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Elizabeth Warren’s Wealth Confiscation Tax Would “Redistribute” 2.75 Trillion Dollars Over 10 Years

Authored by Michael Snyder via The Economic Collapse blog,

Elizabeth Warren is making it exceedingly clear that she is a socialist, and that is quite frightening considering the fact that she could potentially become our next president. 

Unless some really big name unexpectedly enters the race, there is a decent chance that Elizabeth Warren could win the Democratic nomination in 2020.  And if she ultimately won the general election, the Democrats would likely have control of both the House and the Senate during her first two years in the White House as well.  So that means that the proposal that you are about to read about could actually become law in the not too distant future.

After AOC’s proposal to raise the top marginal tax rate to 70 percent received so much favorable attention, it was just a matter of time before Democratic presidential candidates started jumping on the “soak the rich” bandwagon, and the first one to strike was Elizabeth Warren.

When she announced her new proposal on Twitter, she dubbed it the “Ultra-Millionaire Tax”…

We need structural change. That’s why I’m proposing something brand new – an annual tax on the wealth of the richest Americans. I’m calling it the “Ultra-Millionaire Tax” & it applies to that tippy top 0.1% – those with a net worth of over $50M.

It would be bad enough if this was just a one-time tax on wealth.

But it isn’t.

Please note the use of the word “annual” in Warren’s tweet.  That means that the rich would keep getting hit with this tax year after year after year.

Those with more than 50 million dollars in assets would pay a 2 percent tax each year, and those with more than a billion dollars in assets would pay 3 percent each year…

The Post reported that Warren has been advised by Saez and Gabriel Zucman, left-leaning economists affiliated with the University of California, Berkeley, on a deal that would levy a 2 percent wealth tax on Americans with $50 million-plus in assets. For Americans with assets above $1 billion, that tax rate would increase to 3 percent.

The newspaper, citing a person familiar with the plan, reported that Warren’s plan would try to counter tax evasion by boosting funding for the IRS, and by levying a one-time tax penalty on people with more than $50 million who try to renounce their U.S. citizenship. It would also require that a certain number of people who pay the wealth tax be subject to annual audits, the Post reported.

3 percent may not sound like a lot to many of you.  But over the course of a couple of decades many families could have their fortunes almost completely wiped out by this wealth confiscation tax.

According to economist Emmanuel Saez, this new tax would be imposed upon approximately 75,000 families and would raise 2.75 trillion dollars over 10 years.

Clearly this is a move by Warren to appeal to the progressive wing of the Democratic Party.  I really like how Zero Hedge made this point…

Elizabeth Warren has never been a friend to the wealthy. But in the age of Bernie Sanders and Alexandria Ocasio-Cortez, merely advocating for “holding the rich accountable” simply doesn’t penetrate like it did back in 2008. And that’s because, on the left flank of the Democratic Party, you’re not really a progressive unless you believe that the existence of billionaires is a policy error.

And surprisingly, there is actually a lot of public support for such a proposal.  In fact, a recent Fox News poll found that Americans overwhelmingly support soaking the rich…

Voters support tax increases on families making over $10 million annually by a 46-point margin (70 percent favor-24 percent oppose), and support a hike on those making over $1 million by 36 points (65-29 percent).

There is less support for a broader tax increase: 44 percent favor raising rates on those with income over $250,000, and a small minority, 13 percent, approves of an increase on all Americans.

Of course so much depends on how a survey is worded.  For example, I would be willing to bet that a survey would show that well over 50 percent of all Americans would back my proposal to abolish the income tax completely.

Over the coming months, Democratic presidential contenders are going to be continuously trying to one up each other with their promises to tax the rich and give out free stuff.  By the end, someone out there may even be promising to give free rides to the Moon to everyone.

But if Elizabeth Warren really wants to be considered a serious contender, she needs to eliminate the ridiculous gaffes that have plagued her in the past.  For instance, she recently claimed that we have “two co-equal branches of government”…

Freshman Rep. Alexandria Ocasio-Cortez, D-N.Y., already has declared that the government has “three chambers of Congress,” the House, the Senate and the presidency.

Now, Sen. Elizabeth Warren, D-Mass., has claimed on Twitter that the government has “two co-equal branches of government, the president of the United States and Congress.”

“The Notorious RBG (Supreme Court Justice Ruth Ginsburg) is gonna be ticked off that she’s been forgotten again,” said a post on the Twitter news-aggregating site Twitchy.

And there is certainly no excuse for such a gaffe, because she used to be a law professor.

In the end, it is difficult to understand why so many Americans seem to want to march down the road toward socialism.  Because as President Trump has noted, Venezuela has shown us where that road leads…

“We’re looking at Venezuela, it’s a very sad situation,” Trump told reporters. “That was the richest state in all of that area, that’s a big beautiful area, and by far the richest — and now it’s one of the poorest places in the world. That’s what socialism gets you, when they want to raise your taxes to 70 percent.”

