The Election Has Been Hacked: The Dismal Reality Of Having No Real Electoral Choices

Submitted by John Whitehead via The Rutherford Institute,

“Free election of masters does not abolish the masters or the slaves.” ? Herbert Marcuse

The FBI is worried: foreign hackers have broken into two state election databases.

The Department of Homeland Security is worried: the nation’s voting system needs greater protection against cyberattacks.

I, on the other hand, am not overly worried: after all, the voting booths have already been hacked by a political elite comprised of Republicans and Democrats who are determined to retain power at all costs.

The outcome is a foregone conclusion: the police state will win and “we the people” will lose.

The damage has already been done.

The DHS, which has offered to help “secure” the nation’s elections, has already helped to lock down the nation.

Remember, the DHS is the agency that ushered in the domestic use of surveillance drones, expanded the reach of fusion centers, stockpiled an alarming amount of ammunition, urged Americans to become snitches through a “see something, say something” campaign, oversaw the fumbling antics of TSA agents everywhere, militarized the nation’s police, spied on activists and veterans, distributed license plate readers and cell phone trackers to law enforcement agencies, contracted to build detention camps, carried out military drills and lockdowns in American cities, conducted virtual strip searches of airline passengers, established Constitution-free border zones, funded city-wide surveillance cameras, and generally turned our republic into a police state.

So, no, I’m not falling for the government’s scare tactics about Russian hackers.

I’m not losing a night’s sleep over the thought that this election might by any more rigged than it already is.

And I’m not holding my breath in the hopes that the winner of this year’s particular popularity contest will save us from government surveillance, weaponized drones, militarized police, endless wars, SWAT team raids, red light cameras, asset forfeiture schemes, overcriminalization, profit-driven private prisons, graft and corruption, or any of the other evils that masquerade as official government business these days.

What I’ve come to realize is that Americans want to engage in the reassurance ritual of voting.

They want to believe that politics matter.

They want to be persuaded that there’s a difference between the Republicans and Democrats (there’s not).

They will swear that Barack Obama has been an improvement on George W. Bush (he has not).

They are convinced that Hillary Clinton’s values are different from Donald Trump’s (with both of them, money talks).

Most of all, they want to buy into the fantasy that when we elect a president, we’re getting someone who truly represents “we the people” rather than the corporate state (in fact, in the oligarchy that is the American police state, an elite group of wealthy donors is calling the shots).

The sad truth is that it doesn’t matter who wins the White House, because they all work for the same boss: Corporate America. Understanding this, many corporations hedge their bets on who will win the White House by splitting their donations between Democratic and Republican candidates.

Politics is a game, a joke, a hustle, a con, a distraction, a spectacle, a sport, and for many devout Americans, a religion. It is a political illusion aimed at persuading the citizenry that we are free, that our vote counts, and that we actually have some control over the government when in fact, we are prisoners of a police state.

In other words, it’s a sophisticated ruse aimed at keeping us divided and fighting over two parties whose priorities are exactly the same so that we don’t join forces and do what the Declaration of Independence suggests, which is to throw the whole lot out and start over.

It’s no secret that both parties support endless war, engage in out-of-control spending, ignore the citizenry’s basic rights, have no respect for the rule of law, are bought and paid for by Big Business, care most about their own power, and have a long record of expanding government and shrinking liberty. Most of all, both parties enjoy an intimate, incestuous history with each other and with the moneyed elite that rule this country.

Despite the jabs the candidates volley at each other for the benefit of the cameras, they’re a relatively chummy bunch away from the spotlight. Moreover, despite Congress’ so-called political gridlock, our elected officials seem to have no trouble finding common ground when it’s time to collectively kowtow to the megacorporations, lobbyists, defense contractors and other special interest groups to whom they have pledged their true allegiance.

So don’t be fooled by the smear campaigns and name-calling or drawn into their politics of hate. They’re just useful tactics that have been proven to engage voters and increase voter turnout while keeping the citizenry at each other’s throats.

We’re in trouble, folks.

We are living in a fantasy world carefully crafted to resemble a representative democracy.

It used to be that the cogs, wheels and gear shifts in our government machinery worked to keep our republic running smoothly. However, without our fully realizing it, the mechanism has changed. Its purpose is no longer to keep our republic running smoothly. To the contrary, this particular contraption’s purpose is to keep the corporate police state in power. Its various parts are already a corrupt part of the whole.

Just consider how insidious, incestuous and beholden to the corporate elite the various “parts” of the mechanism have become.

Congress. Perhaps the most notorious offenders and most obvious culprits in the creation of the corporate-state, Congress has proven itself to be both inept and avaricious, oblivious champions of an authoritarian system that is systematically dismantling their constituents’ fundamental rights. Long before they’re elected, Congressmen are trained to dance to the tune of their wealthy benefactors, so much so that they spend two-thirds of their time in office raising money. As Reuters reports, “For many lawmakers, the daily routine in Washington involves fundraising as much as legislating. The culture of nonstop political campaigning shapes the rhythms of daily life in Congress, as well as the landscape around the Capitol. It also means that lawmakers often spend more time listening to the concerns of the wealthy than anyone else.”

