Category: zerohedge

Authored by Burak Bekdil via The Gatestone Institute,

His critics often joke that when President Recep Tayyip Erdoğan pledges democratic reforms, one should run away immediately. His latest charm offensive in November, aimed at repairing Turkey’s badly-strained ties with the West and Western institutions, has proven that the joke still holds value.

“We don’t see ourselves elsewhere but in Europe,” Erdoğan said on November 21.

“We envisage building our future together with Europe.”

Two days later, Defense Minister Hulusi Akar described NATO as the “cornerstone of our defense and security policy” and said that Turkey was looking forward to cooperating with the incoming administration under Joe Biden in the United States. Erdoğan also promised a bold package of democratic reforms.

Less than five months later, Italy’s Prime Minister Mario Draghi had to call Erdoğan a “dictator.”

That was not because an experienced European politician wanted to insult a Muslim head of state.

According to Turkish news site Gazete Duvar, a total of 128,872 people have been indicted in the past six years for insulting Erdoğan. Of those, 27,824 had to stand trial and 9,556 were convicted. By comparison, only 11 Turks had been convicted for insulting Ahmet Necdet Sezer, president between 2000 and 2007.

After Erdoğan’s latest reform pledge, on March 21, Turkish authorities arrested a pro-Kurdish opposition MP who had refused to leave parliament for several days after his seat was revoked. Ömer Faruk Gergerlioğlu “was brought out by force while he was in pyjamas and slippers” by “nearly 100 police officers,” the leftist Peoples’ Democratic Party (HDP) said in a statement.

On March 17, the Supreme Court Chief Public Prosecutor’s Office filed a lawsuit against HDP for its closure on the grounds that it has links with “terror acts.” On April 14, state prosecutors asked for the removal of the parliamentary immunity of main opposition leader Kemal Kılıçdaroğlu and nine MPs from his Republican People’s Party (CHP). Apparently, Erdoğan wants a democratic system without opposition.

This month, Europe’s top human rights court ruled that the right to liberty and freedom of expression of Turkish journalist and author Ahmet Altan had been violated due to his detention and imprisonment on charges related to a 2016 coup attempt. Altan, 71, has been in prison since September 2016, when he was detained over allegations that, during a TV program, he disseminated “subliminal messages” related to the coup attempt, as well as for articles he had written criticizing the government. Shortly after that ruling, the Turkish Court of Appeals released Altan. In other words, Altan had been unlawfully imprisoned for 55 months, nearly five years.

That was “normal” in a country where an army of pro-government judges has the habit of announcing rulings in defiance of rulings from superior Turkish courts, including the Constitutional Court, and from the European Court of Human Rights. Those judges who dare make “undesirable verdicts” are probed and often get disciplinary punishments. Erdoğan’s coalition partner and staunchest political ally, ultra-nationalist leader Devlet Bahçeli, has called for the closure of the country’s top judicial institution, the Constitutional Court.

On April 5, Turkish prosecutors detained 10 retired admirals over their public criticism of Erdoğan’s multi billion-dollar Istanbul canal project, which will create a new artificial waterway from the Black Sea to the Marmara Sea, to complement the Bosporus Strait. The arrest warrants came a day after a group of 104 former senior navy officials signed an open letter warning that the proposed canal could harm Turkish security by invalidating an 85-year-old international treaty (the Montreux Convention) designed to prevent militarization of the Black Sea. Pro-Erdoğan officials and prosecutors interpreted the statement as a direct challenge from the military to the civilian government, “echoing coup times.”

The prosecutors’ move is in direct breach of the Article 26 of the Turkish Constitution:

“Everyone has the right to express and disseminate his/her thoughts and opinions by speech, in writing or in pictures or through other media, individually or collectively. This freedom includes the liberty of receiving or imparting information or ideas without interference by official authorities. This provision shall not preclude subjecting transmission by radio, television, cinema, or similar means to a system of licensing.”

But who cares about the Constitution in a country where the governing bloc is proposing to close down even the Constitutional Court, in addition to banning opposition parties?

All these autocratic measures occurred in the less than half-year since Erdoğan pledged democratic reforms. But no story would be completely Turkish without an element of black humor: Where is the $128 billion?

That sum refers to the US dollars sold by state banks to support the Turkish lira in foreign exchange markets. The policy began around the time of the March 2019 municipal elections and was ramped up in 2020, when the pandemic laid bare the lira’s vulnerability and Turkey’s reliance on external funding. Bankers have calculated that the sales totaled $128.3 billion in 2019-20.

As government officials remain mute on the question, the main opposition CHP recently launched a campaign to embarrass Erdoğan’s ruling Justice and Development Party (AKP) by hanging huge posters on CHP party buildings across the country with the simple question: Where is the $128 billion? Not one more word. Not one single comment or insult. Just a question, though annoying especially at a time of economic crisis.

Turkish police started to rip down those posters without court orders. As one prosecutor confessed in a letter to a governor, “We cannot find a legal pretext to declare the posters illegal. You must rip them down citing administrative reasons.”

In protest, a CHP MP hung the same poster outside his office office window in the parliament building. Parliament’s administrative directors had to send a fire truck to rip down the poster. The MP said he would hang it again.

Erdoğan’s effort to hang onto power is taking uglier shapes every new day. A few years ago, then Prime Minister Ahmet Davutoğlu had vehemently denied claims that Turkey was a second-class democracy. He was right. Turkey has since remained a third-class democracy.

