Category: zerohedge

At what point to Democrats start to realize that they’re running out of things to tax?

Could today be a wake up call? Perhaps the fact that Mayor Pete, now Transportation Secretary, is honestly pitching the idea of a vehicle mileage tax that would increase the further one travels, might wake some people up to the idea that we’ve gone too far?

Buttigieg told CNBC Friday that the idea was on the table to help pay for President Biden’s upcoming infrastructure plans. “He spoke fondly of a mileage levy,” CNBC wrote. 

Buttigieg said: “When you think about infrastructure, it’s a classic example of the kind of investment that has a return on that investment. That’s one of many reasons why we think this is so important. This is a jobs vision as much as it is an infrastructure vision, a climate vision and more.”

He continued: “A so-called vehicle-miles-traveled tax or mileage tax, whatever you want to call it, could be a way to do it.”

“I’m hearing a lot of appetite to make sure that there are sustainable funding streams. A mileage tax shows a lot of promise if we believe in that so-called user-pays principle: The idea that part of how we pay for roads is you pay based on how much you drive,” Buttigieg said. “You’re hearing a lot of ‘maybe’ here because all of these things need to be balanced and could be part of the mix.”

He’s also considering issuing “Build America Bonds” and says there’s “a lot of promise in terms of the way that we leverage that kind of financing. There have been ideas around things like a national infrastructure bank, too.”

He concluded: “There is near-universal recognition that a broader recovery will require a national commitment to fix and transform America’s infrastructure.”

Biden’s infrastructure proposals are expected to total $3 trillion to $4 trillion. Biden said last week that rebuilding the nation’s infrastructure was was critical to restore the economy and continue to compete with China. 

Authored by James Rickards via DailyReckoning.com,

Gold has taken a hit this year, no doubt about it. Since peaking over $1,950 in early January, the price of gold has fallen to $1,725 today.

But not all is doom and gloom. Some perspective is needed. If we go back to the beginning of the current bull market on December 16, 2015 (when gold bottomed at $1,050 per ounce), gold is up over 60% even at today’s beaten-down price.

That bottom occurred on the exact day that the Fed started their “lift-off” in interest rates after seven years stuck at zero. I urged investors to buy gold then. Those who listened are still sitting on huge gains even after the latest drawdown.

Savvy investors know the dollar price of gold is volatile. They keep their eye on the long-term trends and long-term drivers of the gold price. Sophisticated investors don’t sweat the dips. They see the occasional drawdowns as a great entry point and buying opportunity. So do I.

Nothing New Here

We’ve been here before.

Gold fell 17% from August 5, 2016, to December 1, 2016. It fell 8.1% from September 8, 2017, to December 13, 2017. It fell 12.5% from March 6, 2020, to March 19, 2020, during the pandemic panic.

After every one of these falls, gold rallied back and maintained a trend line of higher highs, finally reaching the $2,000 per ounce threshold in August 2020.

The important questions for gold investors are: Is this just a dip or the start of a new bear market?

And, what’s been driving the dip; when can we expect a turnaround? We address both questions by looking at the mainstream scenario and explaining why it’s wrong and how the turnaround will emerge.

The Mainstream Scenario

Here’s the mainstream scenario: The U.S. and global economies are making a strong comeback from the pandemic. China is growing quickly, U.S. unemployment is dropping, the virus is fading and the lockdowns are ending. This would be a recipe for strong growth and higher interest rates by itself.

Now, Congress and the White House have passed a $1.9 trillion COVID relief bill, which has little to do with COVID and everything to do with spending for favored interests, including teachers, municipal workers, federal workers, and community organizers. It also provides money for programs such as the Kennedy Center, the National Endowment for the Arts, etc.

The market view is that this additional $1.9 trillion of spending, combined with the $6 trillion of deficit spending already approved for fiscal 2020 and fiscal 2021 and another $4 trillion deficit spending package expected later this year, is more than the COVID situation requires and more than the economy can absorb without inflation.

Therefore inflation expectations have risen sharply. And, along with inflation expectations, the yield-to-maturity on the benchmark 10-year U.S. Treasury note has spiked.

The yield on the 10-year has risen from 0.917% on January 4 to 1.316% on February 6 to 1.638% today. Those rate hikes might not sound like much, but it’s an earthquake in the note market.

