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Authored by Fjordman via The Gatestone Institute,

In November 2019, Germans celebrated the collapse of the Berlin Wall and the reunification of Germany 30 years earlier. That same month, Chancellor Angela Merkel, in a speech to the German federal parliament (Bundestag), advocated more restrictions on free speech for all Germans. She warned that free speech has limits:

“Those limits begin where hatred is spread. They begin where the dignity of other people is violated. This house will and must oppose extreme speech. Otherwise, our society will no longer be the free society that it was.”

Merkel received great applause.

Critics, however, would claim that curtailing freedom in order to protect freedom sounds a bit Orwellian. One of the first acts of any tyrant or repressive regime is usually to abolish freedom of speech. Merkel should know this: she lived under a repressive regime — in the communist dictatorship of East Germany, where she studied at Karl Marx University.

The First Amendment to the United States Constitution protects freedom of speech, specifically speech critical of the government, and prohibits the state from limiting free speech. The First Amendment was placed first in the Bill of Rights because the American Founding Fathers realized that freedom of speech is fundamental to a free society. US President George Washington said:

“For if Men are to be precluded from offering their Sentiments on a matter, which may involve the most serious and alarming consequences… reason is of no use to us; the freedom of Speech may be taken away, and, dumb and silent we may be led, like sheep, to the Slaughter.”

Without freedom of speech, you cannot truly be free. Freedom of speech exists precisely to protect the minority from the tyranny of the majority.

What exactly is “hate speech,” and who gets to define it? Those who love justice usually also hate injustice. But what is justice? Social justice? Economic justice? Ecological justice? Religious fundamentalist justice? Climate justice?

Hate may be a negative emotion, but you cannot ban emotions. Envy and jealousy are also widely considered negative feelings. Yet we do not ban them. Envy of people who are wealthier than you is arguably a component of Socialist and Marxist political parties everywhere.

The concept of a “hate crime” is also flawed. If you rob, assault or murder people, that is equally injurious regardless of the motivation of the assailant or of who the victim is. We should not have different penalties depending upon whether the victim is a gay black man, a straight white man, a Muslim woman or a Christian nun, or we will end up with a kind of a legal caste system.

Although the legal system should not be based on feelings or emotions, we see an increasing tendency toward this subjectivity. There is a tendency to censor certain viewpoints because they might “offend” others. The problem is, it is not the inoffensive things that need protecting; it is only the offensive things that do. When, in the US, the National Socialist Party of America wanted to march though Skokie, Illinois, home to many Holocaust survivors, the Supreme Court decided that the Nazis’ right of free speech overrode suppressing the marchers. According to the Bill of Rights Institute:

“In these cases, National Socialist Party of America v. Village of Skokie (1977), and Brandenburg v. Ohio (1968), the Supreme Court held that the First Amendment protects individuals’ rights to express their views, even if those views are considered extremely offensive by most people…

“American writer Noam Chomsky said ‘If we don’t believe in freedom of expression for people we despise, we don’t believe in it at all.’ Individuals who express unpopular opinions are protected by the First Amendment. The First Amendment prevents majorities from silencing views with which they do not agree—even views that the majority of people find offensive to their very core. “

Possibly many things people say will be considered offensive to somebody, somewhere. In 1600, Giordano Bruno was burned alive at the stake as a heretic for saying that the universe has no center, and stars are suns, surrounded by planets and moons. The findings of Charles Darwin were challenged by the “Scopes Monkey Trial” in 1925, when a high-school teacher in Tennessee, John T. Scopes, was charged with violating state law by teaching the theory of human evolution.

Just a few years ago, it was uncontroversial to state that there are only two biological sexes. After all, this is a fact that would seem pretty straightforward. Yet recently, even this simple statement has become explosive. When the tennis champion Martina Navratilova questioned the fairness of having transgender men compete in sports again women, but was eventually driven to “apologize.”

In the UK, a physician, David Mackereth, recently lost his government job as a medical assessor after more than three decades for refusing to renounce his view that gender is determined at birth.

People who claim to combat “hate” often seem to be quite full of hate themselves. Some Americans claim that US President Donald J. Trump is a racist, yet themselves express open hatred toward Trump, and those who vote for him. They do not object to hating. They just seem to believe that their hate is the only legitimate one.

In 2013, the American scholar Robert Spencer was banned by British authorities from entering the UK. Spencer the author of many books about Islam and runs the website Jihad Watch.

The Koran sura 9:5 has verse stating:

“When the sacred months are over slay the idolaters wherever you find them. Arrest them, besiege them, and lie in ambush everywhere for them. If they repent and take to prayer and render the alms levy, allow them to go their way. God is forgiving and merciful.”

The exact translation of this verse can be debated, but the Arabic verb qatala generally means to kill, slay or murder somebody. How come it is all right to publish the original source, prescribing murder, but that it is “hate speech” to point out that quote?

