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Back in March, we asked a simple question: Can Russia & China Rescue Venezuela?

Realistically, and in retrospect, the answer was always no, but the reason we asked the question was simple: both China and Russia have extended massive credits to Caracas, and Maduro’s regime in particular. As such, letting the country “die” was never an option that either Beijing or Moscow would gladly accept; neither was it an option to allow a transition in Venezuela’s top power echelons, one which replaces the pro-Russia and China Maduro regime, with another regime which would, supposedly, be supported and endorsed by the US, and thus jeopardize Venezuela’s obligations to the two nations.

And, as we also said last March, “chances are that Washington is aware of the role that China and Russia play there. Otherwise [Washington] would have already gone ahead with the broad oil sanctions, despite potential headaches for U.S. refineries.”

Ten months later, something changed and whether due to Trump’s urge to once again deflect attention from the domestic political chaos surrounding the government shutdown, Trump decided to escalate his long-running feud with Venezuelan President Nicolas Maduro, who on Wednesday announced cutting diplomatic ties with the US after opposition leader Juan Guaidó declared himself the country’s interim president and Trump formally stated his recognition of Guaidó.

In other words, currently, there are “two regimes” coexisting in Venezuela, which brings severe risk of political turmoil.

The quick US recognition led nations of the Lima Group to imitate and recognize the Venezuelan opposition regime. Nonetheless the country’s Defense Minister Vladimir Padrino López refused to recognize Guaidó, saying the military will defend the constitution and sovereignty.

Shortly after this initial escalation, we reported that the Russian foreign ministry stated that Moscow supports Maduro and accused the US of attempting regime change, “which is the nation’s internal affair.” Meanwhile, despite Maduro ordering the US to vacate its embassy “within 72” hours, Washington has refused to do so, and has warned that any escalation would be seen as a provocation.

Yet while Russia’s support of the Maduro’s regime was to be expected, the big question is how China would react to the quasi-coup taking place in Venezuela.

Today, the headline article in China’s nationalist Global Times provided the answer, when Beijing effectively slammed what it saw as US interference in Venezuelan issues, noting that “in recent year Washington has enhanced its interference in affairs of Venezuela and Cuba and attempted to regain influence in Latin America. The fast recognition of Guaidó signaled the strong US desire to intervene in Venezuela’s internal affairs.“

According to the Global Times, “the move was aggressive with a clear goal, that is, to directly affect the  the country’s political landscape” and escalated by saying that “from the viewpoint of maintaining the system of international law, such interference must not be encouraged” as “independence and sovereignty are the most important defense for most countries to safeguard their own interests. If any outside forces stick their nose into a country’s major internal affairs based on their values, there will be a huge loophole in the international order.”

Needless to say, China will not stand for that, especially since as the Global Times warns, “for a long time, the US has been eager to replace international law with its geopolitical interests and values so as to legalize its interference.”

And the punchline of Beijing’s criticism:

“Washington has confused right and wrong by calling some normal interactions interference and penetration.”

The criticism continued when the authors said that “Washington’s move obviously forced Latin American countries to pick a side: left or right. Washington worsened disputes in these countries and damaged regional integration.”

In other words, it is now the turn of China – the same country that believes the South China Sea is its undisputed territory and no foreign interference is permitted – to play the role of the moderate, diplomat saying that “it is unfortunate for Venezuela to experience two coexisting regimes. As long as the incident does not lead to bloody conflicts that trigger a humanitarian disaster and force the international community to step in, the political disputes should be solved, in the first place, by the country’s different political forces.”

What does Beijing propose? Simple: “All sides must keep calm and be alert about possible provocation to militarily intervene in Venezuela” and further adds that “the international community should encourage forces of Venezuela to peacefully solve the issue within the framework of dialogue. Picking sides will not be conducive to the solution, but intensify the rivalry, worsen the situation and possibly push the nation into long-term turmoil.”

