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Color us skeptical, alt-right, conspiracy-wonk, Putin-puppets; but the transparency and timing of tonight’s “bombshell” report from The New York Times of an ‘alleged’ hacking by ‘allegedly’ Russian hackers of Burisma – the Ukrainian energy firm that VP Biden’s crack-smoking, energy-ignorant son was paid $50,000 per month as a board member – reeks so strongly of foundational narrative-building for something “embarrassing” that is coming, it is stunning just how dumb the deep state must think the American public really is. Actually, maybe not all that stunning.

According to Area 1, the Silicon Valley security firm that detected the hacking, Russian hackers from a military intelligence unit known formerly as the G.R.U., and to private researchers by the alias “Fancy Bear,” used so-called phishing emails that appear designed to steal usernames and passwords, to gain access to Burisma’s network.

Full Area 1 Report here:

Oren Falkowitz, a co-founder of Area 1, and previously a hacker at the National Security Agency, proclaimed in the report that “the attacks were successful,” even though it is unknown what the alleged hackers were attempting to discover.

“The timing of the Russian campaign mirrors the G.R.U. hacks we saw in 2016 against the D.N.C. and John Podesta,” the Clinton campaign chairman, Mr. Falkowitz said.

“Once again, they are stealing email credentials, in what we can only assume is a repeat of Russian interference in the last election.”

As The Mercury News reported, over the summer, Area 1 persuaded the Federal Election Commission to allow it to provide low-cost services to political campaigns, which would typically be a violation of rules designed to prevent businesses from currying political favor.

Additionally, and coming as no surprise to many, Mr. Falkowitz is a significant donor to Democrats; and even more intriguing, the company’s CSO – Blacke Darche – also worked at the NSA and most notably, Crowdstrike.

While NYT admits it is not yet clear what the hackers found, or precisely what they were searching for, that did not stop them speculating, based on more anonymous sources.

The Times, citing an American security official, who spoke on the condition of anonymity to discuss sensitive intelligence, claiming – without any proof – that the Russian attacks on Burisma appear to be running parallel to an effort by Russian spies in Ukraine to dig up information in the analog world that could embarrass the Bidens. The spies, the official said, are trying to penetrate Burisma and working sources in the Ukrainian government in search of emails, financial records and legal documents.

So-called “experts” reportedly claim the timing and scale of the attacks suggest that the Russians could be searching for potentially embarrassing material on the Bidens – the same kind of information that Mr. Trump wanted from Ukraine when he pressed for an investigation of the Bidens and Burisma, setting off a chain of events that led to his farcical impeachment.

All sounds very sinister!

The New York Times, thoughtfully asks Andrew Bates, a spokesman for the Biden campaign, what his thoughts are on the entirely unfounded story. His response is unsurprising to say the least…

“Donald Trump tried to coerce Ukraine into lying about Joe Biden and a major bipartisan, international anti-corruption victory because he recognized that he can’t beat the vice president.”

“Now we know that Vladimir Putin also sees Joe Biden as a threat.”

“Any American president who had not repeatedly encouraged foreign interventions of this kind would immediately condemn this attack on the sovereignty of our elections.”

Oh we are sure Putin is terrified of Biden!?

And the icing on the cake from the New York Times reporters, to ensure the dumbfounded reader is completely clear on what just happened (without any shadow of a doubt)…

The Russian tactics are strikingly similar to what American intelligence agencies say was Russia’s hacking of emails from Hillary Clinton’s campaign chairman and the Democratic National Committee during the 2016 presidential campaign. In that case, once they had the emails, the Russians used trolls to spread and spin the material, and built an echo chamber to widen its effect.

Repeat a lie often enough and it becomes true?

So, what are the Democrats preparing for? Another round of embarrassing leaked emails – Wikigate 2.0? And this story is designed to plant the seed that anyone who releases any of the “hacked” emails – which may or may not expose crimes by the Bidens (or Pelosis) is a Russian agent and must be shunned, censored, and generally disavowed by any and all Western media.

Or, you could choose to believe that the Russians – who allegedly were so dumb last time as to make it obvious it was them doing the hacking – have done it again… following the same pattern, and getting caught in their “meddling”? Oh wait, they have answer for that ‘conspiracy theory’ – that Russian hackers are “lazy”…

“The Burisma hack is a cookie-cutter G.R.U. campaign,” Mr. Falkowitz said.

“Russian hackers, as sophisticated as they are, also tend to be lazy. They use what works. And in this, they were successful.”

Which is odd. Given how terrified every establishment type was at the thought of Iranians hacking America’s most sensitive infrastructure in the last week, one might think that well-trained Russian hackers would be a little more adept. But then again, anyone who chooses to not believe the NYT story hook, line, and sinker – is clearly a puppet of Putin.

Authored by David Stockman via InternationalMan.com,

International Man: You have sounded the alarm on a coming financial crisis of historic proportions. How do Trump’s trade policies figure into your view that a crisis is coming?

David Stockman: Trump’s trade policies only create more risk and rot down below.

They’re just kicking the can down the road. With this latest move by the Fed, they have cut the interest rates three times and short-term rates are back at 1.55%. They’re pumping their balance sheet back up—it’s up $300 billion just since September.