 

The President. What Americans want in a president and what they need are two very different things. The making of a popular president is an exercise in branding, marketing and creating alternate realities for the consumer—a.k.a., the citizenry—that allows them to buy into a fantasy about life in America that is utterly divorced from our increasingly grim reality. Take President Obama, for instance, who now enjoys greater popularity than any previous president, including the beloved Ronald Reagan. This is a president who got elected by campaigning against war, torture, surveillance only to make them hallmarks of his presidency, and yet somehow these “indiscretions” are overlooked and forgiven as long as he presents a jocular, hip façade: slow-jamming the news with Jimmy Fallon, reading mean tweets with Jimmy Kimmel, singing, dancing and being cool. In other words, to be a successful president, it doesn’t matter whether you keep your campaign promises, sell access to the Lincoln Bedroom, or march in lockstep with the Corporate State as long as you keep the feel-good vibes flowing.

 

The Supreme Court. The U.S. Supreme Court—once the last refuge of justice, the one governmental body really capable of rolling back the slowly emerging tyranny enveloping America—has instead become the champion of the American police state, absolving government and corporate officials of their crimes while relentlessly punishing the average American for exercising his or her rights. Like the rest of the government, the Court has routinely prioritized profit, security, and convenience over the basic rights of the citizenry. Indeed, law professor Erwin Chemerinsky makes a compelling case that the Supreme Court, whose “justices have overwhelmingly come from positions of privilege,” almost unerringly throughout its history sides with the wealthy, the privileged, and the powerful.

 

The Media. Of course, this triumvirate of total control would be completely ineffective without a propaganda machine provided by the world’s largest corporations. Besides shoveling drivel down our throats at every possible moment, the so-called news agencies which are supposed to act as bulwarks against government propaganda have instead become the mouthpieces of the state. The pundits which pollute our airwaves are at best court jesters and at worst propagandists for the false reality created by the American government. When you have internet and media giants such as Google, NBC Universal, News Corporation, Turner Broadcasting, Thomson Reuters, Comcast, Time Warner, Viacom, Public Radio International and The Washington Post Company donating to the Clinton Foundation, you no longer have an independent media—what we used to refer to as the “fourth estate”—that can be trusted to hold the government accountable.

 

The American People. “We the people” now belong to a permanent underclass in America. It doesn’t matter what you call us—chattel, slaves, worker bees, drones, it’s all the same—what matters is that we are expected to march in lockstep with and submit to the will of the state in all matters, public and private. Through our complicity in matters large and small, we have allowed an out-of-control corporate-state apparatus to take over every element of American society.

We’re playing against a stacked deck.

The game is rigged, and “we the people” keep getting dealt the same losing hand. The people dealing the cards—the politicians, the corporations, the judges, the prosecutors, the police, the bureaucrats, the military, the media, etc.—have only one prevailing concern, and that is to maintain their power and control over the citizenry, while milking us of our money and possessions.

It really doesn’t matter what you call them—Republicans, Democrats, the 1%, the elite, the controllers, the masterminds, the shadow government, the police state, the surveillance state, the military industrial complex—so long as you understand that while they are dealing the cards, the deck will always be stacked in their favor.

As I make clear in my book, Battlefield America: The War on the American People, our failure to remain informed about what is taking place in our government, to know and exercise our rights, to vocally protest, to demand accountability on the part of our government representatives, and at a minimum to care about the plight of our fellow Americans has been our downfall.

Now we find ourselves once again caught up in the spectacle of another presidential election, and once again the majority of Americans are acting as if this election will make a difference and bring about change. As if the new boss will be different from the old boss.

When in doubt, just remember what the astute commentator George Carlin had to say about the matter:

The politicians are put there to give you the idea that you have freedom of choice. You don’t. You have no choice. You have owners. They own you. They own everything. They own all the important land. They own and control the corporations. They’ve long since bought and paid for the Senate, the Congress, the state houses, the city halls. They got the judges in their back pockets and they own all the big media companies, so they control just about all of the news and information you get to hear. They got you by the balls. They spend billions of dollars every year lobbying. Lobbying to get what they want. Well, we know what they want. They want more for themselves and less for everybody else, but I’ll tell you what they don’t want. They don’t want a population of citizens capable of critical thinking. They don’t want well-informed, well-educated people capable of critical thinking. They’re not interested in that. That doesn’t help them. That’s against their interests.

 

They want obedient workers. Obedient workers, people who are just smart enough to run the machines and do the paperwork…. It’s a big club and you ain't in it. You and I are not in the big club. …The table is tilted, folks. The game is rigged and nobody seems to notice…. Nobody seems to care. That’s what the owners count on…. It’s called the American Dream, 'cause you have to be asleep to believe it.

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Do Newly Built Skyscrapers Signal The Top Of The Stock Market?

Have you heard of the Burj Khalifa in Dubai?

It’s the tallest skyscraper in the world at 828m (2,717 ft), and it was completed in 2009. The price tag was a whopping $1.5 billion, making it one of the most expensive buildings of all time.

As Visual Capitalist's Jeff Desjardin explains, for these bold projects to get the go ahead, global financial conditions have to be just right. Record-breaking skyscrapers can take multiple years to build, and things can change drastically from start to finish.

In this case, construction of the Burj Khalifa started in 2004. By the time it was completed, however, the financial markets were in ruins. Lehman had collapsed, and rescue efforts such as TARP and QE were in full force to try and stop the bleeding. Between October 2007 and March 2009, the Dow Jones Industrial Average lost 55% of value.

The crisis didn’t only bankrupt financial markets – it also took its toll on competing projects that aimed to unseat the Burj Khalifa as the world’s height record-holder. For example, One Dubai Tower A was supposed to be a whopping 1,008m (3,307 ft) tall – but it was shelved in March 2009 once it was clear that global financial conditions would not be improving any time soon.