Robert Spencer and others have observed, for instance, that verse 9:5 and other intolerant verses in the Koran have been quoted repeatedly by militant Muslims to justify jihad attacks and violence (for instance here, here and here). Although other religious books also contain violence, as the scholar Bruce Bawer points out:

“Sometimes, when one points out these rules, people will respond: ‘Well, the Bible says such-and-such.’ The point is not that these things are written in Islamic scripture, but that people still live by them.”

Muslims in Britain and other Western nations are free to spread teachings that are hateful towards non-Muslims. Yet because non-Muslims such as Robert Spencer pointed out that some teachings are hateful and have inspired actual atrocities, UK authorities banned Spencer for spreading “hate.”

One sees, then, that restrictions against “hate speech” often do not really ban hate speech; instead they may actually be protecting certain forms of hate speech against legitimate inquiry.

Laws against “hate speech” and “racism” always lead to political censorship, because the definition of what constitutes “hate” is always influenced by politics and ideology. Laws against hate speech or racism should therefore be removed. No person has the right “not to be offended.” Freedom of speech means saying and hearing things with which you may disagree. What remains important is to be able to say and hear them.

Given Libyan commander Khalifa Haftar has over the past two years captured the majority of the oil and gas rich country’s energy producing regions, he’s now playing his biggest card yet to leverage international peace talks in his favor amid a final push for his Libyan National Army (LNA) forces to take Tripoli. 

Bloomberg reports Saturday that the Benghazi-based ‘rebel’ general has now “blocked oil exports at ports under his control, slashing output by more than half and posing a potential setback for an international conference on Sunday that aims to broker an end to a civil war in the OPEC nation.”

The major talks Sunday are due to be held in Berlin, and a who’s who of external backers of each side of the conflict will be in attendance, including Putin, Erdogan, France’s Macron, and UK Prime Minister Boris Johnson, as well as the Italian prime minister and US Secretary of State Mike Pompeo.

The Berlin conference comes after a failed deal to establish a ceasefire in Moscow earlier in the week, when Haftar left the city after the head of the UN-backed Government of National Accord (GNA) in Tripoli, Fayez al-Sarraj, actually signed the agreement. Haftar also reportedly secretly scuttled to different Mediterranean capitals, including Athens, in a bid to gain recognition as legitimate leader on the ground.

Haftar’s drastic move to block oil exports is likely aimed at torpedoing the Berlin meeting before it even starts, given he’s proven intransigent in the face of international pressure for him to halt the ongoing Tripoli offensive — even during the talks hosted by one of his key political backers Vladimir Putin. 

Libya’s National Oil Corp. (NOC) has now declared Force Majeure, per Bloomberg:

As a result of the blockage of ports in the central and eastern parts of the country, oil output will fall by about 800,000 barrels a day, costing $55 million daily, the National Oil Corp. said in a statement on Saturday. The NOC declared Force Majeure, which can allow Libya, which holds Africa’s largest-proven oil reserves, to legally suspend delivery contracts.

The stoppage also has military implications on the ground, given the GNA’s national army relies on the country’s oil revenue to purchase weapons via Tripoli’s central bank. The NOC has placed sole blame on Haftar for the shutdown, while the LNA has claimed to be listening to the demands of “the people”. 

Speaking to Bloomberg, European Council on Foreign Relations top official Arturo Varvelli acknowledged the action as bold ploy by Haftar to control Berlin discussions before they commence. “It could be counterproductive as it could make the Europeans, who are the largest consumers of Libyan oil, very upset,” he said.

And S&P Global Platts warns the country’s oil sector could enter a “tailspin”: 

Libya’s oil sector could go into a tailspin with two-thirds of its total crude oil production of around 1.20 million b/d at risk after its key oil ports were suspended Saturday by the Libyan National Army…

There’s huge potential for fireworks at the conference itself, given international heavyweights on either side of the conflict will be represented.

Turkey’s Erdogan has recently ordered troops to prop up the Tripoli government, not to mention Turkish drones and military hardware which have for months already been active in defense of the capital against pro-Haftar forces. 

Oil exports make up over 90% of Libya’s national revenue and as the below 2019 Stratfor map demonstrates, Haftar has long held the majority of the nation’s oil fields.

Russia, for its part, is believed to have hundreds of mercenaries from the Wagner Group embedded within Haftar’s forces. And complicating matters in the emerging proxy war, Egypt, the Saudis, and UAE (and most recently the Trump White House, apparently) also back Haftar, while Italy, Turkey, and other UN member nations back the GNA’s Sarraj. 

Meanwhile, Haftar has vowed repeatedly to not give up until he has control of the Libyan capital, despite fighting for months staying at a relative stalemate. So the Berlin conference outcome is not looking good before it even starts. 

