The U.S. economy grew by 4.1 percent during the past quarter, and that’s good news. All the economic signs are positive. Or are they?
There is much less discussion about debt, which has hit another record high. The global debt just reached $247 trillion for the first quarter of this year. That is $29 trillion higher than two years ago. While we rejoice in growth, let’s consider that the global debt-to-GDP ratio exceeds 318 percent. The U.S. debt to GDP exceeds 100 percent. The flood waters are rising, the dams are broken, and we are literally drowning in debt.
Emerging markets, such as Argentina and Nigeria, have accumulated $58.5 in debt, $900 billion of which are in U.S. bonds which will mature in 2020. When interest rates eventually rise, as they will, repayment and refinancing will be more difficult and expensive. Some debts, without a doubt, will be defaulted.
Investor Warren Buffett admits stocks are currently overvalued. He foresees the market going down, but then pulling itself back up. Others are a bit more pessimistic. David Lipton of the IMF has indicated that the burgeoning debt, combined with low interest rates, pose a tremendous economic risk. Dan Coatsof U.S. National Security views America’s $21 trillion debt as not only an economic problem but a security risk, as well.
With rising interest rates looming and trade war between the U.S. and China a real possibility, there are reasons for concern.
Where there is debt, interest payments follow. If current fiscal policies, including President’s Trump’s tax cuts, continue, interest payments could climb to $1.05 trillion by 2028. This would exceed payments for the military or Medicaid as part of the U.S. budget. Interest payments are the fastest part of our budget.
Debt, and the interest payments thereon, are a commitment. However, the current policy of tax cuts and increased spending are decreasing instead of increasing the federal revenues which would allow for repayment. It is up to Congress to set some sound, sane fiscal policies. The simple fact, known to any ten-year with an allowance, is that you can’t keep spending more than you take in.
Thus far, Congress has shown no signs of doing its job. The Federal Reserve continues to print fiat money with abandon, literally throwing fake money at the problem.
It is up to Congress to put a ceiling on our ever-growing debt and find new ways to raise revenues and cut needless spending. Tax breaks and loopholes need to be eliminated. Our debt needs to be paid instead of ignored, and this will take a huge commitment from policymakers. If Congress fails us, it won’t be members of Congress paying our current out-of-control debt. It will our children, grandchildren, and great-grandchildren. They are inheriting a record budget deficit before they have been born.
Congress also needs to consider that Social Security, a debt owed to America’s elderly, is expected to run out of funds in 12 years. We need a plan that protects the money paid into the system for future generations. They have paid for it; they have earned it.
Instead of reveling in our current economic growth, we need to ensure that necessary programs are funded, and our debt is decreased. Wishing won’t make this happen. Congress needs to do something utterly unprecedented – it needs to act sensibly, logically, and in favor of the American people.
Does any American family want to face interest payments as the largest portion of its budget? Neither should the government.
The new round of sanctions this week unleashed by the United States on Russia has only one meaning: the US rulers want to crush Russia’s economy. By any definition, Washington is, in effect, declaring war on Russia.
The implemented economic measures may have a seemingly abstract or sterile quality about them: banning electronic exports to Russia, rattling financial markets, stock prices falling. But the material consequence is that American officials are intending to inflict physical damage on Russian society and Russian people.
It’s economic warfare on a sliding scale to military warfare, as the Prussian General Karl von Clausewitz would no doubt appreciate.
It seems all the more significant that this week also saw US internet services launching a major clampdown on anti-war websites, suggesting that the powers-that-be want to shut down any criticism or public awareness of their reckless warmongering.
What’s more, the latest round of US sanctions – there have been several previous rounds since the contrived Ukrainian conflict in 2014 – is based on nothing but wild, ridiculous speculation. That only adds insult upon injury.
Washington said the new proposed sanctions are due to its “determination” that the Russian state was responsible for an alleged chemical-weapon attack on a former double agent in England earlier this year.
The so-called Skripal affair involving Sergei Skripal and his daughter Yulia allegedly being poisoned by Russian agents using a deadly nerve agent is as yet an unproven conundrum. Some might even say “farce”.
No evidence has ever been presented by the British government to substantiate its sensational allegations against Moscow. Its claims that Russia was responsible for poisoning the Skripals rests entirely on dubious assertion and innuendo.
Now Washington is proposing sanctions based on a wholly unverified “determination” by the British – sanctions that are intended to crush the Russian economy. The proposed punitive measures go way beyond the usual freezing of assets pertaining to individuals. What Washington is moving to do is attack the core financial operation of the Russian economy.
No wonder that Russian Prime Minister Dmitry Medvedev issued a grave response to the latest American sanctions. He said they were comparable to “economic warfare”. Medvedev warned that Moscow would have to retaliate either “politically, economically or in some other way”. Medvedev’s tone was unmistakably one of alarm at the draconian, gratuitous and irrational nature of the US actions.
Kremlin spokesman Dmitry Peskov also expressed incredulity and apprehension over Washington’s conduct. He said that following the seemingly constructive summit between US President Donald Trump and Russian counterpart Vladimir Putin in Helsinki last month, this latest provocation from Washington makes the American side completely unpredictable.
The immediate sanctions coming into force are limited to banning exports of US electronics to Russia. But it’s what comes next that is perplexing. Washington is saying that if Russia does not give a “guarantee” on halting the future use of chemical weapons, and if Moscow does not allow international inspectors into its country to monitor alleged chemical weapons – then the second wave of sanctions will be applied within 90 days.