If you compare the rate hikes to the decline in gold prices, there is a high degree of correlation. As rates go up, gold goes down. It’s that simple.

More deficit spending stokes the flames of inflation expectations, which leads to higher rates and lower gold prices. When those fundamental trends are combined with leverage, algo-trading, and momentum, it’s like throwing gasoline on an open flame.

Gold investors have been getting burned.

What’s flawed in this scenario? The short answer: everything.

Perspective

You can’t argue with the facts – rates are going up, and gold is going down. But, the assumptions behind these trends are flawed. That means the trends will inevitably reverse, probably sharply.

Again, perspective helps.

This is not our first interest rate spike. The 10-year note hit 3.96% on April 2, 2010. It then fell to 2.41% by October 2, 2010. It spiked again to 3.75% on February 8, 2011, before falling sharply to 1.49% on July 24, 2012.

It spiked again, hitting 3.22% on November 2, 2018, before plummeting to 0.56% on August 3, 2020, one of the greatest rallies in note prices ever.

There’s a pattern in this time series called “lower highs and lower lows.” The highs were 3.96%, 3.75% and 3.22%. The lows were 2.41%, 1.49%, and 0.56%.

The point is that the note market does back up from time-to-time. And when it does, it cannot hold the prior rate highs and eventually sinks to new rate lows.

If we apply that pattern to the current rise in rates, we should expect that the rate increase will top out well short of 2.5%, and a new low may follow as low as 0.25% or even zero. There’s no guarantee of this; it’s not deterministic. But, it would be consistent with the 10-year trend of lowering rates.

Still, there’s more going on. The economy is not nearly as strong as the headlines and Wall Street cheerleaders would have you believe.

The Alternative Scenario

Unemployment rates are coming down not because of strong job creation, but because able-bodied, prime-age workers are dropping out of the workforce. The decline in the labor force participation rate is behind the lower unemployment rate because the drop-out workers are not counted as “unemployed.”

If they were, the real unemployment rate would be about 11%, a rate associated with depressions.

Retail sales are being pumped-up by Treasury checks handed out by Congress. What happens when those checks stop?

Real estate losses are being held down by rent moratoriums and anti-eviction decrees. What happens when the rent is finally due?

Student loan defaults are on hold because a grace period on repayment has been extended. What happens when the grace period is over?

The real story is that the economy is weak, but the weakness is being papered-over by handouts, grace periods and repayment standstills. When those handouts stop, growth will slow sharply, and deflation or disinflation will reappear.

Higher interest rates are anticipating inflation, but the inflation is a mirage. Gas at the pump and housing prices are going up. Almost everything else from tuition to healthcare to clothing is going down.

Gold Wins Either Way

What comes next? The realization that we’re not re-inflating will take time to sink in. It will emerge from the data over the next six months.

Congress will halt multi-trillion deficit spending packages, despite the wishful thinking of Democrats that the country is ready for another trillion-dollar package. By mid-to-late 2021, the music will stop, the economy will slow, interest rates will resume their long-term downtrend and gold prices will soar.

What if I’m wrong? That would be good news for gold also.

The worst situation for gold is the one we have now where rates are going up, but there’s no actual inflation. If I’m right about inflation, then rates will come back down, and gold will rally.

But, if inflation actually does appear, guess what? Gold will go up because it always does in inflation.

Gold wins either way.

In what appears to be the third mass shooting in the US in under three weeks, 10 people have been shot, 2 fatally, after what the NYT described as “a chaotic night of violence” in Virginia Beach.

It’s the first shooting incident to grab national headlines in the city since an engineer slaughtered a dozen of his colleagues back in 2019 (an investigation into that incident had only just wrapped a few days ago). Police Chief Paul Neudigate told reporters Saturday morning that 8 people appeared to have been shot during a single incident, while 2 more were shot during other incidents.

In total, 2 of the victims succumbed to their wounds.

Details so far are sparse, but the chief confirmed that officers responded to the first seen around 2300ET Friday night. While officers were responding to the first shooting, they heard shots fired about a block away. As the rushed to confront the shooter, a uniformed police officer engaged one of the suspects in a firefight, killing them.

The department’s twitter account shared a warning about the shootings around 0100ET.