Authored by ‘FreeSpeechFan’ via TheDuran.com,

It is comforting that the Fourth turning is part of a natural cycle but also very disturbing that it is a period of crisis. As we know from previous cycles, many people suffer and die during a fourth turning.  However, I think we all know that a crisis is upon us as the corruption, collusion, scheming, propaganda, and self interest reaches its peak. 

The worst of the baby boomers, Biden, Kerry, Pelosi, Bill Gates, are at their worst.  We don’t yet know what will take their place, but their chaos and selfishness will be swept aside as order, rules, truth, and structure takes its place. 

The movement will be from Yin to Yang, Chaos to Order, Freedom to Self Control, Self Interest to the Collective, Corruption to Honor, Secular to Faith. 

There will be a “New World Order” but not the one chosen for us by the Bush Cabal or the CCP Cabal or the Globalist Cabal.  They are the cause of the crisis but not the solution.  Gen X will help smooth the path of the crisis, but only the millennials hold the answer to the question of what will the New World Order look like. 

I hope they choose well, as it does not have to be communism, fascism, or socialism. It won’t be!  These are tired old doctrines that don’t work, they are being used as facades for the corrupt to hide their true motives behind.  They will be swept away, too!

*  *  *

The Fourth Turning: Why American ‘Crisis’ May Last Until 2030

Editor’s Note: Below is a 14-minute video narrated by Hedgeye Demography Sector Head Neil Howe describing the generational theory put forth in his 1997 classic “The Fourth Turning,” co-authored with William Strauss.

Also below is a brief essay originally published on 3/11/19 by Neil discussing the typical progression of each “Turning”. It remains more relevant than ever amidst our current zeitgeist. Neil’s work has influenced politicians from Newt Gingrich to Al Gore and all of it culminates in a grand theory advanced in The Fourth Turning which he elaborates on in the video and text below.

NH: We live in a tumultuous time in American history.

The 2008 financial crisis and all its hardships, was the catalyst that tipped us into this age of uncertainty. It marked the start of a generation-long era of secular upheaval that will continue to run its course over the next decade or so. This is the generational theory I laid out in “The Fourth Turning,” a book I co-authored with William Strauss in 1997.

The Fourth Turning explains the rise of a figure like President Trump. In Trump’s Inauguration Day speech, he painted a bleak picture of “American carnage,” of “rusted-out factories scattered like tombstones across the landscape of our nation” with “mothers and children trapped in poverty in our inner cities.”

Looking abroad, it’s unclear whether America will turn inward and fall prey to nativism or maintain it’s nearly seventy year role as leader of the Free World. Other countries are becoming similarly insular. Britain voted to exit the European Union and we’ve heard anti-E.U. rumblings echoed throughout Europe from France to the Netherlands.

Other nations and peoples around the world are looking to either fill the vacuum in global leadership or exploit it to advance their own ambitions. We’ve seen the thunderous rise of Chinese economic clout, the calculating geopolitical maneuvering of a resurgent Russia, and the barbarous chaos wrought by the so-called Islamic State.

In many ways, this era of uncertainty follows the natural order of things. Like Nature’s four seasons, the cycles of history follow a natural rhythm or pattern. Over the past five centuries, Anglo-American society has entered a new era – a new turning – every two decades or so.

At the start of each turning, people change how they feel about themselves, the culture, the nation, and the future. Turnings come in cycles of four. Each cycle spans the length of a long human life, roughly eighty to one hundred years, or a unit of time the ancients called the saeculum.

THE FIRST TURNING IS CALLED A HIGH.

This is an era when institutions are strong and individualism is weak. Society is confident about where it wants to go collectively, even if those outside the majoritarian center feel stifled by the conformity.

America’s most recent First Turning was the post-World War II American High, beginning in 1946 and ending with the assassination of John Kennedy in 1963, a key lifecycle marker for today’s older Americans.

THE SECOND TURNING IS AN AWAKENING.

This is an era when institutions are attacked in the name of personal and spiritual autonomy. Just when society is reaching its high tide of public progress, people suddenly tire of social discipline and want to recapture a sense of personal authenticity. Young activists and spiritualists look back at the previous High as an era of cultural poverty.

America’s most recent Awakening was the “Consciousness Revolution,” which spanned from the campus and inner-city revolts of the mid 1960s to the tax revolts of the early ‘80s.

THE THIRD TURNING IS AN UNRAVELLING.

The mood of this era is in many ways the opposite of a High. Institutions are weak and distrusted, while individualism is strong and flourishing. Highs follow Crises, which teach the lesson that society must coalesce and build. Unravelings follow Awakenings, which teach the lesson that society must atomize and enjoy.

America’s most recent Unraveling was the Long Boom and Culture Wars, beginning in the early 1980s and probably ending in 2008. The era opened with triumphant “Morning in America” individualism and drifted toward a pervasive distrust of institutions and leaders, an edgy popular culture, and the splitting of national consensus into competing “values” camps.

AND FINALLY WE ENTER THE FOURTH TURNING, WHICH IS A CRISIS.

This is an era in which America’s institutional life is torn down and rebuilt from the ground up—always in response to a perceived threat to the nation’s very survival. Civic authority revives, cultural expression finds a community purpose, and people begin to locate themselves as members of a larger group.

