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Biden Goes All-In On The Race Issue

Authored by Patrick Buchanan via Buchanan.org,

Those who believed America’s racial divide would begin to close with the civil rights acts of the 1960s and the election of a black president in this century appear to have been overly optimistic.

The race divide seems deeper and wider than at any time in our lifetimes. Most of the aspiring leaders of the Democratic Party have apparently concluded that branding the president a “racist” and “white supremacist” is the strategy to pursue to win the nomination and the White House.

Here is Joe Biden, speaking in Iowa as President Donald Trump was visiting the wounded communities of Dayton, Ohio, and El Paso, Texas:

“This president has fanned the flames of white supremacy in this nation. … The energetic embrace of this president by the darkest hearts and the most hate-filled minds in this country says it all.

“We have a problem with this rising tide of … white supremacy in America. And we have a president who encourages and emboldens it.”

What had Trump done to invite such a charge?

The key piece of evidence linking Trump to the mass murderer of El Paso, is a single phrase out of a 2,000-word screed posted on social media, allegedly by the gunman minutes before carrying out his atrocity.

Patrick Crusius said he was striking this blow against the “Hispanic invasion of Texas.” And Donald Trump has often used that term, invasion, to describe the crisis on the border.

Yet the word “invasion” to label what is happening on America’s Southern border long predated Trump, and, moreover, is both an accurate and valid description.

Consider. There are, by most estimates, at least 11 million migrants in the United States illegally, the equivalent of the entire population of Cuba. Lately, migrants have been crossing the Mexican border at a rate of 100,000 a month. If one had to choose a word to describe graphically what is going on, would it not be invasion?

What a panicked establishment, and its stable of candidates, is doing is transparent. By declaring “invasion” — a legitimate description of what is transpiring on the Southern border — to be inherently racist, it is conceding the word has power and is an effective weapon in the political arsenal of those the establishment seeks to censor, stigmatize and silence.

Trump’s adversaries want to stop him from using his most powerful and compelling arguments and images, the ones that enabled him to win the presidency and oust them from power. The left is now using “white supremacy” as its new hate term, because “racist” has all but lost its sting from overuse.

But Biden’s raising of the race issue is going to come back and bite him.

Said Joe in Iowa:

“Our president has more in common with George Wallace than George Washington.”

Yet, that greatest of the Founding Fathers, George Washington, whom Biden invoked as his beau ideal of a leader, was a slave owner and demonstrably more of a white supremacist than Trump.

And Biden is likely to be reminded of this by Sen. Cory Booker, his rival for the crucial black vote in the primaries, who, as Joe was speaking in Iowa, was at Emanuel AME Zion church in Charleston, South Carolina, tearing into the founding generation of Washington, Jefferson and Madison:

“Bigotry was written into our founding documents,” said Booker.

“White supremacy has always been a problem in our American story.”

“Islamophobia, anti-Semitism, homophobia, xenophobia, misogyny — these tactics aren’t a new perversion,” Booker went on.

“They’ve been ingrained in our politics since our foundation.”

Source

Are American voters supposed to respond warmly to this?

Biden’s words in Iowa – “We have a president who has aligned himself with the darkest forces in this nation” – appear to be a lift from Robert Kennedy’s attack on LBJ when Bobby announced for president just days after Lyndon Johnson was badly wounded in the 1968 New Hampshire primary.

Said Bobby of the father of the Civil Right Act of 1964:

“Our national leadership is calling upon the darker impulses of the American spirit.”

LBJ and his associates, Bobby went on, “have removed themselves from the American tradition, from the enduring and generous impulses that are the soul of this nation.”

“We are fighting for the soul of America,” echoed Biden in Iowa.

As for Wallace, whom Biden disparages, he was a segregationist, much like Biden’s patron, Sen. Jim Eastland of Mississippi, who called Joe “son,” and Strom Thurmond, whom Biden eulogized and who conducted the longest filibuster in history — against the 1957 Civil Rights Act.

