Doug Casey: Why Socialism Is A Moral Failing

Via CaseyResearch.com,

Most likely Alexandria Ocasio-Cortez (AOC) is the future of the Democratic Party – and of the U.S.

Why?

She’s cute, vivacious, charming, different, outspoken, and has a plan to Make America Great Again. And she – or at least her handlers – is shrewd. She realized she could win by ringing doorbells in her district, where voter turnout was very low, and about 70% are non-white. There was zero motivation for residents to turn out for the tired, corrupt, old hack of a white man she ran against.

The things she says are politically astute, although she herself doesn’t seem very intelligent. In fact, she’s probably quite stupid. But let’s define the word “stupid.” Otherwise, it’s just a meaningless pejorative – name-calling. Which I want to avoid.

But in fact she doesn’t appear to have a very high IQ. I suspect that if she took a standardized IQ test, she’d be someplace in the low end of the normal range. But that’s just conjecture on my part, entirely apart from the fact a high IQ doesn’t necessarily correlate with success. Besides, there are many kinds of intelligence – athletic, aesthetic, emotional, situational…

A high IQ can actually be a disadvantage to getting elected. Remember it’s a bell-shaped curve, and the “average” person isn’t a rocket scientist. That’s compounded by the fact half the population has an IQ of 100 or less. They’re suspicious of anyone who’s more than, say, 15 points smarter than they are.

However, there are better ways to define stupid than “a low score on an IQ test,” that apply to Alexandria. Stupid is “the inability to predict not just the immediate and direct consequences of actions, but the indirect and delayed consequences of your actions.”

She’s clearly unable to do that. She can predict the immediate and direct consequences of the policies she’s promoting: her supporters are very excited about “liberating” other people’s wealth that just seems to be sitting around. Power to the People, and AOC! But she’s completely unable to see the indirect and delayed consequences of her policies – which I hope I don’t have to explain to anyone now reading this.

If you promise people unicorns, lollipops, and free everything, they’re going to say, “Gee, I like that, let’s do it.” She’s clever on about a third grade level.

But there’s an even better definition of stupid. Namely, “an unwitting tendency to self-destruction.” All the economic ideas that she’s proposing are going to wind up absolutely destroying the country.

It’s as if she thinks that what’s happened recently in Venezuela and Zimbabwe – not to mention Mao’s China, the Soviet Union, and a hundred other places – was a good thing.

That’s my argument for her being stupid. And ignorant as well. But perhaps I’m missing something. After all, Karl Marx – who would thoroughly approve of her ideas – was both highly intelligent, and extremely knowledgeable; he was actually a polymath. The same can be said of many academics, left-wing economists, and socialist theoreticians.

So perhaps a desire for “socialism” isn’t just an intellectual failing. It’s actually a moral failing.

Socialism – A Moral Failing

Socialism is basically about the forceful control of other people’s lives and property. In my view, that’s evil.

I’m afraid Alexandria is evil on a basic level. I know that sounds silly. How can that be true of a smiling young girl who says she wants just sunshine and unicorns for everybody? It’s too bad the word “evil” has been so compromised, so discredited, by the people who use it all the time – bible-thumpers, hysterics, and religious fanatics. Evil shouldn’t be associated with horned demons and eternal perdition. It just means something destructive, or recklessly injurious.

The world would be better off if she went back to waitressing and bartending. But she herself isn’t the problem. She’s fungible. Her handlers can easily replace her, as an individual. The problem is that voters like what she represents.

It really helps to be young, good looking, and affable. But those things do nothing to solve the immense problems plaguing the U.S., just under the surface. Wouldn’t it be nice if everybody had a job paying at least $15 an hour, free schooling, housing was a basic human right, free medical, free food, and 100% green energy? It doesn’t sound evil – it just sounds stupid. But it’s actually both.

The problem isn’t just that she got elected on this platform in a benighted – but increasingly typical – district. The problem is that most young people in the U.S. also have her beliefs and values.

The free market, individualism, personal liberty, personal responsibility, hard work, rationality, free speech – the values of western civilization – are being washed away, everywhere. But it’s hard to defend them, because the argument for them is intellectual, economic, and historical. While the mob, the capita censi, the “head count” as the Romans called them, is swayed by emotions. They feel, they don’t think. Arguments are limited to Twitter feeds. Or 30-second TV sound bites.

