The US And Iran Are Furiously Trolling Each Other On The Chinese Internet
It looks the US and Iran are on the verge of an all-out meme war.
Over the past few days, as the aftermath of the killing of Iranian General Qasem Suileimani has faded from the headlines, the US and Iran have moved their feuding to a different, and extremely unexpected, venue: The Chinese Internet.
According to the New York Times, the Weibo accounts for the Iranian and American embassies in Beijing have been trading barbs on Weibo, a Chinese-language social-media site that’s often compared to the Chinese version of twitter.
The two sides have accused each other of inciting terrorism, and denounced one another as corrupt. The US embassy has accused Iran of “leaving bloodstains everywhere.” The Iranian embassy has denounced Suleimani’s killing and vowed to seek the end of “America’s evil forces in western Asia.”
The Iranian embassy has also been taking screenshots of tweets from its Foreign Minister Javad Zarif, and reposting them on Weibo with Chinese translations.
Most major western Internet platforms, including Google, FB and Twitter, are blocked from the Chinese Internet (though some can get around this using a VPN).
Typically, China’s censors block political content on the Internet for fear of allowing any information that might undermine the Communist Party from slipping through. But for whatever reason, they have so far been inclined to allow the US and Iran to go at it in full view of the Chinese public.
Instead, Chinese media have closely followed the spat, even going so far as to describe Weibo as “the new battlefield” between the US and Iran. The hashtag “Weibo fight” had been viewed nearly 2 million times as of Thursday.
Meanwhile, in the US, some social media companies, including Facebook, are removing posts and even entire accounts run by Iranians (who have access to Instagram), because of their pro-Iran content.
IRGC affiliated Tasnim News Agency (@Tasnimnews_Fa) has its Instagram profile removed following Soleimani’s assassination. Unclear if because of Soleimani’s terrorist designation and their coverage of him. Semi-official @FarsNews_Agency remains live, with commemorative posts. pic.twitter.com/nboZk1bLTu
Journalist in Iran reports @instagram posts removed: 1st of a Quronic verse commemorating martyrs, & 2nd a photo of Soleimani. Would be good to hear what @instagram‘s decisions are on these moderation policies. Soleimani content still persists on Instagram despite these removals pic.twitter.com/rhM5KXi5Db
So, the US and Iran are having a debate on the Chinese Internet that Facebook and its fellow Silicon Valley titans have banned from the American Internet. Isn’t it ironic?
The Iranian regime and the Saudi Arabian regime are longtime enemies, with both vying for control of the Persian Gulf region. Part of the conflict stems from religious differences – differences between Shia and Sunni muslim groups. But much of the conflict stems from mundane desires to establish regional dominance.
For more than forty years, however, Saudi Arabia has had one important ace in the hole in terms of its battle with Iran: the US’s continued support for the Saudi regime.
But why should the US continue to so robustly support this dictatorial regime? Certainly, these close relations can’t be due to any American support for democracy and human rights. The Saudi regime is one of the world’s most illiberal and anti-democratic regimes. Its ruling class has repeatedly been connected to Islamist terrorist groups, with Foreign Policy magazine last year calling Saudi Arabia “the beating heart of Wahhabism — the harsh, absolutist religious creed that helped seed the worldviews of al Qaeda and the Islamic State.”
Saudis Behind the Petrodollar
The answer lies in the fact the Saudi state is at the center of US efforts to maintain the dollar as the world’s reserve currency, and to ensure global demand for US debt. The origins of this system go back decades.
By 1974, the US dollar was in a precarious position. In 1971, thanks to profligate spending on both war and domestic welfare programs, the US could no longer maintain a set global price for gold in line with the Bretton Woods system established in 1944. The value of the dollar in relation to gold fell as the supply of dollars increased as a byproduct of growing deficit spending. Foreign governments and investors began to lose faith in the dollar, and both Switzerland and France demanded gold in exchange for dollars as stipulated by Bretton Woods. If this continued, though, US gold holdings would soon be depleted. Moreover, the dollar was losing value against other currencies. In May of 1971, Germany left the Bretton Woods system and the dollar fell against the Deustsche Mark.
In response to these developments, Nixon announced the US would abandon the Bretton Woods system. The dollar began to float against other currencies.
Not surprisingly, devaluing the dollar did not restore confidence in the dollar. Moreover, the US had made no effort to rein in deficit spending. So the US needed to continue to find ways to sell government debt without driving up interest rates. That is, the US needed more buyers for its debt. Motivation for a fix grew even more after 1973 when the first oil shock further exacerbated the deficit-fueled price inflation Americans were enduring.
But by 1974, the enormous flood of dollars from the US into top-oil-exporter Saudi Arabia suggested a solution.
