Category: zerohedge

Authored by Jonathan Turley,

We have previously discussed the brutality of Islamic nations enforcing medieval Sharia law. Iran has given the world another shocking addition to the long list of beheadings, floggings, and other forms of Islamic punishment. A “court” has ordered the amputation of the fingers of three teenagers found guilty of theft.

Photographs released by the country’s state news agency in 2013 show the punishment being carried out. In the images, a blindfolded man is led to the a crude saw, where two hooded men put his hand in a vice.

(source: The Sun)

Another turns a handle which operates a circular saw that guillotines four of the man’s fingers.

(source: The Sun)

The three prisoners will have four fingers from their right hands sawn off.

According to Iran International, the Iranian Supreme Court has upheld the Sharia sentencing Hadi Rostami, Mehdi Sharafian and Mehdi Shahivand who were convicted of four counts of robbery in the northern city of Urmia.

The boys have complained of torture leading to their confessions and one is reportedly in dire health condition after slitting one of his wrists.

Here is the provision found in Article 278 of the Islamic Punishment Law:

Article 278– The hadd punishment for theft is as follows:

(a)   On the first occasion, amputation of the full length of four fingers of the right hand of the thief in such a manner that the thumb and palm of the hand remain.

(b)   On the second occasion, amputation of the left foot from the end of the knob [on the foot] in such a manner that half of the sole and part of the place of anointing [during ablution] remain.

(c)    On the third occasion, life imprisonment.

(d)   On the fourth occasion, the death penalty even though the theft is committed in prison.

Note 1- When the thief is lacking the limb which shall be amputated, s/he shall be sentenced to the punishment prescribed for ta’zir thefts.

Note 2- Regarding paragraph (c) of this article and other thefts that do not fall under the category of ta’zir, if the offender repents during the execution of the punishment, and the Supreme Leader agrees with his/her release, s/he shall be pardoned and released. In addition the Supreme Leader can replace his/her punishment with another ta’zir punishment.

Amputation was thought to have been phased out of Tehran’s arsenal of punishment in the mid-2000s. But in 2008, five criminals convicted of various crimes, including “acting against God” and “corruption upon this Earth,” were reportedly subjected to “cross amputation” where the right hands and left feet of the men were removed.

In a report on Iran’s justice system, Amnesty International said:

“Amputation is torture plain and simple, and administering torture is a crime under international law.

As a party to the International Covenant on Civil and Political Rights, Iran is legally obliged to forbid torture in all circumstances and without exception.

Those responsible for ordering and executing such practices should know that they are liable to criminal prosecution under international law.”

The amputation of the fingers of these minors is an offense to the most base concepts of human rights and indeed humanity itself.

Vladimir Putin has blamed the United States for Russia’s development of hypersonic weapons, saying specifically it was ultimately Washington’s withdrawal from the Anti-Ballistic Missile Treaty (ABM Treaty) in 2002 which triggered the experimental defense technology program. 

As the name suggests, it was an arms limitation and reduction treaty brokered with the Soviet Union which regulated the anti-ballistic missile systems used in defending areas against ballistic missile-delivered nuclear weapons.

Putin said during a televised address on Saturday: “The withdrawal of the United States from the Anti-Ballistic Missile Treaty in 2002 forced Russia to start developing hypersonic weapons. We had to create these weapons in response to the deployment of the US strategic missile defense system, which was capable to actually neutralize, reset our entire nuclear potential in the future,” according to Russia’s Sputnik.

Interestingly the timing and blame-game nature of Putin’s statements come a little over a year after the United States withdrew from the Intermediate-Range Nuclear Forces Treaty, or INF. It also comes as the New START nuclear arms reduction treaty is on the chopping block as well, amid ongoing negotiations. 

“I have repeatedly said that for decades we had to constantly catch up, as you know very well. At first, this applied to nuclear weapons, then long-range strategic aviation, and then intercontinental missile technology, which specialists call the means of delivery,” Putin stated.

“And now, for the first time in our modern history, Russia has the most modern types of weapons that are many times superior in strength, power, speed, and, most importantly, accuracy to anything that existed and exists today. No one in the world has such a weapon. Not yet, anyway,” the Russian president said.

The remarks were on the occasion of honoring the scientist and engineer responsible for the success of Russia’s Avangard hypersonic glide vehicle program, Gerbert Efremov.

Addressing Efremov, Putin said, “Today, the implementation of your idea can undoubtedly be compared to the implementation of the Soviet Union’s nuclear and missile projects, which were carried out by outstanding Soviet scientists [Igor] Kurchatov and [Sergey] Korolev,” Putin said.

Over the past couple years Russia has unveiled multiple cutting edge strategic weapons systems which are at various stages of development and testing. 

