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Authored by Michael Snyder via The End of The American Dream blog,

It looks like we are headed for the most chaotic presidential election in modern U.S. history.  According to some estimates, somewhere around 40 percent of all U.S. voters will vote by mail this year.  That means that tens of millions of votes will be going through the postal system, and that has the potential to create all sorts of problems.  For one thing, it is going to take a lot of extra time to open those ballots and count them. 

For states that allow mail-in votes to be counted in advance, that shouldn’t delay final results by too much, but in other states we are facing the possibility of a nightmare scenario.  There are certain states that are not allowed to start counting any ballots until the polls close on election day, and that includes key swing states such as Wisconsin, Michigan and Pennsylvania…

In several states not accustomed to high volumes of mail-in voting, including Rust Belt swing states Wisconsin, Michigan and Pennsylvania, election officials cannot start counting ballots until voting ends on election night. Other swing states, such as Minnesota, allow absentee ballots to be postmarked up to Election Day.

So as we all watch the election results come in on the night of November 3rd, what we will be getting will only be partial results.

And at this point the mainstream media is assuming that the votes that are cast in person will heavily favor President Trump, and so they are warning us that there could be a “red mirage” scenario in which it appears that Trump is easily winning an election that he has actually lost.

Of course if Trump builds a huge lead on election night, he is likely to declare victory, and Facebook has already stated that they intend to “flag” any such attempt…

Facebook plans to flag any attempt by the Trump campaign to declare a premature victory in the presidential race on the platform, the company announced on Thursday.

The social media giant, which has come in for heavy criticism for failing to police foreign and domestic elections propaganda on its network, also said it would not accept any new political ads in the final week of the 2020 presidential race.

This is one of the reasons why I have always been strongly against mail-in voting.  Our nation is likely to be thrown into a state of chaos in November because it is going to take so long to count all the votes.  President Trump and his supporters will be absolutely convinced that they have won the election if they have a big lead on election night, and Joe Biden and his supporters will be absolutely convinced that they will be victorious once all of the mail-in votes are finally counted.  And then no matter what the final result is, about half the country will not be willing to accept it as legitimate.

This is going to be such a disaster, but nobody can do anything about it now.  All we can do is watch this slow-motion train wreck play out.

Biden supporters are already pointing to a recent poll which shows that Biden voters are far more likely to vote by mail than Trump supporters are…

Forty-seven percent of voters who plan to vote for Biden say they are likely to vote by mail, according to a USA TODAY/Suffolk University poll released Wednesday. That’s more than double the 21% of voters backing Trump who say they are likely to vote by mail. The poll found 56% of Republicans say they intend to vote on Election Day, compared with 26% of Democrats.

If all of the votes were counted and released at one time, this wouldn’t be so much of a problem.

But instead most of the results that we will get on election night will be from in-person voting, and most of the mail-in votes will be counted some time later.

At this point, everyone should be able to see that this is almost certainly not going to end well.

So many Trump voters prefer to vote the old-fashioned way, while many Democrats are very eager to vote by mail, and this has created a huge disparity in ballot requests in some of the most critical swing states.  Just check out these numbers…

In Pennsylvania – a state Trump won in 2016 but where polling shows him behind – nearly 900,000 Democrats have requested a mail ballot for the election, more than twice the 347,000 Republicans who have done so. In North Carolina, another state Trump won in 2016 but where he and Biden are in a close race, nearly 313,000 Democrats requested mail ballots compared with nearly 93,000 Republicans.

We are seeing similar numbers in other states, and this is one of the reasons why Joe Biden will not concede no matter how large Trump’s lead on election night is.

This thing could end up dragging out for an extended period of time, and that is extremely unfortunate.

And the truth is that we may never even know the true winner of the 2020 election.  Voting by mail opens up so many opportunities for fraud, and large numbers of ballots never even get delivered to the intended voters in the first place.  As Breitbart has reported, 17 percent of the ballots that were sent out to registered voters in Nevada for their primary in June came back as “undeliverable”…

Last month, the Trump campaign filed suit against Nevada for their universal mail-in voting plans that would allow votes submitted after election day to count for the election. More than 223,000 mail-in ballots sent to registered voters in Las Vegas, Nevada, for their June primary bounced as “undeliverable” — 17 percent of the total 1,325,934 mail-in ballots that were sent out in the county.

Over the next couple of months, tens of millions of ballots are going to be floating around out there, and many will end up in the hands of people that should not have them.  For example, Hulk Hogan says that one of his friends just received a ballot that was addressed to his dog…

Crazy stuff, a friend of mine just got a mail in ballot for his dog Nugget? Now even dogs can vote!

How does something like that happen?