That year, Nixon sent new US Treasury Secretary William Simon to Saudi Arabia with a mission. As recounted by Andrea Wong at Bloomberg the goal was to
neutralize crude oil as an economic weapon [against the US] and find a way to persuade a hostile kingdom to finance America’s widening deficit with its newfound petrodollar wealth. …
The basic framework was strikingly simple. The U.S. would buy oil from Saudi Arabia and provide the kingdom military aid and equipment. In return, the Saudis would plow billions of their petrodollar revenue back into Treasuries and finance America’s spending.
From a public finance point of view, this appeared to be win-win. The Saudis would receive protection from geopolitical enemies, and the US would get a new place to unload large amounts of government debt. Moreover, the Saudis could park their dollars in relatively safe and reliable investments in the United States. This became known as “petrodollar recycling.” By spending on oil, the US — and other oil importers, who were now required to use dollars — was creating new demand for US debt and US dollars.
This dollar agreement wasn’t limited to Saudi Arabia either. Since Saudi Arabia dominated the Organization of the Petroleum Exporting Countries (OPEC), the dollar deal was extended to OPEC overall which meant the dollar became the preferred currency for oil purchases worldwide.
This scheme assured the dollar’s place as a currency of immense global importance. This was especially important during the 1970s and early 1980s. After all, up until the early 1980s, OPEC enjoyed 50-percent market share in the oil trade. Thanks to the second oil shock, however, much of the world began searching for a wide variety of ways to decrease dependency on oil. By the mid 1980s, OPEC’s share had decreased to less than one-third.
Today, Saudi Arabia ranks behind both Russia and the United States in terms of oil production. As of 2019, OPEC’s share remains around 30 percent. This has lessened the role of the petrodollar compared to the heady days of the 1970s. But the importance of the petrodollar is certainly not destroyed.
We can see the ongoing importance of the petrodollar in US foreign policy which had continued to antagonize and threaten any major oil-exporting state that moves toward ending its reliance on dollars.
As noted by Matthew Hatfield in the Harvard Political Review, it is not likely a mere coincidence that especially belligerent US foreign policy has been applied to the Iraqi, Libyan, and Iranian regimes. Hatfield writes :
In 2000, Saddam Hussein, then-president of Iraq, announced that Iraq was moving to sell its oil in euros instead of dollars.
Following 9/11, the United States invaded Iraq, deposed Saddam Hussein, and converted Iraqi oil sales back to the U.S. dollar.
This exact pattern was repeated with Muammar Gaddafi when he attempted to create a unified African currency backed by Libyan gold reserves to to sell African oil . Shortly after his announcement, rebels armed by the US government and allies overthrew the dictator and his regime. After his death, the idea that African oil would be sold on something other than the dollar quickly died out.
Other regimes that have called for abandoning the petrodollar include Iran and Venezuela. The US has called for regime change in both these countries.
Oil Exporters Control US Assets
Threats can be leveled in both directions, however. Last year, for example, Saudi Arabia threatened “to sell its oil in currencies other than the dollar” if Washington “passes a bill exposing OPEC members to U.S. antitrust lawsuits.” That is, the Saudi regime is aware that it has at least some leverage with the US because of the Saudi position at the center of the petrodollar system.
Saudi Arabia is one of few states that can even feign to call the US’s bluff on matters such as these. As has been made abundantly clear by US policy in recent decades, the US is more than willing to invade foreign countries that run afoul of the petrodollar system.
In the case of Saudi Arabia, however, the Kingdom’s position as an Iran antagonist — and as the world’s third-largest oil exporter — means the US is likely to avoid unnecessary conflict.
Moreover, it is likely that Saudi holdings of US debt and other assets are significant. When the Saudis make threats, this implicitly also “include[s] liquidating the kingdom’s holdings in the United States.” As Bloomberg reported, Saudi Arabia has also “warned it would start selling as much as $750 billion in Treasuries and other assets if Congress passes a bill allowing the kingdom to be held liable in U.S. courts for the Sept. 11 terrorist attacks.”
We often hear about how China and Japan hold a lot of US debt, and therefore hold some leverage over the US because of this. (The problem here is that were foreigners to dump US assets, they would drop in price. If US debt drops in price, then the the debt must increase in yield, which means the US must then pay more interest on its debt.) But there is good reason to believe Saudi Arabia is a major holder as well. It is difficult, however, to keep track of how large these holdings are because the Saudi regime has worked closely with the US regime to keep Saudi purchases of American assets secret. When the Treasury reports on foreign holders of US debt, Saudi Arabia is folded in with several other nations to hide the precise nature of Saudi purchases. Nevertheless, as Wong contends, the Saudi regime is “one of America’s largest foreign creditors.”