Authored by Tim Kirby via The Strategic Culture Foundation,

The seemingly longest divorce proceedings in history continue as the United Kingdom is still struggling to ever so slowly wiggle its way out of the EU. The British are trying to work out a post Union trade deal that will work out for their best interests and is hammering home the threat of abandoning negotiations and bailing without any agreement if they don’t get what they want in time. Perhaps, at one point the threat of London abruptly leaving would have had more weight than after years of watching the British “kind of” slowly leaving the EU party one at the speed of a glacier. In 2020 it is hard to take any threat of abrupt action from them seriously. Obviously, the economic impact of Brexit has been much discussed and for some feared, but the British are taking something else entirely with them that is not being discussed. And this aspect of Brexit should raise many questions for the future of the EU – the removal of the EU’s native English-speaking core.

In theory, the ideas that unite the EU are beliefs in Western Style Democracy, Human Rights (and the West’s monopoly on the interpretation of the idea), the geographic unity Europe (excluding the evil Russians) and a sort of friendly-faced Capitalism with a Nanny State side. To what extent these pillars of the union are taught in schools across the many nations is up for debate. Very often the ideas in society that should be known to all are pushed into the realm of the esoteric due to their exclusion from mainstream public education. As an American growing up in the Cold War it is still very surprising that we never had “Capitalism” as a school subject. During my childhood I knew we were fighting for Capitalism and that Communism “doesn’t work” but we never had it explained to U.S. until much later. And this was only due to the fact that I was in “AP” classes into which only a tiny percentage of the student body actually went. Who knows what they told the normies about economics, probably not much. But in contrast to this, one thing that is definitely taught to all children in the EU regardless of educational system is English.

Again as an American we are bombarded by media fear porn that Spanish (aka “Mexican”) will take over the United States and our wonderful version of English will be subjugated/die out. This narrative works well in the U.S. as few people ponder what the rest of the world is doing, but once an American steps foot in places like Eastern Europe they can begin to see the big international push for English goes from the cradle to the grave with no exceptions. In places like Poland, Russia and Kazakhstan the stock answer as to why the entire planet needs to learn English is something like “but it’s the international language”. When you ask them, why that is the case (who deemed this to be so and by what authority?) you are met with just blank stares as either their minds are open or they feel like a parent having to explain to their son why the sky is blue for the third time. The NPC programming has not worked out this if-then statement yet.

Image: The real reason why English is the “International Language”.

The uncomfortable actual reason that Europe “speaks” English is because the United States won the Cold War. After WWII half of the continent was occupied by the Soviet Union and the other half was occupied by the United States only we called it the Marshall Plan and NATO and other more friendly terminology. Had the Soviets won the conflict, then every human on Earth would know how to at least read the letters of the Cyrillic Alphabet. English today in Europe has left the same mark as Western European languages did in Africa – as a symbol of subordination.

This is not to say that this is bad or good, but it is the way it is. There are arguments as to the pluses of living in a cultureless future with only one global language regardless of which one crushes the others. I don’t believe in them but they are at least coherent.

How many Africans use French in contrast to how many French colonizers learned local African languages? With few if zero exceptions the losers of history are forced to speak the language of the winners. So for the EU, its English based internationalism is a big Elephant in the room that no one ever speaks of and it was the presence of the United Kingdom that kept this question down for years. Having countless millions of native English speakers in the Union made universal English education seem reasonable or at least didn’t raise any red flags in the subconscious mind of the masses. But now the British are gone and they aren’t coming back. So why should children in Germany spend so much time fiddling with English?

Image: There is no longer a dominant nation of native English speakers in the EU, if you don’t count Washington’s influence.

With the UK gone the only really big English-speaking country is Ireland, which is not particularly proud of this fact. Inside of Ireland itself the restoration of their native language is an issue that at least makes the news on a regular basis and is something politicians pander to. Ireland’s attitudes towards English are far from fanatical. Furthermore, and with no insult to the Irish intended, the EU logically should not gravitate itself to revolve around Irish-English as the nation is a smaller player farther from the heart of Europe than even England was. Europe is not going to learn English for the sake of Ireland nor should they.

Image: The “Blue Banana” shows where Europe’s population is most dense.

The real center of Europe is shown by the so-called “Blue Banana” that goes right over the territory of the old Holy Roman Empire + England. This is the economic and population heart of Europe. Removing London from the picture linguistically, we are looking at an EU master language that should be something Franco-German-Italian. The languages of the Blue Banana are the actual means of human communication of the EU after Brexit. It seems much more logical for this organization to orient itself towards this language realm rather than to now foreigners outside of the European Union.