When somebody says, for instance, “Why can’t we have free school for everybody? The university buildings are already built. The professors are already there. So why can’t everybody just go to class, and learn about gender studies?” The same arguments are made for food, shelter, clothing, entertainment, communication – everything in fact.

To counter that, you have to come up with specific reasons for why not. You end up sounding like a Negative Nelly because you’re telling people they can’t have something.

I guess I’ve given too much credit to the goodwill and the common sense of the average American. The proof of that is the success of AOC. Her election brings the average American’s psychological aberrations to the fore.

It’s exactly the type of thing the Founders tried to guard against by restricting the vote to property owners over 21, going through the Electoral College. Now, welfare recipients who are only 18 can vote, and the Electoral College is toothless. Some want to totally abolish the College, and have even 16-year-olds and illegal aliens voting.

Nobody, except for a few libertarians and conservatives, is countering the ideas AOC represents. And they have a very limited audience. The spirit of the new century is overwhelming the values of the past.

Everybody Will Blame Capitalism

When the economy collapses – likely in 2019 – everybody will blame capitalism, because Trump is somehow, incorrectly, associated with capitalism. The country – especially the young, the poor, and the non-white – will look to the government to “do something.” They see government as a cornucopia, and socialism as a kind and gentle answer. Soon, they think, everyone will be able to drink lattes all day at Starbucks while they play with their iPhones, living on a Guaranteed Annual Income.

The people who control the government definitely won’t want to be seen as “do nothings.” Especially while the ship of state is sinking in The Greater Depression. They’ll want to be seen as forward thinkers, problem solvers, and social justice warriors.

So we’re going to see much higher taxes, among other things. There’s no other way to pay for these programs, except sell more debt to the Fed – which they’ll also do, by necessity.

The government is bankrupt. But like all living things from an amoeba to a person to a corporation, its prime directive is to survive. The only way a bankrupt government can survive is by higher tax revenue and money printing. Of course, don’t discount a war; these fools actually believe that would stimulate the economy – the way only turning lots of cities into smoking ruins can.

I don’t see any way out of this.

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

New York City Set To Pass “Congestion Toll”, Mansion Tax And Plastic Bag Ban

New York state is nearing completion of a 2020 budget deal that’s going to result in “congestion tolls” in Manhattan, alongside a “mansion tax” and a ban on single-use plastic bags, according to Bloomberg. State leaders and Governor Andrew Cuomo agreed this week on a spending plan for 2020 that allocates for 2% budget growth for the ninth year in a row. The plan increases spending for education aid and provides tax relief for the middle class, according to the Governor.

Lawmakers will be discussing the budget again Sunday night to try and meet a midnight deadline to pass it. The proposed “congestion tolls” will make New York City the first American city to charge drivers for access. It’s projected to raise $1 billion, which will then be used to pay debt service (of course) on the $15 billion in Metropolitan Transportation Authority bonds outstanding. 

MTA’s Triborough Bridge and Tunnel Authority has not yet released details on the toll program, which is expected to be implemented after December 2020. 

In an attempt to drive even more wealthy New Yorkers to Florida, lawmakers will also be asked to approve a progressive tax on mansions with a combined top rate of 4.15% on the sale of properties valued at over $25 million:

The so-called mansion tax would establish a new scale of graduated levies, starting at 1 per cent on all New York City apartments selling for more than $1 million, rising at $2 million and reaching a top of 4.15 percent on $25 million. It’s expected to raise $365 million, to borrow about $5 billion. The old tax imposed a flat 1 percent rate at $1 million or more on all apartments.

Additionally, New York will follow California’s lead in banning disposable plastic grocery bags. This will force residents to pay for paper bags or reuse their own bags and is expected to be implemented by March 2020. 71,000 tons of plastic bags are used annually in New York City, according to the report.

The legislation will also include “elimination of cash bail for about 90 percent of defendants awaiting trial on misdemeanors and low-grade felony charges.”

Cuomo said of the budget: “From the beginning, I said we will not do a budget that fails to address three major issues that have evaded this state for decades — the permanent property tax cap, criminal justice reform and an MTA overhaul including Central Business District Tolling. I also said this budget must be done right — meaning it must be fiscally responsible and protect New York from the federal government’s ongoing economic assault on our state. I am proud to announce that together, we got it done.”