VBPD is investigating a shooting involving several victims with possibly life-threatening injuries. Large police presence at the oceanfront between 17th and 22nd St. Please avoid the area at this time. More to follow as it becomes available. @CityofVaBeach

— Virginia Beach PD (@VBPD) March 27, 2021

VBPD actively investigating oceanfront shooting with multiple gunshot wound victims and 1 deceased. Officer involved shooting with 1 deceased. @CityofVaBeach https://t.co/09uGbn9rOT

— Virginia Beach PD (@VBPD) March 27, 2021

Although the timeline was left unclear, police also said a second victim was shot and killed in a third shooting incident that appeared to be unrelated to the others Neudigate said. A police officer was struck by a car while responding to the incident, though the officer’s wounds were non-life-threatening.

“What you can see is that we have a very chaotic incident, a very chaotic night in the beach,” Chief Neudigate said. “Many different crime scenes.”

Several people were in custody, the chief told reporters. But their exact connection to the violence was unclear.

In a Twitter post just after 1 a.m. on Saturday, the department said that it was investigating a shooting in which several victims had “possibly life-threatening injuries,” and that there was a large police presence along a section of the city’s oceanfront.

“Please avoid the area at this time,” it said.

A person who answered the phone at the department said that no one was available to comment. Virginia Beach was the site of a mass shooting in May 2019, which we mentioned above. In that incident, 12 people were killed and several others injured before the shooter was killed during a gun-battle with police. 

On social media, some disputed whether any of the incidents qualified as an “active shooter” situation, saying that the shooters were simply two people with a personal beef, and terrible aim.

People the Virginia Beach shooting WAS NOT A ACTIVE SHOOTER it was two idiots fighting that wanted to shoot each other but unfortunately have horrible aim and shot innocent people. NOT A ACTIVE SHOOTER. Just groups fighting turned shooting

— 🏳️‍🌈🏴🏳️=🇺🇸 (@tony3879) March 27, 2021

Whether that is an accurate characterization, or not, will need to wait for more information from the department.

Of course, while two dead from gun violence in a single evening is extremely unusual in Virginia Beach, if the same incident unfolded on the South Side of Chicago, it would barely make the news.

More than 300 vessels are logjammed at either end of the Suez Canal on Saturday, though an increasing number of vessels were being diverted to the southern tip of Africa, also known as the Cape of Good Hope. 

Lieutenant-General Osama Rabie, Chairman of the Suez Canal Authority (SCA), said at least 14 tugboats and a dredging ship worked around the clock to free the stranded containership ‘Ever Given’.

I’ve got boots on the ground reporting from the Suez Canal – Ever Given is an absolute unit pic.twitter.com/Qv1S4vC0UY

— litquidity (@litcapital) March 26, 2021

Rabie said 9,000 tons of ballast water were removed from the ship. Dredgers had removed some 20,000 tonnes of sand from around its bow by Friday, and the rudder and propeller system of the vessel was restarted.

He said the stern of the vessel started to move last before refloating efforts stopped.

“The bow is really stuck in the sandy clay, but the stern has not been pushed totally into the clay, which is positive. We can try to use that as leverage to pull it loose,” Peter Berdowski, chief executive of Boskalis, which owns Smit Salvage, which was brought in this week to help with efforts, said.

“Heavy tugboats, with a combined capacity of 400 tonnes, will arrive this weekend. We hope that a combination of the tugboats, dredging of sand at the bow and a high tide will enable us to get the ship loose at the beginning of next week.”

The chairman said around 321 ships were waiting to transit the canal as of Saturday. 

Many of the vessels stuck in or around the Suez Canal are carrying billions of dollars of goods, such as crude, crude products, automobiles, electronics, livestock, other consumer goods, and other commodities.

Rabie also said wind speeds were not the main reason for stranding the ship on the side of the canal. He said technical or human error could have contributed to the incident. 

And the worst-case scenario might play out if the ongoing dredging to refloat the ship assisted with tugboats and high tide doesn’t work, that is, as explained by the chairman, the possibility of lightening the vessel’s load. He hoped the salvage team wouldn’t have to come to that because, as JPMorgan’s Marko Kolanovic told clients Friday, unloading the ship could result in a “ship breaking.” 

As Kolanovic puts it, “another interesting development of this week was the blocking of the Suez Canal. While we believe and hope the situation will get resolved shortly, there are some risks of the ship breaking.”

Additionally, Reuters reports that Boskalis and Smit Salvage have warned that using too much force to tug the ship could damage it. Berdowski said a land crane would be brought in at the weekend which could lighten the Ever Given’s load by removing containers, though experts have warned that such a process could be complex and lengthy.