On Friday, Minneapolis Fed president Neel Kashkari, who just two months earlier made a stunning proposal when he said that it was time for the Fed to pick up where the USSR left off and start redistributing wealth (at least Kashkari chose the proper entity: since the Fed has launched central planning across US capital markets, it would also be proper in the banana republic that the US has become, that the same Fed also decides who gets how much and the entire  democracy/free enterprise/free market farce be skipped altogether) issued a challenge to “QE conspiracists” which apparently now also includes his FOMC colleague (and former Goldman Sachs co-worker), Robert Kaplan, in which he said “QE conspiracists can say this is all about balance sheet growth. Someone explain how swapping one short term risk free instrument (reserves) for another short term risk free instrument (t-bills) leads to equity repricing. I don’t see it.“

To the delight of Kashkari, who this year gets to vote and decide the future of US monetary policy yet is completely unaware of how the plumbing underneath US capital markets actually works, we did so for his benefit on Friday, although we certainly did not have to: after all, the “central banks’ central bank”, the Bank for International Settlements, did a far better job than we ever could in its December 8 report, “September stress in dollar repo markets: passing or structural?”, which explained not just why the September repo disaster took place on the supply side (i.e., the sudden, JPMorgan-mediated liquidity shortage at the “top 4” commercial banks which prevented them from lending into the repo market)…

… but also on the demand side, which as Claudo Borio, head of the monetary and economic department at the BIS, explained was the result “high demand for secured (repo) funding from non-bank financial institutions, such as hedge funds heavily engaged in leveraging up relative value trades.“

Incidentally, we harbor a slight suspicion that Kashkari, who also admitted to “finding amusement in needling critics calling them conspiracists or goldbugs” (which is a delightfully ironic statement for a person responsible for the biggest asset bubble in history, and one which we are confident in 1-2 years time he would love to retract), was being disingenuous and knows exactly how the Fed is impacting markets, because in what was perhaps the most important news last week which flew under the radar, the WSJ reported that the Fed was considering lending cash directly to – i.e., bailing out – hedge funds, or as we put it, “Fed officials are considering a new tool to ease repo market stress: namely bypassing the existing system entirely, and lending cash directly to smaller banks, securities dealers and hedge funds through the repo market’s clearinghouse, the Fixed Income Clearing Corp., or FICC.“

And so we once again get to the real issue at hand, namely the bailout of those hedge funds which even the BIS said were on the verge of failure had the repo market not been unfrozen – and which the Fed was all too aware of – and had the massive leverage that some hedge funds operate under collapsed, forcing an unprecedented liquidation cascade.

Incidentally, it is the repo-utilizing hedge funds that is the transmission mechanism of the Fed’s monetary policy, and the source of so much Neel Kashkari confusion. Luckily for Neel, and everyone else still confused, the BIS explained that too:

Shifts in repo borrowing and lending by non-bank participants may have also played a role in the repo rate spike. Market commentary suggests that, in preceding quarters, leveraged players (eg hedge funds) were increasing their demand for Treasury repos to fund arbitrage trades between cash bonds and derivatives.

And there you have it: when properly funded, repos issued by commercial banks are critical in preserving and boosting risk prices, by way of levered hedge fund pair trades; indeed as the FT noted in December, “one increasingly popular hedge fund strategy involves buying US Treasuries while selling equivalent derivatives contracts, such as interest rate futures, and pocketing the arb, or difference in price between the two.”

While on its own this trade is not very profitable, given the close relationship in price between the two sides of the trade. But as LTCM knows too well, that’s what leverage is for. Lots and lots and lots of leverage. And when the repo market seized in September, the risk was that all this leverage would be pulled, forcing an unprecedented liquidation wave among the massively levered hedge fund world.

Hence the need for an emergency liquidity intervention by the Fed.

But as the WSJ noted, it’s not just about preserving a handful of hedge funds – fundamentally, the very foundation of the US financial system was suddenly at risk, and with the Fed suddenly targeting liquidity injections into claringhouses, it immediately became apparent what the weakest link was: Clearinghouses themselves.

This is hardly the first time we have discussed clearinghouses as the weakest link in the US financial system. As a reminder, the “hail mary” thesis of the uber bearish CIO of Horseman Global, Russel Clark (who in 2019 was down a record 35%) is that clearinghouses will collapse as liquidity is drained from the market:

LCH claim to have done a quadrillion of compression trades or netting in the last year, this is more than twice the notional of all outstanding interest rate derivatives.

If initial margins rise significantly, the only assets that will see a bid will be cash, US treasuries, JGBs, Bunds, Yen and Swiss Franc. Everything else will likely face selling pressure. If a major clearinghouse should fail due to two counterparties failing, then many centrally cleared hedges will also fail. If this happens, you will not receive the cash from your bearish hedge, as the counterparty has gone bust, and the clearinghouse needs to pay from its own capital or even get be recapitalised itself.

For those confused, here is another quick primer on clearinghouses from Horseman’s November letter to clients:

Clearinghouses have become the center of the financial system, but they do not bear the cost of any mistakes they make in pricing risks. This is borne by other clearinghouse members. But what the BIS note and the note issued by the banks and other users of clearinghouses makes clear is that the market has become very directional, with banks supplying liquidity to the repo market, while leveraged funds are taking liquidity (until 2017 banks were taking liquidity from the system). As the near bankruptcy of a clearinghouse highlighted last year, it is other members that bear the risk when things go wrong, and hence big US banks have acted rationally in looking to reduce liquidity to the repo market, which of course forced the Federal Reserve to act.