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Hedge Fund CIO: “America’s Yield Curve Inversion Can Mean One Of Three Things”

Submitted by Eric Peters, CIO of One River Asset Management

Three Worlds

America’s yield curve inversion can mean one of three things,” said the CIO. “We’re either living in a world of secular stagnation and investors worry that central banks no longer have sufficient policy tools to spur growth and inflation,” he continued. “Or the economy is simply sliding toward recession and the inversion will persist until the Fed panics and spurs a recovery,” he said. “Or we’re living in a world, where the market is moving in ways that defy historical norms because of global QE. And if that’s the case, the curve is sending a false signal.”

“If we’re sliding toward recession, then it seems odd that credit markets are holding up so well,” continued the same CIO. “So keep an eye on those,” he said. “And if the curve is sending a false signal due to German and Japanese government bonds yielding less than zero out to 10yrs, then the recent Fed pivot and these low bond rates in America may very well spur a blow-off rally in stocks like in 1999.” A dovish Fed in 1998 (post-LTCM) and 1999 (pre-Y2K) provided the liquidity without which that parabolic rally could have never happened.

“But if investors believe America is succumbing to the secular stagnation that has gripped Japan and Europe, and if they’re growing scared that global central banks are no longer capable of rescuing markets, then we have a real problem,” said the CIO. “Because a recession is bad for markets, but not catastrophic provided that central banks can step in to spur recovery. But with global rates already so low, if investors lose faith in the ability of central banks to do what they have always done, then we’re vulnerable to a stock market crash.”

Sovereignty:

Turkish overnight interest rates squeezed to 300% on Monday. Then 600% on Tuesday. By Wednesday, they hit 1,200%. Downward pressure on the Turkish lira, and the government’s efforts to punish speculators fueled the historic rise. Erdogan allegedly wants to limit lira loses ahead of today’s elections. The pressures that drove the currency lower were mainly of Turkish origin. Of course, the Turks have every right to their own economic policies, but they must bear the consequences. That’s what comes with being a sovereign state.

The Greeks and Turks are neighbors. The Turks began negotiations to join the EU in 2005, with plans to adopt the Euro after their acceptance. Those negotiations stalled in 2016. As they look across the border at their Greek neighbors now, and see their interest rates stuck at -0.40%, are they envious? Perhaps. But having witnessed the 2011 Greek humiliation, would the Turks be willing to forfeit sovereignty for the Euro’s stability and stagnation? And how do the Greeks (and Italians) feel about having forfeited their sovereignty?

Anecdote:

“Only optimists start companies,” I answered. The Australian superannuation CEO had asked if I’m an optimist or pessimist. “I see the potential for technological advances to produce abundance in ways difficult to fathom. But I also see the chance of something profoundly dark,” I continued. He observed that people seemed consumed by the latter but spend so little time on the former. “That’s good. Humans are wonderful at solving problems of our own creation. The more we worry, the less goes wrong,” I said. So he asked what worries me most?

“Not the displacement of human labor by machines, we can solve the resulting social challenges. I worry that the only thing Americans seem to agree on now is that China is our adversary.” And pressing, he asked me to list the things I admire about China. “Okay. I admire China’s work ethic, drive, ambition, economic accomplishments. They’ve overtaken us in many advanced scientific fields. I admire that very much.” He smiled and asked me to carry on. “I’m grateful for their competition. It makes us better. And I admire that they’ve evolved communism to make it work while all others failed. The world is better with diversity of thought, philosophy – diversity increases resiliency, robustness. And democratic free-market capitalism will grow stronger with a formidable competitor.” He smiled.

“But China’s system values the collective over the individual. We value the opposite. And I’m concerned the two systems cannot peacefully coexist now that we’re the world’s two largest economies. I don’t want to live under their system, I don’t want their vision of the future for my children. They probably feel the same way. Both views are valid but incompatible, and increasingly in conflict,” I explained. He nodded and said, “I don’t want that for our children either.”

via ZeroHedge News https://ift.tt/2U4faZU Tyler Durden

34% Of Michigan Trump Rally Attendees Were Registered Democrats: Parscale

Approximately 34% of attendees at President Trump’s Thursday night rally in Grand Rapids, Michigan were registered Democrats, according to Trump’s 2020 campaign manager Brad Parscale. 