In George Wallace’s salad days, Joe sang a different tune, telling the Philadelphia Inquirer on Oct. 12, 1975:

“I think the Democratic Party could stand a liberal George Wallace — someone who’s not afraid to stand up and offend people, someone who wouldn’t pander but would say what the American people know in their gut is right.”

Perhaps Joe can become such a fearless leader in 2020.

via ZeroHedge News https://ift.tt/2Tl6D0Z Tyler Durden

Lawsuit: SWAT Team Shot 12-Year-Old in Kneecap During Raid

Twelve-year-old Amir Worship was sitting on the edge of his brother’s bed with his hands in the air when an Illinois SWAT team officer shot him and shattered his kneecap, according to a lawsuit filed in Illinois state court Thursday.

The suit, filed by Amir’s mother, Crystal Worship, alleges that SWAT team officers from the Country Club Hills and Richton Park police departments burst into their house on the night of May 26, throwing flashbangs and detaining the family, including Amir and his 13-year-old brother, at gunpoint. The officers were executing a narcotics search warrant for Worship’s boyfriend, Mitchell Thurman, who was subsequently arrested for illegal gun and drug possession.

According to the lawsuit, a SWAT team officer shot Worship in his bedroom after the room had been secured and “and long after it was obvious that a 12-year-old child posed no threat.” 

“In fact, 12-year-old Amir was shot, shot while sitting on the edge of the bed with his hands up,” the lawsuit says. “An officer shot him with his assault rifle, striking him in the knee and shattering his knee cap. At that moment, this officer was pointing his rifle directly at shirtless Amir as he sat on the edge of his brother’s bed.”

The suit also alleges that after the officer shot Amir, he covered his body camera and put black tape over his badge number. The Worship family’s attorney, Al Hofeld, Jr., told Reason that the police departments denied records requests for body camera footage from the incident.

Worship’s 13-year-old brother was also detained at a police station for five hours before being released, the family says. The criminal case against Thurman was later dismissed.

The lawsuit claims that, in addition to several emotional trauma, Amir Worship faces months of intense physical therapy and will walk with a limp for the rest of his life. “Amir will never be able to play sports again,” the suit says. “This part of his childhood has been taken from him forever. He will never again experience the sheer physical joy of walking or running normally.”

“Our lives changed,” Worship said, fighting back tears, at a Thursday news conference announcing the lawsuit. “It will never be the same.”

The lawsuit is the latest in a string of civil rights cases brought by Chicago-area families claiming they were terrorized during violent SWAT raids that were often based on sloppy or incorrect information.

“There is a silent epidemic of trauma being perpetrated upon the children and families of color by Chicago and South Suburban police barreling into the wrong homes, handcuffing innocent adults, holding guns on children, handcuffing children, trashing their homes, refusing to show warrants, and screaming dehumanizing commands,” Hofeld said in a press release. “Now, children are being shot in their beds.”

Chicago’s Inspector General Joe Ferguson announced his office is investigating how Chicago police vet information and execute search warrants. The investigation was sparked by a string of lawsuits and a year-long series of stories by local news outlet CBS 2 that revealed a pattern of Chicago police executing busting into the wrong houses and terrorizing innocent families.

Sloppy, unverified search warrants led heavily armed Chicago police and SWAT officers to ransack houses; hold families, including children, at gunpoint; and handcuff an eight-year-old child in one case, CBS 2 found. In another case, 17 Chicago police officers burst into a family’s house with their guns drawn during a 4-year-old’s birthday party.

Last month, Hofeld filed another lawsuit on behalf of a Chicago family who say police raided their home three times in four months looking for someone the family didn’t even know.

Chicago settled a civil lawsuit last June by one family who claimed CPD officers stormed their house and pointed a gun at a three-year-old girl for $2.5 million. 

“Every one of these incidents is an aggravator and a perpetuator of mistrust that exists,” Ferguson said announcing the inspector general investigation. “It really calls for a greater accountability and examination.”

