Category: zerohedge

Authored by Eric Zuesse via The Strategic Culture Foundation,

On February 18th, Gallup bannered “Record High Name Government as Most Important Problem” and reported that, out of a list of 47 national “problems,” the top ten that were selected (and the percentage of respondents who selected each) were:

More than a third of Americans think that “The government/Poor leadership” is the “Top Problem” in America. 

That’s almost twice the percentage who listed the second-from-top option, “Immigration,” as being this.

In turn, the third-most-frequently chosen option was “Healthcare,” mentioned by a third as many respondents as listed “Immigration.” (And healthcare in the United States is the worst and by far the costliest in all of the developed nations; so it’s a system that’sextraordinarily rotten and corrupt, and thus obviously an enormous U.S. problem.) (And immigration wasn’t high on these lists until Trump’s Presidency, which raised it from virtually nowhere — such as 5% in 2005 — to 19% today; so its being high on the list now is due only to the propaganda and not to any reality.)

Consequently, that this Government does not represent the American people, is a fact which is beyond any reasonable doubt.

How validly can one call such a country a “democracy,” if “democracy” is being defined as“government that represents the people”?

Here are other indications that the U.S. is, in truth, a dictatorship:

America has the world’s highest percentage of its people in prison — the highest percentage in prison of any nation on the planet. If this means that it’s a police-state, then the U.S. already is leading the world as being that. Every other nation can reasonably look down upon America as having the highest percentage of its residents being in prison, and this American condition is entirely inconsistent with the country’s being a democracy. Of course, the U.S. also allows the death penalty, but that punishment is rarely imposed now, because of the international embarrassment.

On 18 July 2018, Dave Lawler at Axios headlined “Comparing the popularities of leading world leaders”, and he reported that in the latest available polling within top nations, the job-approval of heads-of-state were: 55% Justin Trudeau (CA), 52% Shinzo Abe (JA), 48% Angela Merkel (GE), 43% Donald Trump (US), 40% Emmanuel Macron (FR), and 25% Theresa May (UK). Clearly, UK doesn’t now have an effective democracy, when its leader has only one-quarter of the public approving of her performance. That’s way below 50%. Macron’s 40% job-approval in France could also indicate that France is a dictatorship. Trump likewise. The others probably aren’t, or aren’t as much, dictatorships.

Earlier-polled national job-approval ratings showed that the national job-approvals of 7 leaders were, in order starting from the highest: Putin (83%), Trudeau (63%), Obama (56%), Merkel (54%), Italy’s Renzi (40%), France’s Hollande (12%), and Brazil’s Temer (11%).  

Also earlier-polled were 10 leaders, and they rated, top to bottom, within their respective nations: China’s Xi, Russia’s Putin, India’s Modi, South Africa’s Zuma, Germany’s Merkel, Brazil’s Roussef, America’s Obama, Japan’s Abe, UK’s Cameron, and France’s Hollande.

All of those ratings were, of course, within nations. All of those polls sampled people only about their own nation’s leader. By contrast, approval-ratings worldwide for 10 leaders showed them, in order from highest to lowest, to be: Merkel, Macron, Modi, May, Xi, Putin, Salman, Netanyahu, Rouhani, and Trump. But those ratings aren’t relevant to the nations’ degree of democracy or dictatorship.

The United States is the only country in the world that has been scientifically analyzed regarding its degree of dictatorship or else democracy, and the results were clear that it’sa one-dollar-one-vote controlled country; it’s not actually controlled on a one-person-one-vote basis; it’s a dictatorship. In other words, it is an aristocracy — the richest rule here — it’s not a democracy, of any type.

I have elsewhere discussed a multitude of measures for the degree to which a given nation is either a democracy or a dictatorship. America doesn’t score high for democracy on any of them. The common references in the press using the term “democracy” to refer to America are lies. They may express accurately some of the formalities of democracy, but certainly not the realities (such as they claim to be doing).

In conclusion, one may say that internationally the aristocracy has imposed, in many if not most nations, the ways and means to corrupt the government so profoundly that the aristocracy actually reign, but this hasn’t happened uniformly throughout the world. And only in the United States has it been scientifically proven that the Government is a dictatorship. Elsewhere, there is at least the possibility to question whether a nation is dictatorial, and, if so, to what extent. But unquestionably the U.S. is. And, according to the latest Gallup poll on what the nation’s top problem is, a stunningly high percentage even of Americans are now sensing that this is true.

Short of performing a scientific analysis, however, the most reliable indicator of whether or not a given nation is a democracy might reasonably be that the higher the percentage of its people who are in prison, the lower is the given nation’s democracy-quotient, and that the lower this percentage is, the more democratic the government is.

After all, either a military dictatorship, or a police state, is clearly not a democracy, no matter how much the given nation’s constitution and other formalities say  it is.

via ZeroHedge News https://ift.tt/2Nnx6bu Tyler Durden

Last week many traders were dumbfounded when, just as speculation was building that China was preparing to unleash a massive credit expansion a la Shanghai Accord, Beijing confirmed that it had indeed decided to massively reflate its (and the global) economy, in what may soon be dubbed the Shanghai Accord 2.0, when the PBOC announced it had flooded the economy with a gargantuan 4.64 trillion yuan in various new forms of debt which comprise China’s Total Social Financing in January, including notably, the “shadow” credit which Beijing had been aggressively cracking down on: an aggressive credit expansion which many took as a tacit confirmation that China was losing the fight with deleveraging.