DO NEWLY BUILT SKYSCRAPERS SIGNAL THE TOP OF THE STOCK MARKET?

Could record-setting skyscrapers signal economic over-expansion and a misallocation of capital?

EWN Interactive, a subscription service focused on technical analysis, thinks so. The following infographic follows the “Skyscraper Curse” through six different market tops and subsequent crashes over the past century.

It is gigantic in size, so please click here or the below image to access the legible version:

Courtesy of: Visual Capitalist

EWM Interactive sums up the infographic with these words:

In the market, extreme optimism results in price bubbles. One of the real-life manifestations of extremely positive social mood is the construction of enormous buildings. Market tops and skyscrapers often seem to emerge simultaneously, because both phenomena are the result of the illusion of infinite prosperity.

 

But extreme psychological conditions do not last very long. That is the reason why record-breaking buildings, whose construction starts during a market bubble, are often completed after the bubble’s collapse.

That said, there are counter-examples that show the “skyscraper theory” is not perfect.

The recession after World War I, the recession of 1937, and the recession in the early 1980s were not correlated with any record-breaking skyscraper projects. An empirical test in 2015 that looked at the theory found that record-setting skyscrapers did not correspond directly with the business cycle.

Let’s hope that they are right, since the Jeddah Tower – a 1,008m (3,307 ft) monster in Saudi Arabia – is expected to unseat the Burj Khalifa as the world’s tallest building by the year 2019.

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An Academic Tries To Explain The Yield Curve, Says “Gloom” Is Irrational

Submitted by Jeffrey Snider via Alhambra Investment Partners,

One of the articles referenced in Janet Yellen’s Jackson Hole speech last week was a piece written for the Peterson Institute for International Economics by Senior Fellow Olivier Blanchard. Dr. Blanchard has, as noted earlier today, all the “right” credentials, which is why his conjecture gets included into the speeches of Federal Reserve Chairmen. Having taught at both Harvard and MIT, becoming chair of the economics department at MIT for five years, landed Blanchard the role of research director at the IMF. Private experience is obviously missing from his resume.

Dr. Blanchard’s article was an attempt to “explain” the yield curve in the United States. Economists like Blanchard are so indoctrinated in central bank and QE mythology that what is exceedingly simple is dismissed as impossible. Persistently low interest rates are proof of “tight” money in the real economy; but that just can’t be with QE and all the amassed central bank intellectual capacity in that area. Instead, they must make the most absurd arguments to try to square a circle of their own often circular logic or paradoxes (central bankers know everything about money but now central bankers are stumped, therefore it can’t be money?).

You can read his whole argument and decide for yourself, of course, as I will only highlight but one of three reasons he specifies as really a window into this academic divide. One of the primary correlations in this view, which isn’t necessarily consistent with actual data, is that low rates are a function of low productivity and expectations for continuing low productivity. Blanchard tries to argue that while the crash in 2008 might explain the lack of productivity in the immediate aftermath, it doesn’t do much to render understanding about why it appears to have lingered.

To have become permanent, he contends, is the partial responsibility of “gloom”; I’m not making this up. He actually writes, “I believe that this bad news about the future largely explains the relative weakness of demand today.” And that sets up what is a very good example in how economists think not about the economy in which we all live but the “economy” where models prevail.

It is useful to play with some numbers here. Suppose that you learn that your income over the next 30 years will rise at 4 percent rather than at 5 percent as you expected earlier (because income typically increases with age, individual income typically increases faster than aggregate income). This represents a roughly 20 percent decrease in the present value of your future earnings, and is likely to lead you to consume say 10 percent less. If this realization comes to you over a period of five years, you will decrease consumption by 2 percent each year relative to your income. Returning to aggregate implications, as consumers adjust their expectations the way you do, consumption growth will be weak. The same argument applies to investment. The lower the expected growth rate of profit, the lower the desired level of capital, and this in turn will lead to a period of low investment until the new lower level of capital is reached.

Nobody but an economist would think like this; and while this example is meant as a means to translate a very real phenomenon into the math-speak of regressions that academics use, he is seemingly unaware of the translation and thus the potential for error in even attempting it. In the world of high-credential universities, actual phenomenon must be converted into linear functions. That means that “gloom” has to be accounted for across several variables that can be each modeled in such a way that it makes sense to the mathematical versions of reality (and thus to economists who think I equations first).

Any non-indoctrinated non-statistician can immediately recognize the problems with thus thinking math-first. If you need to translate the real world into nonsensical linear mathematics before you can attempt to understand said world, then the bond market will really be a mystery to you.

In the world of the real, businesses don’t invest because their revenues don’t expand; end of story. Revenues aren’t expanding because businesses won’t hire no matter what the unemployment rate says; end of story. This was all, of course, one of the factors that quantitative easing was meant specifically to address – derived from the statistically modeled understanding of expectations rather than the actual conditions of them. The “wealth effect” was supposed to break the economy out of any gloom, as rising asset prices, especially the repeated and emphasized “record highs” of stocks, bonds, or anything in between, would surely negate any immediate “gloom” as it rolled over into expectations of an impeccable future.

Economic theory just does not allow for the possibility that asset prices, particularly stocks, are anything but completely efficient. But that is increasingly what we find, even in the math of orthodox construction. As noted earlier, the CBO has been keeping account of the withering failure of monetary policy in a manner that economists don’t want anyone to explore. Rewriting economic “potential” within these very mathematical functions serves to undermine the core of orthodox economics itself, especially since the CBO is not just proving the lack of recovery but rewriting most of the 21st century economy with it.