“If we don’t succeed in getting it loose next week, we will have to remove some 600 containers from the bow to reduce the weight,” he said.

“That will set us back days at least, because where to leave all those containers will be quite a puzzle.”

Rabie did not give any timelines on when the vessel would be refloated. He said the stranded ship would need to be surveyed after it was refloated. 

There’s still no word on the US Navy’s assessment of the vessel. 

The blockage of the world’s most crucial shipping lane has added significant pressure to the already stretched global supply chain. 

Authored by Charles Hugh Smith via OfTwoMinds blog,

Borrowing a quarter of the nation’s entire economic output every year to prop up an ineffective, corrupt status quo is putting a Band-Aid over a tumor.

If we misdiagnose the disease, our treatment won’t work. We’re all familiar with medical misdiagnoses, which lead to procedures and prescriptions that can’t possibly fix the patient’s illness because the source has been missed or misinterpreted.

Medical diagnoses are often tricky, as many general symptoms can arise from a variety of sources.

Social and economic ills can also be tricky to diagnose, and the diagnosis is hindered by political polarization and sacrosanct orthodoxies which make it difficult to have a rational discussion in public about many difficult issues.

If we can’t even discuss a problem, then that creates another problem, because problems that can’t be discussed openly cannot be solved.

There’s also a human tendency to choose the diagnosis with the easiest-at-hand solution. This allows us to quickly apply an approved solution and then declare the problem solved.

The current flood of financial stimulus is an example of this misdiagnosis and application of an easy solution which fails to address the underlying disorder.

The conventional diagnosis of the post-pandemic economy is that the only problem is people don’t have enough money, and so giving them money to spend will cure the financial damage the pandemic inflicted. (Never mind that the economy was rolling over in 2019 long before the pandemic, which served as a catalyst in a sick, unstable status quo.)

Creating $1.9 trillion out of thin air and distributing it is painless: who doesn’t like free money? But is a scarcity of cash the source of America’s economic malaise?

The general view is that pumping free money into the economy will automatically increase employment, launch new businesses, increase profits and tax revenues, etc.

Yet as I discussed in my blog post on the velocity of money, Our Dead Money Economy, as the money supply expands in a parabolic fashion, the frequency that all this new money is changing hands (money velocity) is in a free-fall to historic lows.

Simply put, much of this money is either being saved (“hoarded” to economists who want us all to spend every dime of it), applied to debts outstanding (back rent, credit cards, etc.) or sent overseas for imported goods.

There is no guarantee that all this stimulus will generate the jobs, new enterprises, profits and tax revenues that are anticipated.

Distributing stimulus money and expecting this solution to fix America’s economic malaise is akin to applying a Band-Aid over a tumor. It may well hide the problem but it cannot heal the disorder or save the patient.

My current work focuses on three dynamics that define any human civilization: the distribution of resources, capital and agency. Resources are straightforward–food, energy, shelter, etc.– and capital is financial (money), tangible (tools, ownership of land and enterprises, etc.) and intangible (social and human capital). Capital productively invested produces income.

Agency is control of one’s life and having a say in community/public decisions and having some control and power over one’s circumstances.

When these three are distributed asymmetrically, where the majority of the resources, capital and power are distributed to an elite, the society and economy are imbalanced and prone to stagnation and eventual discord.

The statistics are unequivocal: income-wealth inequality in the U.S. continues reaching new heights. This is reflected in asymmetric access to healthcare and other resources, asymmetric ownership of income-producing capital and limited agency. ( Trends in Income From 1975 to 2018)

The bottom 90% of the U.S. economy has been decapitalized: debt has been substituted for capital. Capital only flows into the increasingly centralized top tier, which owns and profits from the rising tide of debt that’s been keeping the bottom 90% afloat for the past 20 years.

As I’ve often observed here, globalization and financialization have richly rewarded the top 0.1% and the top 5% technocrat class that serves the New Nobility’s interests. Everyone else has been been reduced to a powerless peasantry of debt-serfs who rely on lotteries and playing the stock market casino or hoping their mortgaged house on the Left or Right coasts doubles in value, even as the entire value proposition for living in a congested urban sprawl vanishes.