As the following chart from BofA’s Michael Hartnett shows, which puts China’s latest credit expansion in historical context, January’s debt tsunami was vastly greater than China’s credit expansion during both the global financial crisis and the Shanghai Accord.

And while analysts, economists and markets cheered this unprecedented credit generosity by Beijing, which appeared to once again throw in the towel on deleveraging after a similar attempt sent overnight rates soaring five years ago and nearly blew up the local banking system, expecting that China will henceforth inject even more debt which in turn will spark an inflationary impulse across the globe and prop up both economies and markets (it’s hardly a surprise that Chinese stocks have soared in the past few weeks), it appears that January’s gargantuan credit boost may end up being a one off event, because while China’s credit injection amounting to over 5% of GDP was welcome by global market, it also resulted in a rare public spat between Chinese premier Li Keqiang and the central bank, after he expressed concern about record credit expansion in January, a result of monetary stimulus intended to support flagging economic growth.

As the FT notes, since assuming the premiership in 2013 alongside President Xi Jinping, Li has been “a consistent critic of the large-scale stimulus that their predecessors launched in response to the 2008 financial crisis, which economists said led to wasteful investment and a dangerous increase in debt.”

The spat, according to analysts, is the result of Li’s concerns that his credibility will suffer if the government was seen as backsliding on its commitment to avoid heavy-handed stimulus. And there is no better way to feed such speculation than by injecting nearly $700 billion in credit in one month, more than the GDP of Saudi Arabia.

Speaking to the FT, Jianguang Shen, chief economist at JD Digits, a Chinese fintech group, said: “Li has always tried to emphasize that he will never do flood-style stimulus. He is expressing the concern of many commentators that if you have such huge lending, some part of it will not go to the real economy.”

True, but a large part will go to the economy, and the problem is that in China, some 300% in debt/GDP notwithstanding…

… absent massive new credit creation, the economy tends to grind to a halt.

Indeed, following a crackdown on excessive debt and financial risk in 2017 which led to a sharp slowdown in credit growth last year, GDP growth tumbled to a historic low. In response, Beijing politicians and local bankers enacted a series of monetary and fiscal stimulus measures since last summer, with a particular focus on boosting lending to small, privately owned companies, which suffered disproportionately in the debt crackdown

There was just one problem: these stimuli were too feeble to move the needle on the local economy, which until recently was enjoying the tailwinds of trillions in shadow banking, and which has for the past two years been aggressively curtailed.

Indeed, as the FT notes, for months, policy loosening failed to boost credit flows, as banks remained cautious on lending into a slowing economy, while the US trade war battered business confidence, reducing companies’ appetite for capital expenditure.

But all that changed in January, when the latest data showed last Friday that banks and bond investors unleashed a record monthly volume of new credit. This, in turn, prompted Li to speak up, and in a statement released last on Wednesday, the Prime Minister warned of risks from January’s credit deluge:

“The increase in total social financing appears rather large on the surface, but if one analyses in detail, a large part of this rise was bill financing and short-term lending. Not only does this potentially create ‘arbitrage’ and ‘empty cycling’ of funds, but it may also bring new potential risks.”

He is referring to what we said last Friday, when we noted that a big part of the TSF surge was the result of a fresh shadow banking expansion. The chart below indicates that Beijing may have thrown in the towel on its crackdown in Shadow Banking, which after contracting for almost all of 2018, not only rose for the first time in 11 months, but soared the most in nearly two years as Chinese regulators now appear focused on providing credit using the very same channels they spent the past two years desperately trying to block.

As for Li’s references to “arbitrage” and “empty cycling”, these refer to concerns that investors are obtaining low-interest, short-term loans and re-investing the proceeds in high-yielding wealth management products, earning virtually risk-free profits on the spread, according to the FT. The angry prime minister also added that the “fundamental path to solving China’s long-term development problems” was structural reform and a focus on high-quality growth, however as China has observed for the past two years, structural reform takes a very long time, and neither Beijing, nor the world has the patience to wait.

But what may be the worst news for an army of analysts and traders who are confident that China has unleashed another credit creation tsunami, is that just hours after Li’s statement, the People’s Bank of China appeared to respond directly to Li’s criticism in an interview with an unnamed PBoC official published in Financial News, the central bank’s official newspaper, under the headline “Accurately regarding the January financial data”.

As quoted by the FT, the official argued that China was not embarking on “flood irrigation-style” stimulus, saying that January is traditionally the biggest month of the year for bank loans due to seasonal factors.

The official added that small businesses were the main beneficiaries of bill financing and other short-term loans. While acknowledging the possibility for arbitrage, he said such transactions were only “minority behaviour”.