The op-ed’s diplomatic conclusion: “Venezuela should not be another bloody battlefield of the color revolution”, with the implicit suggestion all too clear: China, whether with or without Russia, will not allow the US to conduct another “color” coup in Caracas and usher in a new, pro-US regime, one which wipes out all the goodwill China (and Russia) have built up with the Maduro regime over the years in the form of billions in vendor financing loans. Whether China will actually interfere physically to preserve its national interest in Venezuela is a separate, if absolutely critical matter, and hopefully the world won’t have to find out Beijing’s resolve to counteract what it now sees as the latest attempt to interfere in a Latin American nation.

via ZeroHedge News http://bit.ly/2DwUgZK Tyler Durden

Authored by Brandon Smith via Birch Gold Group,

A lot can happen between now and 2034. If you were to listen to a consensus from experts, you’d hear Social Security could run out of money in about 15 years.

This idea was recently addressed in a MarketWatch article, which included this potential result:

As most retirees and soon-to-retirees already know, Social Security is slated to run out of money in 2034 and, unless changes are made between now and then, beneficiaries beginning in that year will receive only 79% of what they otherwise would be owed.

But the article continues by highlighting the uncertainty behind this and other “consensus” predictions (emphasis ours):

To be sure, predicting what will come out of Congress in the next few months is an inexact science at best, much less the next 15 years.

The article features an interview with one (of many) experts on Social Security, Andy Landis, who worked at the Social Security Administration (SSA). In 1983, changes were enacted that, according to Landis, bring a certain perspective to expert predictions about Social Security.

He mentioned that those changes brought about the surplus that would postpone the SSA running out of money until the predicted 2034. So there “should be nothing surprising” about the idea that Social Security could run out of money at some point, Landis opined.

But other experts claim the system is broke now. Their idea is the surplus is already “spent,” and the money’s gone, according to the MarketWatch piece. Landis appears to have his own response for that too:

Landis responds that “of course” the Social Security Administration deposited its surplus with the U.S. Treasury, since it is required by law to purchase U.S. Treasury bonds with its surplus. And “of course” the U.S. Treasury has spent the proceeds of the bonds it sold.

In 15 years, it’s the changes that may be required to keep the system going that could add even more uncertainty to the equation.

2020 COLA Predictions Reveal Even More Uncertainty

The Senior Citizens League (SCL) recently offered early estimates for Social Security’s Cost of Living Adjustment (COLA) in 2020.

At CNBC, Mary Johnson from the SCL said, “At the rate we’re going, there might not be a cost-of-living adjustment for 2020 at all.” The organization is noted for the accuracy of its COLA predictions, but on much shorter timelines.

But these predictions change as circumstances do. The CNBC article confirms that, noting the consistent drop in predicted COLA since October (emphasis ours):

The Senior Citizens League’s estimate for COLA in 2020 using the CPI-W, meanwhile, is currently at 0.1 percent using the December data.

That’s a dramatic drop from October’s numbers, which pegged the COLA for next year at 2.5 percent, and the November data, which brought it to 1.5 percent, according to Johnson’s calculations.

The article finished by confirming the vast amounts of uncertainty that lie in any expert’s prediction:

“We could go even lower, or it could come back up,” Johnson said. “What catches my attention is how much we have lost for it to be so close to zero. We have sort of started back to where we were at the beginning of 2018, as far as the rate of inflation goes. We’ve really almost lost a whole year’s worth.”

Energy and food prices, along with other factors (like real inflation), could be playing a role in the COLA “loss” that Johnson is concerned with.

But one problem that is left unsolved by these expert predictions is the fact that Social Security makes up 66% of retirees’ incomes, according to Transamerica. With that being the case, any uncertainty can be worrisome.

What You Can Count On When It Comes to Social Security

Whether Social Security runs out of money in 2034 or not, one thing is certain: Social Security’s future is uncertain. The experts each have their idea of what may happen, but there isn’t a way to conclusively prove if any of it will come to pass.

What you can do in the meantime is consider adding protection from instability to your retirement portfolio through diversification into a variety of asset classes. Precious metals such as gold and silver fit well in a comprehensive retirement plan.