In every instance, Fourth Turnings have eventually become new “founding moments” in America’s history, refreshing and redefining the national identity. Currently, this period began in 2008, with the Global Financial Crisis and the deepening of the War on Terror, and will extend to around 2030. If the past is any prelude to what is to come, as we contend, consider the prior Fourth Turning which was kicked off by the stock market crash of 1929 and climaxed with World War II.

Just as a Second Turning reshapes our inner world (of values, culture and religion), a Fourth Turning reshapes our outer world (of politics, economy and empire).

To be clear, the road ahead for America will be rough. But I take comfort in the idea that history cycles back and that the past offers us a guide to what we can expect in the future. Like Nature’s four seasons, the cycles of history follow a natural rhythm or pattern.

Make no mistake. Winter is coming. How mild or harsh it will be is anyone’s guess but the basic progression is as natural as counting down the days, weeks and months until Spring. 

Something fishy is happening in Miami as thousands of pricy koi fish have turned up dead at several homes and a city park. It’s more than fish, birds, plants, and wild raccoons are mysterious dying, according to local news WPLG Local 10. 

The epicenter of the thousands of dead koi is happening in Coconut Grove, a shoreline neighborhood in Miami bordering Biscayne Bay. Homeowners in the community report thousands of their fish have “all of a sudden died.” 

“We’re not talking about a couple of fish or even hundreds of fish. We’re talking about thousands of fish that, all of a sudden, have turned up dead,” said WPLG. 

No one seems to know why the koi are suddenly dying. What’s troubling is the sudden death of the fish is happening across the neighborhood. 

Resident Lee Marks woke up Saturday morning to koi and other exotic fish dead in his pond. 

“All these beautiful coy fish and other fish just dead,” he said. “It’s just awful. It’s horrible.”

Marks and other residents are demanding answers as to why their fish in backyard ponds are dying. 

“They just all don’t die at once like that,” he said.

Pond Doctors, a Miami-based company focused on maintaining private ponds, told WPLG their crews have responded to “devastating fish kills” at four homes in the Coconut Grove neighborhood in the last two weeks. 

“Thousands of fish have turned up dead from one day to the next, all in the same area,” said Jen Wheeler, the owner of Pond Doctors.

“To have them suddenly pass away for some unknown reason is really scary because you also start to think what else is this affecting,” Wheeler said. “Other than the fish that we are in love with.”

WPLG adds it’s more than fish. Local wildfire is also mysterious dying, including birds, plants, and mammals. 

Marks said a raccoon convulsed and died in his yard. 

“It came up right up the driveway and turned on its side,” Marks said. “It looked like it might be playful, but it was convulsing and just died.”

Wheeler said the oxygen levels in all the neighborhood ponds were normal and serviced regularly. 

“To have so many animals affected by this, something is going on,” she said.

Wheeler called Miami-Dade County to see if mosquito companies had recently sprayed in the area. The answer local government officials gave her was that spraying last occurred in 2017. 

Dead fish have also turned up in Miami’s Simpson Park. The common theme with all these ponds is the source of water is connected to a local aquifer. 

“We’re still trying to figure out what’s in the groundwater and what is causing it,” Wheeler said.

The “canary in the coal mine” is the sudden death of koi and other animals and how something toxic could be lurking in the area’s aquifer.

Authored by Jack Phillips via The Epoch Times,

The Department of Defense (DOD) announced it is canceling U.S.-Mexico border wall construction efforts that were paid with funds that were initially allocated for the military.

Work is done on a new border wall being constructed in Jacumba, Calif., on Jan. 22, 2021. (Sandy Huffaker/Getty Images)

Former President Donald Trump ordered the diversion of billions of dollars in military and defense funds toward building the wall, using his emergency executive powers.

“The Department of Defense is proceeding with canceling all border barrier construction projects paid for with funds originally intended for other military missions and functions such as schools for military children, overseas military construction projects in partner nations, and the National Guard and Reserve equipment account,” said Jamal Brown, a spokesperson for the Pentagon, in a statement.

Brown said the returned funds will now be used for deferred military construction projects.

“DOD has begun taking all necessary actions to cancel border barrier projects and to coordinate with interagency partners. Today’s action reflects this Administration’s continued commitment to defending our nation and supporting our service members and their families,” he said.

The Department of Homeland Security also announced on Friday that it would take steps to address “physical dangers resulting from the previous administration’s approach to border wall construction.”

The decision is expected to draw criticism from Republicans.

GOP Congress members have previously accused President Joe Biden of illegally halting congressionally approved border wall construction projects, while the Government Accountability Office is investigating whether the administration acted illegally.

Sen. Jim Risch (R-Idaho) described Friday’s move as a national security threat.

“Having a secure, defined border is important to our national security & public health efforts. This is an ill-advised decision at best,” he wrote on Twitter.

Illegal immigration has become an issue for Biden as his administration has dealt with a surge of illegal immigrants and unaccompanied minors along the southern border. Several weeks after taking office in January, Biden signed executive orders rescinding several of Trump’s policies, including the “remain in Mexico” initiative.

Even some Democrats have faulted the president for his messaging, including Sen. Mark Kelly (D-Ariz.), who said the president has not laid out a comprehensive immigration plan so far.

“While I share President Biden’s urgency in fixing our broken immigration system, what I didn’t hear tonight was a plan to address the immediate crisis at the border,” he stated, referring to Biden’s speech to Congress on Wednesday. “And I will continue holding this administration accountable to deliver the resources and staffing necessary for a humane, orderly process.”