“Premier Li is right. We’re now in a grey area where deleveraging is done, but it’s too early for policymakers to leverage up again,” said Larry Hu, China economist at Macquarie Securities in Hong Kong. “But the PBoC is also right that the pick-up of credit growth in January, partly driven by short-term lending, is helpful on the margin.”

The question now is whether after January’s massive credit injection, the PBOC will take heed from Li’s warning and ease back on the gas, or do what it has always done before on the verge of a recession, and despite its soothing words to the contrary, unleash a flood of credit which while kicking the can for another quarter or two, will only result in even greater pain when China’s credit house of cards finally comes crashing down.

There’s one more thing: while China’s reckless credit flood will only result in even more tears in the end, for now it may well be the only thing that keep the global economy from foundering because as we showed last week, the only chart that truly matters for the global economy is the size of China’s credit impulse, and whether Beijing can do it again. As shown below, already the world economy is set for a steep drop just to catch down to where China’s credit creation has been recently.

Which means that while listening to Li would be the most prudent thing for China’s economy in the long run, it also means that if Beijing reverses on its massive January credit expansion in February and onward, another global recession would seem virtually inevitable.

via ZeroHedge News https://ift.tt/2H43MFX Tyler Durden

Authored by Martin Hutchinson via TBWNS.com,

This column has contended for several years, based on empirical data observations from several countries, that low interest rates worldwide were killing productivity growth. A University of Chicago paper finally provides some academic back-up for this contention and suggests a mechanism through which it takes place. There are other mechanisms also, and I would suggest that the Ben Bernanke-inspired wild monetary experimentation from 2008 on has done more damage to the world economy than any other initiative in the history of mankind.

The paper,“Low interest rates, market power and productivity growth” by Ernest Liu, Atif Mian and Amir Sufi, examines the behavior of firms in a competitive marketplace as interests decline, and demonstrates that, although lower interest rates at first increase competitiveness through increased investment, they also increase the comparative advantage of large firms, thus after a time discouraging the smaller firms from investing and making the market less competitive. If low interest rates persist and approach zero, eventually even the larger firms stop investing, because they are no longer subject to significant competition and thus do not need to invest.

The paper provides theoretical backing to and a possible mechanism for the observation set out in this column on several occasions in the last few years: that ultra-low interest rates in Japan, the Eurozone, Britain and the United States were closely correlated with unprecedented declines in the rate of productivity growth in those countries. In all the high-income industrial countries where interest rates were held artificially low after 2008, productivity growth by 2016 had effectively disappeared altogether, or close to it. The worst effects were seen in the eurozone and in Britain, where inflation continued, making real interest rates sharply negative. Even in Japan, where interest rates have been held artificially low for two decades, the productivity dearth worsened substantially after 2009.

Only after President Donald Trump was inaugurated in the United States did U.S. productivity growth begin recovering towards its healthy historical levels. Undoubtedly part of this recovery was due to the Trump administration’s de-regulation policies – just ceasing to pile regulation upon regulation appears to have had some positive effect, especially in industries sensitive to environmental-regulatory harassment. However, the positive productivity signs became clearer during 2018, as interest rates climbed towards the U.S. inflation rate, albeit still below their healthy historic levels.

It has also been noted in the United States that small business formation, a key driver of productivity growth, in 2010-2016 ran about a third below its historic levels, and half the levels of the late 1970s, when figures were first compiled, even though the economy itself had moved towards recovery. This aligns with the theory postulated in the University of Chicago paper, that small businesses become discouraged by very low interest rates, and simply cease investing, or even cease being formed.

From Austrian economic principles, there is a clear explanation for the decline in productivity growth in low-interest-rate environments. Economies work best when interest rates are at or close to their natural level, that would be set in a free market. In a Gold Standard system with free banking, interest rates naturally stay close to that level. However, if as in modern economies governments have taken over the money creation and interest-rate-setting functions from the market and move rates a substantial distance from their natural level, then investment decisions become distorted and suboptimal. In such a situation, productivity growth will naturally decline; if the distortion of the interest rate curve is prolonged, productivity growth may even disappear as investments are made into entirely the wrong assets.

This is what happened worldwide after 2008 (arguably, in Japan from 1998 with a short remission in the mid-2000s). As the University of Chicago paper points out, ultra-low interest rates discouraged small businesses (that effect appears to have been especially strong in Japan, where almost no major new companies have emerged since 1990). However, there are other sources of distortion.

In the United States, vast sums have been poured by companies into buying back their stock, because the earnings cost of doing so is small at low interest rates and companies believe that if their cash flow is solid, they can survive ad infinitum without significant equity capital. They are wrong, but only the next recession will teach them so, at great cost to their employees and the U.S. economy as a whole (doubtless their foolish and greedy top management will emerge with substantial payoffs, as usual).

In London, San Francisco, New York and elsewhere, the prices of high-end real estate have soared without limit. Low interest rates reward those with borrowing capacity, and for more than 20 years now, it has been profitable for the rich to borrow gigantic amounts of money at low interest rates and invest it in high-end real estate. This bubble is now in the process of bursting, much to the benefit of Millennials, for whom the price of modest real estate has been over-elevated by the shenanigans at the high end.