The Fed has reverted to all of the things that have created the underlying rot—and that means when finally things break loose, it’s going to be far worse than it would have otherwise been.

Given that they’re kicking the can down the road, they’re building the pressure in the system to really explosive levels.

The trade chaos that Trump’s creating is probably the catalyst that will bring down the whole house of cards.

At end of the day, it’s about the Red Ponzi. The world economy would be not nearly as good as it looks had the Chinese not been borrowing like there’s no tomorrow and building regardless of whether its efficient or profitable.

This has kept the global economy inching forward on a totally artificial basis. You could track it; some people call it the “China credit impulse.” Every time they get into trouble, they turn on the printing press. That causes commodity prices to rise and industrial activity and trade to pick up. It shows up in the GDP numbers, and then everybody gets all excited.

The fear of recession that we had a while back has now abated. We’re back to another global reflation meme, but none of this is sustainable.

And yet that’s what has happened about three times since 2011. Each time, we have to remember the rulers in Beijing are digging themselves deeper into the hole. They’ve got an economy now that they claim is worth $13 trillion of GDP, but it’s got $40 trillion of debt on it. That’s just bank debt! I’m not even talking about the other forms of debt, such as trade debt, bond debt, so on and so forth.

It’s like nothing we’ve ever seen before. People should be fearful that this tower of debt is visibly wavering, as China is getting clobbered by Trump’s trade war.

Recently, exports to the United States were down 23% from the prior year.

Nothing like this has happened in a decade or longer. China’s investment in fixed assets, which has kept their whole economy going, is slowly grinding to a halt. The leaders there are desperately trying to keep the whole Ponzi going. That’s the heart of the risk.

Yet Trump is going right at it because of his primitive view that everybody else cheats and we have to teach China a lesson.

The trade problem in the world is real, but it’s a consequence of bad money, not a consequence of bad trade policies, stupid people doing bad negotiations, or stupid presidents who didn’t know what they were doing.

It was the dumb central bankers who didn’t know what they were doing and that basically created a global financial system that won’t correct these huge imbalances in capital and trade flows. It’s leading to a point of unsustainability and eventual crisis.

Whether President Trump knows it or not, in the guise of pursuit of MAGA [Make America Great Again], he is shaking the Red Ponzi to the core, and I think it’s very fragile.

The whole global economy is really dependent on China piling even more debt onto the $40 trillion pile they already have. Trump’s trade war is basically an economic cruise missile barrage aimed right at that gargantuan pile of unsupportable debt.

Therefore, I think there are very troubling times ahead.

International Man: What developments do you expect in 2020 that could lead to a crisis?

David Stockman: They’re all interrelated. How many times does the stock market rally because there was some type of TV headline about a trade deal? In fact, there is one every other day.

It’s going to become damn clear that there’s no fundamental trade deal, just an unstable truce. It’s going to become apparent that there is an ongoing deep, destructive war, not just on trade, but on technology, the whole military-political spectrum that has been unleashed and exacerbated by Trump’s trade policies.

It has very negative implications for the future—economically and otherwise.

The so-called “phase one” deal doesn’t amount to a hill of beans.

The $50 billion of farm exports, for example, is a complete pipe dream. But say China is going to buy $25 billion of our products by 2021. That’s where we started four years ago, and it’s way below the all-time peak of $28 billion back in 2013.

How’s that a deal?

All the other issues have been deferred.

China says they won’t manipulate their currency. But everybody in the world manipulates their fiat currency, and central banks are constantly doing that.

If this flimsy phase one deal actually gets signed, it’ll become evident to the market and the robo traders that this isn’t the end of a threat to future prosperity. It’s just a sign that this is going to be ongoing and will get bigger and more disruptive as time goes on.

They may get what they wish, which is a trade deal. That deal will only crystallize the fact that we’re in a world that’s coming apart at the seams, in terms of the global trading system and financial and capital flows.

International Man: What is your view on the future of the US dollar? Does that outlook change depending on the results of the 2020 election?

David Stockman: Trump is simply demanding that the Fed become more aggressive in the race to the bottom.

That’s dangerous, it’s destructive, it’s stupid.

Also, you’re competing with the likes of the ECB [European Central Bank], which now, has a new leader, Christine Lagarde, who is even crazier than was Draghi when it comes to money printing. And competing with Japan, which is basically drowning its economy with money printing.

The Bank of Japan’s balance sheet is 100% of GDP. It’s out of this world.

People don’t know, in historic times—and by that I mean anything before 1990—the balance sheets of central banks tended to be 2–4% of GDP. Now we’re in a totally different world.

If the US wants to compete with the BOJ [Bank of Japan] or the ECB or the people’s printing press of China, then go ahead, but you’ll never win. It’s a race to the bottom.

That is the real issue.

It’s not going to happen only to the US dollar; it’s what’s going to happen to the fiat currencies, generally. They’re all run by Keynesian central bankers. I think they’re all going to fall apart.

Fiat currencies are heading for a demise, because they’re based on principles and predicates that are, one, stupid, and, two, unsustainable over a long period of time.

We’re soon going to find that out.

International Man: What are your views on gold’s future in the international monetary system?

David Stockman: Gold is the enemy of the state.

Central banks are creatures of the state. They are agents, instruments of Leviathan.

Leviathan will fight—to the bitter end—any increase in gold’s role in the global economy or monetary system.