If the EU is actually as independent as it says it is, then perhaps now would be the time to start forcing children across the continent to learn French, German or Italian or some sort of combination of the three. Continuing to be dominated by the English language only proves the Political Realists right – that the EU is and always has been just a tool of Washington. A powerful independent union would surely speak its own language(s) wouldn’t it? With England gone now would be a good time for Europe to speak European and not the foreign squawking of the Anglo-Saxons.

Authored by Lawrence Franklin via The Gatestone Institute,

China and Russia’s coordinated policies in foreign affairs and economic endeavors belie deep-seated fissures that might well prevent their current period of cooperation from evolving into a sustained alliance.

Despite China’s planned participation in Russia’s annual Caucus 2020 exercises on September 21-26, Sino-Russian history is so replete with war, unequal treaties and racism, there seems little probability that their present military cooperation will succeed in developing into a military alliance.

The current Russo-Chinese cooperation seems loosely rooted in the notion that “the enemy of my enemy is my friend.” Both countries apparently believe that checking U.S. power is in their national interests. China wants the U.S. to withdraw from its military and diplomatic commitments in the Western Pacific, thereby allowing Beijing to assert primacy in Asia, at least for a start. Russia seems to want the U.S. to decouple itself from the decades-old NATO alliance, thereby enabling Moscow to re-assert its dominance in the Baltic region and Eastern Europe.

Russia’s drive eastward in the late 17th century already brought Russians into conflict with China’s Qing Dynasty. After a series of clashes in the 1680s, the two empires temporarily settled on a boundary along the banks of the Amur River, separating Manchurian China from the Russian Far East. The Chinese, however, apparently resented Russia’s intrusion into a region Beijing considered its backyard. The Chinese also seem to have felt humiliated by defeats in subsequent wars with Russia and by having been coerced into signing what Beijing still refers to as “unequal treaties.” The ill will generated between China and Russia over several military conflicts in the 18th and 19th centuries, and a fierce ideological rivalry in the late 20th century, might also be an obstacle to an enduring bilateral alliance. Some Chinese commentators allege that Russia still occupies hundreds of thousands of square miles of Chinese territory seized in Tsarist times. China even recently claimed that Vladivostok, the most prominent city in Russia’s Far East, is historically Chinese territory.

China and Russia’s profoundly different cultures might also help to limit a bilateral honeymoon. A portion of Russia’s self-image is that of protector of the Slavic World, guardian of the Orthodox Christian faith, and the lead society in the Eurasian landmass from the Urals to the Pacific. Moscow’s historical view of China further seems conflated with a contempt for the Mongols, who cruelly subjugated Russian Slavdom for centuries. Ethnic tensions took a dark turn in July 1900, when Russian soldiers in the Amur River territory of Blagoveshchensk executed a racist rampage with forced deportation, and killing roughly 5,000 Chinese in the operation.

China sees itself as synonymous with civilization and calls itself “Jungwo” or center country. The Great Wall was continuously maintained by Chinese dynasties to keep out what China viewed as the “northern barbarians”: the Russians and earlier marauders. Chinese racism seems to extend to everyone outside its civilization’s values, such as China’s current concentration camps holding more than a million Uighurs, who are Turkic, as well as against Africans doing business in China.

Today, most Russians who live in Siberia reside less than 150 miles from the Chinese border, and the Russian population in these border provinces is in decline. Siberia, larger than the continental United States and India combined, is home fewer than 35 million people, with hundreds of millions of Chinese just over the border. At some point, China may start eyeing this energy- and mineral-rich region of Russia. Chinese investors have already leased large swathes of land in Russia’s Far Eastern realms.

The only major link that connects European and Asian Russia is the Trans-Siberian Railroad. China is now building more roads and more rail connectivity.

President Vladimir Putin’s Russia is clearly the junior partner in the Sino-Russian anti-American “alliance of convenience”: China’s growth is nearly five times that of Russia. Bilateral trade is increasing with the hoped-for goal of reaching $200 billion by 2024. Most of their joint projects are being carried out in agriculture, light industry, and energy. Last month, the two countries agreed to initiate two new joint projects: a gas processing plant and a bilateral insurance company. China’s investments in Russia are largely in energy, agriculture, forestry, construction materials, textiles, and household electric goods.

China seems to see Russia less as an economic partner than as a source for extraction of energy and raw materials. In 2019, Russian exports to China consisted almost entirely of oil, mineral ores, and wood. China appears to favor procurement of technically advanced products from the West rather than from its Eurasian ally. China, for instance, awarded contracts for hydroelectric products for its massive Three Gorges Dam to two European consortia, one headed by Germany’s Siemens Corporation, the other by the British/French GEC-Alstom, evidently preferring western designs to bids by Russia’s “Energomashexport.” Additionally, the trading branch of a major Chinese oil refining enterprise has been turning down Russian crude oil exports since Moscow’s state petroleum institution, Rosneft, was sanctioned by the United States.