Whatever you decide to do, don’t wait for the experts to outline your future. Take back control, and prepare your portfolio for the worst.

via ZeroHedge News http://bit.ly/2WdZjp3 Tyler Durden

As it became clear during the 2016 US election that Donald Trump had a mountain of support underneath him, nervous Democrats connected to the Hillary Clinton camp reached out to US officials over a half-dozen times, “each tapping a political connection to get suspect evidence into FBI counterintelligence agents’ hands,” according to The Hill‘s John Solomon, citing internal documents and testimonies he has reviewed, along with interviews Solomon conducted. 

Each contact by a Clinton crony was unsolicited, according to Solomon’s FBI sources, in what they described as a “classic case of information saturation” meant to inject toxic and unverified opposition research into the agency’s counterintelligence apparatus that should have known better than to eventually bite.

Ex-FBI general counsel James Baker, one of the more senior bureau executives to be targeted, gave a memorable answer when congressional investigators asked how attorney Michael Sussmann from the Perkins Coie law firm, which represented the Clinton campaign and Democratic Party, came to personally deliver him dirt on Trump.

“You’d have to ask him why he decided to pick me,” Baker said last year in testimony that has not yet been released publicly. The FBI’s top lawyer turned over a calendar notation to Congress, indicating that he met Sussmann on Sept. 19, 2016, less than two months before Election Day. –The Hill

Perkins Coie, as we know, paid Fusion GPS to produce opposition research assembled by former MI6 spy Christopher Steele in his now infamous “Steele Dossier,” which suggested that Donald Trump colluded with Moscow during the 2016 election. 

By the time Perkins attorney Sussman reached out to the FBI’s James Baker, the Steele dossier had already made its way inside the FBI. Sussman, however, “augmented it with cyber evidence that he claimed showed a further connection between the GOP campaign and Russian President Vladimir Putin,” according to Solomon. Some of this digital evidence was delivered on a thumb drive, according to Baker. 

“[Sussmann] told me he had cyber experts that had obtained some information that they thought they should get into the hands of the FBI,” Baker testified. “I referred this to investigators, and I believe they made a record of it,” he added, telling his colleagues to “Please come get this.” 

Baker acknowledged that the Clinton-linked attorney’s evidence did not follow the typical route into the FBI – but since he was the bureau’s top attorney, agents snapped-to and collected it from him. 

Rewinding to Steele’s first outreach

According to Solomon, “the tsunami began when former MI6 agent Steele first approached an FBI supervisor, his handler in an earlier criminal case, in London” on July 5, 2016 – the same day that former FBI Director James Comey made the shock announcement that he would not recommend criminal charges against Hillary Clinton for mishandling classified emails on her homebrew server. 

Steele’s approach was not initially embraced, however, and the FBI took no action on the dossier according to congressional investigators. Then things escalated…

Steele traveled to Washington later that month where he would reach out to two political contacts who were in positions to influence the FBI; a former State Department official under John Kerry, and former #4 DOJ official Bruce Ohr – who immediately took Steele’s “research” to then-FBI Deputy Director Andrew McCabe. Ohr would eventually warn the FBI that Steele’s information was biased opposition research, which the agency ignored. 

Then-senior State Department official Jonathan Winer, who worked for then-Secretary John Kerry, wrote that Steele first approached him in the summer with his Trump research and then met again with him in September. Winer consulted his boss, Assistant Secretary for Eurasia Affairs Victoria Nuland, who said she first learned of Steele’s allegations in late July and urged Winer to send it to the FBI. 

(If you need further intrigue, Winer worked from 2008 to 2013 for the lobbying and public relations firm APCO Worldwide, the same firm that was a contractor for both the Clinton Global Initiative and Russia’s main nuclear fuel company that won big decisions from the Obama administration.)

When the State Department office that oversees Russian affairs sends something to the FBI, agents take note.