The subsequent round of sanctions include banning Russian state-owned airline, Aeroflot, from operating flights to the US. The impossibility of Russia meeting Washington’s absurd demands make the further application of sanctions inevitable.
A separate bill is passing through Congress which is planning to hit the Russian banking system, aimed at preventing international transactions.
Senators sponsoring that bill have labelled it “the sanctions bill from hell”. The title of the proposed legislation says it all: “Defending American Society From Russian Aggression Act”. Senators John McCain, Lindsey Graham, Robert Menendez and Ben Cardin, among other Russophobes who are pushing the bill, are explicit about the objective. They say the measures implemented will “crush the Kremlin”.
Tragically, the American people are being led to the abyss by politicians who are either ignorant, insane or prostitutes for war profits. Maybe even all of the above. Perversely, these politicians and their media clients accuse Russia of “acts of war” over fantastical claims about “election interference” when in reality it is they who are the ones committing acts of war against Russia.
The chances are paltry that President Trump will use his executive power to block the forthcoming sanctions. The political climate in the US among the intelligence agencies, lawmakers and the mainstream media has become saturated with anti-Russian hysteria. The US is an oligarchy in throes of insanity beyond democratic accountable to its people.
Already this week’s announcement of more offensive economic incursions on Russia sent the Russian economy plummeting. The ruble, bonds and stocks all nosedived. This is an attack on Russia’s vital interests. An economic Barbarossa.
No doubt part of the American calculation is to foment social discontent and discord towards the Putin government. It’s the same illegal playbook that the Americans are using with Iran, whose economy this week was also hit with draconian US sanctions.
If Russia’s economy has been thrown into turmoil already over the latest announced sanctions one can only imagine the damage inflicted when further American attacks are mounted on the fundamentals of Russia’s banking system and its freedom to trade with the rest of the world.
For Washington this seems to be open season for sanctions. It’s not just Russia and Iran on the receiving end. China, Canada, the European Union, Turkey, Venezuela, North Korea, among others, are also being battered with American economic warfare, either under the name of “sanctions” or indirectly using the rhetoric of “tariffs”.
For Russia’s part, it has shown immense forbearance up to now in tolerating Washington’s provocations and indeed aggression over numerous pretexts. From the conflict in Ukraine, to the alleged annexation of Crimea, to Moscow’s principled support for Syria being traduced as “supporting a dictator”, to alleged “meddling in US elections”, and much more, Russia has shown huge reserves of stoicism and self-discipline in tolerating what can only be called gratuitous American aggression.
At all times, Russia has maintained a dignified, unflappable posture in the face of American taunting and irrationality. Moscow perhaps thought that President Trump could bring some normality to bilateral relations. That’s turned out illusory.
But what happens now? When Washington has really gone too far. The US has taken its churlish conduct to a whole new dangerous level, by preparing to launch a full-on economic war on Russia’s vital interests.
The crazed American rulers are pushing the world to the brink by their belligerence.
Washington has heretofore given notice that it is not interested in diplomacy, dialogue, or negotiation. It only has one mode of conduct – war, war, war.
A Baltimore police officer was suspended with pay after a viral video showed him repeatedly punching a man in the face before body slamming him to the ground.
Interim Police Commissioner Gary Tuggle said he was “deeply disturbed” by the video published on social media, and that the incident is now under investigation.
“The officer involved has been suspended while we investigate the totality of this incident,” Tuggle said. “Part of our investigation will be reviewing body worn camera footage.”
The Baltimore Police said the incident occurred Saturday afternoon. It was not clear what provoked an initial police response outside the 2600 block of E. Monument St. in East Baltimore City.
Police said the second officer present at the scene was placed on administrative duties pending the outcome of the investigation.
Attorney Warren Brown, who is representing the man who was brutally punched, told The Baltimore Sun his client is Dashawn McGrier, 26. Brown said McGrier was not being charged with a crime but was rushed to a nearby hospital for suspected fractures to the face from the fight.
“Brown said McGrier had a previous run-in with the same police officer — whom he identified as Officer Arthur Williams — in June that resulted in McGrier being charged with assaulting the officer, disorderly conduct, obstructing and hindering, and resisting arrest. Brown said that in that incident and in the one Saturday, McGrier was targeted without justification by the officer,” said The Baltimore Sun.
“It seems like this officer had just decided that Dashawn was going to be his punching bag,” Brown said. “And this was a brutal attack that was degrading and demeaning to my client, to that community, and to the police department.”
The 36-second video was shared on numerous social media platforms by activists, community members, and journalist, shows a Baltimore police officer talking to a man on the city street backed up against a building.
The man, yells at the officer, “For what?” That is the moment when the officer pushed the man against the building, but the man then shouts, “Don’t touch me,” before the officer then unleashes a WWE Smackdown assault.
The officer strikes the man with a barrage of blows to the face as he body slams him onto the ground. Even as the man hits the ground, the officer continues punching the man. Throughout the short video, it appears the man did not hit the officer.
DeRay Mckesson, an American civil rights activist, shared the video on Twitter Saturday afternoon, which he asked for a response from the city’s mayor, Catherine Pugh. Since the tweet, the video has been viewed more than 300k times.
TW: Police Violence
This is a video of the @BaltimorePolice reported to be from earlier today.