The Washington Post reported that the Illinois State Police has an open investigation into the raid on the Worship family.

The Country Club Hills Police Department did not immediately respond to a request for comment. The Richton Park Police Department said it had no comment at this time.

“Someone should be held responsible,” Crystal Worship said.

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“That’s What I’m Worried About Most Right Now”: Steve “Big Short” Eisman Reveals The Next “Black Swan”

Verbal acrobatics about the redundancy of defining an event as a “black swan” (yes, yes, it is by definition impossible to predict the unpredictable, we get it) aside, yesterday Steve Eisman, the infamous star of “Big Short” subprime fame, said that while he is not worried about the American financial system saying it is sound and that there is little risk of a systemic crisis like the one he effectively bet against more than a decade ago, he revealed that his biggest fear right now are the Hong Kong protests, which he says could endanger any kind of trade deal with China and hurt the global economy.

And yes, he called them a black swan: “I think the potential black swan, if there is a black swan right now, is what’s happening in Hong Kong right now,” said Eisman on CNBC’s Power Lunch. “If things escalate even further in Hong Kong, that would have a real impact back on the global economy.”

He is right, of course, only whereas Black Swans are events that nobody can anticipate, and thus when they arrive they shock the world, the risk of an insurrection in Hong Kong – as well as its potentially dire consequences – has been obvious to anyone following what we previously dubbed “the potential epicenter for the next global crisis.”

Hundreds of thousands of protesters have taken to Hong Kong’s streets since early June, due to opposition to a now-suspended extradition law that would have allowed people in the city to be extradited to Mainland China. These protests demonstrate the large discontent the people have for the city’s government, which has become a proxy for mainland rule. Meanwhile, for Beijing the ongoing protests represent a sign of weakness: if China’s 1.4 billion citizens see Beijing expressing doubt or weakness over how to bring Hong Kong to heel, the risk is that similar violent middle class insurrections could follow anywhere else in China. This, as China watchers know, represents the biggest nightmare for Beijing’s top politicians.

And much to the chagrin of China, the Neuberger Berman managing director said the protests in Hong Kong “seem to be escalating.”

“The people who are protesting are not backing down, the Chinese government doesn’t seem to be backing down, so if cooler heads don’t prevail it’s possible things in Hong Kong could get very ugly.”

Of course, as we listed last night, China has many other headaches on its hands, including trade war, PPI deflation, soaring food inflation, a trade war with the US, and record high debt. Eisman said conflict in Hong Kong could further adversely impact the trade war between the U.S. and China and could ripple through the global markets.

“That’s actually what I’m worried about the most right now, because every weekend we’ve got this drama where the people of Hong Kong are having protests in the millions and its starting to get very violent,” said Eisman.

“That is not going to be a positive in terms of negotiating a trade deal between the United States and China, its not going to be a positive at all for the global markets,” said Eisman.

Beside losing sleep over Hong Kong, Eisman is famously short Canadian banks, and is currently betting again shares of Zillow.

His full CNBC interview below:

via ZeroHedge News https://ift.tt/2YEhjOo Tyler Durden

Lawsuit: SWAT Team Shot 12-Year-Old in Kneecap During Raid

Twelve-year-old Amir Worship was sitting on the edge of his brother’s bed with his hands in the air when an Illinois SWAT team officer shot him and shattered his kneecap, according to a lawsuit filed in Illinois state court Thursday.

The suit, filed by Amir’s mother, Crystal Worship, alleges that SWAT team officers from the Country Club Hills and Richton Park police departments burst into their house on the night of May 26, throwing flashbangs and detaining the family, including Amir and his 13-year-old brother, at gunpoint. The officers were executing a narcotics search warrant for Worship’s boyfriend, Mitchell Thurman, who was subsequently arrested for illegal gun and drug possession.

According to the lawsuit, a SWAT team officer shot Worship in his bedroom after the room had been secured and “and long after it was obvious that a 12-year-old child posed no threat.” 