The Problem Grows as US Debt Grows
All else being equal, the US should be growing less dependent on foreign holders of debt. This should especially be true of Saudi and OPEC-held debt since the global role of OPEC and the Saudis have been diminishing in terms of global share.
But all else isn’t equal and the US has been piling on ever larger amounts of debt in recent years. In 2019, for example, the annual deficit topped one trillion. In a past, less profligate age, this sort of debt creation would be reserved only for wartime or a period of economic depression. Today, however, this immense growth in debt levels makes the US regime more sensitive to changes in demand for US debt, and this has made the US regime ever more reliant on foreign demand for both US debt and for US dollars. That is, in order to avoid a crisis, the US must ensure that interest rates remain low, and that foreigners want to acquire both US dollars and US debt.
Were petrodollars and petrodollar recycling to disappear, this would have a two-fold effect on US government finances: a sizable decline in petrodollar recycling would put significant upward pressure on interest rates. The result would be a budget crisis for the US government as it had to devote ever larger amounts of the federal budget to payments on the debt. (The other option would be to have the US’s central bank monetize the debt by purchasing ever-larger amounts of US debt to make up for a lack of foreign demand. This would lead to growing price inflation.)
Moreover, if participants began to exit the petrodollar system (and, say, sell oil in euros instead) demand for dollars would drop, exacerbating any scenarios in which the central bank is monetizing the debt. This would also generally contribute to greater price inflation as fewer dollars are sucked out of the US by foreign holders.
The result could be ongoing declines in government spending on services, and growing price inflation. The US regime’s ability to finance its debt would decline significantly, and the US would need to pull back on military commitments, pensions, and more. Either that, or keep spending at the same rate and face an inflationary spiral.
China’s Mobile Phone Shipments Plunge 6.2% In 2019
The Chinese economy continues to slow with new data via the China Academy of Information and Communications Technology (CAICT) that shows the country’s mobile phone market suffered its worst month in nearly one year as phone shipments plunged 14.7% in December, contributing to a full-year 6.2% decline, reported Xinhua News Agency.
Full-year phone shipments totaled 389 million, with at least 90% were from domestic brands including Huawei, Oppo, Vivo, and Xiaomi, according to CAICT.
Shipments of domestic brands dropped 17.4% Y/Y in December. Apple bucked the trend in China last month, recorded an 18% increase.
Apple shipped 3.2 million iPhones in China in December, CAICT said, adding that it was up from 2.7 million a year earlier.
Chinese sales of iPhones peaked in 2015 due to longer upgrade cycles and increased domestic competition.
In 3Q19, Huawei controlled 42% of all new phone shipments in China, according to research firm IDC.
Despite a continued slowdown in the overall phone industry, 5G phone shipments continued to increase, accounting for 17% of all phones shipped last month.
Sluggish phone shipments in China is another warning that the global economy is stuck in a low growth period.
From this afternoon’s decision by U.S. District Court Judge Michael P. Shea in Mucaj v. Univ. of Connecticut (see this post for the facts and for the plaintiffs’ substantive argument, which the court did not have to fully resolve):
“[D]istrict courts may grant a preliminary injunction where a plaintiff demonstrates irreparable harm and meets either of two standards: ‘(a) a likelihood of success on the merits, or (b) sufficiently serious questions going to the merits to make them a fair ground for litigation, and a balance of hardships tipping decidedly in the movant’s favor.'” …
Based on the facts alleged in the complaint, the Plaintiffs’ affidavits, and the documents submitted in support of the motion, the Plaintiffs have demonstrated that they will suffer irreparable harm should the disciplinary hearing proceed, specifically, from the chilling effect on speech and from the potential disciplinary sanction of the loss of their campus housing. The email from UCONN’s general counsel to Plaintiffs’ counsel also makes clear that the harm is imminent, because it states that any sanctions imposed at the conclusion of or following the hearing will be effective immediately and will not be stayed if Plaintiffs appeal the hearing officers’ decision….
The plaintiffs allege that they are being disciplined solely because of their First Amendment protected speech. On the record before the Court, the movants have demonstrated “sufficiently serious questions going to the merits to make them a fair ground for litigation.”
In addition, the Plaintiffs have demonstrated that the balance of hardships tips “decidedly” in their favor should injunctive relief be denied. Any hardship the University defendants might suffer by postponing the hearing until after a preliminary injunction hearing is held is clearly outweighed by the injuries the Plaintiffs will sustain, including the loss of their housing, if injunctive relief is not granted….
Finally, the requested injunctive relief is in the public interest. “[S]ecuring First Amendment rights is in the public interest.”