It isn’t just the CBO, however, who has been pressed by regression into an impossible reconciliation. The Fed’s own models show almost exactly the same condition as the CBO with regard to shrinking “potential.” In the latest FOMC projections, released coincident to the June FOMC meeting, the models reduced the upper bound of the central tendency for long run real GDP to 2% from 2.1%; the lower bound of 1.8% remained the same.

ABOOK August 2016 Fed Potential Long Run

In late 2011, the central tendency for long run growth was believed to be between 2.5% on the low side and as much as 2.8% at the upper bound. While that may not sound like much of a difference, it is huge. The long run growth rate takes into account full business cycles, meaning that the average growth must include both recessions and their recoveries. Peak to Peak (meaning the current quarter of GDP), total growth has been equivalent to just 1.2%, a stunningly (economists are literally stunned by this) bad run that now extends almost a decade.

ABOOK August 2016 Fed Potential Peak to

That is why the Fed has to mark down long run potential because not doing so would mean that at some point in the near future the economy is going to have to explode higher to bring up the average of this “cycle.” And the longer the economy persists in this mysterious “low growth trap” the greater that eventual “liftoff” will have to be get back to the normal long run tendency. Instead, economists have reduced economic potential because nobody believes any such thing will occur, note even them. Thus, they now have to come up with reasons that preserve their worldview while also accounting for the world – an increasingly impossible task. Even now the much-reduced long run tendency remains quite far out of reach, dampening enthusiasm all over again academically for both the timing and intensity of that anticipated “liftoff.”

ABOOK August 2016 Fed Potential Current

In other words, the continued and “unexpected” lack of recovery after nine years of failure in monetary policy is forcing the math to recognize what is obvious in non-mathematical terms. No regressions are at all necessary to conclude that the bond market has, in fact, made sense this whole time and that it is economists who have no idea what is going on or why. By the mathematics of 2011, real GDP “should be” $19.3 trillion in Q2 2016; it was instead just $16.6 trillion after the third straight quarter near 1%.

To the academics, “gloom” is irrational and thus requires translation into math to become somehow backwards explanatory for why the economy that “should be” isn’t. In the actual economy, “gloom” is properly called reality. In this world, people know all-too-well that jobs disappeared during and after the Great Recession and never came back. No amount of asset price manipulation can possibly make up that difference. Economists try to convince everyone but really themselves that it didn’t matter when it is this very math that proves yet again it did; in fact, the true state of labor beyond the unemployment rate and Establishment Survey is all that matters.  

ABOOK August 2016 Payrolls Final Sales LF Part

Further, the people recognize that this wasn’t just a cyclical process that started in late 2007; it was, in fact, an extension of the impoverishment that has been eroding the true economic foundation for more than just the 21st century where it has become most apparent.

ABOOK August 2016 Potential CBO Jan 2004 Aug 2016

The math of potential and even gloom is just the frustratingly late catch-up forcing economists to come to terms with the fact they have been all wrong about all of this all along.

 

ABOOK August 2016 GDP Corp CF Baseline Nom GDP

You need no PhD to so easily understand that you just cannot substitute jobs with debt; doing so is economic suicide.

 

ABOOK August 2016 Durable Goods Cap Goods SA

At some point over the long run you must come to terms with that discrepancy. This math is finally welcoming economists to that long run, a place their patron saint, Keynes, said didn’t exist. It really does as the math has been recalculated far more toward the “impossible”; even the “tight” money indicated by the bond market is recognition of these plain facts.

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China Bans Low Income ‘Terrorists’ From Guangzhou; Those Willing To Buy Fancy Hotels Still Welcome

Apparently China is taking a play from the Trump playbook by banning hotels from accepting guests from five, predominantly Muslim countries, including Pakistan, Syria, Iraq, Turkey and Afghanistan.  The ban was allegedly implemented by local police in the southern city of Guangzhou and coincided with a development forum being held there.  The ban is expected to remain in place until after the G20 Summit to be held in Hangzhou (620 miles away) in early September. 

That said, apparently the cops are only worried about "low income" terrorists as the ban has only been implemented at Guangzhou's low-end hotels charging an average of around $25 per night.  Per the Independent:

Budget hotels in the southern city of Guangzhou said they had received notices from police beginning in March, ordering them to turn away guests from Pakistan, Syria, Iraq, Turkey, and Afghanistan.

 

The rule coincided with a development forum held in Guangzhou on 25 and 26 August, and will extend until after the G20 summit set to take place in Hangzhou, 620 miles away from Guangzhou, on 4 and 5 September.

 

A hotel worker told the South China Morning Post that local police had told staff they must turn away guests from the five countries until September 10, but had not explained why.

 

“I'm not clear of the reason. We just can't take them,” a worker in another hotel told Reuters.

 

The ban has not been extended to upmarket hotels, or to budget hotels that belong to international or domestic chains. Three hotels identified by Reuters were all independent and charged around $23 a night.

Guangzhou

 

Foreign ministry spokesman, Lu Kang, denied that Muslims were banned from low-end hotels in Guangzhou.  Instead, Kang insisted that China's official policy is to "encourage people from China and other countries to have friendly exchanges."

“I've never heard that there is this policy being followed in China,” Lu told a daily news briefing.

 

“Moreover, as far as China is concerned, our policy in principle is that we encourage people from China and other countries to have friendly exchanges and are willing to provide various convenient policies in this regard.