It will materialize only if there is a complete existential crisis and the whole central banking system breaks down and the world has to put itself back together.

Some people will recognize that one element of the reset and revamping needs to be the anchor that kept the monetary system stable for several centuries before 1971—which is gold.

That is a possibility, but how do you get from here to there?

The answer is a devastating crisis that is so powerful and destructive that the philosophy that drives everything today is completely discredited.

That’s pretty severe. It’s a valley of death that you don’t necessarily want to hazard, but it’s the only way to get from here to sound money, unfortunately.

International Man: The central banks of China, Russia, Turkey, and several European countries are buying massive amounts of gold. What do you think this means?

David Stockman: I think they’re hedging.

I think that intelligent people can see that this system of balance sheet expansion and interest rate repression—and $17 trillion in bonds trading with sub-zero yields a few months ago—isn’t sustainable.

Some central banks at least are trying to hedge their bets by reallocating their balance sheet to have a larger share of gold. As the crisis of what I call “Keynesian central banking” becomes more and more intensive and acute, more central banks will be buying gold.

Gold has a small trading value, or market cap, compared to something like a trillion dollars that turns over in the repo market every day. Or the five trillion dollars a day that turns over in the currency markets. Gold is a minor player, compared to that.

If central banks begin to really stock up on gold, what’s going to happen is people will try to front run them.

This is the whole secret of what’s been ongoing for the last 20 years in other markets. The reason bond yields have gone to rock bottom is the central banks have been buying the bonds. So, the smart traders are buying what the central banks are buying.

If the central banks are going to start buying gold, the same guys who have been buying the 10-year Treasuries or Bunds are going to start buying gold, and it’ll soar. The same way that bond prices have in last few years.

In other words, the world is awash with massive artificial liquidity created by the central banks. It’s in the hands of traders, who move in split-second intervals and attempt to leverage anything that looks like it’s going up. Especially if they can put it on leverage that costs nothing.

Maybe the next chapter is the whole system becomes unwound and the banks start buying more gold, and the front runners start buying more gold, and the price begins to multiply by breathtaking rates.

*  *  *

Unfortunately most people have no idea what really happens when a government goes out of control, let alone how to prepare… The coming economic and political crisis is going to be much worse, much longer, and very different than what we’ve seen in the past. That’s exactly why New York Times best-selling author Doug Casey and his team just released an urgent new PDF report that explains what could come next and what you can do about it. Click here to download it now.

The Trump administration is considering 100% tariffs on French goods, including wine and champagne, in response to the country’s planned digital services tax, reported Reuters.

This would mean a $70 bottle of Moet & Chandon Grand Vintage could cost $130 if the new round of tariffs is implemented.

Trump administration officials have already said if France goes ahead with its controversial new tax on the profits of large tech firms such as Facebook and Google, a 100% tariff on $2.4 billion of French Champagne, handbags, cheese, and other products would be seen.

A 25% tariff on non-sparkling European wines remains in effect since October after the Trump administration got into a dispute with the European Union over Airbus’ subsides.

Industry experts told Reuters that French companies were able to absorb 25% tariffs, though, at a 100% rate, this would be impossible and would have to pass it through to consumers.

Next week, E.U. Trade Commissioner Phil Hogan and U.S. Trade Representative Robert Lighthizer will discuss trade disputes in a meeting.

David Parker, chief executive of Benchmark Wine Group, a top U.S. supplier of wines, warned that 100% tariffs could cost the industry upwards of 50,000 jobs.

The U.S. is the largest foreign market for French sparkling wine. If tariffs are increased, U.S. consumers will reject higher prices and shift to other brands. French companies would have to rework their supply chains towards Asia and South American markets.

Robert Tobiassen, president of the National Association of Beverage Importers, said higher tariffs are likely, and that could be damaging to the industry.

 

 

Authored by Chris Hamilton via Econimica blog,

Today, rather than anecdotal economics and narratives of overpopulation, I offer a view of the world from the bottom up.  Based on 2019 UN population data, I offer a ninety year window of annual births and those of childbearing age globally, regionally, and for some selected countries.  Gauging the size and changing nature of the “pie” is a question business owners, economists, and even presidents should know.  How many potential customers / consumers / workers presently exist and how will this be changing going forward?  Based on this, business’ and nations could make informed decisions on spending, leverage, and growth.  So, without further wasted digital ink, I will show that annual births have peaked in each world region (except Africa), and subsequently when the female childbearing population peaked or will peak.

Global Childbearing Females, Births

From 1950 to 1989, annual births rose by almost 1.5 million a year. Since 1989, global births have essentially stalled at around 135+/- million births a year (black columns below), while the growth of the potential quantity of females of childbearing age (red line) has slowed.

