is that Bitcoin is the only cryptocurrency unambiguously NOT a security.

The US government has been clear that it views Bitcoin—and only Bitcoin—as a commodity under the purview of the Commodity Futures Trading Commission (CFTC) and the Commodity Exchange Act.

Bitcoin is a commodity because it is an asset without an issuer.

Similarly, gold, silver, copper, wheat, corn, and other commodities have producers, but they do not have issuers.

Every other cryptocurrency other than Bitcoin has an issuer. They also have identifiable founders, central foundations, marketing teams, and insiders who can exercise undue control.

On the other hand, Bitcoin has none of these things—just as copper or nickel has no marketing department or founder.

The SEC couldn’t go after Bitcoin even if it wanted to because there’s nobody to go after. There’s no Bitcoin headquarters. Bitcoin has no CEO, no marketing department, and no employees.

But presuming the SEC could go after Bitcoin, they won’t because even they admit Bitcoin is not a security and thus not under their purview.

Misconception #14—Breaking Bitcoin’s Cryptography

Bitcoin’s cryptography is not a risk today.

If Bitcoin’s cryptography were at risk of being broken, it would also be an existential problem for every bank, brokerage, central bank, email provider, and every aspect of modern digital life.

I would put this risk in the same category as an alien invasion—something theoretically possible but irrelevant to investment decisions today.

But let’s suppose a hypothetical problem of quantum computing—or some new technology—posing a threat to Bitcoin’s cryptography.

A hypothetical solution exists.

It would be possible to upgrade Bitcoin’s cryptography by gaining the consensus of the full nodes to make it resistant to quantum computing or whatever new technology is an existential threat to it.

Misconception #15—Bitcoin Is Too Volatile To Be Money

It’s essential first to clarify that while the Bitcoin price is volatile, the Bitcoin protocol is the most stable, predictable, and reliable thing I know of in finance.

Ever since Bitcoin’s inception in 2009, the 21 million total supply has not changed, the network has never stopped, miners have continued to create a new block every 10 minutes on average, and anyone has always been able to use Bitcoin to send value to anyone, anywhere, without needing a third party.

In short, despite everything that has happened since 2009, the Bitcoin network hasn’t missed a beat.

That said, monetization doesn’t happen overnight, and it’s inherently a volatile process for the Bitcoin price.

While gold is an established money, Bitcoin is an emerging one.

It took gold centuries to achieve monetization. Bitcoin has a good chance of undergoing monetization in a much shorter period—and it’s already well on its way.

Something doesn’t go from having no value to being significant global money without volatility in its price. For example, Bitcoin went from having no value in 2009 to over $67,000 in 2021 to around $41,600 as of writing.

It is not uncommon for Bitcoin to have significant corrections of 50% or more, which has happened eight times. Further, there have been three occasions where Bitcoin has declined 80% or more.

Here is a chart showing Bitcoin’s biggest corrections over the years to put its volatility into perspective.

If you zoom out and look at the Big Picture, the volatility of the Bitcoin price has mainly been to the upside over the long term.

It’s a series of higher highs and higher lows.

Stomaching Bitcoin’s volatility is the price we must pay to earn outsized gains as it undergoes the process of monetization.

It will be a wild ride—like a violent roller coaster—but I believe it will reward patient investors.

There are a couple of ways to help tame the volatility of Bitcoin’s price.

First, instead of buying your desired amount of Bitcoin in one large transaction, use dollar cost averaging (DCA) to spread it out over time.

For example, suppose you’d like to invest $10,000 into Bitcoin. Instead of buying $10,000 at once, make a purchase of around $192 each week for a year.

DCA significantly reduces the risk of buying too much at the top of a cycle and not buying at the bottom.

That’s how DCA can turn Bitcoin’s volatility in your favor.

Second, plan on holding for at least four years—through one halving cycle.

There has rarely been a period in which the Bitcoin price was lower than it was four years ago. But, of course, past performance does not indicate future results.

Third, whenever you see volatility in the Bitcoin price, ask yourself two things:

1) Does Bitcoin still have superior monetary properties (total resistance to debasement and extreme portability)?