“In fact, 12-year-old Amir was shot, shot while sitting on the edge of the bed with his hands up,” the lawsuit says. “An officer shot him with his assault rifle, striking him in the knee and shattering his knee cap. At that moment, this officer was pointing his rifle directly at shirtless Amir as he sat on the edge of his brother’s bed.”

The suit also alleges that after the officer shot Amir, he covered his body camera and put black tape over his badge number. The Worship family’s attorney, Al Hofeld, Jr., told Reason that the police departments denied records requests for body camera footage from the incident.

Worship’s 13-year-old brother was also detained at a police station for five hours before being released, the family says. The criminal case against Thurman was later dismissed.

The lawsuit claims that, in addition to several emotional trauma, Amir Worship faces months of intense physical therapy and will walk with a limp for the rest of his life. “Amir will never be able to play sports again,” the suit says. “This part of his childhood has been taken from him forever. He will never again experience the sheer physical joy of walking or running normally.”

“Our lives changed,” Worship said, fighting back tears, at a Thursday news conference announcing the lawsuit. “It will never be the same.”

The lawsuit is the latest in a string of civil rights cases brought by Chicago-area families claiming they were terrorized during violent SWAT raids that were often based on sloppy or incorrect information.

“There is a silent epidemic of trauma being perpetrated upon the children and families of color by Chicago and South Suburban police barreling into the wrong homes, handcuffing innocent adults, holding guns on children, handcuffing children, trashing their homes, refusing to show warrants, and screaming dehumanizing commands,” Hofeld said in a press release. “Now, children are being shot in their beds.”

Chicago’s Inspector General Joe Ferguson announced his office is investigating how Chicago police vet information and execute search warrants. The investigation was sparked by a string of lawsuits and a year-long series of stories by local news outlet CBS 2 that revealed a pattern of Chicago police executing busting into the wrong houses and terrorizing innocent families.

Sloppy, unverified search warrants led heavily armed Chicago police and SWAT officers to ransack houses; hold families, including children, at gunpoint; and handcuff an eight-year-old child in one case, CBS 2 found. In another case, 17 Chicago police officers burst into a family’s house with their guns drawn during a 4-year-old’s birthday party.

Last month, Hofeld filed another lawsuit on behalf of a Chicago family who say police raided their home three times in four months looking for someone the family didn’t even know.

Chicago settled a civil lawsuit last June by one family who claimed CPD officers stormed their house and pointed a gun at a three-year-old girl for $2.5 million. 

“Every one of these incidents is an aggravator and a perpetuator of mistrust that exists,” Ferguson said announcing the inspector general investigation. “It really calls for a greater accountability and examination.”

The Washington Post reported that the Illinois State Police has an open investigation into the raid on the Worship family.

The Country Club Hills Police Department did not immediately respond to a request for comment. The Richton Park Police Department said it had no comment at this time.

“Someone should be held responsible,” Crystal Worship said.

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Blackout Strikes London As UK Power Grid “Experiences A Major Incident”

Update: Electricity providers confirm 90% of customers are now restored and we are working hard to restore the remaining customers as soon as possible.

*  *  *

London and large parts of the south of England are suffering from a widespread ‘power cut’ described as “a major incident” by electricity providers.

Transport for London said the drop in power is affecting traffic lights, while many trains have been delayed.

The blackout struck as Brits commute home (or head to the pub)…

via ZeroHedge News https://ift.tt/2YW3dmD Tyler Durden

S.Korea Weighing Military “Options” To Protect Its Shipping In Persian Gulf

South Korea is denying a Yonhap news agency report which said US Defense Secretary Mark Esper issued a formal request to South Korea to send troops to join a proposed US-led maritime force in the Strait of Hormuz to protect international tankers sailing near Iran, according to Bloomberg. Esper is said to have directly appealed to Defense Minister Jeong Kyeong-doo during a meeting in South Korea. 