And since things are getting a bit fuzzy, let’s summarize here is what we know:

1. The repo crisis was the result of a liquidity shortfall at the “Top 4” banks, precipitated by JPMorgan’s drain of over $100BN in repo market liquidity (a wise move, which eventually forced the Fed to launch QE4, and helped JPM report its most profitable year on record)
2. The Fed addressed the “supply side” of the Sept repo crisis by injecting over $400BN in liquidity to replenish bank reserve levels, first via repo and then via T-Bill POMO, i.e., QE4.
3. The Fed has yet to address the “demand side” of the Sept repo crisis, namely the market transmission mechanism which is intermediated by hedge funds. And it is here that, as the WSJ reported, the Fed is currently contemplating providing liquidity directly to hedge funds to prevent a systemic collapse during the next repo crisis, whenever it may strike.

But going back to the clearinghouse issue, how are these linked to the potential failure of a handful of (massive) hedge funds? Well, we have an explanation for that too, and it once again comes from Horseman’s Russell Clark, who in his latest letter to the few clients he has left (which is a damn shame, because despite his dismal performance in 2019, one can argue that Clark is one of the best investors of his generation, yet one who will soon be out of a job due to endless central bank intervention), writes that “since 2016, its has become much harder to short. There are two reasons. One is negative interest rates have made almost any amount of investment risk justifiable, as owning a safe asset will cost you in real terms. The second is that the malinvestment has moved from bad investment in real assets, into bad investment in financial structures that actually push up markets before crashing them.”

How is that relevant to clearinghouses… thus hedge funds… thus repo… thus liquidity… thus the Fed…. thus QE4? Clark explains:

In 2019 there were many signs that the Japanese were perhaps beginning to step away from US debt markets, which made me very bearish. Yet US corporate debt continued to trade very well, which ultimately was the main support for US markets. As I looked more and more closely at clearinghouses, I realised the way they priced risk, and the provided leverage through compression, meant they were the grease that kept the US debt markets operating, and in fact kept spreads much tighter than they should be.

This brings us to the punchline, namely the reason why clearinghouses have emerged as the weakest link in the Frankenstein monster of a market that the Fed has created over the past decade, and why the Fed is, quietly, preparing to backstop hedge funds and clearinghouses themselves during the next crisis. Or rather 944 trillion reasons. Here is Clark’s conclusion:

Regulators, clearinghouses and central banks have published notes saying that clearinghouses are safe and the problems in the Swedish exchange in 2018 were due to one rogue trader. But when the biggest clients of the clearinghouses, banks, say there is a problem, then I suspect they are right. I spent the Christmas period trying to prove that compression is dangerous, and the best nugget I could come from was from the biggest interest rate clearinghouse in the world, LCH.

In a pamphlet on their website, pushing the benefits of “Compression with Swap Clear”, in the 12 months to October 2019, LCH did a record 944 trillion USD (11x world GDP) of compression. LCH also provide an estimate of the amount of capital this saved members (i.e. banks) under Basel III, a princely 37 million USD. To restate, USD 944 trillion of compression, yielded the banks USD 37 million of regulatory capital saving.

Which leads to the 944 trillion dollar question asked by the Horseman CIO: “If the banks are not benefitting, who is?”

His answer:

“Leverage funds with huge interest rate derivative positions. And who is on the hook if they blow up? The big banks who are on the other side of the trade, as they would be forced to recapitalise the clearinghouses.“

In other words, if enough liquidity is drained, mutual assured destruction between funds and banks will almost instantly follow. And since banks are now aware of the risk and are trying to reduce their exposure, it is very hard if not impossible to see how this can be unwound “without triggering all the other bad financial structures and malinvestment that QE has produced.”

It also explains why the Fed had to get involved, if under the guise of saving the repo market, when in reality the Fed was once again bailing out the banks and levered funds that are facing trillions of dollars in losses should one clearinghouse go under, as the cascade of resulting events would lead to a domino effect where one counterparty after another failed, and one clearinghouse after another has to be bailed out, initially by banks, and ultimately by the Fed.

And there you have it: while the September repo crisis was fundamentally represented by the Fed as one of insufficient reserves, and the resultant QE4 was painted by Powell merely as an exercise in “reserve management” the real reason why the Fed stepped in so decisively was to prevent a cascading sequence of hedge fund failures that would have not only sent the market crashing as funds were forced to liquidate all positions once leverage as high as 10x (see chart above) was yanked, but would culminate in the failure of one or more clearinghouses. Which is also why now that the Fed has stepped in, and backstopped this weakest link, stocks keep hitting new all time highs.

As for Mr Kashkari’s childish “needling of critics”, if after reading the above he still doesn’t understand what is going on, we have a suggestion: announce on Monday the Fed will no longer inject $100 billion in liquidity each month via repo and POMO, and see what happens to the stock market. After all, the Fed’s actions – or in this case the lack thereof – do not lead to “equity repricing”, right?