Another thing to watch out for is “ballot harvesting”.  Democrats have become masters of this practice, and they used it with devastating effectiveness in California in 2018.  Now they are deploying this tactic all over the nation, and very alarming incidents of abuse are already being reported…

Furthermore, a citizen journalist reported that Democrats were harvesting mail-in ballots from nursing homes in Texas by fraudulently submitting ballot applications in bulk.

The journalist said that at least 32 applications supposedly from elderly voters were all submitted with the exact same handwriting, and were all submitted using the same pre-printed envelope with the same-style stamp.

In the end, we should all want a legitimate outcome.  The integrity of our elections is of paramount importance, and the will of the American people should be respected.

But I don’t think that any of us will ever be able to feel good about the outcome of this election no matter who ends up winning.

Needless to say, the losing side is likely to be absolutely enraged over an election that they feel has been stolen from them, and that is likely to make the current chaos in our streets even worse.

At this point, even the Washington Post is warning that this election is likely to end “catastrophically”…

Perspective: The election will likely spark violence — and a constitutional crisis.

In every scenario except a Biden landslide, our simulation ended catastrophically.

For once, I actually agree with the Washington Post.

I have a hard time trying to imagine how this election could possibly end well.

Right now, Trump and his supporters are convinced that Trump will win, and Biden and his supporters are convinced that Biden will win.

One side is going to be bitterly, bitterly disappointed, and they will almost certainly feel like the election was not won legitimately.

There is going to be so much anger, and when it explodes it is going to be very frightening to watch.

This is already such a dark chapter in American history, and this election is going to take things to an entirely new level.

Sadly, I believe that after November 2020 nothing in this country will ever be the same again.

A nursing home which has seen at least 73 residents die of COVID-19 and more than 400 residents and staff infected has been raided by the FBI late this week after being flagged for rampant health violations, including administering experimental doses of hydroxychloroquine to about half its 435 residents in an attempt to stave off the outbreak, despite not having state health authorities or families’ approval to do so.

Brighton Rehabilitation and Wellness Center, located northeast of Pittsburgh, drove headlines last spring into the summer for seeing the single biggest coronavirus outbreak numbers of any facility in the state. 

Over three weeks ago Pennsylvania Attorney General Josh Shapiro launched a criminal investigation related to unsafe “conditions and practices” of the nursing home, namely according to a prior statement, that it failed to meet a “high threshold of certain circumstances when the caretaker of a person fails to properly provide for their health, safety and welfare.”

In other press statements “neglect” of patients has been central to the allegations, including abandoning patients for long periods of time, without access to clean clothes, or simple needs like tissues and enough water to drink. 

According to police records, local law enforcement had at some point stopped responding to calls to the facility, given the danger to police of potentially catching the virus.

#BREAKING: The Brighton Twp Police Chief no longer allows his officers to physically respond to calls @ Brighton Rehab and Wellness ever since the outbreak. Officers take calls over the phone. The PD received their highest # of incident calls from that facility. @KDKA pic.twitter.com/d9P2X5qKOl

— MEGHAN SCHILLER (@MeghanKDKA) September 3, 2020

Investigators from the Pennsylvania Attorney’s general office assisted in Thursday’s FBI raid, including at another nearby hard hit care center, the Mt. Lebanon Rehabilitation and Wellness Center outside Pittsburgh.

Essentially all of Brighton’s elder residents caught the disease as well as many staff over a few month period, totaling a whopping 447 residents and staff testing positive, according to Pennsylvania Department of Health data. One staff member had died as well in addition to the 73 deceased residents.

In April NBC News wrote that the entirety of the residents and staff were “presumed infected”:

The Pennsylvania nursing home where all 750 residents and staffers may be infected with the coronavirus was hit last year with a “below average grade” by state inspectors who warned that lax sanitary conditions could lead to the “spread of infection and diseases,” Medicare records revealed.

Even months prior to the coronavirus pandemic, health authorities were investigating the facility over widespread reports that patients were living in filth and being mistreated:

The report [from Sept. 2019] “identified repeated deficiencies related to proper infection control procedures not maintained during dressage change, improper storage of soiled linens and failure to provide appropriate facilities for hand washing which created the potential for cross contamination and the potential spread of infections and diseases.”

The facility in reaction to the investigation appeared to point the finger at the failed response of state and federal health officials, however, stating: “We will leave the readers to determine why some politicians seek ‘investigations’ into people and facilities instead of looking at governmental response to better their directives.”

Authored by Lance Roberts via RealInvestmentAdvice.com,

At the recent Jackson Hole Economic Summit, Jerome Powell unveiled the Fed’s new monetary policy designed to create inflation. In today’s #Macroview, we will discuss the 5-reasons why the Fed will not get inflation, and why deflation is the bigger risk.

The current assumption is that the Fed’s new policy will lead to higher inflation.