• 1950-1989 +424 million, +111% 20-40yr/old females… Annual Births +57 million, +73%

• 1989-2020 +342 million, +40% females… Annual Births +0 million, +0%

• 2020-2030 +28 million, +2.5% females… Annual Births +0.5 million, +0.3%

• 2030-2040 +62 million, +5.3% females… Annual Births +1.4 million, +1%

Global Births, Excluding Africa

But if we exclude Africa, a radically different picture emerges.  Why exclude Africa? Africa is incredibly poor, consumes just 3% of global energy/exports, and has very low levels of emigration.  Essentially, what happens in Africa stays in Africa.  From 1950 through 1989, global births (x-Africa) rose from 70 million births annually to 112 million annually.  But 1989 was not only the beginning of a deceleration in births, it represented a hard pivot for mankind from growth to decline.  Had births (x-Africa) continued to rise at the pre-1989 rate, annual births in 2040 would have reached 168+/- million.  In the 30+ years since 1989, global annual births (x-Africa) have declined by 17 million, a 15% decline.  The concern of overpopulation and wildly rising consumer bases ended over thirty years ago.   Mankind’s footprint (x-Africa) among the folks that consume 97% of everything will be persistently smaller as this plays out.

World Childbearing Females, Births (both X-Africa)

Below, focusing on annual global births (x-Africa) and the 20 to 40 year old female population. Two main points, outside of Africa, all regions either have (or in the case of Asia, soon will have) negative fertility rates and the total population of childbearing females (x-Africa) will soon begin declining.  With births peaking in 1989 and declining since, the world would have to wait about thirty years until the childbearing population began declining.  Queue 2020 and the decline in those capable of giving birth is just a few years from beginning.  Over the next ten years, the number of females capable of childbearing will decline by about 26 million or a 3% decline.  This shrinking populace plus ongoing negative fertility rates means births will begin declining at an accelerating pace.  The charts below are the UN medium variants which are consistently too high…but reality will be births falling faster than projected although the exact course of that decline is simply unknowable.

• 1950-1989 +373 million, +109% females… Annual Births +43 million, +61%

• 1989-2020 +228 million, +32% females… Annual Births -17 million, -15%

• 2020-2030 -26 million, -3% females… Annual Births -5.6 million, -6%

• 2030-2040 -6.4 million, -1% females… Annual Births -4.2 million, -5%

The Nexus of Inflation / Deflation

Family formation and child rearing ultimately drive spending and consumption.  The chart below shows what is at the heart of global inflation; the year over year change in the female childbearing population (red columns), mirrored by the Federal Funds rate (yellow line), and the impact on annual global births (black line). 

The soon to be declining quantity of females of childbearing age coupled with ongoing declining fertility rates means births will continue declining… and organic demand declining… and only via destructive federal government / central bank ZIRP, NIRP, and market manipulation, can consumption and asset prices be manipulated upward.

Regional Year of Peak Births, % Declines Since

While births have declined globally, the timing and depth of the declines have varied widely. To detail this, the chart below calls out the regional year of peak births and percentage decline in births from that peak through 2020. Eastern European births peaked in 1950 (or earlier) and have declined by 51% since…East Asia peaked far later, in 1989, but has fallen far faster since with annual births down 45%. Western European births peaked in 1969 and births are down 36% since. As for the US, annual births essentially doubled peaked in 1957 and a miniscule amount higher in 2007…births are down 14% since. Latin American (South America, Central America, plus the Caribbean) births peaked in 1995 and are down 11% since. South East Asia peaked in 2015 and are already down 9%. As for India/Pakistan, etc. of South Asia, annual births peaked in 2003 and after a long plateau, have declined 3% thus far.

East Asia Childbearing Females, Annual Births

(China, Japan, Taiwan, S/N Korea, Mongolia)

The 45% decline in East Asian births since 1989 has changed the world.  By 2000, the East Asian female childbearing population peaked and likewise entered a secular decline.  Over the next decade, this decline in births beginning three decades ago, will severely impact the size of the childbearing female population.  20 to 40 year old females capable of childbirth in East Asia will decline by 40 million persons or -17% over the next ten years.  This collapse in those capable of childbearing coupled with ongoing declines in fertility rates (those willing to undertake childbearing) has the potential for much larger declines in births than the UN is currently projecting…and I offer a more likely quantity of births.  I’m suggesting that, by 2040, annual births in East Asia will be down something like 70% from the 1989 peak.  All the debt, excess capacity, bridges to nowhere, speculative unoccupied housing, etc. will likely be more than this region can bear.

• 1950-1989 +132 million, +135% females… Annual Births +12 million, +53%

• 1989-2000 +28 million, +12%… Annual Births -11 million, -32%

• 2000-2020 -31 million, -12%… Annual Births -5 million, -22%

• 2020-2030 -39 million, -17%… Annual Births -2 million, -11% (-5 million, -26%)

• 2030-2040 -11 million, -6%… Annual Births -1 million, -5% (-2.5 million, -18%)

Eastern Europe Childbearing Females, Annual Births

(Russia, Belarus, Bulgaria, Ukraine, Czechia, Hungary, Poland, Moldova, Romania, Slovakia)

Like East Asia, the Eastern European childbearing population is in the midst of an unavoidable freefall.  Those females capable of childbirth will decline by 8.5 million or a 22% decline.  Like East Asia, the collapse of those capable and ongoing collapse in those willing (fertility rate) will lead to significantly lower births than the UN is projecting.  By 2040, annual births in Eastern European births are likely to be down 70%+.