Debt of all kinds has proliferated, whether in auto loans at the consumer end (less so in home mortgage loans since 2008) or in corporate leveraged loans used by the innumerable buyout artists at the high end. Default rates on all these debts are beginning to rise; they will cause massive losses before we are much older.

In Britain, Switzerland and the EU, interest rates have sunk so low that even investments without any profit at all have been attractive, provided money can be borrowed against them. I have written in the past about the possibility of a flood of Babylonian ziggurats in the major financial centers – technically religious buildings, thus exempt from local property taxes, but serving a religion with no current believers, thus making them a pure speculative asset suitable for the ultra-Keynesian New Age.

Not content with the damage they have already done, some extreme aficionados of low interest rates are devising schemes to drive them even lower, confiscating ordinary people’s cash holdings so that there was no longer any alternative to their diabolical financial schemes. Truly Ben Bernanke’s inspiration of 2002 to drop money from helicopters, uttered at a meeting of the National Economists Club at which I was present, has been among the most economically damaging ideas in all of history.

One competitor for that prize, I suppose, is Karl Marx’s Communism, so banally celebrated by the functionaries of the of the EU at last year’s bicentenary. However, that great fallacy never affected more than about a quarter of the world’s population, and eventually exploded under its own weight. Bernanke’s folly, on the other hand, shows no sign of correcting itself. Although a few more years of U.S. success with President Trump and higher rates might do the job of correcting it worldwide, our chances of getting this necessary combination are currently less than 50-50, I would say.

Another such competitor for Worst Idea was the invention of agriculture. Yes, it enabled the planet to support more people, but at what a cost! Instead of devoting only a modest portion of their time to finding and killing woolly mammoths, humanity was now forced to devote itself night and day to back-breaking manual labor in the fields. In the short term, this was truly an unspeakably bad trade-off. In the long term, of course, it led to civilization and industrialization, but it took several thousand miserable years to do so. We can however be sure that Bernanke’s brainwave will lead to no such economic breakthrough, however many millennia we wait.

Perhaps the most likely competitor to Bernanke’s contribution as a destroyer of economic value is Maynard Keynes’ “General Theory.” It unmoored us from the established truths such as the Gold Standard and balanced budgets and enabled greedy and unscrupulous politicians to waste ever more of our money in the name of “stimulus.” The California High Speed Rail scheme was just one $77 billion example of such folly; to misquote Oscar Wilde, a man would need a heart of stone not to laugh at its demise this week.

We do not yet know whether negative real interest rates or trillion-dollar budget deficits will be more ultimately destructive of our civilization, and Keynes, not Bernanke, is responsible for the latter. Unlike Marxism and like Bernankeism, Keynesianism has affected the entire planet; indeed, it seems irrefutable, the fallacy that will not die. However, Keynesianism’s effect on productivity is indirect; it merely grows government, a low-productivity activity, rather than destroying productivity directly. If I had to bet, therefore, I would bet that Bernanke, even more than Keynes, Marx or the inventor of agriculture, will be the chief destroyer of economic value in our long-term future.

By promoting ever-lower interest rates, set completely artificially by meddling bureaucrats, Bernankeism’s proponents have gone far to killing the engine of prosperity that is capitalism itself. Contrary to Keynes’ belief, the level of interest rates is the central variable in a well-functioning capitalist system. By meddling with it, politicians and bureaucrats are attempting to act as Gosplan, the central planning agency of the Soviet Union. It doesn’t work, and the attempt to meddle in this way is morally wrong as was Communism.

It is good to have some respectable academic backing for this column’s battle against the monetary folly of Bernankeism. The struggle continues!

via ZeroHedge News https://ift.tt/2BPMPM1 Tyler Durden

China suddenly cut a BBC broadcast as the network’s China correspondent began to discuss Beijing’s detention of more than a million Uighur Muslims in “re-education” camps. 

The BBC‘s Stephen McDonell filmed the moment it happened as he began to discuss the infamously poor treatment of the Turkic ethnic minority living in China’s northwestern Xinjiang province. 

After going on air at 7am to file his account of the trip, he decided to record the 8am replay.

The video shows his TV in China going blank as he says: “One thing he might be expected by some in Muslim countries to raise would be the question of the camps in the far west of China. There’s up to…” –Independent

Here’s the moment #China’s censors pull the @BBCWorld TV feed this morning as I’m speaking about the visiting crown prince of #SaudiArabia and the possibility of him raising the mass extra-judicial detention camps holding many 100s of thousands of ethnic Uighurs in the west… pic.twitter.com/Yl9Eo13GHL

— Stephen McDonell (@StephenMcDonell) February 22, 2019

McDonell said that the same thing happened the previous day. 

“We can pretty much predict the subjects when they will cut the feed and recently coverage of Xinjiang’s mass “re-education” camps has been just such a subject,” he said. 

McDonell’s tweets sparked quite a few replies, including one from author and political historian Brian Dooley, whose interview on Chinese state television was cut short when he began to discuss the killings in Tiananmen Square. 