There seem to be problems even in the most vibrant dimension of Sino-Russian cooperation: arms sales. While China in the past purchased billions of dollars of fighter and bomber aircraft from Russia, Beijing has quickly been developing its own arms industry, sometimes reverse engineering Russian weapons systems. Russia, perhaps annoyed at China’s aggressive pattern of copying its weapons systems — such as the SU-27 fighter and the S-300 surface to air missile system — has delayed a planned shipment of its premier S-400 air defense system. Moscow, it seems, decided to deliver the system to China’s regional arch-rival India instead. China’s development of its most modern stealth fighter aircraft, the Chengdu J-20, resembles a cancelled variant of a Russian fighter aircraft.

China is already successfully challenging Russia for influence among the post-Soviet states in Central Asia, particularly in Tajikistan. China’s establishment of a military base inside Tajikistan near its border with Afghanistan appears to have bested Russia’s effort to provide the Tajik government with security against Afghanistan-based jihadists just across the border.

Another area of disagreement is China’s opposition to Russia’s seizure of Crimea and its subsequent invasion of Ukraine.

A major plank of disingenuously articulated Chinese foreign policy is the principle of non-interference in the internal affairs of other countries. While disapproving of Russia’s assaults on sovereign states, China seems to have no problem asserting its own will in and around other states, for instance, in the South and East China Seas, India and the Galapagos Islands.

Russia, in turn, has not supported China’s aggressive moves in the South China Sea, in an attempt not to alienate Vietnam, the Philippines or Malaysia.

Mainly, this bilateral condominium might be doomed to collapse because there is no trust in the relationship. Russian security officers recently arrested a Russian scientist accused of spying for China. Russia and China act far more like competitors than allies. Their common antipathy for the United States most likely presents a distorted image of a coordinated policy agreement. These two authoritarian rivals could eventually assume their normal historical role as adversaries, even enemies. Consequently, Western intelligence agencies and policymakers might want to be wary of not overestimating the solidity and longevity of the Chinese-Russian friendship.

A shocking claim, made by one parent in Anne Arundel County, Maryland, alleges a popular smartphone app designed for children asked a  5-year-old user to take naked pictures of themselves and siblings while in the bathroom and threatened to strangle the child if they didn’t comply, reported WBAL Baltimore. 

Anne Arundel County police learned about the incident on Wednesday (Sept. 16), said the child had several apps “Talking Angela,” “Talking Angela 2″, Talking Tom 2”, and “Talking Ben 2” on their smartphone device. The complaint, filed by one of the parents, though the report did not specify which one (mother or father), called police after the incident. Police are now warning parents in the county, just outside Washington, D.C., to monitor their children’s online activity of apps and social media. 

“The parent reported that the app requested the child remove clothing and take photos while in the bathroom,” Anne Arundel County police Sgt. Kam Cooke said. “We are not really sure as to, did the app actually say that? Or was that some sort of other entity within that app that was able to request that?”

WBAL downloaded the popular apps but did not find “any verbal commands, only written messages or symbols pointing out what to do next.” 

The local television station interviewed one parent in the county, Victoria Rodriguez, who said she would not let her young kids use smartphone apps. 

“I feel it’s weird, like someone is watching my child through the game or through the camera. It gives me the heebie-jeebies,” Rodriguez said.

A Patch report said the tech company behind the app, Outfit7, has denied the claims:

“The claims have no factual basis and are completely untrue,” company spokesperson Daša Rankel told Patch in an email.

However, one of the apps, Talking Tom, was in hot water in 2015 in the U.K., after the Advertising Standards Authority received complaints from two parents that their 7-year-old and 3-year-old children saw porno ads on the app. One ad read,” “Wanna f**k?”

Besides police warning about apps possibly requesting children to take pictures of themselves and or others, there’s been a massive problem of hackers disrupting virtual classes for children with porn, guns, and threats, all across the country. 

Authored by Matt Taibbi via taibbi.substack.com

From a speech given this week to the McCourtney Institute of Democracy, Penn State University:

We live in a time of incredible political division. Many of us have had the experience of talking to someone whose idea of reality seems to be completely different from our own. It’s become difficult to have an argument in the traditional sense. People with differing opinions are often no longer even working from the same commonly-accepted set of facts. It’s a problem that has a lot to do with changes in how we receive and digest information, especially through the news media.