While there have been more than 60 confirmed cases of a new mystery virus emerging from Wuhan, China, UK experts estimate that closer to 1,700 have been sickened with the SARS-like pneumonia, according to the BBC.

“I am substantially more concerned than I was a week ago,” disease specialist Prof Neil Ferguson told the outlet.

The work was conducted by the MRC Centre for Global Infectious Disease Analysis at Imperial College London, which advises bodies including the UK government and the World Health Organization (WHO). –BBC

The estimate was calculated by the Imperial College of London based on the following assumptions: 

• Wuhan International Airport has a catchment population of 19 million individuals [1].
• There is a mean 10-day delay between infection and detection, comprising a 5-6 day incubation period [8,9]  and a 4-5 day delay from symptom onset to detection/hospitalisation of a case (the cases detected in Thailand and Japan were hospitalised 3 and 7 days after onset, respectively) [4,10].
• Total volume of international travel from Wuhan over the last two months has been 3,301 passengers per day. This estimate is derived from the 3,418 foreign passengers per day in the top 20 country destinations based on 2018 IATA data [11], and uses 2016 IATA data held by Imperial College to correct for the travel surge at Chinese New Year present in the latter data (which has not happened yet this year) and for travel to countries outside the top 20 destination list.

According to the report, “It is likely that the Wuhan outbreak of a novel coronavirus has caused substantially more cases of moderate or severe respiratory illness than currently reported. The estimates presented here suggest surveillance should be expanded to include all hospitalised cases of pneumonia or severe respiratory disease in the Wuhan area and other well-connected Chinese cities. This analysis does not directly address transmission routes, but past experience with SARS and MERS-CoV outbreaks of similar scale suggests currently self-sustaining human-to-human transmission should not be ruled out.”

To that end, airports in Singapore and Hong Kong have been screening passengers from Wuhan, while three US airports announced similar measures on Friday at three major airports; San Francisco, Los Angeles and New York. While most of the cases have occurred in China, there has been at least one reported in Japan, after a Chinese national traveled from Wuhan to his home in Kanagawa Prefecture.

About the virus:

The BBC also reports that this virus is just one of six Coronaviruses known to infect people.

At the mild end they cause the common cold, but severe acute respiratory syndrome (Sars) is a coronavirus that killed 774 of the 8,098 people infected in an outbreak that started in China in 2002.

Analysis of the genetic code of the new virus shows it is more closely related to Sars than any other human coronavirus. –BBC

Preliminary analysis of the novel coronavirus (in red) believed to be responsible for an outbreak of pneumonia in Wuhan, China shows it’s closely related to SARS CoV. https://t.co/Vf6U2W4oYR pic.twitter.com/3WbFpQ02Pc

— EcoHealth Alliance (@EcoHealthNYC) January 11, 2020

According to Ferguson, it’s “too early to be alarmist” over the virus, but that “people should be considering the possibility of substantial human-to-human transmission more seriously than they have so far,” adding “It would be unlikely in my mind, given what we know about coronaviruses, to have animal exposure, be the principal cause of such a number of human infections.”

Understanding how a novel virus is spreading is a crucial part of assessing its threat.

The WHO’s China office said the analysis was helpful and would help officials plan the response to the outbreak.

“Much remains to be understood about the new coronavirus,” it said. “Not enough is known to draw definitive conclusions about how it is transmitted, the clinical features of the disease, the extent to which it has spread, or its source, which remains unknown.” –BBC

So far just two deaths have been reported.

Authored by Adam Taggart via PeakProsperity.com,

Juggernaut: (n) massive inexorable force, campaign, movement, or object that crushes whatever is in its path

The US Federal Reserve is once again force-feeding liquidity into the system. At its fastest rate ever.

The result? Record high stock prices whose valuations defy all logic.

What’s wrong with that? Shouldn’t we just enjoy the party and be grateful for our rising 401ks?

What’s wrong is that the Fed’s actions are dooming us. Their poisonous cocktail of endless cheap money and rock-bottom interest rates is hastening a terminal breakdown of the economy, while deliberately enriching a tiny cadre of elites to the ruin of everyone else.

Though most remain blind to this, Fed policy (and the similar ones pursued by the other major world central banks) is directly responsible for, or a major contributor to, many of the biggest challenges society is facing.

Tens of millions of Boomers who can’t afford to retire. Tens of millions of Millennials who can’t afford to purchase a home. History’s largest wealth gap between the 1% and everyone else. Relentless increases in the cost of living while real wages remain stagnant. Depletion and degradation of our key natural resources by zombie companies run without profits. We can thank the Fed for all of these ills, plus many more.

All we’re offered in return is the fake reassurance that “everything is awesome” because stocks are higher today than they were yesterday. As if that really makes a difference when the top 1% owns 50% of all stocks and the top 10% owns over 90%.