Accordingly, it is HEREBY ORDERED that the defendants, their officers, agents, servants, employees, attorneys, and any other persons who are in active concert or participation with them, are ENJOINED from conducting the Plaintiffs’ disciplinary hearing scheduled for January 17, 2020, and are further ENJOINED from imposing any disciplinary sanctions against the Plaintiffs stemming from the October 11, 2019 incident including, without limitation, termination of the Plaintiffs’ campus housing, until the Court rules on the Plaintiffs’ alternative motion for preliminary injunction following a hearing scheduled for January 28, 2020….
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From this afternoon’s decision by U.S. District Court Judge Michael P. Shea in Mucaj v. Univ. of Connecticut (see this post for the facts and for the plaintiffs’ substantive argument, which the court did not have to fully resolve):
“[D]istrict courts may grant a preliminary injunction where a plaintiff demonstrates irreparable harm and meets either of two standards: ‘(a) a likelihood of success on the merits, or (b) sufficiently serious questions going to the merits to make them a fair ground for litigation, and a balance of hardships tipping decidedly in the movant’s favor.'” …
Based on the facts alleged in the complaint, the Plaintiffs’ affidavits, and the documents submitted in support of the motion, the Plaintiffs have demonstrated that they will suffer irreparable harm should the disciplinary hearing proceed, specifically, from the chilling effect on speech and from the potential disciplinary sanction of the loss of their campus housing. The email from UCONN’s general counsel to Plaintiffs’ counsel also makes clear that the harm is imminent, because it states that any sanctions imposed at the conclusion of or following the hearing will be effective immediately and will not be stayed if Plaintiffs appeal the hearing officers’ decision….
The plaintiffs allege that they are being disciplined solely because of their First Amendment protected speech. On the record before the Court, the movants have demonstrated “sufficiently serious questions going to the merits to make them a fair ground for litigation.”
In addition, the Plaintiffs have demonstrated that the balance of hardships tips “decidedly” in their favor should injunctive relief be denied. Any hardship the University defendants might suffer by postponing the hearing until after a preliminary injunction hearing is held is clearly outweighed by the injuries the Plaintiffs will sustain, including the loss of their housing, if injunctive relief is not granted….
Finally, the requested injunctive relief is in the public interest. “[S]ecuring First Amendment rights is in the public interest.”
Accordingly, it is HEREBY ORDERED that the defendants, their officers, agents, servants, employees, attorneys, and any other persons who are in active concert or participation with them, are ENJOINED from conducting the Plaintiffs’ disciplinary hearing scheduled for January 17, 2020, and are further ENJOINED from imposing any disciplinary sanctions against the Plaintiffs stemming from the October 11, 2019 incident including, without limitation, termination of the Plaintiffs’ campus housing, until the Court rules on the Plaintiffs’ alternative motion for preliminary injunction following a hearing scheduled for January 28, 2020….
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This story represents the ubiquity of blaming climate change as a means of avoiding responsibility for the failings of civil society. It is interesting that even wealthy countries like South Africa suffer the same problems – albeit on a lesser scale – as seen in poor and developing countries. Money cannot obviate the damage caused by lack of governmental foresight and lack of continuing infrastructure investment. I grew up in Southern California, living through periods of drought and periods of seemingly endless rains that washed homes and whole mountainsides into the sea. For those with interest, the movie-classic “Chinatown” tells some of the story.
* * *
Water tankers ply the city streets bringing essential supplies of fresh potable water to thirsty neighborhoods.
“For city authorities that are already struggling to maintain the current supply as climate change strikes, let alone source additional water, tankers can seem like a safety net they feel powerless to resist.’’
So Peter Schwartzstein writes in a feature piece in the New York Times titled “The Merchants of Thirst” in the 11 January 2020 online edition.
The Times’ article is about a real and important issue: the inability of many cities in developing countries — and sometimes well developed countries, such as South Africa — to provide adequate clean, safe and drinkable fresh water to homes and businesses, even in their larger cities.
To fill the gap, fleets of water tankers (as pictured in the featured image) roam the streets of these cities, delivering much needed water to homes and businesses, filling everything from large 100 gallon tanks to 5-gallon jerry cans and even 1-gallon jugs. Of course, in most cases, the tankers are selling this water to desperate customers.
I can confirm from personal experience in Puerto Rico, the Virgin Islands and the Dominican Republic that this is a real and ongoing problem. It is more often the poor that end up paying the sometimes exorbitant prices demanded by the tankers — they have no choice when water ceases to come out of the pipes. Note that the wealthier neighborhoods are less commonly under-served by the municipal water supply — and when they are cut off — they have standby water tanks pre-filled and fitted with electric water pumps to ensure that water continues to flow when the faucet is turned on. High-rise apartment complexes sell themselves on their ability to supply 24/7 electric power utilizing on-site dedicated diesel generators and 24/7 water supply — from on-site multi-thousand gallon cisterns buried beneath the building.