“The new policy regime is an important evolution in our thinking about how to achieve our goals and another step toward greater transparency, The policy change positions us for success in achieving our maximum employment and price stability goals in the future.” – Fed Reserve Bank of NY, John Williams, via WSJ 

What exactly is this new policy? Well, that’s the interesting part, no one actually knows. However, as noted by the WSJ:

“The Fed said it would now seek to hit its 2% inflation target on average, and that it wouldn’t raise rates just to ward off the theoretical threat of inflation posed by a strong job market. The Fed, however, didn’t say how it would determine the average, and several regional Fed officials suggested that a 2.5% jobless rate was as much as they would tolerate. At the same time, with the economy in deep trouble, there is little expectation inflation will test the Fed’s target for years.”

So, to be clear, the Fed’s new policy is simply to “average the inflation rate” over a period of time and let the unemployment rate fall to as low as 2.5%. The last time the unemployment rate was at 2.5% was for one quarter in 1953 just before the 1954 recession set in.

40-Years Of Falling Inflation

The entire premise behind the Fed’s “new policy,” and by being extremely vague about it, is to allow the Fed to maintain, and engage in, “ultra-accommodative” policies without any real limits. However, as shown below, the Fed’s monetary policies have not been successful at creating stronger economic growth or inflationary pressures.

Furthermore, while Wall Street is “buzzing” with talk of surging inflation, the reality is such is not likely to be the case. As we discuss below, the Fed’s policies are actually “deflationary” in nature.

Why Printing Money Won’t Create Inflation

“The Fed is printing money like crazy which is going to lead to inflation.”

For the last 12-years, this belief has remained a constant in the market. It stems from the idea that increasing the money supply is inflationary as it decreases the value of the dollar. There is indeed truth in that statement when considered in isolation. However, when the money supply is increasing, without an increase in economic activity, it becomes deflationary.

The chart below compares the money supply to GDP growth and our composite economic indicator which is comprised of inflation, wages, and interest rates which all have a direct correlation to economic activity.

Importantly, since 1980 as the money supply increased, economic activity slowed.

This is where monetary velocity becomes important.

Monetary Velocity

What the Federal Reserve has failed to grasp is that monetary policy is “deflationary” when “debt” is required to fund it.

How do we know this? Monetary velocity tells the story.

What is “monetary velocity?” 

“The velocity of money is important for measuring the rate at which money in circulation is used for purchasing goods and services. Velocity is useful in gauging the health and vitality of the economy. High money velocity is usually associated with a healthy, expanding economy. Low money velocity is usually associated with recessions and contractions.” – Investopedia

With each monetary policy intervention, the velocity of money has slowed along with the breadth and strength of economic activity.

However, it isn’t just the expansion of the Fed’s balance sheet which is undermining the strength of the economy. It is also the ongoing suppression of interest rates to try and stimulate economic activity.

In 2000, the Fed “crossed the Rubicon,” whereby lowering interest rates did not stimulate economic activity. Instead, the “debt burden” detracted from it.

To illustrate the last point, we can compare monetary velocity to the deficit.

To no surprise, monetary velocity increases when the deficit reverses to a surplus. Such allows revenues to move into productive investments rather than debt service.

The problem for the Fed is the misunderstanding of the derivation of organic economic inflation

Why Inflating Asset Prices Won’t Create Inflation

The one thing the Fed has done very successfully is to create “boom and bust” cycles within the economy which has continued to erode the economic prosperity of the masses.

The only reason Central Bank liquidity “seems” to be a success is when viewed through the lens of the stock market. Through the end of the Q2-2020, using quarterly data, the stock market has returned almost 135% from the 2007 peak. Such is more than 12x the growth in GDP and 3.6x the increase in corporate revenue. (I have used SALES growth in the chart below as it is what happens at the top line of income statements and is not AS subject to manipulation.)

Unfortunately, the “wealth effect” impact has only benefited a relatively small percentage of the overall economy. Currently, the Top 10% of income earners own nearly 87% of the stock market. The rest are just struggling to make ends meet.

In order for the Fed to achieve actual inflation, they need an economy that is growing strongly enough to generate increased production to support stronger consumption. Only when there are self-sustaining increases in consumption can you achieve higher sustained rates of inflation.

Creating a “wealth gap” where 10% have the ability to consume while the bottom 90% struggle to make ends meet, continues to apply deflationary pressures on the economy as a whole.

Why Full Employment Won’t Create Inflation

However, let’s assume for a moment that the economy returns back to the same historically low unemployment rate we were enjoying at the end of 2019. As shown in the chart

This is crucially important to understand why the Fed’s actions are “deflationary.”

As noted, in order to generate “real inflation,” economic growth must be strong enough to support employment that exceeds the rate of population growth. That employment must ALSO be productive (manufacturing based) employment which leads to higher wages. (Service jobs are deflationary as they go to the lower cost of labor.) Higher wages lead to increased consumption which allows producers to increase prices (inflation) over time.