America has no plan to reverse this destructive tide of Neofeudal Pillage. Our leadership’s “plan” is benign neglect: just send a monthly stimulus of bread and circuses (the technocrat term is Universal Basic Income UBI) to all the disempowered, decapitalized households so they can stay out of trouble and not hinder the New Nobility’s pillaging of America and the planet.

The bottom 90% of American households receive a mere 3% of capital-generated income. That 3% might as well be 1% or 0.1%–it’s inconsequential.

As for agency: Martin Gilens of Princeton University and Benjamin Page of Northwestern University are the authors of the study “Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens.”

Professor Gilens gave this brief summary of their conclusions:

“I’d say that contrary to what decades of political science research might lead you to believe, ordinary citizens have virtually no influence over what their government does in the United States. And economic elites and interest groups, especially those representing business, have a substantial degree of influence. Government policy-making over the last few decades reflects the preferences of those groups — of economic elites and of organized interests.” (Source: Foreign Affairs, January 2021, Monopoly Versus Democracy)

That is as definitive as soaring income-wealth inequality. Both are inherently destabilizing.

Meanwhile, central bankers, monopolists and the politicos whose campaigns are funded by monopolists are all frantically trying to convince us their Band-Aid will heal the metastasizing tumor consuming America. And if it doesn’t, well, it was inevitable that the central banks would boost the wealth of the top 0.1% and leave the bottom 90% spiraling into the abyss; we really can’t stop “technology” (heh) or “capitalism” (heh-heh). Consider this excerpt from the article:

“…high-tech monopolists (pursue) a strategy of encouraging people to see immense inequality as a tragic but unavoidable consequence of capitalism and technological change. But as Lynn shows, one of the main differences between then and now is that, compared to today, fewer Americans accepted such rationalizations during the Gilded Age. Today, Americans tend to see grotesque accumulations of wealth and power as normal. Back then, a critical mass of Americans refused to do so, and they waged a decades-long fight for a fair and democratic society.”

Distributing “free money” (much of which goes to favored industries and cartels) is a Band-Aid over the metastasizing tumor of perversely imbalanced distributions of resources, capital and agency/power.

If America cannot bear to discuss these realities (and structural solutions– yes, there are solutions) openly, they will unravel the social, economic and political orders in a non-linear Cultural Revolution with a highly uncertain outcome.

Borrowing a quarter of the nation’s entire economic output every year to prop up an ineffective, corrupt status quo is putting a Band-Aid over a tumor.

*  *  *

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A Hacker’s Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

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Russian state sources are alleging that Washington under the Biden administration is ramping up military aid to Ukraine after local media observed a US cargo ship delivering 350 tonnes of military equipment – including tactical vehicles – to Ukraine’s Odessa port.

Local media reported the delivery which began late Wednesday and which is said to still be in process Friday. Ukraine’s Dumskaya news agency said the American vessel carried at least 35 US military humvees for Ukrainian national forces. 

“Dry-cargo ship Ocean Glory under the American flag entered the port of Odessa last night,” the report indicated.

“The bulk carrier Ocean Glory specializes in military transportation. Built in 2015, length 171 meters, width 25 meters, deadweight about 20 thousand tons,” it added according to a translation.

The delivery follows last year’s US DoD announcement of an additional $125 million military assistance package for Ukraine (unveiled in March) which involves equipment, training, and military advisory support, with an additional $150 million waiting for Congressional and Pentagon approval. 

Recall that a little over a month after Biden taking office, the White House issued an official communique commemorating “Russia’s illegal invasions of Ukraine” – as the statement put it.

“The United States continues to stand with Ukraine and its allies and partners today, as it has from the beginning of this conflict. On this somber anniversary, we reaffirm a simple truth: Crimea is Ukraine,” the Biden administration said on Feb.26.

“The United States does not and will never recognize Russia’s purported annexation of the peninsula, and we will stand with Ukraine against Russia’s aggressive acts.”

Needless to say the Kremlin has been monitoring US equipment deliveries through Odessa port very closely as concerns grow over Biden’s Russia and China-centric foreign policy, which has seen additional pressure ramping up fast on both countries, including fresh sanctions against Kremlin officials of late and vows of impending cyber-attacks in retaliation for alleged US election ‘interference’.

Authored by Steve Watson via Summit News,

British former Supreme Court judge Lord Sumption has warned that “social controls” brought about by the coronavirus pandemic may be kept in place by governments for up to a decade.