He added: “You know, it’s interesting, I’ve been watching our opponents — our future opponents talk about 70 percent. No. 1, they can’t do it for 70 percent, it’s got to be probably twice that number. But, maybe more importantly what happens is you really have to study what’s happened to Venezuela. It’s a very, very sad situation.”

Unfortunately, political proposals don’t have to actually make sense, and right now Elizabeth Warren is doing all that she can to win the progressive vote.

via ZeroHedge News http://bit.ly/2MCsqyc Tyler Durden

EU Adds Saudis To Terror-Funding List (As Iran-Sanction-Evading SPV Reaches “Advanced Stage”)

The European Union seems confused…

Reuters reports that, according to two sources, the European Commission has added Saudi Arabia to an EU draft list of countries that pose a threat to the bloc because of lax controls against terrorism financing and money laundering.

The move comes amid heightened international pressure on Saudi Arabia after the murder of Saudi journalist Jamal Khashoggi in the kingdom’s Istanbul consulate on Oct. 2.

The EU’s list currently consists of 16 countries, including Iran, Iraq, Syria, Afghanistan, Yemen and North Korea, and is mostly based on criteria used by the Financial Action Task Force (FATF), a global body composed by wealthy nations meant to combat money laundering and terrorism financing.

Saudi Arabia missed out on gaining full FATF membership in September after it was determined to fall short in combating money laundering and terror financing.

The government has taken steps to beef up its efforts to tackle graft and abuse of power, but FATF said in September that Riyadh was not effectively investigating and prosecuting individuals involved in larger scale money laundering activity or confiscating the proceeds of crime at home or abroad.

The provisional decision to add Saudi Arabia needs to be endorsed by the 28 EU states before being formally adopted next week.

And this is where we get a little confused… because while Europe lists Iran as a state sponsor of terror, it is also, reportedly, at an “advanced stage” of completion of its special purpose vehicle to help European companies bypass U.S. sanctions on Iran.

Citing three European diplomats, Bloomberg reports that the European Commission said it’s seeking to launch “very soon” with the official unveiling could come as early as Monday.

“The SPV preparations have progressed; they are at an advanced stage,” the spokeswoman, Maja Kocijancic, told reporters in Brussels.

“I hope that we can announce the launch very soon.”

Progress had been slow as the EU, led by France, Germany and the U.K., has struggled to find a government willing to host the vehicle, which risks drawing criticism from the American administration.

The Trump administration has considered such efforts an attempt to evade its “maximum pressure” campaign on Iran. The U.S. will fully enforce its sanctions and hold accountable any individuals or entities that undermine them, according to an administration official who spoke on condition of anonymity.

via ZeroHedge News http://bit.ly/2RRGs4O Tyler Durden

Washington State Lawmaker Wants to Ban Dwarf Tossing, Says It ‘Ridicules and Demeans’

A Washington State legislator has proposed legislation that would ban dwarf tossing, arguing that it’s “an offense to our sensibilities.”

Dwarf tossing, for those who aren’t familiar, involves a person with dwarfism allowing him or herself to be thrown onto a padded surface (like a mattress) or Velcro wall. The dwarfs are usually paid performers, and they generally wear protective gear. The practice has origins in mid-1980s Australia, according to The Washington Post. If you’ve got more questions, look no further than the opening scene of the 2013 film The Wolf of Wall Street, starring Leonardo DiCaprio.

But according to Washington State Sen. Mike Padden (R–4), it should be illegal. “There’s nothing funny about dwarf-tossing,” Padden said in a statement yesterday. “It ridicules and demeans people with dwarfism, and causes others to think of them as objects of public amusement. Even when participants are willing, it exposes them to the possibility of lifetime spinal injury. Dwarf-tossing is an offense to our sensibilities.”

Padden’s statement came a day after he co-sponsored SB 5486 along with Sens. Barbara Bailey (R–10) and Patty Kuderer (D–48). The bill says businesses licensed to sell liquor (i.e. bars) and “adult entertainment venues” (i.e. strip clubs) cannot “allow or permit any contest or promotion or other form of recreational activity involving exploitation that endangers the health, safety, and welfare of any person with dwarfism.” Violations are punishable by a loss of liquor/business license and a fine of up to $1,000.

Padden says he became aware of this issue following a dwarf-tossing event last October at the Deja Vu Showgirls strip club in Spokane Valley. “Why would these people sign up to be, you know, be physically abused, maybe even hurt, thrown around?” Gonzaga University student Ben Foos, himself a dwarf, asked KREM at the time. “It’s more frustrated with the viewers and the people who are coordinating it because they know what’s happening and they are paying to see it happen,” Foos added.