Every country I have visited, with the exception of those in Europe, uses water tankers for some purposes. Even where I live in Upstate New York, there are water tankers that fill swimming pools in the spring and dump water down dry wells in the late summer.
Many of us may not realize that when there is no water flowing out of the pipes it means: No showers, no baths, limited cooking, no dish washing, no clothes washing, no toilet flushing.
[In the Dominican Republic, it was common practice for homes to have a 50-gallon drum in the bathroom — which would be kept full with a hose from the sink or shower — next to the toilet. A gallon-sized water scoop made from a used bleach bottle could then be used to flush the toilet even when the water pipes ran dry.]
Apparently in keeping with the NY Times’ editorial narrative for climate change — which seems to require that every story on an ever-longer list of topics blame climate change for any and all negative circumstances — the problems related to Water Tankers in various places is hinted to have something to do with Climate Change, which is claimed to be adversely affecting the water supply in these places. However, it is in fact almost totally unrelated, even where there are real, physical problems such as drought.
In one word: Infrastructure
The real-world problem is infrastructure — inadequate, often antiquated, infrastructure. That is both not enough infrastructure and failing infrastructure.
To deliver fresh potable water to homes and businesses, these cities must have a whole list of major items; as illustrated in this diagram of Oahu, Hawaii’s water system:
1. Sources of water — dependable rivers, reservoirs, aqueducts and water treatment facilities to sanitize the public water supply.
2. A water distribution system — once the water is treated, it must be distributed throughout the city — down every street to every home, apartment building and business. This distribution system has valves and booster pumps and supply mains and distribution pipes of adequate size to meet the demand of customers.
3. In many cases in poorer countries, public water fountains and faucets need to be supplied for those neighborhoods not served with water piped directly into individual homes.
Schwarzstein reports;
“But no matter how hard the [tanker truck] crews worked or how furiously they pushed their lumbering vehicles over the potholed roads, there was no satisfying the city’s needs. The going was too slow. The water shortage too severe.’
The fake news is right there. It is the sentence “The water shortage too severe.”
What water shortage?
There was no water shortage — not in Kathmandu. There was a water delivery problem — a water infrastructure problem — Schwartzstein reports it — right after the false information. The whole article starts with the truth “It had been 11 days since a ruptured valve reduced Kupondole district’s pipeline flow to a dribble,…” — a valve in the water supply main had ruptured leaving the neighborhood without water. He goes on later: “By the time the pipeline was fully restored, some households had subsisted on nothing but small jerrycans for almost an entire month.”
There is nothing in the entire article about an actual water shortage in Kathmandu — yet the Times’ author repeats three times that the problem is water shortages and climate change. He cites problems in Chennai, Indian and in Cape Town, South Africa.
They have had problems in Chennai, India, which has traditionally depended on the Indian monsoons to supply water but where the reservoirs have been allowed to silt up reducing their capacity while the population of the city of Chennai has grown out of control — without any additional investment in water infrastructure — no new reservoirs.
“The Cape Town crisis stems from a combination of poor planning, three years of drought and spectacularly bad crisis management. The city’s outdated water infrastructure has long struggled to keep up with the burgeoning population. As dam levels began to decline amid the first two years of drought, the default response by city leadership was a series of vague exhortations to be “water aware.”
Not enough water or too many people?
Both, actually. Chennai, India had a population of 4 million in the year 2000. Today there are almost 11 million. [World Population Review reports 10,971,108] — nearly a three-fold increase in twenty years. In 2001, Kathmandu had a population of 671,846, today it is just under 1.5 million — more than doubled. Cape Town population in 2001; 2,900,000; in 2020 4,617,560 — adding one and a half million additional people, plus businesses and agriculture.
Rich or poor, localities cannot expect to meet the water needs of today with the infrastructure of the past century.
We see these recurring factors: There are too many people in an area without dependably sufficient natural fresh water supplies — in Chennai and Cape Town — both in naturally dry areas which are prone to drought. We see burgeoning populations without commensurate increases in water supply infrastructure and, in many cases, without adequate maintenance of existing, already inadequate, infrastructure — particularly in Kathmandu. The island of Phuket, Thailand, dependent on monsoonal rains, had water problems last year — with the same factors — skyrocketing population and inadequate water supply infrastructure. In each case, we see poor government — poor planning — poor crisis management.
And we see weather — good weather, bad weather, too dry weather, too wet weather. And we see slowly changing, ever changing climatic patterns with broad changes in atmospheric and oceanic circulations — and the coming and going of El Niños and La Niñas.