• 1950-1987 +8 million, +20% females…Annual Births -1.6 million, -25%

• 1987-2011 -1.8 million, -4%…Annual Births -1.4, -29%

• 2011-2020 -6 million, -14%…Annual Births -250k, -7.5%

• 2020-2030 -8.5 million, -22%…Annual Births -510, -16% (-1 million, -30%)

• 2030-2040 +800k, +2.6%…Annual Births +50k, +2.6% (-100k, -3.4%)

Western Europe Childbearing Females, Annual Births

Like East Asia and Eastern Europe, the childbearing females are in decline but the decline will be significantly gentler if high rates of immigration continue.  Assuming ongoing immigration, the fall in births may likewise not be as stupendous.  Because of immigration, Western European births are likely to be down “only” 50% from the ’64 peak.

• 1964-1993 +12 million, +20% Females… Annual Births -2.1 million, -31%

• 1993-2020 -8.5 million, -14% Females… Annual Births -330k, -7%

• 2020-2030 -3.6 million, -7% Females… Annual Births -210k, -5% (-420k, -10%)

• 2030-2040 -1.4 million, -3% Females… Annual Births -0, -0% (-380k, -10%)

US Childbearing Females, Annual Births

US births essentially peaked in 1957 and only in one year thereafter (2007) did the US ever have more children than in 1957.  The US childbearing population of females rose rapidly from 1970 to 1990 but has been little changed ever since.  The ongoing declining US fertility rate has been overwhelming the relatively minor growth in the childbearing female population, resulting in fast falling total births since 2007.  Most / all of the anticipated growth in the US childbearing female population is anticipated to come from immigration, but primarily due to stricter border enforcement, US immigration is at low levels not seen for decades.  The impact will be little to no growth in the childbearing population coupled with deeply negative fertility rates, resulting in ongoing falling total US births.  Based on this, annual US births are likely to be down over 20% by 2040 instead of the Census and UN estimates of rising births.

By the way, 10 US states are now outright depopulating (and this number will keep growing) and likely over half of the states have declining under 65 year old populations only disguised by even faster growing 65+ year old populations.  As for counties, likely 60% to 80% of counties have declining under 65 year old populations.  While major metropolitan centers continue growing, it is primarily at the expense of rural American emigration.

• 1957-1990 +17 million, +70% females… Annual Births -100k, -3%

• 1990-2007 -1 million, -2% females… Annual Births +140k, +3%

• 2007-2020 +4.7 million, +12% females… Annual Births -600k, -14%

• 2020-2030 +1.3 million, +3% females… Annual Births -400k, -11%

• 2030-2040 -1 million, -2% females… Annual Births -700k, -20%

As for the most optimistic of population growth scenarios, the chart below details the shifting population growth (as per UN #’s) per twenty year periods from among the young to almost solely among the elderly…with all the associated problems.  Actual births and under 40 year old population growth will turn to outright decline if my birth projection and/or ongoing tanking immigration continue.

Latin America / Caribbean / South America

(Everything Western Hemisphere except US/Canada)

Annual births across Latin America peaked in 1995 and have been gently receding ever since.  The outcome of these declining births and net emigration is a childbearing population that will begin declining by the mid 2020’s.  From there, births will begin declining faster.  Annual births will only continue downward and likely far more than the UN’s projection of a 27% decline by 2040.  How far?  Your guess is probably as good as mine.

• 1950-1995 +52 million females, +216%… Annual Births +5.4 million, +89%

• 1995-2020 +27 million females, +35%… Annual Births -1.2 million, -11%

• 2020-2030 +0.6 million females, +1%… Annual Births -0.7 million, -7%

• 2030-2040 -3.3 million females, -3%… Annual Births -0.7 million, -7%

South East Asia Childbearing Females, Annual Births

(Cambodia, Brunei, Indonesia, Lao, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam)

This region also had a double peak in annual births, 1985 and just slightly higher in 2015.  A flat childbearing population coupled with mostly negative fertility rates among these nations will result in ongoing declining annual births, according to the UN, down something like 14% by 2040.

• 1950-1985 +36 million, +149% females…Annual Births +6 million, +113%

• 1985-2015 +42 million, +70% females…Annual Births +200k, +2%

• 2015-2030 +3.9 million, +4% females…Annual Births -1.1, -10%

• 2030-2040 +0.5 million, +1% females…Annual Births -0.5 million, -5%

South Asia Childbearing Females, Annual Births

(India, Pakistan, Afghanistan, Bangladesh, Iran, Bhutan/Nepal, Sri Lanka)

The worlds most populous region saw fast rising annual births from 1950 until 1986, more than doubling annual births over that period.  However, since 1986, annual births have essentially been unchanged and peak births occurred somewhere around 2003.  This means the growth of the childbearing population is nearly over and with fertility rates now nearly down to 2.1 and ongoing net emigration, the UN projects annual births will be down 14% from peak births by 2040.

• 1950-1986 +81 million females, +115%… Annual Births +19 million, +117%

• 1986-2020 +156 million females, +103%… Annual Births +1.2 million, +3%

• 2020-2030 +19 million females, +6%… Annual Births -2.2 million, -6%

• 2030-2040 +2.5 million females, +1%… Annual Births -2.4 million, -7%

Extra Credit-

The following countries are unlikely to survive within their current monetary, political, and geographical locations as the populations collapse against skyrocketing debt, surging overcapacity, and collapsing domestic and international import demand.