Ever since then, Foos and his mother Ginny, who’s also a dwarf, have advocated to make dwarf tossing illegal. “I’m particularly concerned about that it is occurring among inebriated people that leave the bar and think they can do that to just anybody,” Ginny Foos told KHQ. “I hope it’s eradicated by the time I have grandchildren so I don’t have to worry about it.”

The state senate’s Law and Justice Committee will hold a hearing on the bill on January 31. Representatives from the dwarf advocacy group Little People of America, which generally opposes dwarf tossing, will testify, according to The Spokesman-Review.

But not everyone is in agreement. Mighty Mike Murga, who was tossed at the Deja Vu Showgirls club in October, compared his preparation to that of any other athlete. “It’s a sport that started in England in the 1800s,” he tells The Spokesman-Review. “This is not for every little person. If you’re not cut out for it, don’t do it,” he adds.

Washington isn’t the only place where people are debating the merits of dwarf tossing. That’s thanks to Neomi Rao, the administrator of the White House’s Office of Information and Regulatory Affairs, who President Trump has nominated to be a judge on the U.S. Court of Appeals for the D.C. Circuit.

As the Post notes, Rao has faced criticism for her defense of Manuel Wackenheim, a dwarf living in a Paris suburb where dwarf tossing was prohibited. Wackenheim challenged the ban in the 1990s, claiming that he made a living by being tossed.

Writing in Volokh Conspiracy in 2011, Rao explained why the ban was misguided. “Respect for intrinsic human dignity, however, would favor individual choice,” she wrote. “As with other similar theories, it is a short step from having substantive ideals of dignity to coercion of individuals in the name of these ideals.”

It’s a fair point, as the R Street Institute’s Shoshana Weissmann explained in a November piece for Reason. “One can disagree with another’s choices,” Weissmann wrote, “but dignity is about the right to make those choices instead of having the government make them for us.”

This applies to the law proposed in Washington State as well. Padden claims dwarf tossing “ridicules and demeans people with dwarfism.” In reality, it’s far more demeaning to think you know what’s best for an entire group of people. No one is forcing dwarves to be tossed, but if that’s an activity they want to voluntarily pursue, they should be able to.

And what about claims that dwarf tossing is physically dangerous? Well, no one has seriously proposed banning football or hockey. According to Murga, it’s the same idea. “The impact [in dwarf tossing] is hitting the mattresses from the top,” he told the Post. “In those sports, the impact is the other player pushing or hitting you, shoving you over, and you falling to the ground. So this is the same resistance.”

from Hit & Run http://bit.ly/2Tajwdz
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A Recession Survival Guide

Authored by Charles Hugh Smith via OfTwoMinds blog,

The funny thing about slashing your budget to survive a recessionary storm is that it works wonders whether the recession is deep or shallow.

We know that after 10 years of expansion, a recession is baked in. Trees don’t grow to the moon, etc.

We also know that some people will hardly notice the recession while others are devastated. I addressed this in The Recession Will Be Unevenly Distributed(January 10, 2019). A retiree on Social Security and a bit of income from Treasury bonds isn’t going to be affected much, and a power couple in Washington DC who are high up the food chain in the federal government will also shrug off the recession.

What we don’t know is what kind of recession we’re going to get. It’s been almost 40 years since the U.S. experienced a “real recession,” i.e. a downturn that was severe and not limited to narrow slices of the economy.

The recession of 2008-09 was over before it started, and the damage was largely limited to the speculative housing-mortgage sectors and finance and everyone who was over-leveraged in the housing market.

The recession of 2000-02 was limited to the tech sectors that were exposed to the dot-com meltdown and investors in speculative dot-com companies.

The recession of 1991-92 was brief and shallow by historical standards.

The “real recession” of 1981-82 laid waste to numerous sectors and spread devastation throughout the economy. Interest-sensitive industries were crushed, and this impacted sectors such as government that are typically impervious to recessions.

Even further back, the Oil Shock recession of 1973-74 was also an economy-wide upheaval.

Those pundits who aren’t denying a recession is baked in are busy assuring us it will be a mere slowdown. What the well-paid pundits of the status quo can’t or won’t discuss is the economy’s fragility and vulnerability to self-reinforcing declines.

I’ve often discussed this systemic fragility as buffers have been thinned and transparency has been replaced with asymmetric information. The neofeudal-rentier structure of our economy is brittle, inflexible and grossly inefficient. As a result, a “downturn” will unleash a tsunami as opaque, brittle skims and scams break down.