To deal with ever changing weather, and slowly changing climate, requires good government and adequate national wealth, well spent, to prepare first for the present, and then for the inevitable but unpredictable possible futures. All three of the localities covered in the Times have not even properly planned for the present — not kept water supply infrastructure up to the task of keeping up with population growth and local water needs of agriculture and business — not even in fully modern Cape Town. India, Nepal and Thailand are in far worse situations — broken and inadequate infrastructure, planning decades behind the needs of times, governments without sufficient funds to make needed corrections and additions.
Politicians fall back on blaming Climate Change — something they can’t be expected to be held responsible for — for their own shortcomings and failures. The international community is equally happy to blame Climate Change for the misery of local peoples left without basic cheap clean safe water supplies — blaming climate, the universal scapegoat, rather than supplying humanitarian aid to help where it is really needed.
The international community needs to focus more of its humanitarian aid effort on the real and pressing problems of water supply in developing nations — a pragmatic approach that will be a win-win regardless of the vagaries of climate.
Without any need to invoke Climate Change, Cape Town’s narrow escape should inform the megalopolises of the American Southwest (in particular Southern California but including such cities as Phoenix, Arizona and Las Vegas, Nevada) of their imminent and possibly unavoidable danger — they share a common Mediterranean climate and are historically subject to droughts and mega-droughts. Both have out-of-control population growth and tourism growth as well as heavy demands of agriculture on water supplies. The American Southwest and especially Southern California are just one extended drought away from a massive water crisis.
US To Start Issuing New 20-Year Bond In First Half Of 2020 To Fund Soaring Deficit
After more than three years of careful consideration whether to issue 50 or 100 year bonds to take advantage of record low yields and an unprecedented scramble for duration, late on Thursday the Treasury announced the outcome of that process when it unveiled plans to issue… 20 year bonds.
As we have periodically reported over the past several years, the Treasury had explored a range of potential new debt products, including 20-year, 50-year, and 100-year bonds, as well as floating-rate notes linked to the Secured Overnight Financing Rate—all with the goal of expanding borrowing capacity to finance the soaring federal deficit at the lowest possible cost. The decision to pick 20 year bonds is not surprising in light of persistent pushback by the Primary Dealer community against longer durations. Furthermore, the fact that the Treasury previously issued 20 Year bonds means it is familiar with the mechanics and market demands (the Treasury discontinued the issuance of 20Y bonds in 1986).
As part of its consideration of new products, Treasury gathered feedback on these potential products from a large and diverse set of market participants. Curiously, while choosing to ignore 50 and 100-year bonds, despite the tremendous demand these issues have seen across Europe (if not so much Argentina)…
… the Treasury believes that there will be strong demand from investors for a 20-year bond, which will increase Treasury’s financing capacity over the long term.
“The Treasury Department appreciates the input of market participants, including the Treasury Borrowing Advisory Committee and primary dealers, for their contributions to Treasury’s decision to launch a 20-year bond,” said Treasury Secretary Steven T. Mnuchin. “We seek to finance the government at the least possible cost to taxpayers over time, and we will continue to evaluate other potential new products to meet that goal.”
The announcement of the 20Y bond will probably not come as a surprise: in its August presentation to the Treasury, the TBAC stated that “market participants do not expect meaningful ultra-long supply.”
And while the TBAC was pessimistic about demand for 50 Year paper, it explicitly recommended against issuing a 100-year bond due to “limited pension or insurance cash flows beyond 50-years and the preferable attributes of stripped 30-year bonds to meet a similar duration as a 100-year coupon bond.”
Hence, we get 20 year bonds.
In its notice, the Treasury said that “consistent with Treasury’s longstanding issuance practice, Treasury plans to issue this product in a regular and predictable manner in benchmark size. Additional information regarding the launch of the 20-year bond will be provided in Treasury’s quarterly refunding statement on Wednesday, February 5, 2020.”
Institutional investors have been demanding more longer-dated, risk-free securities that offer some nominal yield, amid a global total of $11 trillion of debt with negative rates. As Bloomberg notes, Japan recently announced that it will sell more 20-year bonds in 2020, responding to such calls.
The new U.S. 20-year security is set to offer a notable premium over comparable notes abroad, presuming it slots somewhere between 10-year and 30-year yields, currently at about 1.81% and 2.26%. Japanese 20-year bonds yield about 0.32% and German ones just 0.07%.
“The 20-year bond fits more easily into the existing market structure because it’s likely to be an attractive trading instrument with the markets because it lines up with existing with other cash market instruments,” Wrightson ICAP LLC chief economist Lou Crandall told Bloomberg.