In the immortal words of Ron Burgundy, “that escalated quickly.”

In 15 calendar days, Ethereum has gone from sub-$2000 puke to being over $3000 ($3028 highs)…

Source: Bloomberg

Ether has quadrupled year-to-date (dramatically outperforming bitcoin, which itself has put in a none-too-shabby double YTD)…

Source: Bloomberg

ETH is now at its strongest relative to BTC since Aug 2018…

Source: Bloomberg

As CoinTelegraph notes, the remarkable run has even prompted renewed speculation that Ethereum could “flippen” Bitcoin, overtaking BTC as the largest digital currency in the world.

The first time we detailed Ethereum’s potential was in February 2017 (when ETH was at around $13)…

“Because of its capacity for smart contracts — and other complicated computing capacities — Ethereum is viewed as more agile and adaptable than Bitcoin.”

Ethereum is now bigger than Bank of America, Disney, and Home Depot:

Source

There are multiple catalysts behind Ethereum’s rise, as CoinTelegraph details:

The first is an ongoing surge in activity on the chain, including from institutional entities: earlier in the week the European Investment Bank announced it would be issuing a two-year digital bond worth $121 million in collaboration with banking entities such as Goldman Sachs.

Retail interest in DeFi has also been rising as of late, with total value locked numbers reaching astonishing highs above $100 billion.

However, the “London” hardfork, which includes the EIP-1559 overhaul of Ethereum’s fee structure, as well as the subsequent looming ETH 2.0 transition to a proof-of-stake consensus model, may be the prime events investors are anticipating. These upgrades to the network are expected to significantly decrease fees, as well as reduce the amount of ETH rewarded to miners – which in turn is expected to decrease sell-side pressure on the asset.

Between the enormous amount of activity on Ethereum, the economic improvements to Ether, and the promise of increased scalability with Ethereum 2.0, there is a lot for the Ethereum community to be excited about.

Finally, we note that FundStrat’s Tom Lee maintains his $10,500 target for Ethereum as we detailed here (and suggests the possibility of a $35k target).

Authored by James Bovard,

The FBI continues to lawlessly use counterintelligence powers against American citizens…

The Deep State Referee just admitted that the FBI continues to commit uncounted violations of the Foreign Intelligence Surveillance Act of 1978 (FISA).

If you sought to report a crime to the FBI, an FBI agent may have illegally surveilled your email. Even if you merely volunteered for the  FBI “Citizens Academy” program, the FBI may have illegally tracked all your online activity.

But the latest FBI offenses, like almost all prior FBI violations, are not a real problem, according to James Boasberg, presiding judge of the U.S. Foreign Intelligence Surveillance Court. That court, among other purposes, is supposed to safeguard Americans’ constitutional right to privacy under FISA. FISA was originally enacted to create a narrow niche for foreign intelligence investigations that could be conducted without a warrant from a regular federal court. But as time passed, FISA morphed into an uncontrolled yet officially sanctioned privacy-trampling monster. FISA judges unleash the nuclear bomb of searches, authorizing the FBI “to conduct, simultaneous telephone, microphone, cell phone, e-mail and computer surveillance of the U.S. person target’s home, workplace and vehicles,” as well as “physical searches of the target’s residence, office, vehicles, computer, safe deposit box and U.S. mails.”

In 2008, after the George W. Bush administration’s pervasive illegal warrantless wiretaps were exposed, Congress responded by enacting FISA amendments that formally entitled the National Security Agency to vacuum up mass amounts of emails and other communication, a swath of which is provided to the FBI. In 2018, the FISA court slammed the FBI for abusing that database with warrantless searches that violated Americans’ rights. In lieu of obeying FISA, the FBI created a new Office of Internal Audit. Deja vu! Back in 2007, FBI agents were caught massively violating the Patriot Act by using National Security Letters to conduct thousands of illegal searches on Americans’ personal data. Sen. Richard Durbin (D-Ill.) declared that an Inspector General report on the abusive searches “confirms the American people’s worst fears about the Patriot Act.” FBI chief Robert Mueller responded by creating a new Office of Integrity and Compliance as “another important step toward ensuring we fulfill our mission with an unswerving commitment to the rule of law.” Be still my beating heart!

The FBI’s promise to repent after the 2018 report sufficed for the FISA court to permit the FBI to continue plowing through the personal data it received from NSA. Monday’s disclosure—a delayed release of a report by the court last November—revealed that the FBI has conducted warrantless searches of the data trove for “domestic terrorism,” “public corruption and bribery,” “health care fraud,” and other targets—including people who notified the FBI of crimes and even repairmen entering FBI offices. As Spencer Ackerman wrote in the Daily Beast, “The FBI continues to perform warrantless searches through the NSA’s most sensitive databases for routine criminal investigations.” That type of search “potentially jeopardizes an accused person’s ability to have a fair trial since warrantlessly acquired information is supposed to be inadmissible. The FBI claimed to the court that none of the warrantlessly queried material ‘was used in a criminal or civil proceeding,’ but such usage at trial has happened before,” Ackerman noted. Some illicit FBI searches involve vast dragnets. As the New York Times reported, an FBI agent in 2019 conducted a database search “using the identifiers of about 16,000 people, even though only seven of them had connections to an investigation.”