And this is why folks don’t have any faith in the police. @MayorPugh50, what’s your response to this? What is happening with the consent decree? pic.twitter.com/yABsCZDEmq
Brown said Internal Affairs officers interviewed McGrier at the hospital. Brown had a conversation with the office of Baltimore State’s Attorney Marilyn Mosby. However, Mosby’s office did not respond to a request for comment via The Baltimore Sun.
In a statement, Mayor Pugh said she viewed the video and “demanded answers and accountability.”
“We are working day and night to bring about a new era of community-based, Constitutional policing and will not be deterred by this or any other instance that threatens our efforts to re-establish the trust of all citizens in the Baltimore Police Department,” the statement read.
Mayor Pugh referred to Tuggle in a statement late Saturday, in which she also called the incident between officers and McGrier “disturbing.”
City Councilman Brandon Scott said the department followed protocol by suspending the officer but should have fired him.
“You see that video and you see what we are trying to prevent in the police department,” said Scott, who is chair of the council’s public safety committee. “It goes against the consent decree and the work we’re trying to do to rebuild trust between the community and the police department.”
In early 2017, Baltimore and the U.S. Justice Department entered into a consent decree deal that aimed to issue new drastic reforms for the crippled police department. The agreement via the Feds discovered widespread racial discrimination against black residents in the department’s policing tactics.
The base case here remains that the 2Q18 US GDP will mark the peak of growth in this cycle on the ‘sugar rush’ of Donald Trump’s tax reform.
Still, the latest US GDP data was impressive. Consumption was strong and capital spending maintained its momentum. US real GDP rose by an annualized 4.1%QoQ in 2Q18, compared with 2.2% in 1Q18, and was up 2.8% YoY in 2Q18 (see following chart). While real private consumption rose by an annualized 4.0%QoQ and 2.7%YoY in 2Q18 (see following chart).
As for real private non-residential fixed investment, or capex, it rose by an annualized 7.3%QoQ and 6.7%YoY in 2Q18, compared with an annualized 11.3%QoQ and 6.7%YoY in 1Q18.
US REAL GDP GROWTH
Source: US Bureau of Economic Analysis
US REAL PRIVATE CONSUMPTION GROWTH
Source: US Bureau of Economic Analysis
INCOME OUTPACING CONSUMPTION
The really interesting point about the second quarter data was the impact of some significant revisions to the personal income data. Annualized personal disposable income growth for the past two years to 1Q18 has been revised up from 3.4% to 4.4% in nominal terms and from 1.5% to 2.4% in real terms.
The result is to make the US household sector look in much better health. It now transpires that income growth has been running ahead of consumption growth in the past five quarters, which was not the case previously. Thus, real personal disposable income growth rose from 1.1%YoY in 3Q16 to 2.9%YoY in 2Q18, while real personal consumption growth remained broadly flat at 2.7%YoY over the same period (see following chart).
REAL PERSONAL CONSUMPTION GROWTH AND PERSONAL DISPOSABLE INCOME GROWTH
Source: US Bureau of Economic Analysis
As a result, the US savings rate is almost double the level it was previously estimated at. The US personal savings rate was 6.8% of disposable income in 2Q18, according to the revised data, and broadly flat over the past five years.
By contrast, the previously released data showed that the savings rate had declined from 6.2% in 2Q15 to 3.1% in April-May 2018 (see following chart). Moreover, this strong income growth trend has also been confirmed to an extent by the release of the monthly personal income data for June. Personal disposable income rose by 5.4% YoY in nominal terms and 3.1%YoY in real terms in June, up from 4.9%YoY and 2.7%YoY in May (see following chart).
The same trend is also reflected in the latest Employment Cost Index (ECI) data for 2Q18. The Employment Cost Index rose by 2.8%YoY in 2Q18, up from 2.7%YoY in 1Q18. This is the highest growth rate since 3Q08.
REVISIONS IN US PERSONAL SAVINGS AS % OF DISPOSABLE INCOME (QUARTERLY DATA)
Note: Old data up to April-May 2018. Source: US Bureau of Economic Analysis
US MONTHLY PERSONAL DISPOSABLE INCOME GROWTH
Note: Data up to June 2018. Source: US Bureau of Economic Analysis
STRONG CONSUMPTION COULD ACCELERATE MONETARY TIGHTENING
All of the above data has increased the risk of another test of the top end of the channel on the yield on the 10-year Treasury bond. It is also the case that the recent revisions have also strengthened the case for higher inflation. The US GDP deflator rose from 2%YoY in 1Q18 to 2.4%YoY in 2Q18, the highest level since 4Q07 (see following chart). While core PCE inflation accelerated from 1.7%YoY in 1Q18 to 1.9%YoY in 2Q18 (see following chart).
All this has the potential to resurrect accelerating monetary tightening concerns and this time there will be a political dimension to the story given that Donald Trump has now made Fed policy part of the political debate.
Money markets are already projecting 75-100bp of monetary tightening through to the end of 2019, with another 25bp rate hike expected at the September FOMC meeting on 25-26 September.
US GDP DEFLATOR
Source: US Bureau of Economic Analysis
US CORE PCE INFLATION
Note: Quarterly data up to 2Q18. Source: US Bureau of Economic Analysis
IMPACTS OF THE END OF US CYCLICAL EXPANSION
Thus, in investment terms, it has become very important if the last quarter really does mark the peak of US cyclical expansion. For if that is the case, then it is more likely that the US dollar has seen the bulk of its rally and the bond market has seen most of its correction, outcomes which would be positive for both emerging market debt and equities.