Our Financial Buffers Are Thinning (July 13, 2017)

How Systems Collapse (May 29, 2018)

Few participants are expecting a “real recession” and so they’re ill-prepared for a “real recession.” Discussing how to weather a recession is akin to discussing oral hygiene and home maintenance: everyone nods their heads at the same old advice, but they don’t actually clean their gutters.

It’s easy to lulled into believing every recession will be short and shallow, and the effect on one’s own household will be modest. But “real recessions” are not short and shallow, and they impact the entire economy, not just a few sectors.

Recessions slash income but leave fixed costs–rent, auto and student loan payments, mortgages, etc.–untouched. It sounds too obvious to be useful but if incomes decline while major expenses remain unchanged, that’s a problem for every household and entity with high fixed costs.

Put another way: fewer bad things can happen to households and entities with no debt and low fixed costs.

The solution to high debt/fixed costs in expansive eras is to increase income.Very few people manage to increase their incomes in recession; most suffer declining income and higher fixed costs as local governments raise taxes to cover shortfalls in their revenues.

The age-old advice to survive recessions is: get rid of debt, diversify the household’s income streams, slash fixed costs and build up some savings.

The more radical the slashing of debt and fixed costs the better. Assuming the household will have to survive a 50% drop in income is a good place to start.

Selling (overpriced) assets to liquidate debt is one way to get rid of debt payments. Eating 95% of all meals at home slashes food/dining expenses, eliminating media subscriptions (and reducing the time spent staring at screens) cuts fixed costs, and so on.

The funny thing about slashing your budget to survive a recessionary storm is that it works wonders whether the recession is deep or shallow. If your income doesn’t take a hit, then you’re saving money to buy recession-discounted assets or spend on important purchases later without having to go into debt.

If your income does take a significant hit, you’re already prepared.

Look at what the 1% own and what the bottom 80% own. 

The bottom 80% “own” debt and the top 1% owns income-producing businesses and assets. Who is better prepared to survive a “real recession”? Those with zero debt and income streams they control.

*  *  *

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($6.95 ebook, $12 print): Read the first section for free in PDF format. My new mystery The Adventures of the Consulting Philosopher: The Disappearance of Drake is a ridiculously affordable $1.29 (Kindle) or $8.95 (print); read the first chapters for free (PDF). My book Money and Work Unchained is now $6.95 for the Kindle ebook and $15 for the print edition. Read the first section for free in PDF format. If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

via ZeroHedge News http://bit.ly/2DzgMkI Tyler Durden

Gold Jumps, Dollar Dumps As Trump Folds, Fed Holds

China Manufacturing, European Economy, and US Hope all plunging further… so buy stocks right? Bad global news is great stocks news?

And then there’s this…

So what is lifting stocks? Well that’s easy…

How to trade it? Simple, don’t…

 

China let slip quasi QE but the early gains were erased into the close…

 

German business sentiment tumbled but EU stocks managed strong gains…except UK’s FTSE…

 

Led by European banks soaring today after dumping on ECB comments (and no, nothing changed)…

 

US equity futures surged overnight after Quasi QE from China and a WSJ headline on the end of QT. However, having tagged the week’s highs, stocks dipped on headlines of a shutdown deal (remember, End of Shutdown is negative for stocks as it means the economy won’t crash in Q1, meaning a lower probability that The Fed stops QT), but ended higher on the day and week…

The S&P ended red on the week (breaking its 4-week win streak) but Nasdaq and The Dow managed to hold tiny gains on the week…

 

Another major short-squeeze dragged markets higher after Tuesday’s tumble…

 

Credit and equity protection compressed notably on the day and week…

 

Treasuries were sold today, erasing yesterday’s gains but ending the week lower in yield still…

 

Bond yields still have room to fall if equity cyclicals are right…

 

The dollar puked today after WSJ reports a QT slowdown – this is the biggest drop since early November…

 

Yuan surged on the week… (today was biggest spike since Dec 1st)

 

EUR dumped on ECB yesterday and jumped today on WSJ’s Fed QT story, breaking up to the 1.14 technical support/resistance…

 

Despite the dollar weakness, bitcoin and Ether both fell on the week…

 

Commodities spiked on the day as the dollar dumped…Silver was best on the week…

 

WTI chopped around between various whole numbers…

 

Spot gold spiked above $1300 intraday to its highest since June…

 

Silver surged on the day amid heavy volume…

Breaking above the 200DMA…

Gold is nearing a “golden cross” formation…

 

Gold surged in dollars and yuan (the biggest jump in the latter in over a month)…

 

And finally, since The Fed hiked rates in December, gold remains the leading asset class, just ahead of The Dow…

 

And we leave you with this from a decade ago – has anything really changed?… “wankingbankers”…

via ZeroHedge News http://bit.ly/2ThcJyW Tyler Durden

Jim Kunstler: “Sometimes, Nations Just Lose Their Shit”

Authored by James Howard Kunstler via Kunstler.com,

In The Deep Mid-Winter

Ill winds sweep across the fruited plain in the cruel heart of winter. America can resolve nothing. The state-of-the-union is a kind of hysterical nausea, and the nation hunkers into its crib of toxic diverse identities waiting for history to bitch-slap it back on its feet. History’s big sister, Reality, stands by, witnessing all. Spring… is… coming….