I was interviewed in 2014 on Chinese state CCTV about American civil rights history. Interview swiftly ended when I started talking about killings in Tiananmen Square. @stephenmcdonell @bbcworld https://t.co/eLiYwOYoNL

— Brian Dooley (@dooley_dooley) February 22, 2019 

Winnie the Pooh isn’t happy with you! pic.twitter.com/af1XZaKIpl

— Scary Monsters, Super Creeps (@daveparke) February 22, 2019

pic.twitter.com/38KyibD7gI

— gregor lewis (@suepesas) February 22, 2019

Might’ve just been a glitch inside China. Who woulda thunk? 😉

— Stephen McDonell (@StephenMcDonell) February 22, 2019

China has gone to great lengths to pretend that their Uighur “re-education” camps are the happiest places on earth – going on a narrative-shifting campaign to spin the cities as positive. 

According to a report in The Times, Beijing is parading groups of Muslims around on state TV to extol the virtues of the system.

One restaurant owner, for example, said he became more tolerant after his time in a re-education camp, stating: “If I had let the religious extremism develop, I might have beaten non-Muslims who entered my restaurant,” the man identified as Abudu Saimaiti said. “In the worst case, I would not walk on public roads, take city buses or use the official currency, because they are provided by non-Muslims, who run this country.”

Speaking into the camera, the Chinese Muslim business owner added, “Through learning the law and the national policy, I have come to realize it’s a dead end for me, for my family and for my offspring, and my hometown will for ever be chaotic.”

Any reports to the contrary will get yanked off TV without so much as a transition. 

via ZeroHedge News https://ift.tt/2No8106 Tyler Durden

Satire or not? You decide…

While Empire actor Jussie Smollett has been having a tough week so far, there appears to be a silver lining: cable news channel CNN has offered Smollett a job as an investigative reporter and on-air anchor after witnessing his skills at fabricating a story entirely out of thin air.

CNN producers were reportedly impressed throughout the ongoing saga of Smollett’s apparent hoax attack on himself. They realized early on the facts didn’t add up but were fascinated with how well the actor kept the narrative going. An HR rep quickly reached out to Smollett to see if he’d be interested in taking on a position at the news organization after news broke that the entire thing was probably fabricated.

“Smollett has exactly the kind of skills we look for at our fine organization,” said CNN correspondent Brian Stelter. “He picked a narrative, made up all the relevant facts and details, and stuck with his story in spite of glaring holes in the plot. It’s hard to find people who understand our core values here at CNN, but Smollett seems to be just the guy for us.”

The actor has accepted the offer and is now undergoing training to learn how to weave even more intricate narratives ex nihilo, according to insiders.

via Babylon Bee

via ZeroHedge News https://ift.tt/2SnbMDP Tyler Durden

Sorry, Elon. The title of market leader of the commercial spaceflight industry officially belongs to Sir Richard Branson. Because on Friday, Virgin Galactic’s spaceplane, the VSS Unity, made its second trip into sub-orbital space, proving to the world that the company’s historic December launch wasn’t just a fluke, and earning Beth Moses, the company’s chief astronaut instructor, the distinction of being the first woman to ever reach space on a commercial flight.

The test flight, which took off from a launchpad in California’s Mojave Desert, was manned by the same two pilots who earned their astronaut wings from the FAA after the company’s December flight.

Here’s a description of the flight, courtesy of the Verge:

As usual, VSS Unity was lofted to an initial altitude of around 45,000 feet by its huge carrier aircraft, WhiteKnight Two, where it was then released into the air. The two pilots of this morning’s flight, Dave Mackay and Mike “Sooch” Masucci, ignited the spaceplane’s engine and climbed to an altitude of 55.85 miles (89.9 kilometers), the highest the vehicle has gone yet. During the test, the vehicle reached a top speed of three times the speed of sound — the fastest ever for Virgin Galactic — before shifting its wings and gliding back to Earth to land on a runway.

While the December flight was manned solely by the two pilots, Moses tagged along in the cabin to get a better understanding of the “customer cabin and spaceflight environment from the perspective of people in the back,” according to a statement from the company. Once the company starts flying commercial passengers – at an estimated price of $250,000 a pop – Moses will be responsible for preparing future passengers about what to expect during the flights.

The three people aboard the flight become the 569th, 570th and 571st people to ever reach space.

According to RT, Chief pilot Dave Mackay said the stunning view of Earth surpassed all of their expectations.

“For the three of us today, this was the fulfillment of lifelong ambitions, but paradoxically is also just the beginning of an adventure which we can’t wait to share with thousands of others,” he said.

The company released video of the flight…

SpaceShipTwo, welcome back to space 🚀 🌎 pic.twitter.com/5pboTQeRjI

— Virgin Galactic (@virgingalactic) February 23, 2019

…as well as a brief video depicting what Earth looked like from the passengers’ vantage point:

Hello, Earth 🌎. Footage from the boom of SpaceShipTwo pic.twitter.com/i6jdsjrRRB

— Virgin Galactic (@virgingalactic) February 22, 2019

Several other companies, including Elon Musk’s SpaceX and Jeff Bezos Blue Origin are still testing unmanned rockets. But both executives are no doubt aware of the fact that, after Friday’s launch, the competition to “own” commercial space travel is heating up.

via ZeroHedge News https://ift.tt/2U4EZFh Tyler Durden

Iraq. Libya. Syria. Afghanistan – hell, even Vietnam.