But if the cyclical momentum seen last quarter is maintained, then another test is coming for markets in general, and Asian and emerging markets in particular, most particularly if it is combined with renewed negative news flow on the ‘trade war’ issue.
For if US cyclical momentum is not peaking, then that would suggest that the current macro ‘combo’ in a Trump-led America will go on for longer, namely monetary tightening combined with aggressive fiscal easing.
That combination can be super dollar bullish, as was the case the last time the US really had such a combo when Ronald Reagan was elected in November 1980 and pursued “supply side reform” while at the same time then Federal Reserve Chairman Paul Volcker was tightening monetary policy.
The US dollar index surged from 88.4 in November 1980 to a peak of 164.7 in February 1985, a level that remains an all-time high (see following chart).
Is America’s most celebrated grandfatherly statesman and diplomat, the man whose advice and guidance on world affairs nearly every president of the past half-century has sought, himself being pulled into the nebulous world of “Russia-linked” allegations?
In March 2016, as the U.S. foreign policy establishment shunned presidential candidate Donald Trump, his son-in-law Jared Kushner was invited to lunch for a think tank urging detente with Russia and struggling for influence in Washington.
The meeting at Manhattan’s Time Warner Center, which hasn’t been reported before, would prove significant for the Center for the National Interest and Kushner, who was still a little-known figure in the Trump campaign.
And then enter Dimitri Simes — the Russian-born presidentof the think tank — as Bloomberg is keen to inform its readers, and enter accused Russian agent Maria Butina, who once wrote a single op-ed piece for The National Interest.
And finally, with key pieces of the standard “collusion course” narrative in place, the main attraction is ready to enter the center of the new saga …enter Henry Kissinger.
That’s right, what may be a Russia-linked think tank run by a Russian-born conservative intellectual once upon a time hosted way back in 2016… gasp… now senior White House advisor and Trump son-in-law Jared Kushner alongside Henry Kissinger.
Kushner at that time merely made a brief introduction of himself to Kissinger after the latter gave a talk on US-Russian relations as the center’s honorary chairman. Kushner, as the lesser recognizable figure at the time “remained quiet and unobtrusive during the lunch” according to Bloomberg’s description.
Kissinger, as former National Security Advisor under President Nixon, has actually long maintained close ties with the Center for the National Interest from its foundations in the 1990s. The think tank was personally founded by Nixon under the original name, the Nixon Center for Peace and Freedom.
But for Bloomberg the March 2016 lunch has huge significance as alleged Russian agent Maria Butina had used the center to set up meetings possibly between US and Russian financial officials. Bloomberg notes, “Questions have recently been raised about the center for its ties to Russia, including its interactions with Maria Butina, a woman accused of conspiring to set up a back channel by infiltrating the National Rifle Organization and the National Prayer Breakfast.”
The Kissinger lunch event was reportedly the start of lasting relationships that would significantly boost Kushner’s profile around Washington foreign policy circles, according to Bloomberg:
Kushner meeting Simes at the lunch turned out to be a solid match. In the weeks following they discussed the possibility of an event hosted by the center to give Trump a chance to lay out a cohesive foreign policy speech. Simes’s organization, more pro-Russian than most in Washington, had invited other presidential candidates but none accepted. And Republican foreign policy analysts feared associating with Trump could end their careers. The center had the imprimatur of Kissinger, however, because it had been established by Richard Nixon who named him national security adviser.
A partnership with the center would help catapult Kushner to his role as a key diplomat in the White House. He and Simes organized Trump’s “America First” speech at the Mayflower Hotel the next month, with writing input and a guest list from the center.
So a “more pro-Russian than most” think tank founded by Richard Nixon shortly before his death in 1994 became the setting for the launch of Kushner’s Russia-tainted political career.
The report notes further that Simes and the center would help organize key foreign policy speeches highlighting Trump’s “America First” doctrine which called for easing tensions with Russia.
It was at the Mayflower that Kushner first met Russian Ambassador Sergey Kislyak, an encounter he left off disclosure forms when he initially joined the government. After Trump was elected, but before he took office, Kushner asked Kislyak whether the transition team could use the Russian embassy to communicate privately with Moscow.
But Kissinger’s role in providing Kushner legitimacy in D.C. policy circles continued after their 2016 encounter at the Center for the National Interest, to wit:
Through a spokeswoman, Kissinger confirmed meeting Kushner for the first time at the lunch in March. A year later, he wrote an endorsement of Kushner for Time’s list of the 100 most influential people, saying his closeness to the president, his education, and his years in business “should help him make a success of his daunting role flying close to the sun.”
But actually there’s more, namely the shocking contents of that fateful Trump campaign speech at the Mayflower Hotel which was the ultimate fruit produced of the unlikely Simes-Kushner-Butina-Kislyak-Kissinger axis of mutual influence peddling.
In his speech at the Mayflower, Trump called for easing tensions with Russia.
“Common sense says this cycle, this horrible cycle of hostility must end and ideally will end soon,” Trump said. “Good for both countries.”
A new Reuters report finds that, “The kingdom appears emboldened by Washington’s willingness under Donald Trump to de-emphasize rights issues when it comes to its allies.” However, as Elijah Magnier explains, the Saudis have been mocking the world for quite some time, showing that Western values can be purchased by the highest bidder.