Things break up in spring. Nature unlocks what was frozen. The bodies emerge from the melting ice and ripen. The air is electric and thunderbolts frighten the gathering mobs in the public square, the Walmart parking lot, with rumors of war. The earth shakes and monuments fall. That’s how it’s shaping up for 2019.

Sometimes nations just lose their shit.

The complex collapse of American life proceeds as the public and its leaders fail to comprehend the forces in play. What the Federal Reserve actually accomplished with its ten years of extend-and-pretend policy was not an economic “recovery,” but a degenerative disease of the social contract. If you look more closely, you can sense what will be unleashed when the ground thaws.

There will be a reckoning in the financial markets. Something ominous is rumbling over in bonds. No more high-yield for you! Among the victims of a credit freeze in “junk” (high-risk) lending: the shale oil industry. Watch it start to roll over this spring as money becomes unavailable for the exorbitant operations that comprise fracking. The swift collapse of the shale oil industry will shock the country, but it is really just the downside of its improbably rapid and acrobatic rise since 2005 on the false premise that profits don’t matter in a business venture. Only the fall will be even sharper than the rise: a few measly years. And, of course, the bond market represents the supreme untruth of the age: that debts can be racked up forever and never paid back.

Mr. Trump will be left holding a bag so large that observers may mistake him for a Bizarro Santa Claus. But the baggage within will not consist of sugarplums. It is actually stuffed with bankruptcy filings and pink slips. A year from now, there may be no such thing as a hedge fund left on the planet Earth. Or a job opening, unless you’re really good at weeding or picking fruit. Mr. Trump will attempt a rescue, but so did Herbert Hoover, who had a good three years to try this-and-that while the Depression stole over the land like a deadly fungus. The difference, of course, is that Mr. Hoover was acknowledged as a most brilliant mind of his era, and yet Reality had her wicked way with him, anyway.

The Democratic Party should have been tossed into the rubber room two years ago, but it’s still out there shrieking in its straight-jacket of bad faith. Kamala, Liz, and Kirsten will mud-wrestle for dominance, but so far, the only cards they can show are the race-and-gender jokers in the deck. Meanwhile, the government shutdown standoff may not be the “winner” move that Nancy Pelosi thought it would be. Why do you suppose she thought that the voters would only blame the Golden Golem of Greatness? She could be gone as Speaker when we’re back in shirtsleeve weather.

Also in the background: the likely shocking reversal of the long, dreary, RussiaGate affair as about twenty-odd former officials of the FBI, Department of Justice, CIA, State Department, and other dark corners of the Deep State answer charges of sedition in federal court. Many of them are connected, one way or another, to Hillary Clinton, who may be targeted herself. Robert Mueller is also liable to smacked with a malicious prosecution charge in the matter of General Michael Flynn when he withdraws his guilty plea in March. A significant moment will be when Dean Baquet is fired as editor of The New York Times, after years of running the “newspaper of record” as an exercise in nonstop PMS.

Financial crack-up and RussiaGate reversal will leave both major parties gasping in the mud as the tide goes out. And just in time for the Yellow Vest movement to cross the ocean and bring out the street mobs to slug it out on the National Mall in lovely weather. Finally, a protest you can believe in! By June, it will be clear that the old order is being swept away. The fight over the new order struggling to be born will be even harsher and deadlier. But we may not be as confused about what’s at stake.

via ZeroHedge News http://bit.ly/2MyFkgt Tyler Durden

New Chinese App Lets Users ID Debtors Lurking Nearby

DebtMapAppWeChatIf you’re the sort of upstanding citizen who always wants to know if some deadbeat debtors happen to be lurking nearby, then there’s good news—at least if you live in China’s Hebei province. Last week the Higher People’s Court of Hebei introduced a mini-program on WeChat messaging, social media, and mobile payment app targeting “debt dodgers.” The app, dubbed a “deadbeat debtors map,” enables users to identify and locate any debtors who come within 500 meters. Specifically, it identifies people who have been failing to pay such legal obligations as court-imposed fines, divorce settlements, rent, and loans.

Why publicly expose debtors to public view? The People’s Court Newspaper explains the thinking: “With the development of economy and the convenience of transportation, people’s travel and mobility costs are lower, and there are more opportunities for people to evade responsibility for their debts. Once a discredited debtor leaves his original working life circle to live in other places, he basically does not feel the moral pressure from the society of acquaintances to honor his debts.”