This has not been the case for nearly 40-years as technology continues to reduce the demand for labor by increasing productivity. This is the “dark side” of technology that no one wants to talk about.

Why Debt Won’t Create Inflation

However, this cannot be achieved in an economy saddled by $75 Trillion in debt which diverts income from consumption to debt service. This is why “monetary velocity” began to decline as total debt passed the point of being “productive” to become “destructive.”

The decline in velocity coincides with the point that consumers were forced into debt to sustain their standard of living.

The problem for the Federal Reserve is that due to the massive levels of debt, interest rates MUST remain low. Any uptick in rates quickly slows economic activity, forcing the Fed to lower rates and support it.

With the economy set to push a $4.2 Trillion deficit in 2020, the deflationary pressure alone from the deficit will continue to erode economic activity. As noted, even if the Fed does manage to get a spark of inflation, which would push interest rates higher, the debt burden will lead to an economic recession and deflationary pressures.

Why Sending Money To Households Won’t Create Inflation

If the Government keeps sending money to households, it is going to create inflation.

Such is the underlying sentiment behind a universal basic income and its impact on economic growth. Unfortunately, it simply isn’t true.

Let’s run a hypothetical example using GDP from 2007 to the present. (I am using estimates of -4.3% for 2020 GDP growth) In 2008, in response to the “Financial Crisis,” Congress passes a bill providing $1000/month ($12,000 annually) to 190 million families in the U.S. 

The chart below shows the economy’s annual GDP growth trend assuming the entire UBI program shows up in economic growth. For those supporting programs like UBI, it certainly appears as if GDP is permanently elevated to a higher level. 

However, that is an illusion. When you look at the annual rate of change in economic growth, which is how we measure GDP for economic purposes, a different picture emerges. In 2008, when the $12,000 arrives at households, GDP spikes, printing a 17% growth rate versus the actual 1.81% rate.

Beginning in 2009, however, the benefit disappears.

The reason is that after UBI is injected into the system, the economy normalizes to the new level after the first year. Also, notice that GDP grows at a slightly slower rate as the dollar changes to GDP at higher levels print a lower growth rate.

Not Unprecedented

The Federal Reserve’s new policy tool is nothing more than a “do anything” excuse. The reality is the Fed has no actual ability to create employment, control inflation, or create economic prosperity. The only thing they do have the ability to continue to create is the “wealth gap.”

While many suggest the current situation is “unprecedented,” it really isn’t. Japan has been an ongoing experiment for nearly 30-years with the same economic outcome the U.S. is currently experiencing. 

Furthermore, we have much more akin to Japan than many would like to believe.

• A decline in savings rates

• An aging demographic

• A heavily indebted economy

• A decline in exports

• Slowing domestic economic growth rates.

• An underemployed younger demographic.

• An inelastic supply-demand curve

• Weak industrial production

• Dependence on productivity increases

The lynchpin to Japan, and the U.S., remains demographics and interest rates. As the aging population grows becoming a net drag on “savings,” the dependency on the “social welfare net” will continue to expand. The “pension problem” is only the tip of the iceberg.

Failure To Launch

Since the financial crisis, Japan has been running a massive “quantitative easing” program which, on a relative basis, is more than 3-times the size of that in the U.S. However, while stock markets have performed well with Central Bank interventions, economic prosperity is less than it was prior to the turn of the century.

Furthermore, despite the BOJ’s balance sheet consuming 80% of the ETF markets, not to mention a sizable chunk of the corporate and government debt market, Japan has been plagued by rolling recessions, low inflation, and low-interest rates. (Japan’s 10-year Treasury rate fell into negative territory for the second time in recent years.)

While financial engineering clearly props up asset prices, I think Japan is a very good example that financial engineering not only does nothing for an economy over the medium to longer-term, it actually has negative consequences.” – Doug Kass

Summary

There is no evidence the Fed’s “new policy” tool will create inflation, lead to stronger economic growth, or generate better economic equality.

What we are pretty sure of is that their “new policy” is very much the same as the “old policy,” which will likely continue to foster economic inequality, inflated assets, and a further widening of the “wealth gap.” 

Most telling is the inability of the current economists who maintain our monetary and fiscal policies to realize the problem of trying to “cure a debt problem with more debt.”

The Keynesian view that “more money in people’s pockets” will drive up consumer spending, with a boost to GDP being the result, has been wrong. It hasn’t happened in 40 years.

We fear the Fed’s new policy will only lead to further social instability and populism. Such has been the result in every other country which has run such programs of unbridled debts and deficits.

As Dr. Woody Brock aptly argues:

“It is truly ‘American Gridlock’ as the real crisis lies between the choices of ‘austerity’ and continued government ‘largesse.’ One choice leads to long-term economic prosperity for all; the other doesn’t.”

Take your pick.