China 20 to 40yr/old females, Annual Births

As of 2019, Chinese births have fallen 48% since the 1989 peak and childbearing females have declined 11% since the 2000 peak.  By 2040, females will be down 31% and births down between 55% to 65%.

Below, the big picture in China.  The next twenty years will be a collapse in domestic demand for everything except adult diapers as the under 40 year old population falls 140 million (this is using UN #’s, not my lower and more realistic #’s) and the 70+ segment rises by the same 140 million.

Japan 20 to 40yr/old females, Annual Births

As of 2019, Japanese births have fallen 64% and childbearing females down 31%…by 2040 childbearing females will fall by 43% and births will be down between 66% to 77%.

Detailed below is that the next twenty years will be the end of population growth for any age segment in Japan.  After 2040, all population segments will be pointing downward as Japan’s population collapses (again, this is using UN #’s, not mine).

South Korea 20 to 40yr/old females, Annual Births

As of 2019, South Korean births have declined 71% from the 1960 peak…the childbearing female population has declined 23%.  By 2040, childbearing females will be down nearly 50% and annual births will be down more than the UN’s 72% projection; more likely 85% or more.

The full picture in South Korea, the chart below details the changing nature of the Korean population.  Over the next twenty years, the young and working age populations will sink (again, using UN #’s) while the number of elderly soar.  The actual #’s will be significantly lower as more realistic births become evident but the elderly population growth will remain unchanged.

This is not viable in South Korea, Japan, or China, among so many others and typically when something cannot be, it will not be.  I suspect “something” will likely intercede before too long that radically changes the picture.

President Trump’s Senate impeachment trial will likely begin Jan. 21, according to Sen. John Cornyn (R-TX).

The news comes as House Speaker Nancy Pelosi announced that that two articles will be transferred to the Senate, ending a three-week standoff over how the trial would be conducted, according to Bloomberg.

“Tuesday is what it’s feeling like,” Cornyn told reporters, adding that he expects the articles and the names of impeachment managers from the House this week (likely Jerrold Nadler of NY and Adam Schiff of CA).

Cornyn also says there will likely be a full trial, as there won’t be enough votes to dismiss the charges without one as Trump has suggested over Twitter.

“My understanding is that most Republicans want to have a full trial,” said Conryn.

Meanwhile, Bloomberg cites a Quinnipiac University poll which found that 2/3 of US voters want former White House National Security Adviser John Bolton to testify – a finding which may convince Republicans to join with Democrats in calling him as a witness.

Bolton’s offer to testify at the trial if subpoenaed has been central to attempts by House Speaker Nancy Pelosi and other Democrats to force the GOP-controlled Senate to allow witnesses. It would take just four Republican senators to vote with Democrats to get a majority on the question of witnesses. Maine Senator Susan Collins, one of the most vulnerable GOP incumbents in 2020, said last week she’s been talking with a small number of her colleagues about allowing new testimony.The poll, conducted Jan. 8-12 among self-identified registered voters, also found a bare majority, 51%, approved of the House vote to impeach Trump and 46% disapproved. Voters were divided on the verdict of a trial, with 48% saying the Senate should not vote to remove the president from office and 46% saying Trump should be removed.

The poll of 1,562 people nationwide has a margin of error of plus or minus 2.5 percentage points. –Bloomberg

According to the report, Nadler and Schiff are likely to be the top names on the prosecution team in the Senate trial, according to Rep. Dan Kildee of Michigan during a Monday interview with CNN, who said it would be a “Talented group, obviously with Adam Schiff and Nadler — one would expect them.”

Authored by John Vibes via TheMindUnleashed.com,

A senator from Vermont recently proposed a total ban on cellphone use for anyone under 21-years-old. Democratic Sen. John Rodgers says that he is sponsoring the bill because “cellphones are just as dangerous as guns.”

While Rodgers says that he knows the bill will not make it past the judiciary committee, he is using the effort to draw a comparison between cellphones and firearms, which are illegal for anyone under the age of 21 to purchase in the state of Vermont.

“I’m not going to push for the bill to pass. I wouldn’t vote for the thing. This is just to make a point,” Rodgers said, according to CNN.

The text of the bill reads:

“It is clear that persons under 21 years of age are not developmentally mature enough to safely possess them.“

If the bill ever were actually voted into law violations could result in fines of up to $1,000 – or even up to a year in prison.

Rodgers said that he established the bill to intentionally parallel Vermont’s gun legislation. In the bill Rodgers references the dangers of texting and driving and calls attention to how the problems of bullying have evolved in the social media age. He even suggested that cellphones have played a role in mass shootings.

“The Internet and social media, accessed primarily through cellphones, are used to radicalize and recruit terrorists, fascists, and other extremists,” the text of the bill read.

When Vermont constituents reacted with understandable anger, Rodgers insisted that his bill was intended as somewhat of a troll which was intended to highlight the importance of the 2nd amendment.

“I think people need to think about what liberties they’re willing to give up for safety. My position is that no good can come from taking rights from good people,” Rogers said.

“People in rural areas are largely independent, and we take it upon ourselves to stay safe. Without the Second Amendment, we couldn’t do that,” he added.

Having been previously convicted of transporting child pornography in 1991, George Nader, a Lebanese-American businessman who served as a witness in special counsel Robert Mueller’s investigation, pleaded guilty to two charges relating to sexual exploitation of children on Monday, according to The Washington Post.