Deploying the debtor map app, the People’s Court adds, “is equivalent to constructing a ‘quasi-acquaintance society’ by technical means, and solving the problem of ‘moral pressure’ in a society of strangers. Thus debtors will be forced to fulfill their obligations as soon as possible, no longer getting away with being deadbeats.”

The new app is part of the rollout of China’s Social Credit System, which aims to track and report the “trustworthiness” of every citizen by 2020. So far, the Social Credit System does not assign an easily accessed three-digit trustworthiness score to each citizen, as some media outlets have reported. But as the Hebei debtor map app indicates, various localities are experimenting with combinations of private and public social scoring.

The Nation reports that the city of Rongcheng has implemented probably the most thoroughgoing version of a Social Credit System so far. Citizens of Rongcheng earn or are docked points from their initial assignment of 1,000 points for engaging in various activities that result in social credit grades ranging from A+ to D. Not stopping for pedestrians in a crosswalk results in a loss of five social credit points, for example; graffiti hostile to the government forfeits 50 points. Helping a neighbor prune a tree or get his car out of a ditch earns the do-gooder a point. Citizen activities are monitored and enforced by a extensive system of surveillance cameras. According to The Nation, some neighborhoods “already have a social-credit square where bright billboards show details of the commands and pictures of citizens who have won or lost points during the past month.” Talk about constructing a “quasi-acquaintance society” by technical means!

In addition to the public shaming, blacklisted citizens with low social credit scores are banned from booking rooms in hotels, registering their children for good evening classes, or buying tickets for high-speed trains or air travel for a year. Low-scoring companies are banned from responding to calls for tender offers.

None of us have never done something of which we are now ashamed. Would you like to live in a world where random strangers nearby can click on an app that instantly reports your dumbest and most embarrassing past blunders? I wouldn’t.

But many Chinese say they appreciate the ways the nascent Social Credit System forestalls fraud and encourages people to behave better in public. A 32-year-old Rongcheng entrepreneur named Chen tells Foreign Policy that “people’s behavior has gotten better and better. For example, when we drive, now we always stop in front of crosswalks. If you don’t stop, you will lose your points.” He adds: “At first, we just worried about losing points, but now we got used to it.”

Recent polling data suggests that the Social Credit System has been popular with most Chinese citizens so far. So let’s end on a disquieting question: How many Americans would be similarly willing to surrender the liberty and pleasures of public anonymity in exchange for a bit more public order?

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Roger Stone Indictment Describes a Cover-Up of a Nonexistent Crime

Roger Stone, the self-described “dirty trickster” with a tattoo of Richard Nixon’s head on his back, should appreciate the irony that he has been tripped up by the Watergate-era adage that “it’s not the crime; it’s the cover-up.” Except in this case it looks like there was no crime to cover up, which makes the messy web of deceit described in the federal indictment against Stone seem like a trap he set for himself.

The indictment, obtained by Special Counsel Robert Mueller, charges Stone, a longtime adviser to Donald Trump who worked for the billionaire developer’s campaign until August 2015, with one count of obstructing a proceeding (an investigation by the House Permanent Select Committee on Intelligence), five counts of making false statements during a 2017 HPSCI hearing, and one count of tampering with a witness by trying to dissuade a now-former friend from contradicting his congressional testimony. Those are all felonies, punishable by up to five years in prison for each of the first six counts and up to 20 for the seventh.

All of the allegedly criminal statements and communications relate to WikiLeaks’ publication of emails stolen by Russian hackers from the Democratic National Committee and John Podesta, Hillary Clinton’s campaign chairman, in 2016. The hacking itself was a crime, and if Mueller could show that people in the Trump campaign knew about it in advance, they could be implicated in that crime. Stone has repeatedly denied any such foreknowledge, and nothing in the indictment contradicts him on that point.

To the contrary, the emails and public statements quoted in the indictment paint Stone as eager to see whatever damaging information WikiLeaks had acquired about Clinton but hazy as to what it might be. The indictment does not allege that Stone had any direct contact with WikiLeaks, let alone the hackers. He comes across not as criminal conspirator but as a self-promoter whose bullshit caught up with him.

In June and July 2016, nearly a year after he left the Trump campaign, Stone suggested in emails to campaign officials that he had inside knowledge of damaging Clinton-related documents that WikiLeaks was about to publish, and they seemed to take him seriously. That August he publicly claimed to be in touch with the organization’s founder, Julian Assange, who then as now was holed up in Ecuador’s London embassy. After WikiLeaks denied any direct communication with Stone, he said he had been in touch with an “intermediary,” who at that point seems to have been Jerome Corsi, a conservative writer and conspiracy theorist. Later Stone also tried to get information about WikiLeaks’ plans from Randy Credico, a radio host who interviewed Assange on August 25, 2016.