“This is a way of taking advantage of long-term interest rates that are low by historical standards without introducing a wild-card such as an ultra-long bond, which would have had more growing pains.”
At President Donald Trump’s request, Mnuchin in August launched his second review since he took office into ultra-long bonds. Trump has said repeatedly that the U.S. should seek to take advantage of historically low interest rates. Issuing extremely long-term debt would limit the cost to taxpayers of plugging a budget deficit that is set to surpass $1 trillion annually in 2020. As a result, pension funds would enjoy a few extra points of returns amid falling yields.
Persistently low interest rates have given the Treasury a reason to revisit a proposal it has shelved in the past. Some observers see a window for the U.S. to issue extremely long-term debt instruments, even though the idea has been met with a cool reception on Wall Street. Mnuchin examined the issue when he took office in 2017, but put the idea to rest following a review with the Treasury Borrowing Advisory Committee, or TBAC. This time around he decided to give in to the market’s demands especially since the US deficit is about to go exponential.
‘Boys Could Have Fun With You’: Michigan Lawmaker Under Fire For ‘Humiliating’ 22-Year-Old Reporter
Michigan state legislator Peter J. Lucido (R) has come under fire after telling a reporter she should “hang around” with a group of around 309 teenage boys on a field trip to the state’s Senate chamber, because they could “have a lot of fun with you.”
The boys were from Lucido’s alma mater, De La Salle Collegiate – an all boys’ Catholic high school in Warren.
22-year-old Allison Donahue, a journalist for the Michigan Advance, wrote in a Wednesday report that she was waiting outside the Senate chamber to ask Lucido about an allegation that he belongs to a ‘violent’ Facebook group opposing Democratic Governor Gretchen Whitmer.
As I turned to walk away, he asked, “You’ve heard of De La Salle, right?”
I told him I hadn’t.
“It’s an all boys’ school,” he told me.
“You should hang around! You could have a lot of fun with these boys, or they could have a lot of fun with you.”
The teenagers burst into an Old Boys’ Network-type of laughter, and I walked away knowing that I had been the punchline of their “locker room” talk.
Except it wasn’t the locker room; it was the Senate chamber. And this isn’t high school. It’s my career. –Allison Donahue
“What was meant to be an opportunity for Lucido to respond to the report, turned into him making comments that objectified and humiliated me in front of a group of young boys,” wrote Donahue.
Following Donahue’s report, Lucido told the Detroit Free Press that his comments were “blown out of proportion,” and that he was “not talking about anything sexual,” but was simply “geeked up about the boys coming there” and “was there to have some fun.”
He also told WDIV that Donahue’s quote was “not accurate.”
“I said, ‘We’re going on the floor to have some fun. You’re welcome to join us.’ This thing about what she interpreted, sexually or otherwise, it’s unfortunate,” he said, adding “It really is. Truly unfortunate.”
Lucido later apologized on Twitter according to the New York Times.
I apologize for the misunderstanding yesterday and for offending Allison Donahue.
Donahue told the Times: “I have been asked a few times, do I want a better apology, and I think my biggest takeaway from this is, I have already called him out once about how to talk to women,” adding “I should not have to tell him how to fix the situation.”
Nathan Maus, the principal of De La Salle Collegiate, released a statement saying the comments “do not represent De La Salle nor the values and conduct we instill in our young men.”
“We are very sorry the reporter was put in this position and we have met with the boys who were on the tour to discuss the improper nature of this situation,” Mr. Maus said. –New York Times
Does anyone really believe America is still the land of the free?
Since 9/11, DHS, the FBI, the CIA, and countless other alphabet soup agencies have turned the United States into a public surveillance monstrosity.
In 19 years, one terrorist attack has done what no one else could have dreamed of: turn America’s freedoms into a distant memory.
Abusing citizen’s rights and privacy used to be the hallmark of dictatorships and police states like the CCCP or North Korea.
A recent study conducted by Comparitech, rated 50 countries from best to worst at protecting citizen’s biometric data.
The study found that America is one of the world’s worst abusers of citizen’s biometric privacy.
“While China topping the list perhaps doesn’t come as too much of a surprise, residents of (and travelers to) other countries may be surprised and concerned at the extent of biometric information that is being collected on them and what is happening to it afterward.”
This really should not come as a surprise, because last year Comparitech revealed that American and Chinese cities lead the world in spying on their citizens. Last week, I wrote an article explaining how 2019 would go down as the year that facial recognition and corporate surveillance became commonplace in America.