2) Is Bitcoin still unstoppable?

If the answer to those two questions is “Yes,” I would not be worried.

As adoption grows and Bitcoin becomes more established as money, the volatility should smooth out—but probably at a much higher price.

That’s why you want to buy Bitcoin—and the best Bitcoin stocks—before the rest of the world figures out its superior monetary properties.

I’ve just released an urgent PDF report revealing three crucial Bitcoin techniques to ensure you avoid the most common—sometimes fatal—mistakes.

Check it out as soon as possible because it could soon be too late to take action. Click here to get it now.

With the Biden administration pushing a $106 billion aid package to primarily fund war in Ukraine and Israel, Tucker Carlson sat down with Rep. Thomas Massie (R-KY) on Tuesday, where they discussed the push by establishment lawmakers for more Ukraine funding despite it being a ‘war they cannot win.’

When asked why, Massie explained that the military-industrial complex thrives on the sale of “deadly munitions,” which enriches shareholders, “some of whom are congressmen.”

“But you gotta wonder like, why is the leadership of your party, the Republican party, in favor of this? Why the new speaker — seems like a nice guy but also like a child — why would his first act as speaker be to endorse this? I’m confused,” said Carlson.

To which Massie replied: “Well, I hope he doesn’t. But you know, Biden’s budget director, the head of the OMB sent a letter yesterday to Speaker Mike Johnson, imploring him to spend more money in Ukraine. And what they said is they want to revitalize our defense industrial base.”

“And they sent a list of states that would get money when we spend, you know, money on deadly munitions because they have to be manufactured in Alabama or Ohio or Texas,” Massie continued. “And so, you know, they’re saying the quiet part out loud that congressmen tend to vote for this stuff because a lot of this federal spending that goes to Ukraine is actually laundered back to the military-industrial complex. And in some ways, not very efficiently, but in some ways, it enriches people in their districts and the stockholders, some of whom are congressmen.”

The two also discussed US Under Secretary of State Victoria Nuland and her influence in Ukraine, with Carlson calling her “the single most consequential voice” in the Ukraine debate.

(Nuland’s husband, Robert Kagan, notably penned a ‘Trump Dictator‘ piece in the Washington Post last week)

Carlson notes that she was a “driving force behind the war in Iraq, which was of course a disaster and hurt the United States,” and now “she has far more influence on it than the entire United States Congress put together.”

“How do we allow unelected lunatics like ‘Toria Nuland who clearly hates the United States, and always has, to have this power over our lives and our childrens’ future?“

To which Massie replied: “I don’t know I feel like some of these deep State bureaucrats they’re like the kids who had no friends in high school and somebody did something bad to them long ago. And now they’ve got some power, and they realize how to grab it, and they’re gonna have retribution on everybody else.”

As the Daily Caller notes, Carlson then asked if the people advocating for more war have ever apologized for “the killing of an entire” generation of Ukrainians who are fighting a “war they cannot win.”

“That’s all so grotesque, but it’s also straightforward. You know, people are getting rich, so let’s do it. Okay — that’s an argument. It’s an immoral argument but it is one. But that’s not the argument they’re making in public. They’re saying we have a moral obligation.”

“You’re a bad person, you just heard the national security advisor say it, you’re a bad person if you’re against this. But no one ever mentions that we have abetted the killing of an entire generation of Ukrainian men that will not be replaced. To fight a war that they cannot win.” -Tucker Carlson

Carlson also pointed out that the Biden administration “prevented a peace deal and we extended the war, and we killed all these people,” adding “And so all the ones running around with their little Ukraine flag pins, they’re implicated in that. Has anyone apologized?”

To which Massie replied, “No, to support this money you have to be economically illiterate and morally deficient.”

Watch:

Ep. 45 How could Washington possibly send tens of billions more to sleazy oligarchs in Ukraine now that the whole enterprise has been revealed as a fruitless, corrupt and incredibly destructive disaster? Because that’s what they always do. pic.twitter.com/Cn6SMHcqcr

— Tucker Carlson (@TuckerCarlson) December 5, 2023