Much of the dissembling described in the indictment relates to Stone’s claim that Credico was his only source of information about WikiLeaks’ plans. Credico had privately warned Stone not to say that, since Stone’s references to an “intermediary” predated Credico’s interview with Assange. But Stone stuck to that story in his testimony to the HPSCI on September 26, 2017, and repeatedly urged Credico, who also was asked to testify, not to contradict him. Hence the witness tampering charge.

In addition to the Corsi/Credico switch, Stone is charged with falsely testifying that he had no emails in which he discussed Assange or WikiLeaks with third parties, that he never asked his intermediary to pass along messages to Assange, that the intermediary did not communicate with WikiLeaks by email or text message, and that he never told anyone in the Trump campaign about his conversations with the intermediary. Based on the testimony and emails quoted in the indictment, it is hard to see how Stone could claim his testimony was truthful, although a creative lawyer might discover wiggle room.

After the HPSCI asked Credico to testify in November 2017, the indictment says, Stone urged him to either back him up or exercise his Fifth Amendment right to remain silent. Credico ultimately declined to testify voluntarily and told the committee he would invoke the Fifth Amendment if required to appear by a subpoena. Why Stone did not do the same thing is not exactly clear, although apparently he worried that it would make Trump look bad by implying that his former adviser had done something criminal. “Because of tromp [sic] I could never get away with [asserting] my Fifth Amendment rights but you can,” Stone wrote in a text message to Credico on December 1, 2017. “I guarantee you you are the one who gets indicted for perjury if you’re stupid enough to testify.”

Credico thought Stone had no one to blame but himself. “You should have just been honest with the house Intel committee,” he wrote in an email last May. “You’ve opened yourself up to perjury charges like an idiot.”

It is hard to argue with that assessment. Judging from the indictment, nothing Stone did in connection with WikiLeaks prior to his congressional testimony was illegal. That includes his communications with the Trump campaign, his suggestion that Corsi obtain emails related to the Clinton Foundation from Assange, and his queries to Corsi and Credico about the dirt that WikiLeaks had on Clinton. Even if Stone had actually obtained and shared purloined emails from WikiLeaks (as many news organizations eventually did), it would not have been a crime. Lying to a congressional committee about those noncriminal acts is another matter. Stone’s problem, like Michael Flynn’s, is not what he did but what he said about what he did.

Trump himself, given his penchant for prevarication, could fall into a similar trap if his lawyers let him. But two years after the investigation into Russian attempts to influence the presidential election began, we have not seen any real evidence of illegal collusion by the Trump campaign. It still looks like the cover-up is the only crime.

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Tumbling Asian Exports Confirm Global Earnings Recession

One wouldn’t know it looking at today’s surge in stocks, but as of this moment no less than three indicators suggest the world now finds itself in either an economic or earnings recession.

Two weeks ago, we showed a chart from Bank of America, according to which the ongoing collapse in global M1 growth strongly suggested that global industrial production was not only negative, but contracting at a rate last seen during the financial crisis.

Then, one week ago, BMO economist Douglas Porter observed the OECD’s leading indicator – which is a good guide post of what is coming just around the corner – and which dipped for the 11th month in a row—it peaked in December 2017—clearly signaling a cooldown.

Now, according to the latest BofA Flow Show report, the bank’s chief investment strategist Michael Hartnett also confirms that “we are in a global EPS recession” by observing the plunge in Asian export growth, which tumbled -4% YoY most recently, a number “consistent with negative global EPS growth.” This is shown in the left chart below, and is is in line with BofA’s own global EPS model forecast, which is currently at  0% EPS growth in the next 12 months (versus 6% consensus) according to Hartnett, who notes that “no new highs for stocks, lows for spreads without inflection point higher in corporate profits.”

Having declared a global EPS recession, BofA then lays out the signs to keep an eye on that the global EPS recession is over, which include:

  • US 2s10s yield curve steepens (> 50bps);
  • global PMI up from 51 to 53;
  • Asian export growth rebounds (signaled by ADXY >108, KOSPI 2300, copper >$300);

And most importantly: China financial conditions ease more substantially (i.e. CHBGMCI >100) as policy makers U-turn on deleveraging of $20tn shadow banking system & stop rising defaults in $3tn corporate bond market.