Seoul is said to be considering “various options,” according to Reuters, since South Korean vessels frequent the strait. Despite Seoul officials now downplaying the story, a prior Reuters report detailed early this week: 

The Maekyung business newspaper, citing an unidentified senior government official, said South Korea had decided to send the anti-piracy Cheonghae unit operating in waters off Somalia, possibly along with helicopters.

…“It is obvious that we have to protect our ships passing through the Strait of Hormuz, isn’t it? So we’re considering various possibilities,” deputy ministry spokesman Ro Jae-cheon told a regular news briefing on Monday.

Illustrative file photo

The current mixed messaging coming out of Seoul, however, suggests plans could be stalled, possibly as official wait and see if the White House plans for a global force gets off the ground.

Meanwhile the only European country to enthusiastically jump on board the US administration’s joint patrol plan has been the United Kingdom, with Germany and France trying to distance themselves, even as they attempt to form a European-led maritime initiative. At the moment France, Japan, and India have said they are undecided. 

Earlier this week it was revealed that China also, to the surprise of many observers, is actually mulling a reported invitation to join the proposed US-led maritime coalition to protect oil shipping lanes in the Gulf following Iran’s military confirming it has seized three foreign tankers this summer.

“If there happens to be a very unsafe situation we will consider having our navy escort our commercial vessels,” the Chinese ambassador to the UAE Ni Jian told Reuters in Abu Dhabi. “We are studying the U.S. proposal on Gulf escort arrangements,” China’s embassy later confirmed. 

Again, it’s likely that authorities in Seoul are waiting to see if European countries join but also Beijing’s stance regarding an international coalition ensuring the safety of the vital gulf waterway, before actually deploying its own troops and naval assets.  

via ZeroHedge News https://ift.tt/2GYtHhr Tyler Durden

Aaron Sandusky Has Spent 7 Years in Prison for Selling Medical Marijuana

Aaron Sandusky has spent nearly seven years in federal prison for conspiracy to distribute cannabis. He’s one of about 20,000 federal or state inmates behind bars for an activity that is legal in one form or another in 33 U.S. states and Washington, D.C.

A bill is working its way through the Senate that might help people like Sandusky by expunging their records. Some advocates believe that President Donald Trump is close to granting clemency to some of these men and women―including Sandusky.

When Sandusky opened a marijuana dispensary in 2009, medical cannabis had been legal for 13 years in California. But in 2011, the feds carried out a series of federal raids on medical marijuana clinics in California, despite earlier assurances from President Barack Obama and his attorney general that they wouldn’t target operators that were legal under state law.

Sandusky had located his operation in the town of Upland, one of a handful of municipalities that was attempting to use the zoning code to keep the industry away. Sandusky alleges that in 2011 the then-mayor, John Pomierski, demanded a $20,000 bribe to allow him to continue operating.

Sandusky ended up cooperating with the FBI, which later arrested and charged Pomierski with bribery and extortion.

After Pomierski was indicted, Upland continued the fight to force Sandusky to close his dispensary. So he sued in state court and won.

But cannabis is still a schedule one narcotic. According to Sandusky, city officials retaliated by sending a formal request to the U.S. attorney to shut down his operations. On November 1, 2011, federal agents raided Sandusky’s businesses.

The federal government charged him with six counts of drug trafficking. Sandusky’s employees all took plea deals. His business partner testified against him in return for a lighter sentence.

Sandusky declined a plea deal offer that would have turned him into an informant.

“I said, ‘I’m not going to go set people up so these guys can take them down,'” says Sandusky. “These people are following state law.”

Sandusky’s attorney was planning to argue entrapment on the grounds that the Obama administration had publicly stated that it wouldn’t prosecute marijuana operators. The judge prohibited that line of defense, and Sandusky was convicted and sentenced to the mandatory minimum of 10 years in prison. During sentencing, Judge Percy Anderson accused him of having lost his “way about what’s right and what’s wrong.”