Rather than bringing peace, prosperity and democracy like the government propaganda had promised, American military interventions in these countries – interventions that had promised to oust repressive regimes and protect human rights – largely had the opposite impact. They cost thousands of non-American lives, destabilized the country – if not the broader region – and often brought about the rise of regimes that were even more repressive than those that preceded them. In some cases, they led to outright anarchy.

And now, some worry that the Trump Administration is planning another one of America’s famous regime-toppling interventions. Not in Venezuela, but in Iran.

Author Steven Metz, who recently published “Iraq and the Evolution of American Strategy,” wrote in an opinion column that ran in World Politics Review this week that the possibility that the Trump regime might order a military strike against Iran – either to destroy its nuclear generators or something more ambitious to try and bring down the regime – shouldn’t be overlook. Particularly with infamously anti-Iran hawks like John Bolton serving in the senior ranks of the administration.

While it’s true that Iran has been an enemy and antagonist of the US virtually since the founding of the Islamic Republic, and that the regime in Tehran is repressive, theocratic and guilty of most – if not all – of the transgressions identified by President Trump, and a pre-emptive intervention in Iran “would constitute one of the greatest fiascos in American foreign policy, destroying US leadership around the world and probably igniting another wave of violence in the Middle East that provokes more extremism.”

As the Pentagon draws up plans for just such an encounter, it’s worth keeping all of this in mind, even as the tensions between the US and Iran have largely faded from the headlines now that several months have passed since the Iran deal was scrapped.

But with the US waivers on Iranian oil sanctions set to expire in May unless the US chooses to extend them (which, to be fair, is a possibility, given Trump’s stated preference for lower oil prices), another wave of belligerent rhetoric could be on the way.

Read more from Metz below:

Iran is a longstanding and steadfast opponent of the United States. It promotes terrorism, extremism, and instability in the Middle East, with brutal allies like Syrian President Bashar al-Assad and Lebanon’s Hezbollah.
The Iranian regime continues to develop advanced weaponry while repressing internal dissent. There is no question that the United States, its partners in the Middle East and Europe, and many Iranians themselves would prefer a different government than the theocratic one that has held power since 1979. But the idea of a pre-emptive American attack on Iran, which periodically resurfaces in Washington, would be a monumental mistake. The United States has had military encounters with Iran for years around the Middle East, but the more recent wave of support for a pre-emptive strike came earlier this decade, as Tehran expanded its ballistic missile capability and appeared on track to develop nuclear weapons.

After the 2015 international agreement known as the Joint Comprehensive Plan of Action, or JCPOA, placed strict limitations on Iran’s nuclear program, the war drums abated for a while. But now they are beating again.

John Bolton, President Donald Trump’s national security adviser, has long advocated a more hawkish US policy toward Iran. In a 2015 op-ed, he openly supported bombing Iran’s nuclear facilities.

Soon after joining the Trump administration, Bolton asked the Pentagon for military options to strike Iran. Earlier this week, unnamed Trump administration officials — possibly looking to develop a legal rationale for a military strike — suggested to reporters in The Washington Times that Iran is providing sanctuary to senior al-Qaida operatives.

As Steven Cook wrote in Foreign Policy, this all looks ominously like what the George W. Bush administration did in 2002 and 2003 to justify military intervention in Iraq.

It is possible that the Trump administration is simply ratcheting up the pressure on Tehran, but there is also a chance that it intends to attack. To do so in the absence of clear Iranian military aggression would constitute one of the greatest fiascos in American foreign policy, destroying US leadership around the world and probably igniting another wave of violence in the Middle East that provokes more extremism.

Not only would an unprovoked US intervention in Iran be a fiasco on par with some of America’s greatest foreign blunders (of which, as we noted above, there have been many), but it would also be illegal under international law – making Trump a war criminal (and almost certainly disqualifying him from that Nobel Peace Prize he so desperately covets). And given that the US isn’t reeling from a devastating terror attack on its soil, Trump wouldn’t even benefit from the same veneer of justifiability that George W Bush managed to create.

Repercussions could include economic sanctions, of which the US would for once be on the receiving end.

A pre-emptive American attack would be illegal under international law, technically making Trump a war criminal. While the United Nations Charter allows collective or individual self-defense by member nations, Iran’s current regional aggression and weapons programs do not constitute a legal basis for war.

When President George W. Bush intervened in Iraq in 2003, he argued that the United States was implementing UN Security Council resolutions. While this was a contentious position, it was enough to prevent the United States from being universally seen as a criminal aggressor. A pre-emptive attack on Iran now would not even have that kind of thin legal justification.

Absent direct aggression by Tehran against the United States or one of its allies, an illegal American attack would destroy Washington’s ability to promote a rules-based international order and shatter many — perhaps most — of America’s already damaged security partnerships. Trump would be a pariah to most nations.

The United States would face censure, possibly even economic sanctions. Even if militarily successful — by degrading Iran’s ballistic missile arsenal, for example, or weakening the regime — the strategic benefits of an attack would pale in comparison to the costs. By any measure, it would be a massive political loss.