But Steele was hardly done. He reached out to his longtime Justice Department contact, Bruce Ohr, then a deputy to Deputy Attorney General Sally Yates. Steele had breakfast July 30, 2016, with Ohr and his wife, Nellie, to discuss the Russia-Trump dirt. 

(To thicken the plot, you should know that Nellie Ohr was a Russia expert working at the time for the same Fusion GPS firm that hired Steele and was hired by the Clinton campaign through Sussmann’s Perkins Coie.) –The Hill

The Australia connection

While Ohr had passed the Clinton-funded Steele dossier to the FBI, Australia’s ambassador to London, Alexander Downer, contacted US officials – who said Trump campaign aide George Papadopoulos drunkenly admitted to knowing that Russia had dirt on Hillary Clinton.

Downer has a major connection to the Clintons – securing a $25 million donation from the Australian government to the Clinton Foundation in the early 2000s. Between 2006 and 2014, the Clinton FOundation received some $88 million from Australian taxpayers

Downer’s tip on Papadopoulos launched Operation Crossfire Hurricane – the FBI’s counterintelligence operation which employed spies to infiltrate the Trump campaign. 

Continuing with the Trump-Russia “saturation campaign” was the September 2016 delivery of more anti-Trump opposition research delivered to Winer and Nuland – the Kerry State Department employees. This time, however, the opposition research was crafted by known Clinton associates Sidney Blumenthal and Cody Shearer. This second “dossier” was also sent to the FBI. 

All in all – it was a full court press against Trump and his campaign – including an outreach by Christopher Steele to the media which resulted in the FBI severing their relationship with him (despite using his research as the foundation for a FISA spy warrant against Trump campaign aide Carter Page). 

By mid-September — less than a month before Election Day — there likely was agitation inside the Clinton machine: After so many overtures to the FBI, there was no visible sign of an investigation.

Simpson and Steele began briefing reporters with the hope of getting the word out. It is taboo for an FBI source such as Steele to talk to the media about his work. Yet, he took the risk, eventually getting fired for it, according to FBI documents.

Baker, the FBI’s top lawyer, testified to Congress that he was clearly aware Simpson’s team was shopping the media. “My understanding at the time was that Simpson was going around Washington giving this out to a lot of different people and trying to elevate its profile,” Baker told congressional investigators.

Ohr, through his contacts with Steele and Simpson, also knew the media had been contacted. In handwritten notes from late 2016, Ohr quoted Simpson as saying his outreach to reporters was a “Hail Mary attempt” to sway voters. –The Hill

Congressional push…

Clinton’s opposition research got some congressional assistance when then-Senate Minority Leader Harry Reid – after having been briefed by then-CIA Director John Brennan, sent a letter to the FBI in late October, 2016 “demanding to know if agents were pursuing the evidence,” writes Solomon. 

In other words, the Trump-Russia narrative from Team Clinton was promoted through the State Department, Congress, Justice Department and a top Democratic lawyer. And nobody in the FBI – according to what we know, made any efforts to interfere with an obvious attempt at a political hit job.

In another timeline, Hillary Clinton won the election and none of this information would have come to light. That said, it doesn’t seem to matter anyway since there’s clearly a ruling class that’s above the law – whether they win elections or not. 

via ZeroHedge News http://bit.ly/2sHImpz Tyler Durden

Authored by Robert Murphy via The Mises Institute,

Read Part 1 here…

One of the hottest topics in policy wonk circles is the “Green New Deal,” spearheaded by the rising star of the progressive Left, Alexandria Ocasio-Cortez.

In my previous post, I explained that the entire premise of a current New Deal—whether green, red, or blue—was flawed. Even on standard Keynesian terms, it makes no sense to embark on a $1 trillion government spending program with official unemployment below 4 percent and the Fed raising rates to rein in price inflation. Worse, historically the actual New Deal under Franklin Roosevelt prolonged the nation’s suffering, making the Great Depression linger for a decade. Finally, I pointed out that the supporters of a Green New Deal weren’t merely interested in mitigating climate change: they quite openly announce that they will use the plan as a vehicle for transforming society according to the standard progressive wish list.