The leaders of Saudi Arabia mock western values with supreme confidence by virtue of their money power. Democracy, human rights, freedom of speech, freedom to protest, freedom of expression, and other freedoms are treated as norms imposed by the West.
If you wish to violate these sacred principles, all you have to do is pay!
Image source: AFP/Getty
Leveraging its economic power based on oil, Saudi Arabia defied President Obama when Congress approved JASTA (the Justice Against Sponsors of Terrorism Act) in 2016 and threatened to pull hundreds of billions of dollars out of the USA if Saudi Arabia were accused of playing a role in the Al-Qaeda terrorist attack of September 11, 2001 (9/11).
It is known that Osama Bassnan, whom the declassified 28 pages of the 9/11 Commission Report identified as a financial supporter of two of the 9/11 hijackers in San Diego, received money from Prince Bandar Bin Sultan, the Saudi ambassador to Washington, and Bassnan’s wife also got money from Bandar’s wife.
The monarchy also defied the UN when in September 2017 a small group of Western nations sought to create a commission of inquiry to investigate its human rights violations in Yemen, one of the poorest countries in the Middle East where millions face death, disease and famine because of western-supported Saudi bombing.
And last but not least, a Saudi state media account, which promotes the Saudi Information Ministry’s propaganda and is often retweeted by the ministry, last week appeared to explicitly threaten a 9/11 style attack featuring a plane headed towards a skyscraper in Toronto, Canada. The tweet was a response to the Canadian Foreign Ministry’s tweet, expressing grave concern about recent arrests in Saudi civil society and official attacks on women’s rights activists.
Saudi accuses Canada of what it calls “interference in its domestic affairs”. This from the country which routinely advocates “change” in domestic affairs of others: its Foreign Minister Adel al-Jubeir threatened “ad nauseam”, throughout the many years of war in Syria, that President Bashar al-Assad “will be removed by force.”
Saudi leaders have advocated regime change in Iran (the same Twitter account called for the death of the Supreme Leader of Iran earlier that day), held a Lebanese Prime Minister hostage(the French president intervened to obtain his release), and are bombing Yemen daily as the world looks impotently on, killing thousands of civilians and destroying a country whose only crime is to refuse to submit to Saudi rule and Wahhabi ideology. The world looks on these Saudi abuses with impotent eyes.
Canada urged Saudi Arabia to immediately release all peaceful human rights activists. The rough detention of critics has characterized the rule of the young Crown Prince Mohammad Bin Salman (MBS). His first victims were royal family members and the Lebanese Prime Minister Saad Hariri, all held hostage in and by the Kingdom. Bin Salman seeks to repress any voice contradicting him in his oil-rich monarchy; he has already inherited absolute power from his ailing father the King.
Crown Prince Mohammad Bin Salman has tried – with little obvious success, despite the support from Western media – to portray the kingdom as a country undertaking reform. But he has not been able to put a modern face on the extremist Wahhabist doctrine, Saudi Arabia’s official religion.
This doctrine is the “main source of global terrorism” and the same teaching followed by groups like al-Qaeda and the “Islamic State” (ISIS). These groups share Takfiri ideology with most of the kingdom’s inhabitants. This teaching is notable for its rigidity, intolerance and willingness to kill infidels, whether defined as followers of other religions, secular people, or even Muslims who do not agree with a return to the practice of Islam by the sword.
Saudi power and ideology could not maintain itself without the support – apparently unlimited – of the latest US establishment led by Donald Trump: “Countries that are in the area, some of which are immensely wealthy, would not be there except for the United States…They wouldn’t last a week. We are protecting them.” Such often-repeated comments by Trump show that Washington is tolerating al-Qaeda, ISIS and Saudi doctrine in exchange for money. He continues: “They have to now step up and pay for what is happening.”
On these terms, Saudi Arabia – duly paying a protection fee to Trump – has a free hand to destroy Yemen, the poorest country in the Middle East, and to kill as many civilians as its jets can reach. Many more are starved or killed by disease thanks to Saudi destruction of the country’s infrastructure.
Furthermore, Saudi Arabia has threatened to stop all financial contributions to the United Nations if it is accused of human rights violations. No impartial observer can fail to notice that Saudi Arabian money today leads the great power nations around by the nose. The much-vaunted western values are evidently for sale at the bazaar.
Indeed, the world’s silent attitude – which includes Canada – towards the horrible human calamity of the Saudi daily bombing of Yemen, and the support it provides to terrorists (i.e. al-Qaeda in Syria and the Yemen, and ISIS in Syria) boost the Saudi confidence to mock western values with impunity.
Thus, when the West speaks of “dictatorial regimes violating freedom of speech, disrespecting human rights, and filling up jails with citizens accused of contradicting their rulers,” it is merely an indication that those regimes won’t or can’t afford to pay their ransom to Donald Trump and other leaders of the “free world.”
Evidently western leaders are largely concerned with selling more weapons and signing commercial and trade contracts with oil-rich countries. No wonder the propaganda of groups like al-Qaeda and ISIS finds robust grounds from which to criticize the “Western hypocrisy”, with the theft of Muslim countries’ wealth, and its selective values and principles.
Because Tehran escapes the orbit of Trump’s dominance, the new bully in Washington and his warmongering staff had no difficulty revoking an official document (the JCPOA Iran nuclear deal) signed by Obama and world leaders. Iranians are a people with a special aptitude for negotiation at all levels (there is a huge and astonishing bazaar in the heart of their capital). Iranian leaders might have been better “buying off Trump”, as Mohammad Bin Salman did, to purchase their place in the Middle East. Of course, the amount required would have had to surpass the sum paid by the Saudi Prince, Mohammad Bin Salman.