As we detailed in July 2019 when Nader was indicted, Mueller’s team discovered child pornography on his phone while interviewing him about a meeting between Blackwater founder Erik Prince, the brother of Education Secretary Betsy DeVos, and a high-level Russian official with ties to President Vladimir Putin, according to WaPo.

Soon after the images were discovered, prosecutors reportedly filed a criminal complaint against Nader over the images, but they kept the charges under seal, and Nader’s lawyers were never informed of his impending arrest all the while that he continued to cooperate with the Mueller probe.

That means Mueller kept a suspected child abuser and pornographer on the streets while it used him as a witness. And when Nader was no longer useful, he was finally being charged.

Nader has claimed the images were not child pornography but admitted to having received an email including violent sexual images of infants in 2012.

WaPo details the disgusting acts of this key Mueller witness, noting that according to Czech court documents, he paid at least five teenage boys to engage in sex acts, four of whom were under 15.

He engaged them through a boy he met at a Prague arcade, who said he “knew lots of boys who had been in elementary school with him who would be interested.”

Nader enticed the boys with “money, jewelry, mobile telephones, clothing, care and housing,” according to the court record, and took some to the city’s annual Matthew’s Fair.

While the serial pedophile’s charges carry a maximum penalty of 30 years, prosecutors (for reasons that are simply beyond our ken) in the Eastern District of Virginia agreed to recommend the mandatory minimum of 10 years.

Sentencing is set for April 10.

Additionally, as we reported previously, Nader was indicted in December on charges of illegally funneling campaign funds to Hillary Clinton’s 2016 campaign using straw donors, according to Politico.

Authored by Christopher Whalen via TheInstitutionalRiskAnalyst.com,

As we head into Q4 2019 earnings this week, US financials have never been so expensive and risk indicators have never been so skewed.

Just as last July we called the problems brewing in the short-term money markets in a discussion on CNBC’s Halftime Report with Mike Mayo of Wells Fargo (NYSE:WFC), today we want to put down a marker regarding the concealed credit risk inside US banks.

Our favorite bank portfolio holding, U.S. Bancorp (NYSE:USB), closed Friday at 1.87x book value, down about 5% from the peak in December just over $60 and 2x book. Still a little too rich to add more to our portfolio of USB common, but we continue to accumulate a number of bank preferred issues. With the number of profitless unicorns dying at an accelerating rate, steady cash flow has a certain appeal right about now.

More important, credit default swap (CDS) spreads for high quality issuers are also at all time lows. JPMorganChase (NYSE:JPM) is inside 40bp or around a “A” rating for the largest bank in the US. In 2015, JPM’s CDS was trading close to 120bp over sovereign swaps. Question is, does the market know, really, how much risk sits on Jamie Dimon’s books in the world of corporate CDS and more obscure credit products, like “transformation repo.” We think not.

For those not familiar with the wonders of OTC derivatives and collateral swapping, see our 2019 comment “HELOCs and Transformational REPO.” We wrote in March of last year: “The dealer bank trades corporate debt for cash (for a fee), but uses its own government or agency collateral to meet the margin call for the customer. The bank holds the crap and all of the market and credit risk – sometimes for its own book, sometimes for clients. Tales of MF Global. Recall that the margin rules in Dodd-Frank and other laws and regulations around the world are meant to increase the proverbial “skin in da game” for swaps customers, especially the non-bank customers of banks.”

Outgoing Bank of England governor Mark Carney worries that the global economy is heading towards a “liquidity trap” that would undermine central banks’ efforts to avoid a future recession, according to the Financial Times. Former Fed Chairman Benjamin “QE” Bernanke is screaming for new fiscal policy measures to combat a non-existent recession – this as the negative after effects of “quantitative” monetary policy measures are growing.

These central banksters may be right, but to us the bigger question is the unrecognized threat to the financial system from underpriced long-credit positions embedded on the balance sheets of global banks and bond funds. Bank interest earnings have long been subsidized by QE, but now banks are being squeezed by the same forces of market manipulation as credit starts to roll over. Suffice to say that the Street seems to finally understand that bank earnings are going to be a tad light, again, this quarter, due to the hangover from Uncle Ben’s QE electric KoolAid. The chart below shows net interest income for JPM.

Source: FFIEC

Despite the rosy economic outlook, bears continue to see reasons for despair in the world of credit – and we agree. The repo market sailed through year-end cushioned on a soft pillow of liquidity provided by Federal Open Market Committee. With the Fed announcing an end to the not-QE liquidity injection operations, though, we look forward to the next learning-by-doing adventure from Federal Reserve Chairman Jerome Powell.

Should the repo markets again start to seize up when the Fed ends its extraordinary liquidity injections, then Chairman Powell’s job may actually be on the line – and not because of President Donald Trump. The looming threat to Powell and other members of the FOMC is the tightly coiled but largely invisible long credit/short put positions on the books of major banks. This is a largely hidden risk that arises from years of market manipulation by global central banks. But hold that thought…

We appreciate the flow of questions and comments about the latest IRA Bank Profile on Deutsche Bank AG (NYSE:DB). As we wrote in the profile:

“We assign a negative outlook to DB and have little expectation that the situation will change in the near term. In our view, the most promising way to resolve what is an increasingly precarious situation would be for DB to sell its US operations in their entirety and wind up the remaining bank operations. Since Germany political leaders refuse to consider such a possibility, we expect that DB will stagger along, depleting capital and creating outsized risks, until such time as the bank’s poor management makes a mistake of sufficient magnitude to cause the bank to fail.”