Speaking on Saturday with Fox News‘ Jesse Watters, Parscale explained that the campaign uses the phone numbers of attendees to look up their voter information.

“We had tens of thousands of registrants, I believe 34% of the people who came to the Michigan rally were Democrats,” said Parscale, adding “Almost half had only voted once in the last four elections.”  

When asked if the campaign was still harvesting information on various demographics, Parscale said: “I’m harvesting nearly a million voters data information in key swing states every month.” 

“That must terrify the Democrats,” interjected Watters.

“Yeah, we are – put it this way, we are four times ahead of where we were in 2016 and I plan on being 6 to 8 times ahead in data, that’s tens of millions of records.

via ZeroHedge News https://ift.tt/2WzVie3 Tyler Durden

For Traders, It’s Decision Time

Authored by Sven Henrich via NorthmanTrader.com,

The first quarter of 2019 was a smash hit for bulls. Capitulating central banks, record buybacks flushing the system with artificial liquidity, constant jawboning by dovish central bankers and permanent promises of progress on a China trade deal, and a collapsing yield picture bringing back TINA (there is no alternative) all of which produced a relentless 3 month move higher back in equities that rendered any fundamental issues of slowing growth, earnings and even a yield curve inversion irrelevant and erased the losses of a disastrous Q4 of 2018.

Liquidity and central banks rule, nothing else matters. Optimism is back and hope is pervasive that 2019 will replay the earnings recession case of 2016 meaning that all bad news is priced in, any slowdown will be temporary and markets will resume their 10 year bull trend with new highs to come.

Yet, bulls have not proven their case. So far lower highs on all key indices risking major potential topping patterns and hence the upcoming earnings season may serve as a key pivot for markets in the weeks ahead. Dovish central banks have been fully priced in by markets and the liquidity of buybacks will at least temporarily disappear during the buyback blackout window.

Favoring bulls in April is, generally speaking, positive seasonality especially in the early part of the month, but Q1 earnings reports will also serve as a key test of how significant the global slowdown is and how pervasive any spillover may bleed into the next few quarters. As earnings estimates have come down significantly during Q1, companies may even surprise to the upside, but it is the revisions to their outlooks that may serve as a key decision node for investors who have priced in little risk into equities other than a few select sectors.

A China deal and even perhaps a miracle relief on Brexit continue to serve as potential upside triggers to outlooks keeping many sellers on the sidelines as many are expecting a further pop in equities especially if a positive China deal were to come to fruition.

Bears have managed to keep price below the January 2018 highs as well as the long term 2009 trend line, but are also running out of time as a confirmed break above the January 2018 highs could set markets on a path to at least retest the highs or make new highs.

Hence the time period in April into May sets up for decision time for markets.

Risk to markets: The rally off of the December lows remains untested and uncorrected with plenty of open gaps below while indices have formed specific patterns that could be interpreted as bearish. Indeed the rally has been so steep that it will require ever higher prices to avoid a confirmed break of these patterns. Due to the vertical nature of this rally these patterns are at risk of breaking to the downside if markets were to experience just a few days of downside. As these patterns are very large sizable downside and an increase in volatility could emerge on a confirmed break of these patterns.

Timing matters as structurally bulls have not been able to confirm a resumption of the larger bull trend hence April may be a key month and bulls can hardly afford a down month.

I’m discussing technicals and select key charts in the video below:

*  *  *

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“Pitch Up, Pitch Up!”: Black Box From Doomed Ethiopian 737 Reveals Desperate Struggle To Control Plane

As Ethiopian Airlines flight 302 took off in perfect, cloudless conditions on at 8:37 on March 10, it would take less than two minutes for all hell to break loose with the Boeing 737 Max 8 with 157 people on board. 

Two minutes after it departed from Addis Ababa’s highland airport on its scheduled one hour and 40 minute shuttle to Nairobi, things began to go very wrong, according to the Wall Street Journal

At 8:39, with the jet just 450 feet above the ground, its nose began to pitch down. First Officer Ahmednur Mohamed radioed the control tower to report a “flight-control problem.” 

Captain Yared Getachew, a veteran with over 8,000 flight hours, fought to keep the plane’s nose up. One minute later at 8:40, “the oscillation became a wild bounce, then a dive,” according to the WSJ

Pitch up, pitch up!” said one pilot to the other before the radio went dead. 