“It’s politically unrealistic to expect the Government to backtrack now,” commented Sumption, who has been highly critical of the government’s ‘totalitarian’ lockdown policies.

The judge compared the reaction to rationing after the Second World War, which went on for nine years, adding that this time “I think it may be even longer.”

“An interesting parallel is the continuation of wartime food rationing after the last war. People were in favour of that because they were in favour of social control,” he said during a ‘Sketch notes on’ podcast.

“In the 1951 general election, the Labour party lost its majority entirely because people with five years more experience of social control got fed up with it. Sooner or later that will happen in this country,” he added.

Sumption’s warning comes in the wake of Public Health England officials stating that restrictions will remain in place for as long as other countries have not vaccinated everyone, a process likely to take years.

England’s chief medical officer also recently asserted that the pandemic restrictions, which have been in place on and off for a year, have “improved life” for some people.

Despite promising an end to restrictions in June, the UK government yesterday extended emergency COVID laws until October, with Health minister Matt Hancock refusing to say how long they will remain in place after that.

Lord Sumption also noted during the podcast that scientists skeptical of lockdown policies have been “subjected to an extraordinarily unpleasant campaign of personal abuse”.

“I know a lot of people that would prefer not to put their head above the parapet,” He continued, adding:

“From the very moment I started to make these points I began to get emails from politicians who agreed with what I had to say but that they themselves didn’t dare to speak out. That I think is a very serious state of affairs.”

The judge also argued that governments are using the virus politically, noting “They have consistently tried to maintain that the virus is indiscriminate when it is perfectly well-established that it primarily affects people with identifiable vulnerabilities, particularly in the elderly.”

Speaking about the draconian crack down on anti-lockdown protesters, Sumption said “People ought to be entitled to voice their differences (of opinion),” adding “If the only way you can enforce distancing is by beating people over the head with truncheons then it’s not worth it.”

Now that Brits have allowed society to be permanently deformed, with polls routinely showing vehement support for lockdown and other pandemic rules, things are never going to be the same again.

Having allowed the precedent that the government can put the entire population under de facto house arrest on a whim, look for the policy to be repeated over and over again with different justifications that have nothing to do with COVID-19.

As we previously highlighted, one of those justifications will be man-made global warming, with climate lockdowns set to become a regular reality.

Though they aren’t quick to brag about exactly how much they made in 2020, luxury carmakers had an exceptional year during the pandemic. 

And while outlets like have cited that the buying of luxury vehicles was tied to a carpe diem effect (wherein, we guess, people finally started to realize that they will be dead at some point), we’re sure the “support” from Central Banks globally that shot the stock market through the stratosphere in the course of just 9 months, likely also helped. 

But it is worthy to note that these automakers’ wild numbers happened in the midst of an era where more than 10 million were unemployed in the U.S. and many suffered severe financial hardships as a result of global governments vastly overreacting to Covid. 

Bentley’s Adrian Hallmark said on March 23: “Let’s just say we began 2020 with the strongest order bank since 2003—and we started this January with 50% more orders than last January.” The company delivered 11,206 vehicles in 2020, up 1.8% YOY and marking the “highest output” in its 101 year history, according to Bloomberg.

Hallmark said: “Our sales right now are some 30% above last year, even bearing in mind last year was a record. It would take an even bigger asteroid than the Covid one to knock us off track again.”  

“We are not seeing recessionary behavior. We are seeing postwar boom.”

Bugatti saw similar success. “Bugatti did incredibly well,” Stephan Winkelmann said, admitting he was “surprised” at how well the brand did, calling 2020 its “third record-breaking year in a row.”

Porsche’s Oliver Blume said the automaker’s results in 2020 were a “fantastic accomplishment”, noting on a March 18 media day that the company’s revenue reached an all time high of $34 billion in 2020, passing 2019 by more than $100 million. Lamborghini saw annual profits that were higher than any previous year, despite the fact that – like Porsche and Ferrari – sales were actually lower than 2019. Analysts have speculated that it could be positioning for an IPO and spinoff from parent Volkswagen, due to its success.

Aston Martin, on the heels of a $1.79 billion recapitalization in December, also looks to be on an upswing. The company is predicting it will be free cash flow positive by 2023. “Aston Martin is no longer on the critical list,” Michael Dean, head of automotive analysis for Bloomberg Intelligence, said.