And when today’s epicly distorted markets reach their breaking point — which may be imminent given the truly manic action recently — not only will the resulting damage be commensurately epic, but it will injure the 99% FAR more than the 1% who benefitted from it.

Mass layoffs. Bankruptcies. Destroyed retirement portfolios and pensions. State and city budget crises. Higher taxes. More fees. Cancelled social services. Hollowed-out communities.

The Fed’s deliberate policy of privatized gains for the elite and socialized losses for the masses ensures that Joe Sixpack is going to take it in the shorts while Reginald Caviar-Maybach will still receive his record bonus from Goldman Sachs.

Which is why the video below is essential viewing for anyone not currently CEO of a too-big-to-fail bank or too busy counting their $billions.

We brought together several of the best monetary and macroeconomic minds to explain exactly what is transpiring and what concerned individuals like you should be preparing for.

Here’s our full 90-minute video WTF: What The Fed?!?, featuring Grant Williams, Mike Maloney, Charles Hugh Smith and Chris Martenson:

Understanding the nature of what is underway is critical. While the Fed’s liquidity juggernaut rolls on, it will continue to crush equality, opportunity and fairness for the masses. But once it stalls, the systemic crash and societal upheaval that will follow will be even more horrific for those not prepared for it.

Ahead of Tuesday’s opening arguments in the Senate impeachment trial, House Democrats – seven impeachment managers led by Intelligence Committee Chairman Adam Schiff – filed their legal brief today.

The 111-page summons urges the Senate to “eliminate the threat that the President poses to America’s national security” as it lays out the case against President Trump.

The House legal filing (due by 5pmET) reiterates the findings of the House Intelligence and Judiciary panels, which, after hearing from witnesses and experts, settled on charging Trump with abuse of power and obstruction of Congress.

Additionally, the case that House prosecutors sent to the Senate references new evidence that wasn’t part of the impeachment inquiry, including material from Lev Parnas, an associate of Trump’s personal lawyer Rudy Giuliani, according to Democratic officials familiar with the argument.

President Trump’s legal team outlined the fiery response to its impeachment summons, calling the two articles of impeachment passed by the House last month “a dangerous attack on the right of the American people to freely choose their president.”

The six-page document – which they stressed is different from the brief that is not due until Monday – offers a taste of the rhetoric expected to be deployed by the president’s defenders in the Senate.

“This is a brazen and unlawful attempt to overturn the results of the 2016 election and interfere with the 2020 election, now just months away,” the filing states.

Trump’s legal team, led by White House counsel Pat Cipollone and Trump personal lawyer Jay Sekulow, is challenging the impeachment on both procedural and constitutional grounds, claiming Trump has been mistreated by House Democrats and that he did nothing wrong.

Read the president’s full response to articles of impeachment:

Notably, at least four of the impeachment managers, including Schiff, are scheduled to appear Sunday on political talk shows.

Former Rep. Trey Gowdy (R-SC) told Fox News this week that he predicts President Donald Trump’s Senate trial will be short and that the president’s best defense is a review of the transcript.

“The transcript is the single best piece of evidence that the president has,” Gowdy said. “Who brought up Rudy Giuliani’s name? It wasn’t Donald Trump. It was Zelensky. This was the second call, not the first call. If President Trump were really hell-bent on ensuring that Ukraine investigate the Bidens, would he not have brought that up in the first telephone call he had with Zelensky? Why wait till the second?”

“As far as the timing of this trial is concerned, Trey, they are estimates that it could be quick, it could last as long as six weeks,” Fox News co-host Sandra Smith said. “Where do you fall on that, and what is the length of time mean?”

“I mean God help us if it lasts six weeks,” Gowdy responded. “The investigation is over, so it’s Schiff’s job to present the case. If he’s going to present the case on the paper with the depositions, it shouldn’t take that long. I don’t need Adam to read the depositions to me; the jury can go read it themselves.”

“If they open it up to witnesses, and they want Bolton, and then there’s some Republicans that want four or five other witnesses, it could last six weeks,” Gowdy continued. “Sandra, I just have not met anyone whose opinion has changed during the pendency of this investigation. I can’t identify – maybe three open-minded jurors in the U.S. Senate. I just don’t, no matter how long it lasts, I don’t think it’s gonna change anyone’s mind in the Senate or among my fellow citizens. The shorter the better.”

Fox News co-host Bill Hemmer asked, “Did you want to give us a time frame for that?”

“I’m saying two weeks,” Gowdy said. “If it goes six weeks, then they’re going to have to make some hard decisions on which witnesses are important enough to hear from and which ones, while they may have relevant evidence, we just don’t – I think in terms of a real trial.”

“Why would you ever not call a witness if that witness has relevant information?” Gowdy continued. “How do you pick which ones to call and which ones not to? You can never do that in a real trial. So, if we’re going to open this thing up anew to a brand new investigation, then call everybody, and God knows how long that’ll take.”

“President Trump has done nothing wrong and is confident that this team will defend him, the voters, and our democracy from this baseless, illegitimate impeachment,” White House Press Secretary Stephanie Grisham said in a statement on Friday night.