While mainstream media outlets like the New York Times largely neglected to cover the goings-on in Rochester, New York, last night, independent and local reporters were on the scene to document the chaos as agitator-fueled unrest engulfed yet another small post-industrial American city.

One reporter who was on-hand to document the scene tweeted video of a gang of “peaceful Black Lives Matter activists” barging into a restaurant, terrifying diners, flipping chairs and screaming at people. Apparently, they did this to multiple establishments across town.

#HappeningNow the protesters in Rochester NY are “shutting down restaurants”, tables are broken, people running off scared #rochesterprotests pic.twitter.com/oxmlZp526w

— @SCOOTERCASTER (FNTV) (@ScooterCasterNY) September 5, 2020

Independent journalist Cassandra Fairbanks also reported on the mayhem.

In keeping with what’s become an established pattern, the “protest” started hours before as a mostly peaceful daytime demonstration, with the real hard-core anarchists and criminals congregating in the evening to create chaos while vandalizing businesses and terrorizing people in what’s become a transparent attempt to sow even more of the “divisiveness” that Democrats routinely attribute to President Trump and his “comrades” in Moscow.

One of the gang’s leaders shouted at guests, claiming it was “time to leave” and that they were “shutting the party down”.

“There’s no need to run, nobody is hurting y’all. We’re just shutting the party down,” the obnoxious “protester” shouted as people flipped tables and threw chairs.

Meanwhile, in NYC, eight people were arrested Friday night when a group of 150 “Black Lives Matter” protesters smashed windows and sprayed graffiti on storefronts.

Windows were smashed at two Starbucks, five banks and a Duane Reade in Lower Manhattan, causing an estimated $100,000 in damage.

At the scene, police recovered two stun guns, smoke grenades, and tools to aid in “burglary and graffiti”, according to the New York Post.  All those arrested were charged with rioting, while some were hit with weapons charges over the “tools” mentioned above.

The latest wave of unrest is being attributed to the March killing in police custody of Daniel Prude by police in Rochester. The man’s brother called the police after he began behaving erratically, running around in the street naked. He died due to suffocation, which the coroner ruled a homicide, with PCP intoxication listed as an aggravating factor.

The New York Times late Friday published a lengthy story accusing Rochester PD of a “cover up” in the death of Prude, who died back in March, although his family just went public with the claims on Wednesday.

 

Refinitiv weather analyst Ed Whalen states, in a new report, that big temperature changes are ahead for the central US. 

Whalen said parts of the western and central US would see a blast of cold air early next week, for a short period, especially in the Rockies and parts of the Plains. The plunge in temperatures could result in snow for specific areas. 

The EC Operational Forecast for the next nine days (Sept. 05-14) daily average two months (F) deviation (with gray freezing line) shows Arctic air will pour into the central and western regions beginning Sept. 08. 

Here is Whalen’s Sept. agriculture weather report for Central Plains and Midwest regions:

1-5 Day Forecast: A favorable high rainfall pattern is anticipated through early next week across the Central Plains and Midwest U.S., with the highest totals (nearing 50 mm / ~2 in above normal) in the latter. Despite cooler conditions in the Northern U.S. Plains and Southern Canada, temperatures across the core crop regions of North America will be fairly moderate through the next 5 days. This pattern overall will be largely beneficial for corn and soybeans. It is the 6-10 day period which is more notable.

6-10 Day Forecast: A blast of cold air will drop temperatures to around 5-10 °F below normal across the Central U.S. during this period. Frost/freeze risks for corn and soybean regions are not expected, as only areas west of NE/KS are likely to drop below freezing. On that note, there is a possibility for snow across some of the wheat producing areas of Colorado, which could delay plantings down the line. More on precipitation, a swath of heavy rainfall totals associated with the eastern edge of the low pressure trough will range from the Southern Plains through the Midwest during the 6-10 day period. Overall, this cool and wet weather should be very favorable for late developing corn and soybean crops.

10+ Day Forecast: The latest EC extended run from 03 September depicts continued cold weather persisting through September across the vast majority of the Central U.S., coupled with a near normal precipitation pattern. If persistent, the cold weather could begin to raise concerns further for frost/freeze damage to corn/soybeans as well as delays to wheat plantings. – Whalen

The central US heating degree day (HDD) index will spike on Sept. 7, indicating more energy will be needed to heat a building structure as colder weather rolls in. The spike will be short-lived, but the trend in high and low temperatures will be down as summer appears to be winding down. 

US-lower 48 HDD is set to rise through mid-Oct. as cooler temperatures imply people will have to turn up their thermostats. 

As summer transitions to fall, this is particularly bad for restaurants who have been surviving on serving customers on outdoor patios as public health orders limit indoor capacity. It won’t be until Oct./Nov. when temperatures dive further that another wave of eateries will have to shutter operations as patios close. 

Authored by Tom Luongo via Gold, Goats, ‘n Guns blog,

Pipeline politics, like electoral politics, knows no limits.