In the report released Monday, Judge Boasberg lamented “apparent widespread violations” of the legal restrictions for FBI searches. Regardless, Boasberg kept the illicit search party going: “The Court is willing to again conclude that the . . . [FBI’s] procedures meet statutory and Fourth Amendment requirements.” “Willing to again conclude” sounds better than “close enough for constitutional.”

At this point, Americans know only the abuses that the FBI chose to disclose to FISA judges. We have no idea how many other perhaps worse abuses may have occurred. For a hundred years, the FBI has buttressed its power by keeping a lid on its crimes. Unfortunately, the FISA Court has become nothing but Deep State window dressing—a facade giving the illusion that government is under the law. Consider Boasberg’s recent ruling in the most brazen FISA abuse yet exposed. In December 2019, the Justice Department Inspector General reported that the FBI made “fundamental errors” and persistently deceived the FISA court to authorize surveilling a 2016 Trump presidential campaign official. The I.G. report said the FBI “drew almost entirely” from the Steele dossier to prove a “well-developed conspiracy” between Russians and the Trump campaign even though it was “unable to corroborate any of the specific substantive allegations against Carter Page” in that dossier, which was later debunked.

A former FBI assistant general counsel, Kevin Clinesmith, admitted to falsifying key evidence to secure the FISA warrant to spy on the Trump campaign. As a Wall Street Journal editorial noted, Clinesmith “changed an email confirming Mr. Page had been a CIA source to one that said the exact opposite, explicitly adding the words ‘not a source’ before he forwarded it.” A federal prosecutor declared that the “resulting harm is immeasurable” from Clinesmith’s action. But at the sentencing hearing, Boasberg gushed with sympathy, noting that Clinesmith “went from being an obscure government lawyer to standing in the eye of a media hurricane… Mr. Clinesmith has lost his job in government service—what has given his life much of its meaning.” Scorning the federal prosecutor’s recommendation for jail time, Boasberg gave Clinesmith a wrist slap—400 hours of community service and 12 months of probation.

The FBI FISA frauds profoundly disrupted American politics for years and the din of belatedly debunked accusations of Trump colluding with Russia swayed plenty of votes in the 2018 midterms and the 2020 presidential election. But for the chief FISA judge, nothing matters except the plight of an FBI employee who lost his job after gross misconduct. This is the stark baseline Americans should remember when politicians, political appointees, and judges promise to protect them from future FBI abuses. The FISA court has been craven, almost beyond ridicule, perennially. Perhaps Boasberg was simply codifying a prerogative the FISA court previously awarded upon FBI officials. In 2005, after a deluge of false FBI claims in FISA warrants, FISA Presiding Judge Colleen Kollar-Kotelly proposed requiring FBI agents to swear to the accuracy of the information they presented. That never happened because it could have “slowed such investigations drastically,” the Washington Post reported. So, FBI agents continue to lie with impunity to the judges.

The FISA court has gone from pretending that FBI violations don’t occur to pretending that violations don’t matter. Practically the only remaining task is for the FISA court to cease pretending Americans have any constitutional right to privacy. But if a sweeping new domestic terrorism law is passed, perhaps even that formal acknowledgement will be unnecessary. Beginning in 2006, the court rubber-stamped FBI requests that bizarrely claimed that the telephone records of all Americans were “relevant” to a terrorism investigation under the Patriot Act, thereby enabling NSA data seizures later denounced by a federal judge as “almost Orwellian.” FISA could become a peril to far more Americans if Congress formally creates a new domestic terrorism offense and a new category for expanding FISA searches.

The backlash from Democrats after the January 6 clash at the Capitol showcased the demand for federal crackdowns on extremists who doubted Biden’s election, disparaged federal prerogatives, or otherwise earned congressional ire. If a domestic terrorism law is passed, the FBI will feel as little constrained by the details of the statute as it does about FISA’s technicalities. Will FBI agents conducting warrantless searches rely on the same harebrained standard the NSA used to target Americans: “someone searching the web for suspicious stuff”?  Unfortunately, unless an FBI whistleblower with the same courage as former NSA analyst Edward Snowden steps forward, we may never know the extent of FBI abuses.

US corporations are facing an increasingly tough run over the next few years: on one hand all their domestic profits are about to be taxed at much higher rates thanks to Bidenomics, on the other, they are facing an increasingly hostile socialist regime internationally, that seeks to confiscate most if not all of their offshore profits.

Case in point, Peru, whose presidential front-runner, Marxist Pedro Castillo who favorably quotes Lenin and Castro, said he’ll do what leftists everywhere do, and intends to redistribute wealth – because socialism – by reviewing contracts with transnational companies in a move to increase onshore wealth.

In a debate with Keiko Fujimori ahead of the June 6 runoff, Castillo said multinationals should expect to leave 70% of their profits in Peru. Which is just a little bit more than what leftist president Joe Biden proposes they leave in the US.

“Enough of looting my people,” the 51-year-old school teacher said in his hometown region, Cajamarca.

As part of his populist package, Bloomberg reports that Castillo will also seek to raise investment in education to 10% of gross domestic product. He also proposed lowering the pension age to 60 and cutting lawmakers’ wages by half, although it was unclear where he would find the money to fund the early retirement – probably just more wealth confiscation (he said he would decline compensation as president).

Meanwhile, as Peru braces for the joys of socialism, Peruvian assets have fallen as the presidential election approaches with the sol touching record lows this week.