A GoFundMe for a browbeaten Target manager has reached more than $18,000 after a notorious internet troll’s temper tantrum over a mispriced toothbrush went viral.

Liberal journalist David Leavitt – who the late Anthony Bourdain once called a “gaping asshole” for mocking victims of a terrorist bombing – tried to publicly shame the Target manager, known as “Target Tori” after she refused to sell him a $90 toothbrush which had accidentally been marked at .01c, based on a Massachusetts law (he likely misinterpreted).

When Tori put her foot down, Leavitt called the cops and threatened to take Target to court.

I just had to call the police because @target Refused to sell me the toothbrush

— David Leavitt (@David_Leavitt) January 17, 2020

After Leavitt’s post went viral, he was caught in a lie trying to defend himself when he claimed to have not been to a dentist in over three years – only for an old tweet to surface in which he bragged about turning off Fox News in the Dentist’s office.

pic.twitter.com/9SmngFARvj

— notoriously irritable 🌹 (@manda_writes) January 18, 2020

And while the internet came to Tori’s defense, President Trump’s favorite meme maker – Carpe Donktum – set up a GoFundMe to send ‘#TargetTori on a vactation’ which has raised more than $23,000 as of this writing.

Tori was reached, and full control of the GoFundMe has been granted to her.

Winnie the shit?

Facebook said on Saturday it was trying to figure out how the name of China’s president-cum-dictator for lie, Xi Jinping, appeared as “Mr Shithole” in posts on its platform when translated into English from Burmese, apologizing for any offense caused and saying the problem had been fixed.

The “error” emerged on the second day of Xi Jinping’s visit to the Southeast Asian country, where Xi and state counselor Aung San Suu Kyi signed dozens of agreements covering massive Beijing-backed infrastructure plans.

A statement about the visit published on Suu Kyi’s official Facebook page was littered with references to “Mr Shithole” when translated to English, while a headline in local news journal the Irrawaddy appeared as “Dinner honors president shithole”.

Umm. Facebook seems to be translating “Xi Jinping” written in Burmese as “Mr Shithole”.

This is a post on Aung San Suu Kyi’s official page, recounting her meeting with him yesterday… h/t @felizysolo

”kingdom of Mr Shithole” pic.twitter.com/B4V2cYjPJw

— Poppy McPherson (@poppymcp) January 18, 2020

It was unclear how long the issue had lasted but Google’s translation function did not show the same error, prompting amused commentary on social media.

“Xi Jinping”

Google translate?
No problem. 👍

Facebook translate?
“Mr Shithole”

Keep your head down, Zuck. 😬 https://t.co/UVk7Li8SK2

— Rt Rev Sir Chris Pamplemousse Esq. 🇪🇺 #FBPE🕷 (@ChrisMousse3) January 18, 2020

In a statement, Facebook said that “we have fixed an issue regarding Burmese to English translations on Facebook and are working to identify the cause to ensure that it doesn’t happen again,”

This issue is not a reflection of the way our products should work and we sincerely apologize for the offence this has caused,” Facebook added and it had plenty of reasons to be concerned: China is Facebook’s biggest country for revenue after the US and the company is setting up a new engineering team to focus specifically on the lucrative advertising business there, Reuters reported last week.

“We are aware of an issue regarding Burmese to English translations on Facebook, and we’re doing everything we can to fix this as quickly as possible,” a spokesperson said in a statement.

“This issue is not a reflection of the way our products should work and we sincerely apologize for the offense this has caused.”

This is not the first time Facebook has faced problems with translation from Burmese. In 2018 it temporarily removed the function after a Reuters report showed the tool was producing bizarre results. An investigation documented how the company was failing in its efforts to combat vitriolic Burmese language posts about Myanmar’s Rohingya Muslims, some 730,000 of whom fled a military crackdown in 2017 that the United Nations has said was conducted with “genocidal intent”.

It also showed the translation feature was flawed, citing an anti-Rohingya post advocating killing Muslims that was translated into English as “I shouldn’t have a rainbow in Myanmar.”

Adding more to the ever evolving rationale for the Jan.3 Qassem Soleimani killing which has brought the Middle East to the brink of a new major war, President Trump told Republic donors Friday night that the IRGC Quds force chief was “saying bad things” about the U.S. before his death.  

High-dollar donors were gathered for a fundraiser at Trump’s Mar-a-Lago estate, where Trump offered a play-by-play of sorts surrounding the decision-making behind the admittedly bold and risky move to strike the elite Iranian military leader via drone as he passed through Baghdad’s international airport. Soleimani was “saying bad things about our country” prior to the US taking action, Trump described of his decision. 

“How much of this shit do we have to listen to?” Trump was quoted as saying in audio of the event obtained by CNN. “How much are we going to listen to?” The president continued, suggesting that Soleimani’s anti-American invectives were ultimately a convincing enough reason to sway Trump toward issuing the final order. 