With Nordstream 2’s completion on schedule to happen around the same time Donald Trump will ‘appear to be re-elected,‘ the amping up of anti-Russian rhetoric and political pressure was to be expected.

The poisoning of Russian President Vladimir Putin’s supposed chief critic, Alexei Navalny, is the latest sad attempt to stop the Nordstream 2 pipeline. Laying aside the reality that Navalny isn’t any real threat to Putin, the basic question you should be asking is if Putin truly wanted him dead why not just create a pretext for it and shoot him?

This is the first and only reason you need to prove that this story is a bad Ian Fleming short story concocted in the bowels of MI6.

Navalny gets arrested and released in Moscow as often as most people change their socks. So, if Putin the Gangsta’ wanted him dead, he’d be dead.

But Navalny as a political asset for the West as Putin’s gadfly was completely spent. The proof of this is Navalny’s inability to marshal any opposition to the recent referendum in Russia blessing the proposed changes to the constitution.

While the Democrats and the media try to keep the dream of Russian interference into our elections alive we are distracted from what the real operation is – to stop Trump’s re-election and delay until the coup is complete in the U.S. to bury all the evidence of Obamagate during a restoration.

That’s all Russiagate and Ukrainegate and Skripalgate and now Navalnygate are — comfort food lies to angry shitlibs who are still haven’t fully processed the 2016 election and Brexit, kept on a drip feed of social media dopamine hits in a state of perpetual Bargaining so that they never move on to Acceptance

And if The Davos Crowd can put the screws to Russia’s future gas supplies to Europe and stunt its growth with all of this nonsense, all the better. The motivations of the factions pro and con to the Nordstream 2 pipeline have grown so murky it’s almost too much to outline anymore.

There is no simple throughline to this story since it encompasses so many different angles and potential motivations of the players, many of whom have competing agendas.

Merkel wanted Nordstream 2 to make Germany the gas transit hub for the European Union. German businesses reached out to Russia to supply them this gas after the EU destroyed South Stream in 2014. It would give the Germans a lot more control over the Poles while placating the German industrialists who are the source of her power. Her motivation on this has been very clear.

She has also allowed Russia and Turkey to go forward with the second leg of the Turkstream pipeline which goes through Bulgaria, Serbia and into Hungary.

What’s new is that Merkel is finally getting push back from people within her own party over Nordstream 2 which adds to the pressure the Trump administration is putting on her.

Merkel’s modus operandi is always status quo. So, she will always try to placate both sides while still advancing her own plans. For the most part Trump sees right through her and never gives her any wiggle room.

That’s why Nordstream 2 is so important to him, but it is more symbolic than it is about the gas itself. I suspect it is more about the growing influence of the EU and the mission creep of NATO more than any antipathy he has to Putin and/or Russia.

And it wouldn’t surprise me at all for this Nordstream 2 pressure from him to be more about remaking the U.S.’s relations with the post-WWII institutional order — the U.N., NATO, etc. — than it is about a paltry 55 bcm annually of natural gas.

Europe’s future gas needs are so big, with the shuttering of all nuclear power and this putsch towards Green Energy, that, in the end, this isn’t about Germany’s reliance on Russia but rather about Russia profiting from its relationship to Germany.

This tweet says it all and the interview excerpt says a lot more.

5 Reasons for bogus Navalny Skripal Redux Narrative
1) Derail NordStream Pipeline
2) Payback for failed Belarus 🇧🇾CR
3) Original hope of successful🇧🇾CR could spill over & create turmoil in Russia 🇷🇺
4) US Election engineering
5) Derail Trump/Putin Summit at upcoming G5 meeting https://t.co/zpQUoy6qgr

— Starte Firer (@Anonylyzer13) September 3, 2020

The last point is very important because whenever there is about to be a chat between Trump and Putin the well has to be poisoned, as it were, to ensure nothing of substance can change.

And this, to me, makes the most sense as to why Merkel came out so forcefully about the Navalny poisoning, it serves to shut down internal opposition to the pipeline, which no German in his right mind would object to, while appearing to appease Trump and the U.S. by standing tall to Putin.

But this is all nonsense. Merkel will not shut down Nordstream 2 or block its completion over Alexei Navalny any more than I’m going to dress in black bloc and join Antifa.

And that brings me back to the 800 lb. faction in the room, the intelligence agencies who helped create this mess in the first place, which ties us right back to the election.

Who has motive, means and opportunity to create an international incident like this on the eve of the election?

The very people who were caught red-handed in a treasonous intelligence operation used to justify spying on a political opponent during the 2016 election campaign.

• Who is desperately trying to push all changes to the current state of play until after the election on November 3rd?

• Why is Judge Emmet Sullivan purposefully delaying resolution of the Michael Flynn trial until after the election?

• Who is behind the riots in the U.S.?