Frankly, we've never heard of a diplomat making such gracious and welcoming comments to foreign visitors…an "official policy" supporting "friendly exchanges" is pretty serious. 

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The Darwin Awards For Nations

Submitted by Jeff Thomas via InterntionalMan.com,

The fellow in the photo above is taking a bit of a risk. If all does not go well for him, he may become a candidate for the annual Darwin Awards – an award given to those who have inadvertently taken themselves out of the gene pool.

Of course, Darwin’s premise was that, through natural selection, those who are born weaker, deformed, or otherwise less capable of survival are less likely to live long enough to procreate, thus assuring an ever-stronger, more adaptable species.

This same premise can be applied to banks that follow unsound business practices. They’re more likely to go under as a result. This invariably causes suffering for those individuals who chose to do business with the irresponsible bank, but it can also be argued that those who believe empty promises by an irresponsible bank need to learn the lesson of economic prudence. Winnowing out those banks and their clients results in the responsible banks being stronger.

Of course, when we declare any bank to be “too big to fail,” we assure that the bank in question (and other banks) will behave irresponsibly, as they are assured that they will be bailed out by the taxpayer.

And the premise applies also to governments. Any government that behaves irresponsibly (promising entitlements to the populace, waging war and increasing the size of the government itself, without any plan as to how it will all be paid for) can be expected to exit the gene pool of nations.

The problem is that, unlike the personal Darwin Awards, in which the imbecile in question is likely to meet his end soon after his error, nations tend to suffer for an extended period from poor economic and militaristic steps taken by governments before they collapse. Worse, they take their people down with them when they go.

As an example, in the twentieth century, the UK poured money into two world wars, ultimately impoverishing the country and ending their dominance as the world’s foremost empire. The UK still limps along as a nation, but is greatly diminished from what it was in the nineteenth century.

Across the pond in the U.S., the Federal Reserve was created in 1913, in part, to rob the American people, through regular inflation over an extended period of time. It worked well. Not understanding what inflation means, the American people have lost over 97% of the value of their dollar over the last one hundred years. At around the same time, the U.S. instituted income tax. It started out small (as income taxes always do), then, like Topsy, it just grew. As a result, people who receive lower wages in a no-tax jurisdiction are likely to have a far better standard of living than those in the U.S. (and other countries that have income tax).

And that’s not to say that the UK and U.S. are unique. Quite the opposite. In fact, it’s the norm for any country’s politicians to make promises of largesse to their people just prior to an election. And with each election, the promises need to become larger, to inspire the people to vote for the promisers.

Along the way, politicians use warfare as a tool to both distract the voters from political misdeeds and to convince them to give up their rights in times of war. Today, the concept of perpetual war allows a more frequent removal of rights.

Each of the above works to the advantage of the political class (regardless of whether they claim to be Tory or Labour, Democrat or Republican.) It does however mean that, at some point, economic, social and political collapse will take place when the abnormalities become so excessive that the system can no longer bear their weight.

We’re passing through an unprecedented period in history, in which quite a few of those nations that were once the most prosperous; the most free; the most forward-thinking, are all headed downward at the same time, and for the same reasons. Hence, we shall in the near future be observing the removal from the gene pool of nations many of the most powerful (and formerly most desirable) countries.

It should be stressed that this does not necessarily mean that these countries will come to an end. Their geography will remain, but they may be crisscrossed with new boundary lines, should any of them be cut up. For others, it will mean retaining the name of the country, but they will be “under new management.”

However, existence within these geographical locations will be changed dramatically. Once a country collapses economically/socially/politically, it’s likely to take a long time to recover. That means that those who are getting by in those jurisdictions (or may even be doing well) may find their well-being curtailed – possibly dramatically.

Japan is overdue for a Darwin Award, as are the countries of the EU. They represent a buffer for countries such as the U.S. and Canada. Once the first dominoes topple, the others will soon fall.

We’re taught to believe that we’re married to the country of our birth and would be “deserters” if we were to leave. But, if our country of birth doesn’t represent how we wish to live, we’re living in the wrong neighbourhood. Most people understand that, if they don’t like their neighbourhood, they’d be stupid not to leave for a better neighbourhood. But what if that “neighbourhood” is the country of your birth? Is the concept not the same?

If someone we know foolishly tempts fate by putting his head in a crocodile’s mouth, very few of us would follow his lead. Yet, people in their millions have, throughout history, watched their countries reach the point of self-destruction and have simply gone along – accepting their fate as the failing country carries them over the cliff.

Darwin was correct. Those who represent the future of the species are those who are the strongest and choose their own survival in times of crisis.

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With Japan’s Unemployment Rate At 21 Year Lows, “A Hidden Problem” Is Revealed

On the surface, Japan’s economy should be soaring: just last night, Japan announced that its unemployment rate was 3% in July, better than expected, and the lowest rate since 1995. The number of employed women (28.3 million) and women’s labor participation rate (66.3 percent) rose to a record high in July. According to conventional economic theory, with Japan’s unemployment rate below its long-run normal, the slack-free economy should have generous inflation, rising household spending, and vibrant growth. It has none of that, because aside from its unemployment rate, everything else in Japan’s economy is a sheer disaster.