“Aaron, maybe more than anyone, should receive clemency because his case is so disturbing,” says Amy Povah.

Povah did nine years in prison on a drug charge before receiving clemency from Bill Clinton in 2000. Now she runs the the nonprofit CAN-DO Foundation, which seeks clemency for all nonviolent drug offenders. Sandusky is one of 22 “pot prisoners” who CAN-DO is currently working to free.

“Corporations are making millions [from cannabis], and and we’re even getting into the billions,” says Povah. “I think [it’s] almost a human rights violation to continue to punish people for marijuana offenses.”

Povah says she’s visited the Trump White House several times and met with Jared Kushner, who heads up the president’s criminal justice reform team. She believes Kushner is open to reforming the clemency process and freeing more marijuana offenders.

“I am predicting that the cannabis people who are honest about this will see that [Trump is] the one that can get this done,” says Dana Rohrabacher, a former U.S. congressman, a marijuana legalization advocate, and a Trump supporter.

He co-authored the 2014 Rohrabacher-Farr Amendment, which prohibits the federal government from expending resources to raid and prosecute anyone operating a marijuana-related business under state law. Rohrabacher thinks that under his law, Sandusky should be released immediately, though the courts don’t see it that way.

“They should be let out of jail and they should be given their freedom, clemency, and  maybe even an apology,” says Rohrabacher. 

Sandusky is set for early release from prison this November, when he’ll be transferred to a halfway house in California and then out on probation in early 2020.

Even though Sandusky will be out soon, he knows he’ll be facing consequences long after his release and continues to seek a court appeal overturning his sentence or a full pardon and expungement for operating a business within the bounds of California law.

Produced by Zach Weissmueller. Camera by John Osterhoudt and Weissmueller. Additional camera by Alex Manning and Austin Bragg. Graphics by Josh Swain.

Music from the album “Satin” by Kai Engel is licensed under an Attribution-NonCommercial 3.0 Creative Commons license.

“Florence Federal Prison” photo credit: Chris Schneider/Chicago Tribune/TNS/Newscom

“Dana Rohrabacher” photo credit: Paul Zinken/picture-alliance/Newscom

“Obama 2008” photo credit: Anthony Nowack/Photoshot/Newscom

“Deparment of Justice” photo credit: Alexandre Fagundes De Fagundes/Dreamstime

“J. Edgar Hoover FBI Building” photo credit: Paul Brady/Dreamstime

 

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Aaron Sandusky Has Spent 7 Years in Prison for Selling Medical Marijuana

Aaron Sandusky has spent nearly seven years in federal prison for conspiracy to distribute cannabis. He’s one of about 20,000 federal or state inmates behind bars for an activity that is legal in one form or another in 33 U.S. states and Washington, D.C.

A bill is working its way through the Senate that might help people like Sandusky by expunging their records. Some advocates believe that President Donald Trump is close to granting clemency to some of these men and women―including Sandusky.

When Sandusky opened a marijuana dispensary in 2009, medical cannabis had been legal for 13 years in California. But in 2011, the feds carried out a series of federal raids on medical marijuana clinics in California, despite earlier assurances from President Barack Obama and his attorney general that they wouldn’t target operators that were legal under state law.

Sandusky had located his operation in the town of Upland, one of a handful of municipalities that was attempting to use the zoning code to keep the industry away. Sandusky alleges that in 2011 the then-mayor, John Pomierski, demanded a $20,000 bribe to allow him to continue operating.

Sandusky ended up cooperating with the FBI, which later arrested and charged Pomierski with bribery and extortion.

After Pomierski was indicted, Upland continued the fight to force Sandusky to close his dispensary. So he sued in state court and won.

But cannabis is still a schedule one narcotic. According to Sandusky, city officials retaliated by sending a formal request to the U.S. attorney to shut down his operations. On November 1, 2011, federal agents raided Sandusky’s businesses.