In the present post, I’ll critically analyze some of the specific policy goals listed in the draft text calling for a creation of a select committee to craft a Green New Deal. The various proposals would waste enormous sums of money in pursuit of impossible goals that would raise energy prices and hurt consumers. Even if one believes that carbon dioxide emissions constitute a “negative externality,” the measures in the proposed Green New Deal would achieve emission reductions at a much higher cost than necessary. And we see once again that the progressive Left does not think a simple “price on carbon” is enough to achieve their agenda. Conservatives and libertarians should therefore be under no illusions when the idea of a “carbon tax deal” is floated.

A Carbon Tax Won’t Satisfy the Green New Dealers

Regarding this last point, consider the following excerpt from the Green New Deal draft text’s Frequently Asked Questions:

[Question:] Why do we need a sweeping Green New Deal investment program? Why can’t we just rely on regulations and taxes alone, such as a carbon tax or an eventual ban on fossil fuels?

Regulations and taxes can, indeed, change some behavior. It’s certainly possible to argue that, if we had put in place targeted regulations and progressively increasing carbon and similar taxes several decades ago, the economy could have transformed itself by now. But whether or not that is true, we did not do that, and now time has run out.

Given the magnitude of the current challenge, the tools of regulation and taxation, used in isolation, will not be enough to quickly and smoothly accomplish the transformation that we need to see.

Simply put, we don’t need to just stop doing some things we are doing (like using fossil fuels for energy needs); we also need to start doing new things (like overhauling whole industries or retrofitting all buildings to be energy efficient). Starting to do new things requires some upfront investment…

We’re not saying that there is no place for regulation and taxes (and these will continue to be important tools); we’re saying we need to add some new tools to the toolkit. [Green New Deal “draft text’]

The above excerpt confirms what I stressed in my Part 1 of this series, in reference to Naomi Klein’s discussion: The proponents of government intervention on the progressive Left have quite definitively rejected the notion that a mere carbon tax would be enough to deal with climate change, in their book.

Don’t get me wrong, they want to impose a stiff tax on carbon dioxide emissions—as well as a 70 percent tax on high income earners, as Ocasio-Cortez revealed in a recent interview. But the point is, no libertarian or conservative should go along with a “deal” that ostensibly gets rid of other energy and transportation regulations in exchange for a carbon tax. The orthodox position among progressives is that such a deal would fall far short of the necessary climate goals to avoid catastrophe. Such a deal wouldn’t be acceptable to them, even in principle, let alone in practice.

A Green New Deal Would Be Incredibly Wasteful

The Green New Dealers’ desire for top-down regulations and massive new spending programs not only shows the futility of a carbon tax deal, it also underscores just how wasteful the program would be. Even if one believed in a “negative externality” from greenhouse gas emissions, there is no reason to suppose that policymakers have the knowledge or the incentives to correctly pick the proper ways in which the economy should adapt.

Especially when we are realistic about the political process, it should be obvious that funneling more than one trillion dollars in green “investment” spending through Washington will involve a gross misallocation of resources. For example, the draft text’s call for “retrofitting all buildings to be energy efficient” is a blank check to funnel money into the coffers of politically powerful groups in the construction industry. Anyone who thinks these funds will be spent according to the “social cost of carbon” needs to watch a few episodes of House of Cards.

Stringent Fuel Economy Standards Cause Automobile Fatalities

In his recent endorsement of the Green New Deal, Paul Krugman confirms that “it should emphasize investments and subsidies, not carbon taxes.” Ironically, Krugman and I for once agree that a political deal between conservatives and progressives is a no-go. As he puts it: “[C]laims that a carbon tax high enough to make a meaningful difference would attract significant bipartisan support are a fantasy at best, a fossil-fuel-industry ploy to avoid major action at worst.”

After throwing carbon taxes under the bus, Krugman moves on to argue why top-down regulations and spending programs can achieve significant emission cuts without imposing too much pain on ordinary Americans.