Despite a modest drop in Castillo’s lead – he has of 44% the vote versus 34% for Fujimori, daughter of jailed former President Alberto Fujimori according to a poll released Friday by Datum – he will almost certainly be the next president especially since Fujimori had been confined to campaigning in Lima because she is the subject of a criminal investigation. A full 11% of voters remain undecided, and 11% plan to cast blank or invalidated ballots, the survey found.

As the WSJ notes, Castillo’s thinking is frighteningly similar to that of the late Hugo Chávez, who ruled Venezuela from 1999 until his death in 2013. Chavismo strangled Venezuela’s democratic institutions, sent human capital fleeing, destroyed the economy, and generated widespread poverty. Venezuela was once one of the most advanced countries in the region. Today Venezuelans live primitively, often without running water, electricity or basic medical supplies.

And in a few weeks, the miracle of socialism will strike its next target.

 

Authored by Joakim Book via The American Institute for Economic Research,

In their desperation to find a reason for why bitcoin is terrible-bad-destructive-awful and morally reprehensible, the crypto-obsessed authors of the Financial Times blog Alphaville – Jemima Kelly, Jamie Powell, Izabella Kaminska – are quickly running out of good choices.

Their latest one is the “environmental FUD” – a classic in our world of environmentally obsessed elites, where anything remotely associated with The Climate ensures moral supremacy. If all else fails, guilt-by-association will not. So, complain away about the environmental impact from the energy used by the Bitcoin network’s nodes and miners. 

What’s so strange about this objection is that first, that impact is globally small, and second – who cares? Somebody, somewhere, is using energy in ways that you disapprove of (shocking, I know), to which the only reasonable response must be “Yes, and?” 

Few free(ish) societies run around policing the use of energy, letting woke Establishment journalists decide on what’s permissible use, what’s harmful, and what needs to go. People drive cars, sometimes just because they want to, and sometimes just to compete to see who’s fastest; people go on vacation, mostly because they want to; people buy stuff, ride stuff, build stuff, enjoy stuff, almost all of which use energy and almost never require permission slips from their morally superior overlords. Not yet at least. 

Throwing bitcoin into the mix somehow changes everything. Somebody, somewhere, is running their specialized hardware to validate the network, when they could have used those components (microprocesses, flash memories, fans, storage facilities) to, I don’t know, run a server hall to host all your incredible Instagram pictures. What is it about Bitcoin’s energy requirement that really triggers these people? If you think Bitcoin is a terrible payment mechanism, a subpar currency, a destabilizing base money, or a grand financial fad, those are arguments on their own merits – what’s energy got to do with it?

On a first-pass observation it’s a perfect “gotcha” argument: if you think Bitcoin’s value-add is zero, or negative – Kelly happily calls it “a destructive asset class” – any amount of energy would be a waste, a climate nightmare, an environmental catastrophe. After all, we often hear that this monetary scam consumes electricity on par with small– or medium-sized countries. When the New York Times uses words like “enormous farms” and “endless racks of computers” we know it must be bad. 

As usual when journalists talk about Big Terrible Things, we must dig a little deeper and probe a little more: ask those annoying questions – how much? Is that a lot? Compared to what? 

Estimates for electricity use by the full Bitcoin network are all over the place, partly because nobody really knows how many miners there are and what exact equipment they’re using (and for environmental concerns, what electricity source powers their facilities). Low estimates hover around 40 TWh per year – a little less than Massachusetts used in 2019 – while high estimates report as much as 100 TWh per year – roughly the electricity generation of South Carolina or Louisiana. Let’s take the worst case and conveniently round number of 100 TWh. 

That’s 2.5% of the 4,000 TWh of electricity that was used in America’s record year of 2018, or less than 0.4% of world electricity generation in 2019. Besides, if global electricity use fell by 1% last year because of the pandemic measures, the “savings” could power the entire Bitcoin network’s current use until 2024 (or 2028 at the lower estimate). If Bitcoin had not existed, it’s safe to say that our Alphaville electricity police would have found some other miniscule electricity user to complain about – maybe Christmas lighting (7 TWh), ski resorts (2-5 TWh), or online gaming (75 TWh). Perhaps the global banking system’s ATM networks (at something like 25 TWh)?

Remember that we’re still only on electricity use; the sleight-of-hand involved in the Alphavillers’ magical trick is to equate use with “really bad for the environment.” By this same metric, the electricity generation used to power said writers’ computers qualifies – as does definitely the heating of their apartments (fossil fuels?) and the electricity that brightens their dark homes and runs their home appliances. While minuscule in proportion to thousands and thousands of miners upholding a decentralized monetary network, the Alphaville value add is clearly less than zero and so definitely a horrible waste of electricity. 

If you live in a world of averages and aggregates – like Kelly, when she writes that since most mining is in China where “two-thirds of all electricity is generated by coal power” – Bitcoin mining must indeed be dirty. 

Bitcoin mining is a cutthroat business, almost entirely determined by local electricity prices (though funding costs and legal risks matter). Thus, bitcoin miners are superbly positioned to seek out and find stranded energy, energy that cannot find its way to market, energy that has no opportunity cost: natural gas that otherwise would have been flared; hydro capacity that would have been flushed; wind turbines that otherwise would have turned off or detached from the grid.