In fact, it is hard to discern any strategic logic in the idea of a pre-emptive strike on Iran. Since all indications are that Tehran is complying with the conditions of the JCPOA, an attack would clearly show that Washington is not interested in peaceful methods to limit Iran’s nuclear program.

America, which is already considered the primary threat to peace in many parts of the world, would be seen as a bully, signaling to the Iranian regime that it must have nuclear weapons to stop further US aggression. And many other nations around the world would explicitly or tacitly agree.

A pre-emptive attack, then, would actually increase the chances of a nuclear Iran.

Despite widespread poverty and dissatisfaction with their government’s repressive policies, there is one thing Iranians despise more than the theocratic regime. And that is, as you probably guessed, the United States. Invading their country would certainly do the US no favors from the standpoint of “hearts and minds.”

And even if it succeeded, the cost in terms of human lives would almost certainly outweigh any other benefit to the Iranian people. Worst case, it would pull them into a civil war much like what has been happening in Syria.

A US military strike also would compel even Iranians unhappy with their government to rally behind it. Nothing pulls a nation together like an external attack. Rather than weakening the theocrats in Tehran, American military action would solidify their power and instantly discredit their internal opponents.

Even if Iran is providing sanctuary to al-Qaida leaders, as that recent Washington Times report suggests, there is no way to make a case that it poses enough of a threat to the United States to justify the strategic costs of a military strike. Most of the world would see such an attack based on that thin argument as illegal aggression.

A pre-emptive attack on Iran would not make the United States safer or advance its interests. In fact, it would be the exact opposite of Trump’s stated “America First” policy, by benefiting only Saudi Arabia and Israel, the two countries pushing for Trump to strike Iran, and further damaging America’s influence and security partnerships around the world.

What if American military action somehow succeeded in pushing the Iranian regime out of power, as the Trump administration wants? The result would be a civil war even worse than the catastrophic ones in Syria, Iraq, and Libya.

After Iraq, one might think that Americans have learned that toppling an authoritarian political system without a legitimate and effective substitute in place, and a major international peacekeeping mission, can only lead to disaster. But apparently not everyone in Washington has learned that lesson.

A pre-emptive US military strike on Iran would ultimately be one of the worst strategic blunders in American history. That it is repeatedly considered by serious political leaders and security experts remains incomprehensible.

Of course, there’s also the possibility that, with powerful allies like Russia on its side, a US invasion could risk provoking the next great world war with Russia – a conflict that could quickly lead to a devastating exchange of nuclear weapons.

via ZeroHedge News https://ift.tt/2tAr3Hi Tyler Durden

Who in their right mind would buy an investment company at 90x NAV? A better question for China Ding Yi Feng Holdings shareholders would be who other than unwitting index-fund managers and the retail investors who buy their products?

In a stunning report published Friday, Bloomberg highlighted what we imagine is one of the most egregiously overvalued stocks in the world (a world where Tesla is also a publicly traded company). Despite being comprised of mostly money-losing investments, China Ding Yi Feng has seen its shares smash through one all-time high after the next over the past five years. In that time, it has rallied 8,563%.

But as BBG points out, there is no obvious catalyst for this rally. By every sensible investing metric, the company’s shares should be in free fall.

But ask local market veterans about China Ding Yi Feng Holdings Ltd., and they’ll tell you the rally makes little sense. The investment-holding company has lost money for seven of the past eight years; its stock trades at one of highest valuations worldwide; and DYF’s chairman, a Taoist scholar who boasts investing skills on par with those of Warren Buffett and George Soros, has recently been the subject of several critical reports in Chinese media.

 

“Fundamentals do not support the stock’s rally at all,” said Li Yuanrong, managing director of Shenzhen-based venture capital firm 20VC.

So, what’s keeping its shares afloat? Why, passing investment strategies, of course! After the company became big and liquid enough to be included in the MSCI, multibillion-dollar funds run by BlackRock Inc., Vanguard Group Inc. and Northern Trust Corp. have all been buyers.

Of course, these funds aren’t explicitly choosing to buy Ding Yi Feng. Rather, by dint of needing to mimic the index, they’re effectively forced to buy. MSCI uses quantitative criteria such as market value, free float, and liquidity when choosing companies for its indexes and doesn’t make judgments about profitability, growth prospects or “any other subjective” metrics. This created what appears to be a feedback loop as its rising market value has given it a heavier weighting, and its heavier weighting has helped drive the company’s market value higher.

While the company has made money losing investments, its main source of revenue appears to be a pyramid scheme that has recently attracted press scrutiny.

Around the time DYF entered MSCI’s large-cap gauges last year, critical reports on Sui’s fundraising practices and the unusual move in DYF’s shares began appearing in the Chinese press.

In an emailed response to questions from Bloomberg, the Asset Management Association of China said it was aware of media reports that a unit of Ding Yi Feng Group (a Chinese company that also counts Sui as chairman) had offered individual savers guaranteed monthly returns of 2.5 percent on an investment and that the unit had failed to register multiple fund products with the association.