I’ve worked in the press for thirty years. In my lifetime the core commercial strategy of the news business has changed radically. At the national level, companies have moved from trying to attract one big audience to trying to capture and retain multiple small audiences.

Fundamentally, this means the press has gone from selling a vision of reality they perceive to be acceptable to a broad mean, to selling division. For technological, commercial, and political reasons this instinct has become more exaggerated with time, snowballing toward the dysfunctional state we’re in today.

A story that illustrates how the old system worked involves the first major national news broadcast, the CBS radio program anchored by the legendary Lowell Thomas.

History buffs will know Thomas. His was the iconic voice on those old WWII newsreels:

Read the rest here.

“If you build it, they will come.” That moto was popularized by Kevin Costner’s character in the 1989 movie Field of Dreams, but such advice today in a post-pandemic world is bullshit.

Take, for, example, Christopher Nolan’s movie Tenet, released on Sept. 3, was supposed to mark the revival of the movie theater industry, according to NYT. 

Ahead of the opening, Robinhood traders in August piled into movie theater stocks, including Cineworld and AMC, in anticipation Americans would rush back to theaters. 

But theater stocks dumped into corrections days after the movie was released, due to the fact the film collected $9.4 million in its first weekend in North America and just $29.5 million over its first two weeks. The disappointing turnout has made one thing clear: 

“We have no way of forecasting how long it will take for consumer comfort with indoor movie theaters to return,” Rich Greenfield, a founder of the Lightshed Partners media research firm, wrote in a note on Monday.

Even with theater capacity limited to 50% in most of the country, and 68% of theater chains reopened by Labor Day, the promotion of Tenet still did not entice Americans to return to indoor movie theaters as coronavirus cases continue to rage in late summer, heading into fall. 

We noted in May how a massive shift from indoor to outdoor movie theaters would be a hot trend for 2020. 

• Walmart Is Turning Its Parking Lots Into Drive-In Movie Theaters For Its Customers

• Struggling Mall Owner Transforms Parking Lots Into Drive-In Movie Theaters

• COVID Has Transformed America Into The ‘Drive-In’ Nation

For some comparison, Jeff Goldstein, Warner Bros. president of distribution, said Nolan’s past films – Inception, Interstellar, and Dunkirk – opened in the $50 million range in North America and collected between $527 million and $837 million worldwide. The latest movie sales for Tenet suggest the public is not convinced they should be returning to movie theaters anytime soon. 

Movie theaters have yet to persuade customers that indoor theaters are safe. Even before theaters started to reopen in late summer, there should’ve been an information campaign to educate the public about the millions of dollars theater operators spent to upgrade facilities to mitigate the virus spread. 

Mark Zoradi, Cinemark’s chief executive, doesn’t expect a “sense of normality” for theaters until 2022, calling 2021 a “transition year.” 

“We’ve spent millions and millions of dollars getting this stuff right,” Zoradi said. “If we can convince the consumer that we have done all of these things, they are much more likely to want to come back.

And if readers haven’t figured out, movie theaters will be dead for the next couple of years. Alastair Williamson, who was at a Regal movie theater in the Baltimore metro area on Saturday (Sept. 12), tweeted: “Nobody is here!” 

Nobody is here! pic.twitter.com/Qu7EwWw84h

— Alastair Williamson (@StockBoardAsset) September 13, 2020

In another tweet, Williamson shows the ticket counter, which by the way, appears to be automated, say goodbye to a few low-wage, low-paying jobs permanently displaced by automation, shows absolutely no one is at the cinema on a primetime Saturday evening. 

No one at the movie theater. pic.twitter.com/uJrDo7KZZp

— Alastair Williamson (@StockBoardAsset) September 12, 2020

The moral of the movie theater story is if theaters reopen with top-notch movies by big-time producers, well, the American public is still not interested because they believe facilities are not safe from the virus. To bring consumers back, a lot of convincing by theater operators will be needed. 

Authored by Porter Burkett via The Mises Institute,

Is American politics reaching a breaking point?

A recent study by researchers from Brown and Stanford Universities certainly paints a grim picture of the state of the national discourse. The study attempts to measure “affective polarization,” defined as the extent to which citizens feel more negatively toward other political parties than their own, in nine developed countries, including the United States.

The study authors concluded that affective polarization has risen much faster and more drastically in the United States than in any of the other countries they studied (figure 1). They then speculated on possible explanations of increasing polarization, suggesting that changing party composition, increasing racial division, and 24-hour partisan cable news are convincing possible causes. Notably, the research was completed before the coronavirus pandemic or the police killing of George Floyd, two events that have only deepened political division.

While the study is interesting and well written, the authors completely fail to consider a more fundamental potential explanation of increasing polarization, one that is likely to be understood well by libertarians and federalists, who have long railed against the trend toward ever more usurpation of local and state sovereignty in American politics.