When ARK Invest and Square recently released a report on the renewable energy prospects for bitcoin miners, they offered mining facilities next to stranded energy as a supplement to overcome the intermittency problem. “Intermittency,” snarked Kelly, ridiculing the authors for not understanding that bitcoin consumes electricity without later bringing it back: it’s not the storage mechanism that solves renewable energy’s unsolvable problem.  

A brief reminder of the three basic problems of renewables:

1. they don’t produce much electricity when we need it: nights, evenings, and in the Northern Hemisphere, winter;

2. they produce a lot of electricity when we don’t need it very much: days and summer;

3. they produce this electricity geographically far from where we need it: rural plains, offshore, islands.  

For each of these problems, what we end up doing in electrical grids with plenty of solar and wind is to:

1. Have expensive backup power – mostly natural gas or coal plants – at the ready to start producing electricity when the wind or sun won’t suffice. This is the reason that electricity costs go up – not down – when more renewables are added to the grid.

2. When sun and wind power are about to blow out their grids from overproduction, one of two things usually happen: small countries like Denmark can export its electricity to larger neighbors like Germany and Sweden (offloading the problem to someone else) or the renewables just shut off. Last year, wholesale electricity prices even dipped below zero to desperately induce industrial consumers to take the surplus electricity from the producers. 

3. Our transmission lines are filled to capacity: in the short term, we go back to turning off intermittent sources, and in the long term we crisscross our countryside with more aluminum lines to accommodate trans-Continental sharing of excess electricity. 

Institutional Bitcoin proponents like Cathy Wood of ARK Invest or Jack Dorsey, against whom the Alphavillers direct their current environmental FUD, did not imagine these problems. Producers of stranded energy, like the oversized hydro plants in the four Chinese provinces where most mining apparently takes place, cannot bring their goods to market – but they can offset some of their fixed costs by selling it to reliable bitcoin miners. Did Wood, Dorsey, and Brett Winton (research director at ARK) argue the case in a clumsy fashion, implying that bitcoin could help solar energy power the entire electricity grid? Yes. Are they therefore wrong to say that shedding excess electricity to willing miners helps financing renewable (or nonrenewable) electricity generation? Not at all.  

On the contrary: Nic Carter, the master of environmental FUD-busting, writes

“[c]ompletely off-grid natural gas is entirely nonrival with household or commercial energy consumption. It was never going to be monetized, captured, consumed, or delivered to households. Its fate was simply to be combusted or vented.”

If some of that excess electricity – of the wrong kind, in the wrong place, at the wrong time – can be used to mine bitcoin and finance the electricity provider’s operations, isn’t that an efficiency improvement? The global crew of bitcoin miners vacuum the unused, stranded, and wasted energy of the world, providing extra dough for the marginal electricity generator whether renewable or not. Sounds good to me.  

We should indeed be skeptical of financial fads, of everything in the Everything Bubble. And we should argue over bitcoin’s many monetary attributes – mostly because we therefore highlight how other monetary regimes work. But the environmental accusations of Bitcoin’s mining operations is like hitting your head against brick walls – not a very useful thing to do.

Like the great JP Koning concluded this week, “It’s not the energy needs of these products that is the problem.”

The Biden administration is planning to use an obscure US Department of Agriculture instrument to lay the groundwork for a long-term increase in food aid for tens of millions of Americans.

The instrument, known as the ‘market basket,’ is a shopping list used to determine food stamp benefits, and which can be adjusted without risking an impasse in Congress from Republican lawmakers, according to Bloomberg.

A review of the so-called Thrifty Food Plan, ordered by Biden two days after he took office, could trigger an automatic increase in benefits as soon as Oct. 1, a day after expiration of a temporary 15% boost in food stamp payments that Biden included in his $1.9 trillion Covid-relief package.

James Ziliak, director of the Center for Poverty Research at the University of Kentucky, said the re-evaluation “could result in an upward adjustment of 20% or more in the benefits.” That would amount to roughly a $136-a-month increase in the maximum benefit for a family of four, which was $680 before the temporary pandemic-related increase. -Bloomberg

“This is really meaningful,” according to Harvard professor Jason Furman, who was chairman of former President Obama’s Council of Economic Advisers. “It’s one of the bigger things government can do for poverty without Congress.“

According to Furman, the Obama administration didn’t adjust the market basket because Republicans then controlled both houses of Congress.

“We made a pragmatic decision that it not only could be overridden by a Republican Congress, but they could put something worse in its place. So we decided not to poke the bear,” he said.

The decision follows a years-long campaign by anti-hunger advocates, after the basket hasn’t been adjusted for six decades aside from inflation. According to the report, “The move is emblematic of a broad commitment to anti-poverty programs across the Biden administration … In April, the Agriculture Department extended a universal free school lunch program tied to pandemic relief through the entire 2021-22 school year.”

President Biden has been telegraphing the move for months – frequently reading his speechwriters’ descriptions of cars lined up for miles outside food banks for boxes of groceries. Most recently Biden invoked the imagery last week during his first address to Congress.

“I didn’t ever think I’d see that in America,” he said.

Advocates argue that the $22-a-day food budget USDA currently sets for a family of four is woefully inadequate and relies on outdated, unrealistic assumptions. The market basket assumes a family eats more than five pounds of beans a week, for example. And outside studies have found that the food plan requires spending about two hours a day preparing meals, largely from scratch, at a time the average American family spends just a half hour on daily food preparation.