The official account linked to Saudi’s Ministry of Information (@Infographic_ksa), with over 300K followers, has been self-suspended to allow the storm of reaction to its threat to pass.
Neither Twitter nor Canada commented on the direct threat, much less did they condemn it or ask those responsible to face criminal charges arising from the content. The US-Saudi anti-terrorism center established in the kingdom had no reaction; the Information Ministry simply stated that it has asked its handler to interrupt the account while awaiting further investigation.
Saudi accounts attacked the Canadian Foreign Ministry over indigenous women missing and murdered in Canada, reciprocating what they consider an intrusion into their own internal affairs. These Saudis cannot understand that the Canadian government actually accepts this criticism and condemns such abuses.
Supporters of the Saudi monarchy evidently find it hard to understand that a western government can accept such criticism. Advocates for human rights are well received in the West, while in the Saudi kingdom such criticism is not allowed and is punished by long years in jail. To say the least, no public beheading is performed in Canadian cities as is normal practice in Saudi Arabia, a practice that ISIS and al-Qaeda are also proud to exercise in their zones of influence.
The Saudi escalation (recalling its ambassador and asking the Canadian ambassador to leave; suspending all flights to and from Canada; recalling thousands of students from Canada and suspending scholarships; freezing commercial and investment collaboration) against Canada is certainly not a coincidence.
While Saudi Arabia supplies oil to the Irving refinery in Saint John, New Brunswick, Canada imports only 10% of its oil from Saudi and the two countries have limited commercial exchange (notwithstanding their 2014 arms deal.) According to Bloomberg, Saudi Arabia has invested only $6 billion in Canadian businesses since 2006. This year, according to Statistics Canada, Canada has exported $1.08 Billion in goods to Saudi Arabia and imported $1.5 billion in imports from the kingdom. The level of trade and commerce between the two countries is expendable to Saudi Arabia.
Money can buy anything and everybody… except perhaps those of us who insist on pointing out that our values, not for sale in the Saudi bazaar, are binding only on those who cannot or will not pay through the nose.
Congratulations to Saudi Arabia for its successful purchase of the leaders of the free world.
Senate Democrats are circulating a proposal based upon their claim of Russian hacking that will completely takeover the internet and social media which has been leaked.
They are adopting the EU approach to silence political criticism. They claim it is necessary, just as the EU argued, that they must act to prevent Russian hackers and “restore” the people’s trust in our institutions, democracy, and the free press. They are proposing comprehensive GDPR-like data protection legislation following the EU.
They are calling it a proposal for “Regulation of Social Media and Technology Firms,” and the draft was created by Sen. Mark Warner.
The entire regulation is based upon Russians and it claims they are deliberately spreading disinformation. To justify this act, they also point back to the old Soviet Union stating they attempted to spread “fake news” denigrating Martin Luther King. Despite the Democrats and their campaign to start World War III over Hillary’s emails, of which nobody denied were fake just hacked, their proposal is effectively to shut down anything they can call “hate speech” targeted at them, not Trump of course.
Warner’s paper suggests outlawing companies who fail to label bots and impose Draconian criminal penalties and huge fines.
Effectively, they want people to pay for everything. The Democrats want full disclosure regarding ANY online political speech. They even want the Federal Trade Commission to have unbelievable power and require all companies’ algorithms to be audited by the feds as if they even have qualified staff to conduct such audits. On top of that, they have proposed tech platforms above a certain size MUST turn over internal data and processes to “independent public interest researchers” so they can identify potential “public health/addiction effects, anticompetitive behavior, radicalization,” scams, “user propagated misinformation,” and harassment—data that could be used to “inform actions by regulators or Congress.” This is a complete violation of both the First and Fourth Amendment. They want the same mechanisms in Europe where anyone can complain and demand the content be taken down or subject to fines that can confiscate all assets. Sounds to me like retirement is on the horizon.
This bill would effectively end all our freedoms. This is what is wrong with career politicians. They look at the world ONLY through the eyes of government – NEVER the people.
What we are facing is the Revenge of Hillary – loss of Free Speech and this constant push to reestablish the Cold War and move to World War III. The Democrats have become the party of hate and they have been the party that always starts wars with the only exception being Iran and that was Dick Cheney & Donald Rumsfeld.
With China having given up on its latest attempt to deleverage in response to the escalating trade war, the market was keenly looking at the latest credit metrics out of China to see if this was already reflected in the official data, and sure enough July new RMB loans and M2 data beat market expectations largely thanks to the recent burst in new loan issuance. While July TSF was slightly below market expectations, this was due to the ongoing shrinkage in shadow credit while sequential growth of TSF rebounded from the low level in June, and will likely continue to expand as the government maintains its easing bias in coming months.
Here are the key numbers:
New RMB loans: Rmb 1450BN in July (RMB loans to the real economy: Rmb 1290bn) vs. consensus: Rmb 1250BN. Outstanding RMB loan growth: 13.2% yoy in July vs June 12.7% yoy.