At 8:44 the 737 Max 8 crashed into a field 30 miles from the airport, instantly killing everyone on board. 

An excavator works the crash site of the Ethiopian Airlines jet. PHOTO: XINHUA/ZUMA PRESS

Relatives mourn passengers and crew members from Ethiopian Airlines Flight ET302 at the Selassie Church in Addis Ababa. PHOTO: MAHEDER HAILESELASSIE/REUTERS

This reconstruction of the final moments of Ethiopian Airlines Flight ET302, described in new detail by people close to the crash investigation, airline executives and pilots, paints a picture of a catastrophic failure that quickly overwhelmed the flight crew.

It appears to support a preliminary conclusion reached by Ethiopian officials and international investigators, who believe an automated flight-control feature activated before the plane nose-dived into the ground, according to people familiar with the matter. –Wall Street Journal

The black boxes have reinforced the emerging consensus that the anti-stall MCAS system is to blame, and that the misfiring system is at the heart of both the Ethiopian Airlines crash and the October Lion Air 737 Max 8 crash off the coast of Indonesia less than five months earlier in which the stall-prevention system activated due to an erroneous sensor reading which pushed the plane’s nose down, killing all 189 people on board. 

The day before the Lion Air crash, an off-duty pilot flying in the jumpseat of the same plane was able to talk pilots through powering off the MCAS system as it began to exhibit the same malfunction. 

Right after the Ethiopian Airlines jet lost radio contact and fell off the radar, it was becoming clear that the plane had crashed. 

As two air force helicopters prepared to lift off to search for ET302, pilots on the airport runway were getting restless.

Lazarus Kuol was in line for departure, preparing to take off on his single-engine turboprop aircraft on a medevac flight to the southwestern city of Jinka. He was due to collect two Chinese patients and bring them back to Addis Ababa for treatment.

The waiting pilots, listening to the control tower’s shared frequency, heard the operators discuss an emergency and order all aircraft to remain grounded, while two incoming planes were told to delay landing. The tower had lost contact with ET302. Maybe it was a communication problem, Mr. Kuol thought, or maybe they made an emergency landing on the flat farmlands southeast of the capital. –Wall Street Journal

 

A relative of a crash victim throws dirt in her face in grief. PHOTO: MULUGETA AYENE/ASSOCIATED PRESS

“When I went to the site, the plane was completely below ground,” said Ethiopian Airlines Chief Executive Tewolde Gebremariam. “At that time, we knew there were no survivors.” 

via ZeroHedge News https://ift.tt/2U5mtRc Tyler Durden

“Pitch Up, Pitch Up!”: Black Box From Doomed Ethiopian 737 Reveals Desperate Struggle To Control Plane

As Ethiopian Airlines flight 302 took off in perfect, cloudless conditions on at 8:37 on March 10, it would take less than two minutes for all hell to break loose with the Boeing 737 Max 8 with 157 people on board. 

Two minutes after it departed from Addis Ababa’s highland airport on its scheduled one hour and 40 minute shuttle to Nairobi, things began to go very wrong, according to the Wall Street Journal

At 8:39, with the jet just 450 feet above the ground, its nose began to pitch down. First Officer Ahmednur Mohamed radioed the control tower to report a “flight-control problem.” 

Captain Yared Getachew, a veteran with over 8,000 flight hours, fought to keep the plane’s nose up. One minute later at 8:40, “the oscillation became a wild bounce, then a dive,” according to the WSJ

Pitch up, pitch up!” said one pilot to the other before the radio went dead. 

At 8:44 the 737 Max 8 crashed into a field 30 miles from the airport, instantly killing everyone on board. 

An excavator works the crash site of the Ethiopian Airlines jet. PHOTO: XINHUA/ZUMA PRESS

Relatives mourn passengers and crew members from Ethiopian Airlines Flight ET302 at the Selassie Church in Addis Ababa. PHOTO: MAHEDER HAILESELASSIE/REUTERS

This reconstruction of the final moments of Ethiopian Airlines Flight ET302, described in new detail by people close to the crash investigation, airline executives and pilots, paints a picture of a catastrophic failure that quickly overwhelmed the flight crew.