Comparitech’s recent study on biometric privacy compared how 50 countries collect and use data to identify innocent people:
Many countries collect travelers’ biometric data, often through visas or biometric checks at airports
Every country we studied is using biometrics for bank accounts, e.g. fingerprints to access online app data and/or to confirm identities within the banks themselves
Despite many countries recognizing biometric data as sensitive, increased biometric use is widely accepted
Facial recognition CCTV is being implemented in a large number of countries, or at least being tested
EU countries scored better overall than non-EU countries due to GDPR regulations protecting the use of biometrics in the workplace (to some extent)
The USA Is The 4th Worst Abuser Of Citizen’s Biometric Privacy
Comparitech warns, “these 5 countries show a concerning lack of regard for the privacy of people’s biometric data.” That’s right, the former “land of the free” has become the land of the surveilled and tracked.
How can that be you ask?
According to Comparitech, the United States scores highly in most areas due to:
Having biometrics in passports, ID cards, and bank accounts.
Having a biometric voting system (optical scan equipment used in a large number of states).
Not having a specific law to protect citizens’ biometrics. While there is a handful of state laws that protect state residents’ biometrics (as can be seen in our state privacy study), this does leave many US citizens’ biometrics exposed as there is no federal law in place.
Implementing the widespread use of facial recognition cameras with law enforcement pushing for further use in the identification of criminals. For example, the FBI and ICE have recently been criticized due to their use of facial recognition technology to scan drivers’ license photos without gaining the citizens’ consent beforehand. Equally, some city-level bans have been put in place with San Francisco (CA), Oakland (CA), Berkeley (CA), and Somerville (MA) banning government use of facial recognition technology.
The growing use of biometrics in the workplace. Many companies use employees’ biometrics for certain actions, e.g. using a fingerprint to gain access to a work computer. Again, some state laws offer a little more protection but this still leaves many employees’ biometrics exposed.
Fingerprints being required for most American visas and everyone’s fingerprints being collected upon entry to the country.
Curiously, Comparitech failed to elaborate on DHS’s national Real-ID program which forces everyone to provide biometric information to drive or fly in America. If they had included Real-ID in their study it is my opinion that America would be 2nd only to China in abusing citizen’s biometric privacy.
The other countries listed in the top ten worst abusers of citizens biometric privacy rights, India, South Africa, Brazil, Nigeria, and Argentina are all countries one might expect to be in or near the top but a neighbor to America’s north is also one of the worst, Canada.
As I mentioned earlier, the Western world has used 9/11 as an excuse to abuse citizen’s privacy rights and, sadly, Canada is no exception.
What does this study teach us?
That countries like Canada and the United States, once bastion’s of a free society, are now near mirror-images of surveillance states, like China, Malaysia, Pakistan, India, the Philippines and Taiwan is horrifying.
The Carnegie Endowment For Peace whitepaper titled, AI Global Surveillance (AIGS) Index warned, that AI surveillance is being used by 176 countries to track individuals.
“As the spread of AI surveillance continues unabated. Its use by repressive regimes to engineer crackdowns against targeted populations has already sounded alarm bells.”
And, hopefully, that is what you will take away from this story: our government increasingly uses biometrics and AI surveillance to track everyone.
Trump Nominates Chris Waller, Judy Shelton To Fill Fed Vacancies
President Trump intends to nominate Christopher Waller and Judy Shelton to fill the two vacant posts on the Federal Reserve Board of Governors, according to a White House memo released to the press Thursday evening.
Both have been rumored to be candidates for the two open seats, with rumors about Shelton’s candidacy inspiring an intense discussion over her reputation as a “gold bug” and opponent of liberal central bank monetary policies. In the past, she has advocated a return to the gold standard. She currently serves as the US director for the European Bank of Reconstruction and Development.
Waller is currently the head of research at the St. Louis Fed, and a much less controversial pick. He was purportedly approached by the administration about filling the seat back in June.
Trump’s picks to fill the vacancies on the Fed board have been enmeshed in controversy since last year, when Trump nominated Stephen Moore and Herman Cain to the fill the posts, only to withdraw them in the face of controversy.
Waller (left), Shelton (right)
Just yesterday, President Trump intimated during ad libbed remarks at his trade-deal press conference that he wishes he had nominated former Fed governor Kevin Warsh to lead the Fed instead of Jay Powell, whom Trump has mercilessly bashed for having the audacity to raise interest rates.
It’s possible that Trump following through with nominating Shelton – who was rumored to be a top pick for one of the empty Fed governor seats as early as last July – might spook markets, given her longtime opposition to the type of MMT-lite monetary policy that President Trump favors. Though we imagine Trump wouldn’t nominate her unless she swears to uphold his vision for monetary policy.
Both picks must still be confirmed by the Senate.
Then again, if the price action from today and yesterday is any guide, there’s almost nothing that can shake the market’s singular focus on trade-deal optimism.