Total social financing: Rmb 1040BN in July vs. consensus: Rmb 1100BN and a modest decline June: Rmb 1392BN. However, issuance of local government bonds in July was Rmb 652BN, compared with Rmb 391BN issuance in June, according to WIND data. After including this local government bond net issuance, Goldman estimates adjusted TSF stock growth at 11.5% yoy in July, lower than June. The implied month-on-month growth of adjusted TSF was 17% SA ann, higher than 5.9% in June. The implied month-on-month growth of adjusted TSF was 17% on an annualized seasonally adjusted basis, higher than 5.9% in June.
One note: the PBOC adjusted its methodology of TSF starting this month by adding loan write-off (outstanding amount RMB 2.4 trillion as of July 2018) and depository institutions’ asset-backed securities (outstanding amount RMB 855bn as of July 2018).
As in recent months, the reason why TSF was below new RMB loans was entirely due to the ongoing decline in “shadow banking” conduits, such as entrust loans, trust loans and bank acceptance bills.
Putting these in context:
M2: 8.5% yoy in July, higher than the consensus: 8.2% yoy. and up from the record low M2 print of 8.0% hit in June.
As noted above, on total social financing growth showed a sequential rebound in July, after adjusting for seasonality. Meanwhile, the amount of RMB loans was particularly large. And while shadow banking products under TSF such as entrust loans, trust loans and bank acceptance bills continued to contract, the pace of contraction moderated from June, consistent with the policy goals of the government.
As Goldman notes, the government stepped up the magnitude of the loosening in July, and became more blunt and hands-on; the bank expects the government to maintain this loosening bias in the coming months as the trade tensions linger.
Meanwhile, the rebound in M2 growth from an all time low should alleviate pressures on the PBOC and CBIRC and likely ease market concerns about the ability of these government ministries to loosen policy effectively.
In terms of factors affecting money growth, the FX position was probably largely stable in July. M2 growth accelerated despite the negative contribution from fiscal deposit changes. MOF data indicated on-budget fiscal expenditure growth was slow at 3.3% yoy while revenue growth was faster at 6.1%. The loosening of fiscal policy has been mainly in the areas of faster off-budget bond issuance and borrowing of local government platforms.
And with all that in mind, the question remains: having cast away its deleveraging aura, will China be able to reflate if not the world, then the emerging markets, as it did previously. After all, remember that just two things matter for the global economy and asset prices: central bank liquidity injections, and Chinese credit creation. And when it comes to central bank liquidity, it is already negative….
Which only leaves China, and in a very precarious time. As Russell Napier said earlier:
Clearly in a world of growing EM default/repudiation and lower EM growth, China will have to pull the monetary levers even more dramatically if it is to reflate the world. China’s move looks increasingly like it has come too late to take the world smoothly to the much higher inflation that is necessary to reduce the world’s excessive debt burdens. For a time at least, repudiation and not inflation will dominate the outlook for investors, particularly those in emerging markets.
And despite the latest stronger than expected China credit data, China still has a long way to go to: the latest data showed that China’s credit impulse is still negative and remains at the lowest level it has been in two years.
“Russia dumped 84% of its American debt,” blared a July CNN headline. Russian central-bank head Elvira Nabiullina said the sales were just part of “diversifying the entire structure of currencies.” But with the U.S. dollar accounting for two-thirds of global foreign-exchange reserves and most (non-intra-eurozone) international trade, dumping this much dollar debt goes well beyond prudent diversification.
Many commentators have therefore speculated that the government was actually protecting itself against future U.S. economic attacks. “It looks like Russia was worried about sanctions and their ability to trade Treasuries,” said one head bond trader, “so they sold.”
Still, the Russian central bank needs dollars, which it has always held mainly in the form highly liquid interest-bearing U.S. Treasuries, to stabilize the ruble through market intervention and to help its banks manage liquidity. Furthermore, Russian president Vladimir Putin has stated that “Russia is not rejecting the dollar” and is “not planning any sudden moves.” This doesn’t jibe with the media headlines.
We therefore decided to explore another possibility: that the headlines are just plain wrong, and that Russia has not sold anywhere near that many Treasuries.
Let us start with U.S. Treasury Department data on holdings of Treasury securities. These do indeed show an $81 billion (84 percent) plunge in Russian-held Treasury debt—from $96 billion in March to $15 billion in May. Other figures, however, suggest that Russia’s actual selloff was much smaller than this.
One indicator is Treasury Department data that track sales, between U.S. and foreign entities, of long-term Treasuries—the sole component of Russia’s Treasury holdings that has dropped since March. From March to May, these data show just $35 billion of Russian sales, as the middle bar in the left-hand box above indicates.
This figure, however, likely underestimates Russia’s sales somewhat. Russia may have sold some Treasuries to non-U.S. parties, or executed some sales through foreign financial intermediaries, that the data do not capture. Still, by this measure, roughly $46 billion in Treasuries remain unaccounted for.
Russian data show a similar amount missing. Russia’s central bank reports that, between March and May, its total stock of foreign debt fell by $50 billion. Since March, however, dollar appreciation has lowered the dollar value of Russia’s non-dollar debt assets. We estimate that this explains about $7 billion of the decline, implying $43 billion in actual Treasury sales—as the rightmost bar above shows. This is $8 billion more than the U.S. data indicate, which likely reflects about $8 billion in Russian sales to non-U.S. entities, or sales made through foreign intermediaries.
This leaves $38 billion in “missing” Treasuries. Where could they have gone? The most logical explanation is that Russia moved these assets outside of the United States to protect against U.S. seizure.
The two most likely destinations would be Belgium, home to custodian bank Euroclear, and the Cayman Islands. So we looked at data from both.