It appears to support a preliminary conclusion reached by Ethiopian officials and international investigators, who believe an automated flight-control feature activated before the plane nose-dived into the ground, according to people familiar with the matter. –Wall Street Journal

The black boxes have reinforced the emerging consensus that the anti-stall MCAS system is to blame, and that the misfiring system is at the heart of both the Ethiopian Airlines crash and the October Lion Air 787 Max 8 crash off the coast of Indonesia less than five months earlier in which the stall-prevention system activated due to an erroneous sensor reading which pushed the plane’s nose down, killing all 189 people on board. 

The day before the Lion Air crash, an off-duty pilot flying in the jumpseat of the same plane was able to talk pilots through powering off the MCAS system as it began to exhibit the same malfunction. 

Right after the Ethiopian Airlines jet lost radio contact and fell off the radar, it was becoming clear that the plane had crashed. 

As two air force helicopters prepared to lift off to search for ET302, pilots on the airport runway were getting restless.

Lazarus Kuol was in line for departure, preparing to take off on his single-engine turboprop aircraft on a medevac flight to the southwestern city of Jinka. He was due to collect two Chinese patients and bring them back to Addis Ababa for treatment.

The waiting pilots, listening to the control tower’s shared frequency, heard the operators discuss an emergency and order all aircraft to remain grounded, while two incoming planes were told to delay landing. The tower had lost contact with ET302. Maybe it was a communication problem, Mr. Kuol thought, or maybe they made an emergency landing on the flat farmlands southeast of the capital. –Wall Street Journal

 

A relative of a crash victim throws dirt in her face in grief. PHOTO: MULUGETA AYENE/ASSOCIATED PRESS

“When I went to the site, the plane was completely below ground,” said Ethiopian Airlines Chief Executive Tewolde Gebremariam. “At that time, we knew there were no survivors.” 

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Mulvaney: It Would Take “Something Dramatic” For Trump Not To Close The Southern Border

Following reports over the weekend warning about a “system-wide collapse” along the southern border as a surge in asylum-seeking migrants has overwhelmed Customs and Border Protections’ detention centers and strains municipal resources, Trump acting Chief of Staff Mick Mulvaney warned during an appearance on ABC’s “This Week” that President Trump’s threat to close the southern border this week should absolutely be taken seriously.

Mulvaney

The Mexican peso tumbled Friday afternoon after Trump tweeted that he would close the border unless Mexico took steps to stop Central American migrants traveling through its territory, before telling a group of reporters that he would shut the border “for a long time” if nothing is done.

Responding to a question about whether Trump was serious about closing the border, Mulvaney affirmed that it would take “something dramatic” for him not to do it. Even former Obama officials have come forward to talk about the burgeoning crisis at the border, and the fact that the situation isn’t a “made up emergency” has now been well established.

“When Jeh Johnson said it’s a crisis, I hope people now believe us. A lot of folks in the media…Democrats didn’t believe us a month ago, two months ago, when we said what was happening at the border was a crisis: a humanitarian crisis, a security crisis,” he said.

“One hundred thousand people coming across the border this month…that is a crisis,” he added.

Mulvaney was referring to figures from the border patrol that 100,000 migrants, many of whom were traveling in families, crossed the southern border in March, which would be a new record. Last week, Customs and Border Protection Commissioner Kevin McAleenan warned that the agency’s resources had reached a “breaking point”, and called on Congress to act to authorize more resources for the border patrol and customs enforcement at the border.

Trump previously threatened to close the border in November and December, though the markets mostly shrugged these off as idle threats. But as more mainstream media outlets cover the rapidly deteriorating situation with an increasing sense of urgency, the pressure is mounting on Trump to hold to his anti-immigration principles and take immediate action.

Though any order to close the border will almost certainly elicit lawsuits to try and reverse it.

Watch the clip with Mulvaney below:

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Why Russia Is Dumping Dollars And Buying Gold At The Fastest Pace In Decades

Nine months ago, as US Treasury yields were drifting lower from a seven-year high reached in May of last year, we pointed out a curious development in the market for US sovereign debt that to our complete lack of surprise had been overlooked by the mainstream financial press: In April and May, Russia’s central bank liquidated $81 billion in Treasurys, nearly its entire holdings.

The drop was so significant, that Russia fell off the Treasurys list of the 30 or so largest Treasury holders. And in the months that have followed, as the US has imposed more economic sanctions and feuded with Putin over the fate of Venezuelan leader Nicolas Maduro, Vladimir Putin has turned instead to alternative reserves as the country’s de-dollarization push continued.