• Who is conducting war games on the election outcome, publishing them in their mouthpieces (here and here) and stating the election will be compromised to the point of having to be resolved in the courts reversing what the result will be on election night?

• Who stands to lose the most if Trump is re-elected and a No-Deal Brexit goes through?

British Intelligence, the holdover members of the CIA and Barack Obama, that’s who.

Forget Hillary Clinton, she’s dirty but you shouldn’t care about her. Obama is the one who’s head is actually on the chopping block here, since it’s him the evidence is pointing to as to signing off on all of this.

It’s Obama that was chosen by The Davos Crowd to implement the destruction of Trump, not Hillary.

That’s why we’ve been treated to the greatest show on earth about how the U.S. is going to fail, how the U.S. dollar is going the way of the dodo and the European Union is inevitable.

The only problem with this is it’s completely not true.

This Friday we are seeing what it looks like when you push markets and the political narratives supporting them well past their ‘Best if Used By’ date. A violent snap back which sees stocks fall, safe havens like gold and bitcoin get whacked with the ugly stick and even bond yields rising.

We’re staring at a milder version of what we experienced in March, a sell-everything-not-nailed-down-and-get -to-dollars day. All across the markets we’re seeing a turn towards deflation as the mad scramble for dollars begins now that the odds of Donald Trump winning the election have risen sufficiently to cast doubt on the outcome in the minds of traders.

And the canary in the coal mine for this deflation has, for weeks now, been the inability of oil to rally into this high in stocks. If there has been one thing that I’ve learned in my years of watching markets it is that oil prices never flat line.

That is exactly what’s been going on for the past eight weeks.

So no we have a market correction, long delayed from June, lining up with the height of the election campaign. Everyone is exerting maximum political pressure on each other and it won’t get any better.

With follow-through downside action today after Thursday’s massacre markets all over have thrown technical reversals at the weekly level. Expect more follow through next week as a full-blown panic is likely to emerge here.

But, be especially on the lookout for a crash in oil prices as that will be used to construct a new version of a Trump/Putin bromance that goes something like this:

Now that oil prices have collapsed, Putin will put extra pressure on Trump to steal the election because Putin needs higher oil prices while Biden will go after Big Oil if he’s elected.

The reality is that the global economy was broken by these lock downs and the now indisputable over-reaction by governments to effect fundamental political change and oust Trump from power.

But they are also continuations of decades-long policies of pipeline politics dictating where capital is allowed to flow. In the grand scheme of things Trump and Putin are near-equals as enemies to the people behind these policies.

And that’s why whenever things look good for them, sacrifices must be made. This time it was Alexei Navalny.

*  *  *

Join my Patreon if you want to navigate the pipeline wars. Install the Brave Browser if you think Barr is right and Google is anti-competitive.

We have some more bad news for the thousands of recently laid-off airline pilots, or ones that could be laid off this fall, as the travel and tourism industry remains in a bust cycle, that is, some planes are becoming fully automated and may no longer require pilots.

The future of autonomous flight could be much closer than folks realize, mostly because startups like Xwing, is working with the FAA to certify a fleet of autonomous Cessna 208B Grand Caravan utility planes for short-haul delivery services, reported FOX 5 New York. 

Xwing’s Autoflight System can easily convert an existing small plane into an autonomous aircraft that can taxi, take off, navigate a flight route, and safely land, all on its own. 

The company said the future of the air freight industry is the integration of autonomous systems: 

“We believe the path to full autonomy begins with the air cargo market, and involves remote operators supervising fleets of unmanned aircraft,” Xwing founder and CEO Marc Piette said.

Xwing has already flown the robo-cargo plane more than 40 hours in test flights this summer with hopes of FAA certification in the near term. Upon approval, the company plans to fly a fleet of planes on humanitarian trips, with flight distances up to 500 miles. 

It might be until the mid-point of the decade before autonomous planes begin to chip away at human pilot jobs. We noted last week how thousands of airline pilots are set to learn how to fly drones amid the mass layoffs at carriers. 

So two powerful trends, one that is automation, and another is the collapse of the travel and tourism industry, has already begun to shrink the total number of commercial pilots needed industrywide.

Yesterday, as the gamma meltup insanity of the past month finally rolled over and tech names tumbled, we said  “the real questions emerge and first and foremost is who was it that led this furious gamma charge higher, taking on virtually every dealer?”

As a reminder, this came following several weeks of bizarre market moves duly discussed here, which we said could be described as an unprecedented “epic battle” in gamma “between one or more funds who were aggressively loading up on gamma and bidding up calls to the point that VIX was surging even as stocks hit 9 consecutive all time highs, while dealers were stuck “short gamma” and in their attempts to delta-hedge the ever higher highs, would buy stocks thereby creating a feedback loop where the higher the market rose, the more buying ensued.”