Martin Fritsches, CEO of Rolls-Royce Motor Cars Americas, lamented a sharp decline in 2020 but says it was due to product cycles: “We were gearing up for new Ghost in the midst of Covid shutdowns, however we continued to see strong demand for new Rolls-Royces and ended the year with the highest level of future orders ever for the brand. Orders for commissions today extend well into the third quarter.”

Dean also said on March 16 that the trend in luxury shows no signs of slowing: “History suggests demand for super-luxury sports cars will remain robust, despite a Covid-19-related global recession.”

Analysts have also cited the pandemic making the car buying process more streamlined and easier – as is happening in many industries – as a reason for the success. Statista predicts that U.S. revenue for luxury vehicles will reach $6.9 billion this year.

When Winkelmann would ask clients to why they were so intent on buying a luxury vehicle now, he commented: “They told me: ‘We had more time to think about our future and what is happening next, we were deciding where to put our money, and—well, why not?’ ” 

Authored by Pat Buchanan via Buchanan.org,

During a joint interview with Jens Stoltenberg, the Norwegian secretary-general of NATO, Secretary of State Antony Blinken, fresh from his bout with the Chinese in Anchorage, took on Angela Merkel and the Germans.

Issue: Nord Stream 2, the Baltic Sea pipeline Vladimir Putin is building to complement his Nord Stream 1 and carry more natural gas from Russia to Germany, and from there to other NATO nations.

The original Nord Stream pipeline, also consisting of two strands of pipe along the Baltic Sea floor, was completed in 2011.

In his meeting with Stoltenberg in Brussels, Blinken warned that Western companies participating in building Nord Stream 2, which is 90% complete, would face sanctions mandated by Congress:

“President Biden has been very clear in saying that he believes the pipeline is a bad idea; it’s bad for Europe, bad for the United States,” said Blinken, adding, U.S. law “requires us to sanction companies participating in the efforts to complete the pipeline.”

What is behind American opposition to Russian natural gas going to Germany, and from there to NATO Europe?

• First, the pipelines bypass Ukraine and Poland, cutting those countries out of the transit revenue.

• Second, we want NATO Germany to buy our own shale-produced natural gas.

• Third, we object to a pivotal NATO ally increasing its present dependency for energy on the very nation against which the United States has defended that ally for 70 years.

Why are you Germans buying Russian gas when we are protecting you from Russian aggression, the Americans ask. It’s a fair question.

Last summer, an exasperated President Donald Trump announced plans to withdraw 12,000 troops from Germany in what was described as a “strategic” repositioning of U.S. forces in Europe.

Trump said the move was in response to Germany’s failure to meet national NATO targets on defense spending of at least 2% of GDP.

“We don’t want to be the suckers anymore,” said Trump

“We’re reducing the force because they’re not paying their bills; it’s very simple.”

Merkel ignored Trump’s threat. The U.S. troops are still there.

This week, Blinken met with German foreign minister Heiko Maas to restate the U.S. concern over Nord Stream 2, while hastily adding that Germany is a vital NATO ally and the pipeline is “an irritant in a rock-solid alliance.”

One gets the impression that Merkel and the Germans will prevail, the pipeline will be completed, and the gas will begin to flow to Germany.

And that the Americans will accept it, rather than exacerbate the issue.

Yet, what does Germany’s willing and deepening dependence on Russian gas for its energy, as it moves off coal and nuclear power, tell us?

And what does Germany’s chronic refusal to meet the standard of NATO nations to contribute 2% of GDP to the common defense tell us?

Quite obviously, the Germans do not see Putin’s Russia as the military threat it was in the Cold War. And Berlin has come to believe that, even if it falls short of its commitments to spend more on defense, the Americans are bluffing. They are not going to leave Europe or NATO.

Why are the Germans not wrong to conclude this?

Because being the “last superpower,” “the leader of the free world,” the “indispensable nation,” the architect of the “rules-based international order” created by the World War II generation of Harry Truman, Dean Acheson, George Marshall and the rest, is how we define ourselves and our mission to mankind.

We can’t let go, because this is who we are and what we do.

Without this mission, what could justify the mammoth amounts we invest annually on NATO, national defense, foreign aid, the Indo-Pacific, the CIA and the Armed Forces of the United States?