As Bloomberg observes, Japan’s economy is struggling to gain momentum, evidenced by slower expansion in gross domestic product than economists forecast in the second quarter. Even as the job market remains tight, the yen’s gains since the start of 2016 are hurting exports, making businesses more reluctant to invest. Meanwhile, consumers are wary of spending because wages are barely rising. This is putting pressure on the Bank of Japan to consider more monetary stimulus at its September meeting. Worse, household spending fell 0.5% in July from a year earlier, its fifth straight month, while retail sales fell 0.2% from a year earlier.

“Overall, consumer spending remains weak as wage growth is dull,” Yoshiki Shinke, an economist at Dai-ichi Life Research Institute in Tokyo, said before the reports were released. “Households have been keeping their purse strings tight since the sales-tax increase in 2014.”

And yet, the odd unemployment rate remains a peculiar outlier; in fact some would suggest that Japan is the canary in the coalmine to what the US is going through: a plunging “official” unemployment rate even as the economy slows down year after year.

As it turns out, when one reads between the lines, Japan’s 20 year low unemployment rate is merely the latest statistical farce, something we first pointed out last May in “How Japan’s Unemployment Rate Dropped Even As 280,000 People Lost Their Jobs.” What is really going on is that just like the US, where a major demographic shift is taking place, in Japan a growing number of men in their prime working years are joining the ranks of Japan’s long-term unemployed – unable or unwilling to adapt to a shifting labor market as opportunities continue to shrink in areas like manufacturing.

Ignoring Japan’s “famously low” jobless rate of 3%, hidden in the data is the fact that long-term unemployment among men ages 25-44 has jumped five-fold since the early 1990s after Japan’s economic bubble burst. There were 14.7 million male workers in the 25-44 age group in June, the lowest level in 48 years, even amid an overall increase in the workforce, according to the statistics bureau.

 

For every male loser, there is a female winner, because the surging prime, male unemployment rate contrasts with increasing employment rates for Japanese women. Yet while women are showing more capacity to adapt, they are not necessarily winners either, as they are more likely than men to hold part-time jobs with relatively low pay and fewer benefits than for full-time, regular positions.

Again, this is something we first showed well over a year ago – it appears to have only gained prominence recently, as economists finally do what they are supposed to: look beneath the surface.

 

According to Bloomberg, though Japan’s jobless rate is the lowest since 1995, the trend of rising unemployment among men in their key working years is a disaster for Abe, who is trying to resolve a stubborn labor shortage. Well, not a labor shortage per se as that would mean at least some real wage inflation, something Japan has not had in years, but a substantially fractured job market.

Still, over a year after we first explained what is truly going on, some economists finally admit is a problem. A “hidden problem.”

This is a hidden problem in Japan’s economy,” said Akane Yamaguchi, an economist at Daiwa Institute of Research, who published a report on the issue in April. “Abe’s government has to fix it as this is the generation supposed to be in the prime of their working life.

Behind this is a further decline in the manufacturing base – the number of manufacturing jobs dropped to 10.3 million in June from 11.7 million a decade ago while the medical, health care and welfare sector added 2.7 million jobs, according to the statistics bureau. Employment in the service sector has risen to 74 percent as of 2014, according to the latest report by the Cabinet Office in December.

It is almost as if Japan is a perfect leading indicator of what lies in the US future. Incidentally, that scenario would be a tragedy for America.

“There aren’t really any training programs offered for them so once they missed the opportunity, it gets very hard for them to find a job,” Yamaguchi said. “This is a vicious cycle.” From Bloomberg:

Bank of Japan researchers wrote about the trend in a report in March, saying unemployment of more than a year is “biased heavily” toward men ages 25 to 44. Analysts found that the number of men without jobs in this age range climbed to 310,000 in 2014, about five times more than in the 1990s. Potential reasons include men’s preference to find work in their same industry and a shift of jobs from manufacturing, the BOJ report showed.

It is, indeed a vicious circle, and one limited not only to the labor market: rising unemployment among these men could exacerbate Japan’s demographic challenges – a rapidly aging population and a stubbornly low birth rate – that are weighing on economic growth. Only 39% of men in their 20s want to get married, a clear contrast with 67 percent three years ago, according to a survey by Meiji Yasuda Life Insurance released in June.

The most significant reason men gave in the survey for staying single? They don’t have enough income to support a family.

Now if only they had BTFD in the Nikkei when Abe launched his idiotic strategy of destroying the Yen and wiping out the middle class just to push equities higher.

In retrospect, perhaps to at least delay Japan’s painful demographic death, the BOJ should consider paradropping money and giving every household free cash. If nothing else it may at least spur a temporary spike in births as the local residents encounter a brief glimmer of hope and optimism; without it Japan is literally doomed.

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Food Deflation Driving “Least Profitable Year In 20 Years” As Farmers And Grocers Get Crushed

Sinking food prices, while good for the consumer, is devastating for almost everyone else in the supply chain from the farmer all the way to the grocers.  Farmers suffer as their key input cost, labor, is actually increasing in many states from the rash of minimum wage hikes around the country while fuel seems to move wildly with any number of daily rumors about production freezes in the middle east.  Meanwhile, grocers suffer as already thin margins get compressed even further as existing inventories get marked down. 

Food prices have come under extreme pressure in 2016 due primarily to lower Chinese consumption resulting from a weak Chinese economy and a strong U.S. dollar.  This slack in demand has resulted in massive supply gluts for several commodities as producers failed to adjust supply quickly enough to meet new levels of demand.  In fact, the USDA recently provided a $20mm "bailout" to cheese producers and reports have surfaced that milk producers have been dumping excess milk on fields. 