I propose that the real culprit behind worsening polarization is the gargantuan federal government that has turned the entire country into an unceasing political battleground. When virtually all political issues are settled at the national level, the whole nation becomes a source of potential political opponents. Centralization changes the scale and with it the locus of political debate and conflict. For the average political participant, it is probably true that people with differing ideas live near you, in your city or state, but the mathematical reality is that the vast majority of your political opponents live relatively far away (spread throughout the rest of the country) and thus have no material connection to your life or your community.

Political opposition becomes just numbers on a cable news screen: 49 percent for this, 51 percent for that. Sixty-two million votes for one candidate, 65 million for another. These numbers, without names or faces, become simple objects; some are pawns to be moved around, while others are obstacles to be pushed aside. This is not just speculation: previous research has indicated that partisanship is correlated with the use of tactics to dehumanize political opponents. Centralized political decision-making amounts to a systematic dehumanization of anyone who might participate in the political process.

The effects of such a disastrous form of organization are already evident. Political polarization is not confined to academic papers, but has now manifested in the streets of Kenosha and Portland. As the 2020 election approaches, politically charged killings between members of rival factions will only become more likely. What was formerly a central promise of democratic politics—the peaceful transfer of power—has been abandoned in favor of direct action and blood.

If centralization is the cause of our problems, then decentralization is the cure. Pushing decision-making power down to state and local levels as much as possible, closer to the people actually affected by the decisions, is the only way forward. Of course, it will not solve all the problems of political culture today. Policy debates and disagreements could still be just as intense at the local level as at the federal. But it is harder to dehumanize someone who might be a part of your community. Those numbers on the screen are on your local news now, not the national news. Those percentages and vote tallies might include your neighbor down the street, your Uber driver, the person ahead of you in line at the grocery store, or the old man you saw out walking his dog this morning. Technically, this has always been true, and we would do well to remember the humanity of the people we disagree with even while political focus is at the national level. This fact is simply harder to ignore when the primary nexus for political decisions is more immediate and local.

Admittedly, I do not know exactly how decentralization can happen. There is no magic blueprint. Maybe the worst pessimists are right, and we are doomed to fight some sort of second civil war before we remember that those with whom we disagree are people too. I think the future is brighter than that. Perhaps, as Mises Institute president Jeff Deist has pointed out, de facto decentralization has already begun. Fortunately, nobody has to know exactly what the new political structure will look like, and – arguably the best part of decentralization – it does not have to look the same everywhere. Both major parties, and people of all ideological persuasions, will probably have to give up some preferred victory or vanquishing of the “other side.” Many Democrats would love to prevent all abortion laws in the state of Georgia for the rest of time. Some Republicans would love to lock down California’s southern border with an airtight seal.

A new era of decentralization means that neither of these things can be accomplished by federal imposition, and their proponents are not going to be happy about that. The task ahead is to demonstrate that whatever the sacrifices required to achieve more localized decision-making might be, centralization is too dangerous to continue.

Just because Playboy magazine no longer exists shouldn’t mean that the company shouldn’t have access to tap the capital markets in what is becoming the trendiest way on Wall Street: a SPAC.

Playboy Enterprises could be the next company to go public through a blank check company as the company looks to shift its model away from its magazine and onto sexual wellness products, spirits and cannabis, according to the Post.

The deal would come nine years after Hugh Hefner and Rizvi Traverse Management took the company private for $207 million. Hefner died in 2017 and his mansion in LA was divided into parcels of land. His son, Cooper, exited the business last year. 

The leading SPAC candidate appears to be Mountain Crest, which has raised about $50 million and is led by Dr. Suying Liu, who is head corporate strategist at Hudson Capital, which is based in Beijing.

The company’s CEO, Ben Kohn, said Playboy would stop producing its iconic magazine in March of this year. Playboy remains a “media company” and has a website that carries much of the same content as the magazine did. The company now also focuses on Playboy branded products, including sex gels and CBD sprays. 

As the Post notes, “the brand has been losing momentum in the U.S. for awhile now” – which makes it an obvious candidate to go public again.

After all, if the public markets aren’t for access to capital and socializing the losses of your cash burning company, what are they for?

Authored by Lance Roberts via RealInvestmentAdvice.com,

I have previously discussed the importance of understanding how “physics” plays a crucial role in the stock market. As Sir Issac Newton once discovered, “what goes up, must come down.”