Yesterday, we first identified the solitary party that was responsible for the unprecedented call-buying insanity as Japan’s bizarro VC/media conglomerate SoftBank, and elaborated:

It is hardly unreasonable to imagine SoftBank, the “brains” behind such catastrophic investments as WeWork, WireFraud WireCard, and countless other failed “unicorns” would desperately try to Volkswagen not just a handful of tech names, but the entire market in the process. After all, Masa Son is desperate to deflect attention from the fact that as we put it last October, “SoftBank is the Bubble Era’s “Short Of The Century.” And if there is one thing that can salvage the Japanese VC titan’s reputation it is a second tech bubble which blows out the valuation of his countless (otherwise worthless) investments which form the backbone of SoftBank’s “AI Revolution” whatever that means.

Today, one day after our original report, the Financial Times catches up and confirms that SoftBank has been “unmasked as the ‘Nasdaq Whale’ that stoked the tech rally”, writing that Masa Son’s investing vehicle “has bought billions of dollars’ worth of US equity derivatives in a move that stoked the fevered rally in big tech stocks before a sharp pullback on Thursday, according to people familiar with the matter” (oddly enough, the FT forgot to note that “this was first reported by Zero Hedge” but whatever.)

While traditionally SoftBank for investing in either unicorns or megafrauds such as WireCard, the FT repeats what we first said, namely that SoftBank has “also made a splash in trading derivatives linked to some of those new investments, which has shocked market veterans.” It goes on to quote a derivatives-focused US hedge fund manager “These are some of the biggest trades I’ve seen in 20 years of doing this. The flow is huge.“

How huge? Huge enough to send the implied vol of calls of the world’s biggest company, Apple, soaring at the same time as its stock price hit record highs.

It’s also why the S&P kept rising alongside the VIX, which hit a record high at a time when the S&P was also at an all time high, as we first pointed out on Wednesday, warning that the last time this happened was when the dot com bubble burst.

How much did SoftBank buy? According to the WSJ, which also moments ago confirmed our original reporting, SoftBank…

… spent roughly $4 billion buying call options tied to the underlying shares it bought, as well as on other names

… which due to the embedded leverage in options, is the equivalent of buying tens if not hundreds of billions of underlying stocks, thus sparking the massive upward move in the handful of tech stocks which then spilled over everywhere.

And speaking of underlying stocks, in Q2 SoftBank just so happened bought brand new stakes in all the super high beta names including Amazon, Google, NVidia, Tesla, Netflix, Zoom and so on.

SoftBank’s trade was simple: buy billions in underlying ultra-high beta stocks, then also buy billions in call options to take advantage of illiquid markets and gamma, and sure enough all the “SoftBank stocks” exploded to all time highs, and in the process dragged the entire market higher.

Going back to the FT’s confirmation of our original report, it quotes another anonumous “person familiar with SoftBank’s trades” who said it was “gobbling up” options on a scale that was even making some people within the organisation nervous.

“People are caught with their pants down, massively short. This can continue. The whale is still hungry.”

Or not, because if SoftBank “forgot” to take profits and has been piling on gamma, it is now entirely at the dealers’ mercy as we first explained yesterday, which incidentally explains today’s continued plunge in tech names as traders brace for the unwind of all that gamma.

Of course, that’s the last thing SoftBank – which already is hurting from the dismal performance of so many of its recent investments – wants, and is why a banker “familiar with the latest options trading activity” told the FT that Thursday’s market pullback would have been painful for SoftBank (well, duh), and “he expected the buying to resume” unless of course the dealers double down and sell all those same calls that exploded in recent days. The FT then added, perhaps for the benefit of its Robinhood readers that “a larger and longer-lasting stock-market decline would be more damaging for this strategy, and would probably involve rapid declines.”

While there was nothing actually new in the FT report beside merely confirming what our readers already knew, all we can say is that we sincerely hope that Masa Son publishes all his material derivative holdings so the public can take the other side and finally crush this grotesque company which last October we said was the “Bubble Era’s “Short Of The Century“.”

Meanwhile, for those wondering just how far from the Minsky Moment we are, it appears that Japanese pensioners – who are the 4th largest holder of SoftBank – are now indirectly buying deep OTM Apple and Tesla calls:

One final point: while there is an amusing feud brewing between the FT and the WSJ about who broke the SoftBank story (spoiler alert: neither)…

I have huge respect for the excellent work the Wall Street Journal does but it’s *very* poor form for it to not credit the FT in it’s, er, six paragraph follow up to our huge SoftBank scoop https://t.co/09O5QLy7Hy

— Matthew Garrahan (@MattGarrahan) September 4, 2020

… the real question is which media publication will refuse to touch on the next part of this story, and where the rabbit hole really goes: namely the frontrunning of call options by certain HFTs who clearly magnified the gamma effect sparked artificially by SoftBank.