Over the same period of time, Russia was a conspicuously large buyer of Chinese yuan, as Goldman Sachs noted (and as we highlighted well earlier today), helping contribute to a spike in yuan buying by reserve managers last year, as the IMF pointed out in a recent report.

Reserves

Reserves

But given the yuan’s still-limited convertibility, it has its limitations as a reliable reserve for foreign central banks. Which is probably why Moscow has relied on another reserve option that’s popularity has endured for most of the history of human civilization: Gold.

Data from the Russian central bank cited by Bloomberg show that its gold reserves have nearly quadrupled over the past ten years, and that 2018 marked the most “ambitious year yet” for Russia gold-buying, which coincided with the Central Bank of Russia’s mass-dumping of its Treasury holdings.

Russia

And in a rare, if muted, acknowledgement from the American financial press that de-dollarization is a contemporary threat that should be taken seriously, BBG said that “analysts, who have coined the term de-dollarization, speculate about the global economic impacts if more countries adopt a similar philosophy and what it could mean for the dollar’s desirability compared with other assets, such as gold or the Chinese yuan.”

RS

While Russia’s dependence on exporting commodities like gold means it must continue to depend, at least in part, on the greenback (three-quarters of Russia’s $600 billion of trade is conducted in dollars, per BBG), this voracious gold buying is setting an example for other countries – in the west as well as in the east. Last year, Russia’s gold buying outstripped its gold production for the first time. And as relations with the US continue to deteriorate as longstanding arms control treaties are torn up and belligerent rhetoric spouted by both Trump and Putin, the Russian central bank might start importing more gold, which could have a positive impact on the global price.

Russia

Per two analysts, Russia has ingle-handedly “put a floor” under the price of gold. Though some suspect that, since the CBR is now a known quantity in international gold markets, it would need to markedly accelerate its purchases to have a material impact on the price. Though few expect Russia to stop buying now.

Central bank buying has helped “strengthen gold from a weak hand to a strong hand” and supported gold prices in recent years, according to Ronald-Peter Stoeferle, managing partner at Liechtenstein-based asset manager Incrementum AG. Bullion has risen more than 20 percent since the start of 2016. It traded up 0.5 percent at $1,297.15 per ounce at 12:40 p.m. in London.

“If it wasn’t for Russia’s central bank, last year would have been the worst year for gold buying in a decade, so it helped put a floor on the price,” said Adrian Ash, head of research at gold brokerage BullionVault Ltd. “However, Russian buying is now well known so it would take a significant increase in their purchases to materially impact the gold price.”

But perhaps the most notable aspect of Putin’s rhetoric about de-dollarization  is how it’s apparently influencing leaders of states that are still – at least nominally – friendly toward the US. French President Emmanuel Macron said in an interview late last year that Europe is too dependent on the greenback, declaring it “an issue of sovereignty” (this from one of the most ardently pro-EU politicians on the Continent). And last year, Poland and Hungary surprised the market by making the first substantial purchases of gold by EU member states in more than a decade.

So the next time you hear an analyst on CNBC categorically dismiss the notion that the loss of the dollar’s reserve currency status isn’t something that markets should take seriously (even as several credible voices have warned that it should be), you’d do well to remember this chart.

Reserves

Nothing lasts forever.

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Former Obama Official Admits Trump Is Right: ‘We have A Crisis At Our Southern Border’

Authored by Jennie Taer via SaraCarter.com,

Former Homeland Security Secretary Jeh Johnson said Saturday that America has a “crisis” at the southern border, and that the number of apprehensions exceed anything he encountered during his time serving under former President Barack Obama.

“By anyone’s definition, by any measure, right now we have a crisis at our southern border,” he said on “Cavuto LIVE.”

“According to the commissioner of [Customs and Border Protection], there were 4,000 apprehensions in one day alone this past week, and we’re on pace for 100,000 apprehensions on our southern border this month.”

“That is by far a greater number than anything I saw on my watch in my three years as Secretary of Homeland Security,” he said.

Johnson’s remarks come after President Trump this week accused Mexico of doing nothing to stop the illegal immigration flow to the U.S. and threatened to close to southern border next week.

Last month, more than 76,000 migrants were detained, marking the highest number of apprehensions in 12 years.

via ZeroHedge News https://ift.tt/2FNG9QR Tyler Durden