Just to review, DB is one of four value destroyers in The IRA Bank Dead Pool. Banks that are members of the IRA Dead Bank Pool have poor financial performance, inferior equity market valuations and no apparent plan to correct these deficiencies. Even with US financials at the highest equity market valuations in a decade, the four institutions in the IRA Dead Pool – DB, Goldman Sachs (NYSE:GS), Citigroup (NYSE:C) and HSBC Holdings (NYSE:HSBC) – all trade at or below book value. DB has the lowest multiple of equity price to book value of any major bank.

In a recent twitter post, our pal @Stimpyz1 reminds us that negative interest rates are not the only source of risk to global banks.

“Deutsche bank might be in the crosshairs, but don’t forget HSBC,” he avers. “Hong Kong is looking like a black hole, and HSBC exposure to real estate on the island makes the DB balance sheet look like Microsoft.”

Like DB, HSBC’s US operations are in pretty bad shape, with years of credit losses and poor operational performance. Once upon a time, HSBC was a good comp for Citigroup, but today we would not even bother running the numbers. But when it comes to risk, we are far more focused on the bond market than banks, which are generally under-leveraged but contain a lot of undisclosed credit risk.

The lingering negative effect of the Bernanke-Yellen monetary benevolence is so pronounced in fixed income that a number of institutional managers we know have begun to lighten up on investment grade (IG) exposures based on the belief that a ratings-driven correction is coming. Michael Carrion of TCW wrote before the holiday:

“Much ink has been spilled this year on the topic of how strong the technicals are within the investment grade credit market and for good reason as they have been the dominant underlying driver of overall IG spreads all year. The resurgent strength derives from this year’s re-expansion of central bank balance sheets, which has resulted in a relentless supply/demand imbalance for IG bonds. Demand for IG credit reached a year-to-date peak in November, particularly in the second half of month as the pace of primary market new issuance slowed.”

Patti Domm of CNBC, quoting a research report from Hans Mikkelsen, head of investment grade corporate strategy at BofA Securities, wrote after the close on Friday: “Lured by low rates, companies issue high grade debt at one of the fastest paces ever this week,” this as interest rates touched a three-year low. The combination of market reaction to political uncertainty and central bank purchases of risk-free debt has created a credit trap for global banks and bond investors.

One of the things we learned from our colleague Dennis Santiago years ago at Institutional Risk Analytics is that when a credit spread looks to good to be true, it probably is. In those days, we’d convert the apparent default rate of a bank portfolio into a bond rating equivalent, then look at loss given default (LGD) to try to figure out how much the rate was understated. Today LGDs in the real estate sector are so skewed as to suggest that default rates are understated by at least 100%.

At the end of Q3 2019, the implied rating on the 0.51% of gross defaults for the $10.5 trillion in loans held by all US banks mapped to a “BBB” rating using the S&P default scale. If you believe that the aggregate rating of all obligors of US banks is investment grade, then we have some WeWork shares we’d like to sell you. Step right up.

Source: FDIC

The issuance of IG debt has set new records for the past several years, but most of this paper is clustered around “BBB” ratings. This suggests that the proverbial lemmings could fall off of the ratings cliff with little or no notice. As we all hopefully learned in the Adam McKay film “Big Short,” the major credit rating agencies don’t have the capacity or the courage to react quickly as and when economic and/or market conditions dictate a change for dozens of issuers. The investors that own long positions in underpriced corporate risk positions will be long dead before the ratings change.

The potential ratings volatility embedded in corporate debt has huge implications for banks, which have been “transforming” crap collateral into high IG in order to partially satiate the investor demand for low- or no-risk paper. TCW confirms our earlier colloquy with @Stimpyz1 on Twitter the other day:

This implies that there is an embedded credit put on the books of a lot of banks and funds as and when the QE party well and truly ends. Perhaps this is why John Carney and Ben Bernanke are so insistent of a shift to fiscal stimulus. But it needs to be said that no amount of fiscal push will fix the credit risk that the Fed and other central banks have created via “quantitative easing.”

We’ve been talking about the misalignment of credit ratings and corporate fundamentals for the past several years, but the continuation of QE in Europe and Asia has managed to prevent a reversion to the valuation mean. The divergence seen in junk rated collateral sold into collateralized loan obligations (CLOs) and superior credits suggests to us that an adjustment may finally be underway. The inferior assets always fall first. And to recall John Kenneth Galbraith’s great book about the 1920s: “Genius comes after the fall.”

While interest rate movements are suppressing net interest margins at major US banks, the prospect of a wholesale slip below investment grade for literally hundreds of weak bond issuers may be a far more worrisome problem. Bad ratings concealed the true risk in billions of dollars-worth of mortgage backed securities prior to the 2008 crisis. The new area for securities fraud and ratings malfeasance is the corporate bond market. If you think the liquidity problems we saw last summer in plain vanilla repo were bad, imagine what happens when margin calls on collateral swaps start to swamp the dealer banks.