On the other hand, considering articles such as this one, “China Quietly Announces Quasi QE To “Keep Ponzi Scheme Afloat””, it may be just a matter of time before China’s easing efforts finally spur a material rebound in China’s credit impulse, signaling the key inflection point that will serve to bounce global EPS from their negative bottom.

via ZeroHedge News http://bit.ly/2RQ25T1 Tyler Durden

The Government Will Always Be Shut Down

||| YouTubePresident Donald Trump’s announcement today that the federal government shutdown is ending for a three-week period of negotiations over border security may have put an end to the 35-day standoff. But there is no escaping the conclusion that the underlying dysfunctions and pathologies that got us to this shambolic point will continue long after this month is in the rearview mirror.

As long as Congress refuses to do its job, and as long as the Republican Party refuses to acknowledge that its monomania about security along the U.S.–Mexico border is based on ignorance, unmeetable expectations, and outright lies, we will be reenacting variations on this unpleasant experience for at least the next two years.

“I think part of the problem with politics is people aren’t honest enough about what’s going on. And there’s a lot of bad going on,” Rep. Justin Amash (R–Mich.) told Reason Editor in Chief Katherine Mangu-Ward last Friday at LibertyCon. Like his friend and fellow-traveler Rep. Thomas Massie (R–Ky.), Amash has long been a leading critic of the myriad ways the legislative branch has serially abdicated its most basic of responsibilities in order to preserve electoral viability.

“What we have today is a speakership that is run very much top down,” he told Mangu-Ward. “So the speaker dictates everything to everyone, and then all the legislation is take-it-or-leave-it. ‘Here’s a bill, take it or leave it.’…

||| Nick Gillespie“Under Speaker [Paul] Ryan we weren’t allowed in the last term to even one time—not even one time!—vote on the House floor to amend legislation. It’s the first time in our country’s history. And people don’t know that. First time in our country’s history that members of Congress could not go to the House floor to offer amendments on any legislation. Never happened before….We had a record number of…take-it-or-leave-it bill[s]….So we never really got to legislate.”

Congress hasn’t passed a proper budget in more than two decades, it has let presidents wage undeclared wars all over the globe, and it has shown little interest in rolling back the executive branch’s administrative state. Legislators from the same party as the president openly run interference for the commander in chief, rather than apply the kind of co-equal scrutiny they came into office vowing to exert. Things have gotten so irresponsible that the outgoing House Republican leadership last month tucked into a typically awful Farm Bill reauthorization a provision preventing the 115th Congress from applying the War Powers Act to Yemen.

All of these pathologies have been present in Washington for the entire 21st century; all are objectively getting worse. There is zero reason to expect this sorry trajectory to change.

The same can be said for conservative obsession with “securing the southern border.” Both sides in that debate tend to argue as if the federal government hasn’t been dumping money, personnel, and construction materials into that issue over the past two decades, and on a bipartisan basis. The number of border guards has doubled, the annual Customs and Border Protection budget has more than tripled, physical barriers have expanded from nearly non-existing to more 650 miles, and yet Republicans act as if nothing has ever been done and Democrats act as if such policies are unconscionable only when the other party does them.

But even though Democrats have not yet landed in a coherent space after the great two-party divergence on immigration beginning in around 2013, it’s the restrictionists on the right—and in the White House—who have crossed over into a fantasyland that they show no sign of exiting.

It should tell us something profound that the administration can’t seem to open its mouth about immigration-related issues without lying—about criminality, terrorist infiltration, the drug “pipeline,” sanctuary cities, the diversity lottery visa, chain migration, illegal-immigrant voter fraud, its own reasons for asking about citizenship in the decennial Census, and so on. This is not just about a president uniquely perpendicular to the truth, though Trump did repeat some of his greatest whoppers this afternoon in the Rose Garden. The same broad sense of factually untethered dystopia has been a feature on the right since the end of the Cold War. Just ask Mitt Romney.

Hyperbole is a tool for those frustrated that facts alone haven’t been persuasive enough. Fuse it with the emotions that the immigration issue generates, and the sense of powerlessness that many restrictionists have long felt vis-à-vis the Washington political class, and there’s a potentially lavish reward structure for those who peddle dark fantasies about northbound migrants. Just ask Donald Trump. Or Ann Coulter.

||| Washington PostThe reality is far less exciting. As Nick Gillespie has pointed out in this space, “the number of illegal immigrants in the country is at a 10-year low and the number of people caught trying to enter the country illegally between checkpoints on the Southern border is one-fourth of what it was in 2000 (see chart). Compared to decades past, the majority of illegals enter the country legally and then overstay tourist, student, or work visas. In 2016, the Department of Homeland Security said 170,000 people entered the country illegally outside of border checkpoints while 628,000 people who entered the country legally overstayed visas.”

So enjoy these next three weeks, as a do-nothing Congress matches wits with a hysterical president to see just how both sides can continue putting off their respective reckonings. As in today’s temporary denouement, the safest bet will always be the option that requires exerting the least responsibility. The government will always be shut down, long after the government shutdown.

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