The federal government charged him with six counts of drug trafficking. Sandusky’s employees all took plea deals. His business partner testified against him in return for a lighter sentence.

Sandusky declined a plea deal offer that would have turned him into an informant.

“I said, ‘I’m not going to go set people up so these guys can take them down,'” says Sandusky. “These people are following state law.”

Sandusky’s attorney was planning to argue entrapment on the grounds that the Obama administration had publicly stated that it wouldn’t prosecute marijuana operators. The judge prohibited that line of defense, and Sandusky was convicted and sentenced to the mandatory minimum of 10 years in prison. During sentencing, Judge Percy Anderson accused him of having lost his “way about what’s right and what’s wrong.”

“Aaron, maybe more than anyone, should receive clemency because his case is so disturbing,” says Amy Povah.

Povah did nine years in prison on a drug charge before receiving clemency from Bill Clinton in 2000. Now she runs the the nonprofit CAN-DO Foundation, which seeks clemency for all nonviolent drug offenders. Sandusky is one of 22 “pot prisoners” who CAN-DO is currently working to free.

“Corporations are making millions [from cannabis], and and we’re even getting into the billions,” says Povah. “I think [it’s] almost a human rights violation to continue to punish people for marijuana offenses.”

Povah says she’s visited the Trump White House several times and met with Jared Kushner, who heads up the president’s criminal justice reform team. She believes Kushner is open to reforming the clemency process and freeing more marijuana offenders.

“I am predicting that the cannabis people who are honest about this will see that [Trump is] the one that can get this done,” says Dana Rohrabacher, a former U.S. congressman, a marijuana legalization advocate, and a Trump supporter.

He co-authored the 2014 Rohrabacher-Farr Amendment, which prohibits the federal government from expending resources to raid and prosecute anyone operating a marijuana-related business under state law. Rohrabacher thinks that under his law, Sandusky should be released immediately, though the courts don’t see it that way.

“They should be let out of jail and they should be given their freedom, clemency, and  maybe even an apology,” says Rohrabacher. 

Sandusky is set for early release from prison this November, when he’ll be transferred to a halfway house in California and then out on probation in early 2020.

Even though Sandusky will be out soon, he knows he’ll be facing consequences long after his release and continues to seek a court appeal overturning his sentence or a full pardon and expungement for operating a business within the bounds of California law.

Produced by Zach Weissmueller. Camera by John Osterhoudt and Weissmueller. Additional camera by Alex Manning and Austin Bragg. Graphics by Josh Swain.

Music from the album “Satin” by Kai Engel is licensed under an Attribution-NonCommercial 3.0 Creative Commons license.

“Florence Federal Prison” photo credit: Chris Schneider/Chicago Tribune/TNS/Newscom

“Dana Rohrabacher” photo credit: Paul Zinken/picture-alliance/Newscom

“Obama 2008” photo credit: Anthony Nowack/Photoshot/Newscom

“Deparment of Justice” photo credit: Alexandre Fagundes De Fagundes/Dreamstime

“J. Edgar Hoover FBI Building” photo credit: Paul Brady/Dreamstime

 

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El-Erian Warns: Trade Disruption Is A Symptom (Not The Cause) Of A Deeper Malaise

Authored by Mohamed El-Erian via Project Syndicate,

It’s only a matter of time until the escalating tensions between China and the United States prompt many more economists to warn of an impending global economic recession coupled with financial instability. On August 5, Bloomberg News said that the yield curve, a closely watched market metric, “Blares Loudest US Recession Warning Since 2007.” And Larry Summers, a former US Treasury Secretary who was also closely involved in crisis-management efforts in 2008-09, recently tweetedthat “we may well be at the most dangerous financial moment … since 2009.”

Many economists argue that resolving US-China trade tensions is the best way to avoid significant global economic and financial disruption. Yet, while necessary, this would be far from sufficient.