Sure enough, during April and May, as shown in the right-hand figures, Belgian holdings of Treasuries rose $25 billion, while Cayman Islands holdings rose $20 billion. That sum, $45 billion, is more than enough to account for the missing $38 billion.
In short, Russia appears to have sold only about 45 percent of its Treasury holdings—substantial, but far less than the 84 percent the media is reporting. Sixteen percent remain registered as Russian holdings in the United States, and the remaining 39 percent, we believe, are being hidden in Belgium and the Cayman Islands. With U.S.-Russia tensions increasing, we would not be surprised by further such “offshoring” of Russian Treasuries in the coming months.
Political chaos hit a peak this week with the coordinated banning of Alex Jones from polite social media society and the collapse of the Turkish Lira into the weekend.
How could Alex Jones and Turkey’s currency collapse be related?
They both reveal the desperate need for Globalist control.
Since the election of Donald Trump their fear has been palpable. The Globalists Jones rants about are real. Like him or despise him he generates uncomfortable ideas necessary in a free society.
His silencing has been brewing for over a year. But, silencing him only feeds both his ego and those who follow him.
It validates everything he’s been saying for twenty years, the good and the bad.
Don’t take this the wrong way, I love Alex Jones.
But I don’t weep for Alex Jones. Because I know he will come away from this stronger than before.
And I’m glad they tried to take his platform away.
And I’m equally glad to see his audience rise exponentially.
Cambridge Analytica, Edward Snowden, Tommy Robinson are not anomalies. They are the norm. While many may think Jones is nut-case, they fundamentally believe he has a right to be that guy in a public space.
This was a nuclear bomb of chaos thrown into the digital living rooms of hundreds of millions of people around the world.
They are now awake to the reality these companies are not neutral. That the MAGA crowd isn’t just a bunch of ‘crazy alt-right lunatics.’ Libertarians like myself and Jones have been vindicated.
And it’s good news for every alternative voice in politics.
The stakes just rose exponentially, and it is time for everyone to get serious.
Interest in our work will skyrocket right alongside Alex Jones’.
When you invite the chaos, you reap the whirlwind of the martyrdom. And any air of moral superiority the elite and their quislings in the media and government once had vanishes like a Tweet in a hurricane.
But what about Turkey?
Same rules, different setting.
Turkey is a mess. It paid a terrible price for the U.S./Israeli failure to destroy Syria. Turkey spent billions housing refugees and supporting rebels in pursuit of President Erdogan’s Neo-Ottoman dreams.
Once Erodgan realized he was the scapegoat for that failure he sought a path out. It landed him on the wrong side of U.S. foreign policy.
Turkey is NATO’s crown jewel. It is the second largest ground force in NATO. It controls access to the Black Sea and the Heartland of the world.
And Erdogan wants to join the BRICS. Buy Iranian Oil, Russian gas, nuclear power and missile defense. These are no-nos.
This is why the U.S. is pushing Turkey into hyperinflation.
Yes, Erdogan made this attack easy by dissuading the central bank to raise rates but zero-bound interest rates from the Fed and the ECB were not under his control. And the U.S. won’t stop regardless, not until he capitulates.
Turkey’s $220+ billion pile of worthless corporate debt is the problem.
But, it isn’t just a problem for Erdogan.
When you owe the bank $1000 it’s your problem.
When you owe the bank $220 billion it’s the bank’s problem.
The talk this week about what Turkey must do is fear a collapse of the Lira and Turkey’s debt markets will destroy the banks.
“Turkey must accept an IMF Bailout.” “Regime change is incipient.” “Oh, the banks will get their hair mussed but it’s all good.”
The goal is to reverse Erdogan’s push East. A week after he wants to join the BRICS the Lira enters hyperinflation?
Call me an Alex Jones supporting conspiracy theorist but I call BS.
If Erdogan wanted a deal with Trump he would have dealt months ago.
But, Erdogan is my geopolitical bellwether. He’s the cockroach who scurries under the shadow of who he thinks is winning.
And to him, that guy is Putin.
So, now the U.S. and Turkey are locked in a battle to the death. Place your bets on who wins.
Funny, Russia is sitting on a new pile of U.S. dollars, nearly $100 billion, thanks to its total liquidation of its U.S. Treasury reserves. Do you think Putin’s willing to put that stake on this table?
Russia liquidated $90 Billion in UST in 6 Weeks.
Two can play this game of hybrid war chicken.
Russian Finance Minister Alex Siluanov wants to remove the dollar from all oil sales as it not a reliable currency. The dollar? Not reliable? From Russians? Nonsense!
Anyone doing business in dollars the U.S. doesn’t like can be sanctioned at a moment’s notice thanks to The Magnitsky Act and its sequel from last year, courtesy of John McCain and Bill Browder.
Erdogan will invite his martyrdom in Turkey as the economy crashes and is parlaying that into support by calling out the U.S. for attacking Turkey unfairly.
It’s a partial lie, but so what?
If Turkey’s new friends aid her, swapping out the worst Turkish debt for rubles and/or yuan, the pain for Turks will be great, as it was for Russians in 2015, but the other side of that is independence.
I always bet on the cockroach.
The same way Alex Jones will thrive in this new environment.
This won’t stop with either men. Iran, Russia, Turkey, Alex Jones, Sargon of Akkad for pity’s sake… who’s next?
I’m thinking Pakistan thanks to new Prime Minister Imran Khan.
But that’s next week.
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