Andy Kessler, via the Wall Street Journal, recently discussed a similar point with respect to the momentum in stock prices. To wit:

“Does this sound familiar: Smart guy owns stock in March at $200, sells it in June at around $600, but then buys it back in July and August for between $900 and $1,000. By September it’s back at $200. Ouch. Tesla this year? Yahoo in 2000? Nope. That was Sir Isaac Newton getting pulled into the great momentum trade of the South Sea Co., which cratered 300 years ago this month. He lost the equivalent of more than $3 million today. Newton, whose second law of motion is about the momentum of a body equaling the force acting on it, didn’t know that works for stocks too.”

To understand what happened to the South Sea Corporation, you need a bit of history.

The South Sea History

In 1720, in return for a loan of £7 million to finance the war against France, the House of Lords passed the South Sea Bill, which allowed the South Sea Company a monopoly in trade with South America.

England was already a financial disaster and was struggling to finance its war with France. As debts mounted, England needed a solution to stay afloat. The scheme was that in exchange for exclusive trading rights, the South Sea Company would underwrite the English National Debt. At that time, the debt stood at £30 million and carried a 5% interest coupon from the Government. The South Sea company converted the Government debt into its own shares. They would collect the interest from the Government and then pass it on to their shareholders.

Interesting Absurdities

At the time, England was in the midst of rampant market speculation. As soon as the South Sea Company concluded its deal with Parliament, the shares surged to more than 10 times their value. As South Sea Company shares bubbled up to incredible new heights, numerous other joint-stock companies IPO’d to take advantage of the booming investor demand for speculative investments.

Many of these new companies made outrageous, and often fraudulent, claims about their business ventures for the purpose of raising capital and boosting share prices. Here are some examples of these companies’ business proposals (History House, 1997):

• Supplying the town of Deal with fresh water.

• Trading in hair.

• Assuring of seamen’s wages.

• Importing pitch and tar, and other naval stores, from North Britain and America.

• Insuring of horses.

• Improving the art of making soap.

• Improving gardens.

• The insuring and increasing children’s fortunes.

• A wheel for perpetual motion.

• Importing walnut-trees from Virginia.

• The making of rape-oil.

• Paying pensions to widows and others, at a small discount. 

• Making iron with pit coal.

• Transmutation of quicksilver into a malleable fine metal.

• For carrying on an undertaking of great advantage; but nobody to know what it is.

A Speculative Mania

However, in the midst of the “mania,”  things like valuation, revenue, or even viable business models didn’t matter. It was the “Fear Of Missing Out,” which sucked investors into the fray without regard for the underlying risk.

Though South Sea Company shares were skyrocketing, the company’s profitability was mediocre at best, despite abundant promises of future growth by company directors.

The eventual selloff in Company shares was exacerbated by a previous plan of lending investors money to buy its shares. This “margin loan,” meant that many shareholders had to sell their shares to cover the plan’s first installment of payments.

As South Sea Company and other “bubble” company share prices imploded, speculators who had purchased shares on credit went bankrupt. The popping of the South Sea Bubble then resulted in a contagion that spread across Europe.

Newton’s Folly

Sir Issac Newton, the brilliant mathematician, was an early investor in South Sea Corporation. Newton quickly made a lot of money and recognized the early stages of a speculative mania. Knowing that it would eventually end badly, he liquidated his stake at a large profit.

However, after he exited, South Sea stock experienced one of the most legendary rises in history. As the bubble kept inflating, Newton allowed his emotions to overtake his previous logic and he jumped back into the shares. Unfortunately, it was near the peak.

It is noteworthy that once Newton decided to go back into South Sea stock, he moved essentially all his financial assets into it. In general, Newton was intimately familiar with commodities and finance. As Master of the Mint, his post required him to make many decisions that depended on market prices and conditions.

The story of Newton’s losses in the South Sea Bubble has become one of the most famous in popular finance literature. While surveying his losses, Newton allegedly said that he could “calculate the motions of the heavenly bodies, but not the madness of people.”

For More On The History Of Speculative Bubbles: “Devil Take The Hindmost.”

History Never Repeats, But It Rhymes

Throughout financial history, markets have evolved from one speculative “bubble,” to bust, to the next with each one being believed “it was different this time.” 

The slides below are from a presentation I made to a large mutual fund company.

What we some common denominators between all previous bubbles and now.

The table below shows a listing of assets classes that have experienced bubbles throughout history, with the ones related to the current environment highlighted in yellow.

It is not hard to see the similarities between today and the previous market bubbles in history. Investors are currently chasing “new technology” stocks from Zoom to Tesla, piling into speculative call options, and piling into leverage. What could possibly go wrong?

Oh, by the way, the slides above are from a 2008 presentation just one month before the Lehman crisis.

The point here is that speculative cycles are always the same.