SNAP benefits are calculated on a sliding scale based on income and the number and age of people in a household. Recipients are expected to spend 30% of their net income on food, with food stamps making up the deficit from the USDA food budget. Benefits can only be used to purchase groceries. -Bloomberg

According to a 2011 study, over 25% of SNAP recipients exhaust their monthly benefit within one week of issuance, while over half exhaust it by the second week.

We can’t imagine why.

While historical reviews of the market basket – the most recent being in 2006 – aimed to keep costs constant, this time the USDA won’t require it to be cost-neutral according to official Stacy Dean, who’s leading the review on behalf of Agriculture Secretary Tom VIlsack.

“A core goal of the secretary is to assure nutrition security, not just food security,” said Dean. “We want to make sure the benefits we are providing really and truly can support a nutritious and healthy diet.”

And according to March comments from Vilsack, “It’s fair to say that the SNAP benefit is in many cases not adequate enough to provide the help and assistance that is needed,” adding “I suspect that we’re going to find that the foundation of that program doesn’t meet the activities of normal American families today, and that may result in some adjustment in terms of the benefit.”

By Eric Peters, CIO of One River Asset Management

For nearly a century, gold had been pegged at roughly $20.67/oz. Then in 1934, FDR banned private holdings, confiscated people’s gold, and set the value at $35/oz for use in international trade/settlement. It remained anchored at that price for decades. But fiscal pressures of the Vietnam war and Johnson’s Great Society project stressed the pegged system. Johnson’s war on poverty, Medicare, Medicaid, urban renewal programs and so many others were costly. As they stressed America’s finances, the system’s circuit breakers were overwhelmed.

On August 15, 1971, Nixon abandoned the gold standard, froze wages and prices for 90-days, and imposed a 10% import surcharge. Unemployment was a painful 6.1%, inflation was 4.6% and 10yr yields were 6.58%. All sorts of unique things were happening in the world economy. They always are. Which is why no time is the same. Back then, the Bretton Woods system that had served the post-war economy so well had come under intense pressure. Aided by the Marshall Plan, the rest of the world had been rebuilt, and was starting to catch up in earnest.

Joe Biden was sworn in as a 30-year-old freshman Senator in Jan 1973. Seems like half a century ago, because it was. In the 1.5yrs between Nixon leaving the gold standard and Biden’s inauguration, the gold price jumped from $35/oz to $65/oz (in that same period, the S&P 500 rose 20%, while CPI fell from 4.6% to 3.7%). No doubt that jump in gold seemed like a big move to people. Having traded between $20/oz and $35/oz over the previous 150yrs, people were mentally tethered to historical prices. Humans struggle to process rapid change.

As fate had it, the S&P 500 peaked the month of Biden’s 1973 inauguration with 10yr bond yields at 6.46%. The price of gold and the value of stocks, which had both risen in the 1.5yrs following Nixon’s exit from the gold standard, diverged radically as inflation started to rise in earnest. CPI had started rising before the oil embargo of October 1973. It was lifted in March 1974, with oil prices having jumped from $3/barrel to nearly $12/barrel. By the end of 1974, gold hit $181/oz, the S&P 500 fell 48%, 10yr bond yields rose to 7.48%. CPI had jumped to 12.3%.

Inflation remained volatile for another decade after that. Oil prices too. Commodities in general. Gold hit $850/oz in January 1980. Bond holders got destroyed. Equity holders too. Generally speaking, agricultural commodities did reasonably well on an inflation-adjusted basis in the 1970s. But the really big winners were gold and oil, each for unique reasons, both of which were amplified by that monetary debasement. To this day, most people are mentally anchored to that experience, so that when they worry about inflation they buy gold.

There are more differences between the 1970s and the 2020s than there are similarities. Demographics, technology, global trade, union membership, consumption patterns, environmental stresses, geopolitics, and domestic politics are all different. There are substantial similarities too. But one thing is identical – this planet remains inhabited by humans. And we never change. We despise iniquity. When Biden entered politics in 1973, the rich/poor divide in America had halved since the late 1920s high. It has since doubled. Returning to those highs.
 
Anecdote:

How this inflation plays out will be different from anything that has come before it. It is always so. Naturally, some aspects will resemble the past. This inflation will inevitably be volatile, such periods of price changes typically are. And in the early stages, nearly everyone will persuade themselves that it is transitory.

In the late stages, those same people will conclude that it is permanent. Throughout the process, each of us, individually, will see what we want to see, hear what we want to hear, and believe what we want to believe. Those things are always true, perhaps now more than ever. We will also find the period ahead deeply unsettling. Change is hard to process. And more things are changing now than at any time in our lives – such is today’s utterly unprecedented pace of innovation and disruption.

In such a state, it is natural to cling to our anchors:

• Our policymakers will point to the inflation metrics that they themselves have engineered in such a way to ensure stability, even if they long ago diverged from reality.
• Bond investors will look to the spreads between overnight rates and two-year bonds, five-year, ten, thirty. And despite the reality that the government has run 15% deficits for two years, funded by the Fed which simply creates the money, they will cling to the anchors that have governed the well-behaved yield curve for the course of their careers.
• Equity investors will hold tight to the relationships that anchor their value relative to bonds.
• Not a solitary investor in the mainstream will be prepared to deviate from the benchmarks to which they have anchored their careers.

And yet, all of us will begin to increasingly wonder, whether digital assets, which have no real history, no anchors, are the first to provide a glimpse of what lays beyond the horizon.