Consider. Between 1989 and 1991, the Soviet Empire collapsed and disintegrated. The Berlin Wall came down. All the Red Army divisions went home from Europe. Communism ceased to be the ideology of the Soviet Union, which itself split apart into 15 separate nations.

Russia was no longer the largest captive nation of communism but a nation reaching out in friendship to the United States.

And what did we do in response?

We doubled the number of nations in NATO we are sworn to defend, moved the alliance deep into Eastern Europe and adopted a policy of containment of a shrunken Russia.

Having won the Cold War, and unable to find a new mission, we started a second Cold War to contain the new Russia — this time at the borders of Belarus, Ukraine and Georgia, as we had once contained the old USSR at the River Elbe.

Why does Angela Merkel not take seriously U.S. threats to pull our troops out of Germany, if the Germans won’t cancel Nord Stream 2 or pony up more for defense?

Because Merkel thinks the Americans are bluffing about going home from Europe, and thinks the Russia of Vladimir Putin is not the Russia she knew in the days of the GDR.

Is she wrong?

If there was one topic we covered at length over the course of 2020, it was how the rich were getting much richer as a result of global “stimulus” disguised as helping the little guy.

For example, Elon Musk saw his net worth rise by over $100 billion during 2020 alone. And Musk is just a microcosm of a top 1% that saw a tremendous windfall from Central Banks printing fake money to prop up global capital markets. Reuters reports that “nearly two thirds” of the world’s billionaire class put together larger fortunes in 2020. Forbes estimated billionaires got 20% richer in 2020 by mid-December. 

Now, the rich are starting to brace “for the backlash” of both widening inequality and markets eventually turning against their favor, Reuters reports.

Morris Pearl, a former managing director at BlackRock, told Reuters: “The stock market crashed a year ago, by July or so my portfolio was back where it was before, at the beginning of the year, and now it’s far higher. The fundamental problem is this gross inequality that’s getting worse.”

Rob Weeber, CEO at Swiss wealth manager Tiedemann Constantia, suggested the rich want to start selling before taxes inevitably rise: “It’s quite evident that the bill is coming for everybody.”

Obviously, the U.S. is expected to hike taxes as a result of Joe Biden’s election. Alvina Lo, chief wealth strategist at Wilmington Trust, commented: “We saw a surge of trusts created and funded in Q4 of last year. The vast majority of our clients adopted a wait-and-see approach until the election in November, and then it just kicked up into high gear.”

Jason Cain, who works for Boston Private, also said that families moved items into trust funds: “75-80% of the families that we talk to were convinced that that was an opportunistic time and they needed to do something.”

Many of the rich cashed in on investment opportunities that the average investor couldn’t participate in, like “capitalising on market volatility with short-term derivative trades,” the report notes. Maximilian Kunkel, UBS’s chief investment officer for wealthy family offices, said: “Some of our clients were extraordinarily agile in taking advantage of the biggest market dislocations.” 

Babak Dastmaltschi, Credit Suisse’s head of strategic clients in its international wealth management division, said that some wealthy simply relocated their entire fortunes instead: “They are actually saying: look, we see the world inevitably going towards more and more transparency. And there’s no point fighting a trend. Let’s just find suitable jurisdictions which are transparent, open, respected, and internationally recognised, and establish our structures there.”

Henley & Partners, who helps clients relocate, said that the number of calls from U.S. based clients jumped 206% in 2020. People are moving out of developing countries, as well. Beatriz Sanchez, head of Latin America at global wealth manager Julius Baer, said: “COVID just basically took the clothes off the Emperor, and all of a sudden, people started to realize: our healthcare system is not strong, our social safety net is really not available.”

The wealth of U.S. billionaires rose to $4.2 trillion by the end of the year, about 20% of U.S. economic output for 2020 and double the wealth held by the bottom half of the nation’s 330 million person population. 

And whether it be for tax purposes – or just trying to avoid the blowback of the widening inequality gap – the soaring fortunes have put some added focus on philanthropy.

UBS’s American head of family advisory and philanthropy services Judy Spalthoff, concluded: “There’s been a massive shift in the conversations we’re witnessing among families, in terms of the consideration of social inequity. The younger generation has really been pushing this topic at the board level. We see so many conversations in families really gut-checking to say, ‘Yes, we’ve had success. We’ve worked hard for this success. But let’s not be blind to the world around us. And let’s make sure we can step out of our bubble’.”