With the base inputs of corn, wheat and soybeans all tanking, food deflation has been pervasive with almost every commodity down substantially YoY. 

Proteins, which represent nearly 20% of the typical consumer's shopping basket, are trending flat to down 8% so far in 2016.

Food Inflation - Proteins

 

Dairy and grains are down mid-single digits YoY while egg prices have crashed as suppliers added tons of excess egg-laying capacity in response to last year's price spike related to the avian flu outbreak in the Midwest.

Food Inflation

 

Fresh fruit and vegetable prices have held up better presumably because consumption is less dependent on the export market.

Food Inflation

 

Meanwhile, alcohol prices continue to be the most stable of pretty much any item in the typical shopper's basket.

Food Inflation

 

Farmers are among the hardest hit when food prices decline.  In fact, we recently wrote about how sinking ag commodity prices in the Midwest were resulting in substantial declines in ag land prices and farmer incomes which then translate into an increase in farmer credit defaults (see "Farmland Bubble Bursts As Ag Credit Conditions Crumble").  Within that post we noted that farmland prices in Chicago's 7th District (IL, IN, IA, MI, WI) declined in 2014 and 2015 after only dropping in 4 other years since 1965.

7th District

 

As the Wall Street Journal pointed out, farmers have been forced to dump "millions of pounds of excess milk on to fields" while the USDA provided a $20mm "bailout" to cheese producers. 

The glut is so severe in some places that dairy farmers have been dumping millions of pounds of excess milk onto fields. The U.S. Department of Agriculture just bought $20 million worth of cheese in response to hard-hit dairy farmers’ requests. The cheese was given to food banks and others through USDA nutrition-assistance programs.

 

Ben Moore, a sixth-generation farmer who grows corn and soybeans on some 5,000 acres in Indiana and Ohio, said 2016 is shaping up to be his least profitable year in 20 years. Facing weak crop prices, he is making do with his current tractors and combines rather than upgrading his equipment, and is pushing for lower prices on pesticides, seeds and fertilizer.

 

On Monday, corn futures, which peaked in 2012 at more than $8 a bushel, closed at $3.11 ¾ a bushel, a seven-year low, on the Chicago Board of Trade.

 

“We cannot withstand $4 a bushel corn,” Mr. Moore said.

 

Farmers who had built a nest egg after a robust period earlier this decade now have exhausted those reserves, said Karl Setzer, a market analyst for MaxYield Cooperative, a West Bend, Iowa, grain marketer. “The guys that are heavily leveraged and those who don’t have a plan of action will suffer for a while.”

But farmers aren't the only ones to suffer during a deflationary food environment.  Grocers also suffer as tiny margins get compressed even further as existing inventories get marked down to prevailing market prices.

Falling costs are taking a toll on many food retailers. Grocery stores already have thin profit margins and deflation tends to reduce the value of their inventory. To stay competitive, they must cut prices on existing goods before lower-priced staples land on the loading dock, and have fewer opportunities to raise prices.

 

At least six national food retailers, including Costco Wholesale Corp. and Whole Foods Market Inc., and four of the five largest publicly traded food distributors, including Sysco Corp. and US Foods Holding Corp., have reported that their margins suffered in the last quarter because of food deflation, the first time analysts can recall so many grocers singling out deflation as a big problem.

 

“Deflation is kind of the elephant in the room,” Dennis Eidson, chief executive of SpartanNash Co., which operates 160 grocery stores from Colorado to Ohio and distributes food to 1,900 retailers across the country, told investors this month.

Meanwhile, consumers are the key beneficiaries of food price deflation.

With weak U.S. consumers shunning eating out more and more over the past year….

Restaurant

 

The combination of stagnant real earnings and lower retail food prices have provided the necessary incentives to drive the highest QoQ increase in real consumption of "food for home consumption" since the 80s.

Food Basket

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WTF Headline Of The Day: UND Offers Students “Social-Justice-Themed” Housing Option

Submitted by Amber Athey via CampusReform.com,

  • The University of North Dakota (UND) is offering students the chance to live in a specialized housing community dedicated entirely to social justice.
  • The Social Justice Living-Learning Community (LLC) joins four other LLC's: Aviation, Engineering & Mines, Wellness, and Honors.
  • Students in the Social Justice LLC will have the option to room with individuals of any "gender identity" as long as all parties agree to the living arrangement.

The University of North Dakota (UND) is offering students the chance to live in a specialized housing community dedicated entirely to social justice.

The Social Justice Living-Learning Community is “designed for students who are involved in promoting a more inclusive and just society,” and promises to provide such students with opportunities for “creating and leading positive social change.”

The Social Justice LLC is “for students who are involved in promoting a more inclusive and just society.”  

The website for the LLC does not have a specific schedule of events for the semester, but notes that students may engage with guest speakers, film series, book clubs, and service opportunities.

Cheryl Terrance, faculty advisor of the UND Ten Percent Society (TPS), a student support group for the “GLBTQQIA community,” told Campus Reform that the LLC was developed by the school’s housing office, but predicted that social justice-oriented student groups such as TPS would likely be involved in programming efforts.

Connie Frazier, Executive Director of Housing and Dining at UND, corroborated that speculation, telling Campus Reform that while LLCs are housing initiatives, they arise out of student interest and students self-select who will live in the community.

“This is a brand new one so those students are just beginning now the discussion of how they want to define their community and what kinds of activities they would want to get involved and do,” Frazier explained.