Don’t get me wrong: the focus on the deteriorating relations between China and America is entirely understandable. After all, their worsening dispute increases the risk of a trade war which, coupled with a currency war, would lead to “beggar-thy-neighbor” (that is, lose-lose) outcomes cascading throughout the global economy. As growth prospects deteriorated, debt and leverage issues would come to the fore in certain countries, adding financial instability to an already damaging economic cocktail. And with the US-China row now extending beyond economics to include national-security and domestic political issues, the best-case scenario on trade is a series of ceasefires; the more likely outcome is escalating tensions.

Yet, when viewed in the broader context of the past decade, trade tensions turn out to be a symptom rather than a cause of the world’s underlying economic and financial malaise. In fact, an excessive focus on trade risks is deflecting policymakers’ attention from other measures needed to ensure faster and more inclusive growth in a genuinely stable financial environment.

Policymakers must also contend with growing political pressure on central banks, the backlash against the inequality trifecta (of income, wealth, and opportunity), the politics of anger, the growth of anti-establishment movements, the loss of trust in governments and expert opinion, regional economic and geopolitical tensions, the growing risk of financial instability, threats to long-term financial-protection products, and a general sense of economic insecurity.

As I argued in The Only Game in Town, all of these recent developments – and also, of course, the growing US-China tensions – are related in a meaningful way to two basic and persistent features of the global economy since the 2008 financial crisis.

The first is the prolonged period in which economic growth has been not only too low but also insufficiently inclusive. As a result, growing segments of the population have felt marginalized, alienated, and angry – leading to unexpected election outcomes, the rise of populist and nationalist movements, and, in a few cases, social unrest.

The second post-crisis feature is the persistent over-reliance on the pain-numbing but distortionary medicine of central-bank liquidity, rather than a more balanced policy mix that seeks to ease the (mainly structural, but also cyclical) impediments to faster, more inclusive growth. Monetary policy has not been very effective in boosting sustainable growth, but it has lifted asset prices significantly. This has further fueled complaints that the system favors the already-rich and privileged rather than serving the broader population – let alone helping more disadvantaged groups.

If both these features persist, the global economy will soon enough come to an uncomfortable binary prospect on the road ahead. At this “T-junction,” the current, increasingly unsustainable path will give way either to a much worse outcome involving recessions, financial instability, and rising political and social tensions, or, more optimistically, to a pick-up in inclusive growth and genuine financial stability as the governance system finally responds to popular pressure.

Moreover, the journey to the neck of this T-junction is itself increasingly uncertain. In particular, the protracted use of unconventional monetary policies has entailed costs and risks that have intensified over time. These include attacks on the operational autonomy of central banks, the excessive decoupling of asset prices from their underlying economic and corporate fundamentals, and systemic overpromising of liquidity to end users (particularly in the non-bank sector). Today, a policy mistake or a market accident could make the journey much faster and a lot bumpier.

To avoid a nasty outcome for the global economy and financial system, China and America need to resolve their differences in the context of a more comprehensive policy compact that also involves other leading economies (especially Europe).

Efforts to revitalize free but fairer trade should start by addressing genuine US and European grievances vis-à-vis China regarding intellectual-property theft, forced transfer of technology, excessive subsidization, and other unfair trade and investment practices. And this in turn should serve as the foundation for a comprehensive multilateral effort to remove constraints on actual and potential growth.

Such an initiative would include infrastructure rehabilitation and modernization in Europe and the US, more balanced fiscal policies in Europe and a stronger regional economic architecture, stronger social safety nets around the world, and targeted liberalization and deregulation in China and Europe.

With concerted global action of this type, the world economy could navigate the upcoming T-junction favorably. Without it, current complaints about economic and financial instability and insecurity could pale in comparison to what comes next.

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Of course, while El-Erian is right on the cause – years of central-planner-driven malinvestment – his “globalist” solution should come as no surprise to anyone… if only everyone could just get along, open more borders, and resign all sovereignty to a global government to take care of us all.

via ZeroHedge News https://ift.tt/2YUJ6p1 Tyler Durden