AMAC said private fund managers in China can’t guarantee principal and minimum returns and that it will report and deliver any unlawful cases to the China Securities Regulatory Commission and other authorities. The CSRC didn’t reply to a faxed request for comment.

That the company was included in the index at all speaks to how MSCI hasn’t paid enough attention to discerning which companies that meet its other criteria “don’t pass the smell test.”

The stock has gained 202 percent in the past year alone, the best performance among 2,700-plus members of the MSCI All-Country World Index. Valued at 95 times net assets, it’s one of the most expensive listed companies on Earth. (The stock is also ineligible for short selling, which may help explain why it hasn’t faced more downward pressure. It slipped 1.6 percent on Friday.)

“Why would anyone buy an investment company at 90 times NAV?” said David Webb, an independent investor and former Hong Kong Exchanges & Clearing Ltd. board member who has made a fortune buying small-cap Hong Kong stocks over the past two decades. He said MSCI should leave DYF and other Chapter 21 companies out of its benchmark indexes.

“One of the risks MSCI faces in Asia’s equity markets, where rules can be relaxed and enforcement patchy, is you see a lot of firms included in indexes that wouldn’t pass the smell test,” said Melissa Brown, partner at Hong Kong-based advisory firm Daobridge Capital and former member of the Hong Kong stock exchange’s listing committee, speaking generally.

Oh, and DYF shareholders have benefited from another quirk in Hong Kong markets: short-selling in the company’s shares is illegal. Ultimately, stories like this help tarnish Hong Kong’s reputation as an international financial hub, and a developed market on par with the US and Tokyo. Also, discerning traders can’t help but wonder whether DYF will be the next spectacular market blowup in Hong Kong?

via ZeroHedge News https://ift.tt/2Xh0TqZ Tyler Durden

Authored by Sven Henrich via NorthmanTrader.com,

As the one way market squeeze continues relentlessly for its 9th week in a row there’s a thin red line everybody is watching, or at least should be watching. Well, maybe nobody is watching it, but I am.

Trend lines are very important to these markets and I’ve talked about them at length before. On a log basis markets broke their 2009 bull market trend in December. What this rally has done now is approach this broken trend line. As I’ve mentioned on numerous occasions trend lines can be critical in identifying major resistance and support as they can be incredibly relevant to markets.

But trend lines can also be overshot to the upside or downside on a temporary basis, only to then revert below or above them. We’ve seen this before on numerous occasions as well.

But when a market breaks its long standing trend it’s usually very meaningful.

This happened in December, and what was support was broken. Theoretically that now means that what was support is now resistance and here we are:

It’s pretty impressive actually considering how fast and uncorrected this market has moved since the December lows.

Now to be fair, I can also adjust this trend line slightly to the first low in 2016 and one can see that $SPX has a bit more room to move higher on this version:

Markets will ultimately reveal which version they will find relevant.

For bulls the danger here remains that this rally was an extremely aggressive counter rally in context of a broken bull market trend.

For a reversal in the near future could quickly change the perspective of this rally:

Why? Because a reversal in the near term could confirm that the bull market trend is indeed broken, in which case the technical picture suggests that the December correction was just the first step.

Remember, technically speaking, a break of the bull market trend in earnest suggests a much larger long term fib retrace risk:

That’s the recession scenario everyone seems to be keen on denying being a possibility.

As of this juncture this is all speculative, but $SPX is approaching this potentially key thin red line and everyone should be watching it. If bulls can jump above it and defend it, then that’s bullish. Failing to do so, risks a confirmation of a broken bull market trend.

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via ZeroHedge News https://ift.tt/2tBbyyT Tyler Durden

A Boeing 767 cargo jetliner has crashed near Houston into a bay just east of the city shortly before 12:45pm (central) on Saturday. Emergency crews are responding after the jet went down into Trinity Bay, near Anahuac, Texas. 

Early reports say the cargo plane had 3 crew members on board, with the Chambers County Sheriff’s office saying there were no survivors. The sheriff’s office posted an update to its Facebook page saying the plane has been located at the north end of the bay. 

The Federal Aviation Administration also confirmed three people aboard. The plane, identified as Atlas Air Flight 3591, reportedly operating for Amazon Prime Air, was en route to George Bush Intercontinental Airport from Miami when it crashed, according to the FAA.

The company operating the flight, Atlas Air Inc., says it transports items from “precious perishables or heavy construction equipment to arranging passenger charters for celebrities or dignitaries,” according to its website.

Below shows the plane’s flight path into Houston from Miami before the deadly crash. 

According to a local ABC affiliate: 

The Federal Aviation Administration issued an Alert Notice (ALNOT) on Atlas Air Flight 3591 after losing radar and radio contact with the Boeing 767 approximately 30 miles southeast of Houston George Bush Intercontinental Airport. The aircraft was flying from Miami to Houston.

FAA investigators are on their way to the accident site and the National Transportation Safety Board has been notified,” said FAA spokesman Lynn Lunsford in a statement. “The NTSB will be in charge of the investigation.”

via ZeroHedge News https://ift.tt/2GJkmv6 Tyler Durden