Students who are interested in living in a community that “believe[s] that each person shares the responsibility of creating an environment in which all residents are respected and valued—regardless of one’s age, size, gender, sexual orientation, identity or identity expression, disability, race, ethnicity, color, creed, national origin, cultural background, socio-economic status, or religious affiliation or conviction,” need only indicate interest on their residence hall application in order to be considered for the Social Justice LLC.

The LLC also specifically points out that it is inclusive with respect to gender, and will allow people of all gender identities to room with whomever they feel most comfortable, although the application process does note that “gender inclusive room assignment requests must be mutual.”

UND currently has four other Living-Learning Communities—Aviation, Engineering & Mines, Wellness, and Honors—most of which primarily relate to academic interests.

111315-RickMcKee2

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Gold Withdrawals From The NY Fed Accelerate, Hit 388 Tons Since 2014

First it was Germany who redeemed 120 tons of physical gold from the NY Fed in 2014; then it was the Netherlands who “secretly” redomiciled 122 tons of gold; then last May, we learned that Austria would be the third “core” European nation to repatriate most of its offshore gold, held primarily in the Bank of England, redepositing it in Vienna and Switzerland.

That was just the beginning. Thanks to the latest NY Fed data, we now know that beginning in 2014 and continuing through yesterday, the gold “bleeding” from the vault located 90 feet below street level at 33 Liberty Street  is not only continuing but accelerating.

As the chart below shows, while central banks assure the population that there is nothing to worry about when it comes to paper money, which may or may not soon be banned if certain Harvard economists have their way, they have been quietly accelerating their withdrawals of gold from the biggest centralized depository of global gold in the world: the New York Federal Reserve.

According to the Ny Fed, in the seven months ended July 2016, there were a total of 87 tons of gold withdrawals, 25% more than the 69 tons withdrawn in the same period in 2015, and 60% more than the 55 tons withdrawn in 2014. As of July 31, the NY Fed held 5,807 tons of gold in custody, well below the 6,606 “old normal” that was parked at the Fed until withdrawals started in early 2007.

Just as remarkable, since the current round of monthly withdraws from the NY Fed started in February of 2014, there has been a total of 388 tons of gold redeemed by foreign central bank holders over a span of 30 months, which is just 20 tons shy of the previous burst of withdrawals which started in March of 2007, with the emergence of the subprime crisis, and culminating in November 2008 with the bailout of AIG.

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Another Donor Email Seeking Another Favor; Huma Worries The “Problem Is She Keeps Emailing HRC Directly”

Last week we noted Trey Gowdy’s interview on Fox News where he divulged that Clinton had used a software called “BleachBit” to permanently delete emails in a way to “prevent their recovery” and “hide traces” of their deletion (see “FBI Admits Clinton Used Software Designed To “Prevent Recovery” And “Hide Traces Of” Deleted Emails“).  What got less attention in that post, however, was Gowdy’s question of whether Clinton considered email correspondence with the Clinton Foundation and its donors to be “work related” or “personal”. 

There is increasing evidence that Clinton Foundation related email traffic was specifically omitted from disclosures to the FBI.  Recent emails received under various FOIA requests have uncovered numerous Clinton emails, related to the Clinton Foundation, that were “mysteriously” absent from the “30,000 work-related emails” that were previously turned over to the FBI.  That omission obviously begs the question of how Hillary could possibly consider correspondence with the Clinton Foundation and/or its donors to be “personal”.  Certainly Meredith McGehee, policy director at the Campaign Legal Center, a nonpartisan, nonprofit organization, thinks “It would be a difficult argument” for Clinton to suggest that Clinton Foundation emails were “personal.”

The latest example comes from McClatchy DC and involves another email exchange between then Secretary of State, Hillary Clinton, and a large Clinton Foundation donor, Abigail Disney, who was looking for a favor.  The email exchange in question was revealed by Citizens United and was among the emails received after winning a lawsuit related to their previously unanswered FOIA request.  Oddly enough, this email exchange, and many others like it, were excluded from the “30,000 work-related emails” that Clinton originally disclosed to the FBI. 

Turns out Disney, a Clinton Foundation donor to the tune of $100,000 – $250,000, wanted Hillary to focus more on women’s issues at the next meeting of the Clinton Global Initiative.  But Disney didn’t go to the Clinton Foundation for help with her request she went straight to the Secretary of State.  Per McClatchy DC, Disney’s July 2012 email to Hillary included the following:

We have attended the Clinton Global Initiative now for a few years and feel it is an important gathering of some of the finest and most important thinking about International Aid.  We do, however, feel that woman’s issues have not gotten the attention or the placement they deserve. We are hoping you might consider helping us ‘rock the boat’ a little bit this year.”

Huma Abedin, for one, was apparently not pleased with Disney’s persistence and/or her direct communications with Hillary.  Explain to us again why would direct communications with Hillary be a problem?  Per an email from Abedin to officials at the Clinton Global Initiative on July 23, 2012: 

“The problem is she keeps emailing hrc directly and is quite anxious to talk.”

After a subsequent conversation with Disney, Huma provided the following update to the Clinton Global Initiative Deputy Director, Ed Hughes:

They [Abigail Disney] are going to come back with a clearer proposal for what they want and I told them hrc role at cgi hadn’t even been discussed yet which happens to be true.”

Now we’re not legal experts by any stretch but that seems an awful lot like Huma is suggesting that a Clinton Foundation donor is going to put together a very specific request for a favor from the Secretary of State.  We’ll let you be the judge.

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