Trump further admitted the killing “shook up the world” given that from the perspective of Iran and its allies “He was supposed to be invincible”. 

However, like with prior official statements surrounding the controversial military operation, which subsequently triggered a move in Iraqi parliament to boot American forces from the country, no specific evidence was offered that Soleimani was an “imminent” threat to US national security in the region. Previously contradictory statements have come out of the administration saying US embassies in the region were under threat of bombing. 

Describing that the drone strike took out “two for the price of one” — in reference to slain Iraqi Shia paramilitary commander Abu Mahdi al-Mohandes, who had been at the airport to greet Soleimani, Trump gave a more detailed accounting than ever before of proceedings in the ‘situation room’ (which had been set up at Mar-a-Lago) that night.

According to CNN’s summary of the new details recounted in the speech:

He went on to recount listening to military officials as they watched the strike from “cameras that are miles in the sky.”

“They’re together sir,” Trump recalled the military officials saying. “Sir, they have two minutes and 11 seconds. No emotion. ‘2 minutes and 11 seconds to live, sir. They’re in the car, they’re in an armored vehicle. Sir, they have approximately one minute to live, sir. 30 seconds. 10, 9, 8 …’ “

“Then all of a sudden, boom,” he went on. “‘They’re gone, sir. Cutting off.’ “

“I said, where is this guy?” Trump continued. “That was the last I heard from him.”

During these latest remarks Trump spoke of Soleimani as a “noted terrorist” who “was down on our list” and “was supposed to be in his country” before he landed in Iraq that fateful night. 

However, during the night of boasting the president predictably avoided the question of what’s next in terms of US relations with its uneasy Middle East ally. Washington now finds itself in the awkward and increasingly precarious situation of being at the center of popular Iraqi anger and wrath, while also wanting to ‘stay the course’ in the country to “curtail Iran”.

It goes without saying the Soleimani killing has set off a chain of events which are entirely unpredictable and possibly disastrous for Americans in the region, which could lead to a another significant military conflict and quagmire in the region.

As the market is levitated by central bank liquidity to record high after record high despite stagnant fundamentals, one asset manager is quantifying the mass hypnosis and warns investors are in “grave danger.”

“Investors should keep in mind that market valuations stand nearly three times the historically run-of-the-mill valuation levels from which stocks have historically generated run-of-the-mill long-term returns,” says John Hussman, president of the Hussman Investment Trust, in his latest note to investors.

“In fact, the highest level of valuation ever observed at the end of any market cycle in history was in October 2002, and even that level is less than half of present valuation extremes.”

To Hussman, this indicates that there’s a wide disconnect between valuations and underlying fundamentals.

“This doesn’t mean that valuations have ‘stopped working,'” he said.

“It means that speculative psychology plays an important role over shorter segments of the market cycle, and that investors place themselves in grave danger if they assume, at points of extreme confidence, that valuations can be ignored.“

The business media is awash with asset-gatherers and commission-rakers arguing that low interest rates “justify” higher stock market valuations, but as Hussman explains

“…that’s really equivalent to saying that ‘low prospective returns in the bond market justify low prospective returns in the stock market‘… Emphatically, nothing about that argument changes the fact that elevated stock market valuations imply lower future investment returns. We also have to ask how much of a valuation premium is actually ‘justified’ by low interest rates.”

Adding that…

“It’s there that investors have inadvertently created a world of future pain for themselves.”

So just how much pain?

“The risks that investors face don’t care whether their investment horizon is 10 years, or 12 years, or 20 years,” he said. “The problem is that at present valuation extremes, passive investors are locking in dismal future return prospects regardless of their investment horizon.”

And so how do we get back to historically run-of-the-mill valuation norms?

The answer is simple:

“Wait nearly 30 years, allowing both the U.S. economy and U.S. corporate revenues to grow at the same rate as the past two decades, while stock prices remain unchanged, with no intervening periods of recession or investor risk-aversion, or alternatively (and far more likely), watch the S&P 500 lose two-thirds of its value over the completion of this market cycle.”

Couldn’t happen? Ask the Japanese…

Buy… and wait passively.

Presently, Hussman estimates that S&P 500 total returns will fall short of Treasury bond returns by about 2.5% annually over the coming 12-year period, which is equivalent to saying that we estimate negative total returns for the S&P 500 itself over that horizon.

Future generations, Hussman argues, seeing the collapse of this bubble in hindsight, will marvel that today’s speculative extremes were ever possible; that they were ever invited and embraced by investors.

They will look back on the entire episode, just as we look at the aftermath 1929, and 2000, and 2007, shaking their heads at the utter madness of it all.

“What QE actually did was to amplify yield-seeking speculation: in the attempt of each successive holder to get rid of their zero-interest hot potatoes, the valuations of stocks and bonds were progressively bid up until everything – all of it – is now priced at levels that promise near-zero future long-term returns. That’s exactly where we are today.”

Finally, Hussman concludes, one thing is clear: the Federal Reserve seems to have little grasp of the non-linearities involved in managing such a deranged balance sheet.