The Speculative Cycle

Charles Kindleberger suggested that speculative manias typically commence with a “displacement” which excites speculative interest. The displacement may come from either an entirely new object of investment (IPO) or from increased profitability of established investments.

The speculation is then reinforced by a “positive feedback” loop from rising prices. which ultimately induces “inexperienced investors” to enter the market. As the positive feedback loop continues, and the “euphoria” increases, retail investors then begin to “leverage” their risk in the market as “rationality” weakens.

The full cycle is shown below.

During the course of the mania, speculation becomes more diffused and spreads to different asset classes. New companies are floated to take advantage of the euphoria, and investors leverage their gains using derivatives, stock loans, and leveraged instruments.

As the mania leads to complacency, fraud and manipulation enter the market place. Eventually, the market crashes and speculators are wiped out. The Government and Regulators react by passing new laws and legislations to ensure the previous events never happen again.

The Latest Mania

Let’s go back to Andy for a moment:

“When bull markets get going, investors come out of the woodwork to pile in. These momentum investors—I call them momos—figure if a stock is going up, it will keep going up. But usually, there is some source of hot air inflating stocks: either a structural anomaly that fools investors into thinking ever-rising stock prices are real or a source of capital that buys, buys, buys—proverbial ‘dumb money.’ Think of it as a giant fireplace bellows, an accordion-like contraption that pumps in fresh oxygen to keep flames growing.” – Andy Kessler

We have seen these manias repeated throughout history.

• In 1929 you could buy stocks with as little as a 5% down payment

• The 1960s and ’70s had the Nifty Fifty bubble.

•  In 1987 it was a rising dollar, portfolio insurance, and major investments by the Japanese into U.S. real estate.

• In 2000, it was the new paradigm of the internet and the influx of new online trading firms like E*Trade creating liquidity issues in Nasdaq stocks. Additionally, record numbers of companies were being brought public by Wall Street to fill investor demand.

• In 2008, subprime mortgages, low interest rates, and lax lending policies, combined with a litany of derivative products inflated massive bubbles in debt instruments.

In 2020?

What about today? Look back at the chart of the South Sea Company above. Now, the one below.

See any similarities.

Yes, that’s Tesla

However, you can’t solely blame the Federal Reserve as noted by Andy:

“Most simply blame the Federal Reserve—especially today, with its zero-interest-rate policy—for pumping the hot air that gets the momos going. Fair enough, but that’s only part of the story. Long market runs have always allured investors who figure they’re smart to jump in, even if it’s late.

Everyone forgets the adage, ‘Don’t mistake brains for a bull market.’”

This Time Is Different

As stated, while no two financial manias are ever alike, the end results are always the same.

Are there any similarities in today’s market? You decide.

• Robinhood Investors Discover 3x Leverage

• SPAC’s – Why Investors May Have Wished They Sold Sooner

• So Far In 2020, There Have Been 113 IPOs.

• Surge In Options Trading Drives Wall Street Gains

“From SPACs, or special purpose acquisition companies, which are modern-day blind pools that often don’t end well. Today’s momos also chase stock splits, which mean nothing for a company’s actual value. Same for a new listing in indexes like the S&P 500. Isaac Newton could explain the math.” – Andy Kessler

You get the idea. But one of the tell-tale indications is the speculative chase of “zombie” companies which are only still alive primarily due to the Federal Reserve’s interventions.

Fixing The Cause Of The Crash

Historically, all market crashes have been the result of things unrelated to valuation levels. Issues such as liquidity, government actions, monetary policy mistakes, recessions, or inflationary spikes are the culprits that trigger the “reversion in sentiment.”

Importantly, the “bubbles” and “busts” are never the same.  

I previously quoted Bob Bronson on this point:

“It can be most reasonably assumed that markets are efficient enough that every bubble is significantly different than the previous one. A new bubble will always be different from the previous one(s). Such is since investors will only bid prices to extreme overvaluation levels if they are sure it is not repeating what led to the previous bubbles. Comparing the current extreme overvaluation to the dotcom is intellectually silly.

I would argue that when comparisons to previous bubbles become most popular, it’s a reliable timing marker of the top in a current bubble. As an analogy, no matter how thoroughly a fatal car crash is studied, there will still be other fatal car crashes. Such is true even if we avoid all previous accident-causing mistakes.”

Comparing the current market to any previous period in the market is rather pointless. The current market is not like 1995, 1999, or 2007? Valuations, economics, drivers, etc. are all different from cycle to the next.

Most importantly, however, the financial markets always adapt to the cause of the previous “fatal crash.”

Unfortunately, that adaptation won’t prevent the next one.

Yes, this time is different.

“Like all bubbles, it ends when the money runs out.” – Andy Kessler