How is this possible? Krugman explains:

The majority of U.S. greenhouse gas emissions come from electricity generation and transportation. We could cut generation-related emissions by two-thirds or more simply by ending the use of coal and making more use of renewables (whose prices have fallen drastically), without requiring that Americans consume less power. We could almost surely reduce transportation emissions by a comparable amount by raising mileage and increasing the use of electric vehicles, even if we didn’t reduce the number of miles we drive each year.

Krugman is quite flippant in his above quotation with the word “simply,” as if eliminating coal – which in 2017 provided thirty percent of U.S. electricity – is no big deal. Krugman says we can simply “mak[e] more use of renewables,” without telling his readers that in 2017 (non-hydro) renewables accounted for less than 10 percent of electricity.

Regarding fuel economy, the simple fact is that in order for vehicles to achieve more miles to the gallon, automakers must make them more expensive, but also lighter and smaller. That means more Americans dying in car accidents than would otherwise be the case. How big a deal is this? Reputable studies have estimated that CAFE standards have caused anywhere from 40,000 – 125,000 excess vehicle fatalities.

Of course, proponents of stricter CAFE standards could quibble with these numbers, but the more significant point is that neither Ocasio-Cortez nor Krugman even admit that there is a tradeoff. They speak of cranking up mileage standards as if it’s a mere technical problem, without reckoning the tremendous human cost.

Conclusion

A so-called Green New Deal is aptly named, in the sense that the original New Deal was a massive boondoggle that restricted individual liberty and crippled economic growth. Besides revealing their plans for massive spending and inefficient regulations, the discussion of a Green New Deal indicates that there is no room for a “carbon tax deal” with conservatives.

via ZeroHedge News http://bit.ly/2RMzCxf Tyler Durden

A town hurting for American tourists, and blaming the migrant caravan…

Rosarito Beach is a resort town on the coast of Mexico’s Baja California peninsula. It is known as a nightlife destination for young Americans partying at dance clubs, was desolate. While winter is not generally the party season, residents and business owners warn economic activity has collapsed, reported The New York Times. 

“This is not normal, it’s all empty!” said Luis Pacheco, a waiter at Papas and Beer, a popular beachside bar.

“This used to be full of people,” he said, pointing at the rows of colorful wooden chairs on the sand, devoid of sunbathers.

Businesses who depend on Americans for their livelihood blame the collapse in tourism on the recent turmoil at the border in the neighboring city of Tijuana, where a migrant caravan with thousands of people from Honduras, Guatemala, Nicaragua, and El Salvador arrived in mid-November.

“It has been isolated incidents that have created a distorted, negative image of the border, and we are all suffering from it,” said Ricardo Argiles, the chief executive of the company that operates the Rosarito Beach Hotel, which is a frequent spot for Hollywood elites.

Millennials consider the town an exciting, more cultured alternative to Tijuana, and until recently, young Californians who flooded the beaches on weekends and holidays, enticed by nightlife, seafood, and avocados, have vanished.

Many residents share Argiles’ view that negative news reports of the caravan situation at the border have deterred millennial tourists.

The incident that frightened many Southern Californians, Argiles said, was the complete shutdown of the San Ysidro Port of Entry last November when migrants attacked the border crossing.

Since then, the Rosarito Beach Hotel has experienced a 60% drop in room occupancy, Argiles said, and the property had its worst December in several decades.

There were a few tourists who spoke with the The New York Times agreed with Argiles’s assessment of why Americans are staying away.

John Aslanyan, a pharmacist from San Diego and a regular to Rosarito, said he could not convince his fiancée to accompany him on the stay.

She was terrified, he said, that there would be a repeat of November’s border closing, a worry shared by many Californians, he added.

“This is the first time I am seeing this beach this empty,” said Aslanyan, the lone diner at a restaurant on Rosarito’s oceanfront.

Moises Espitia, an analyst with the Metropolitan Center of Economic and Business Information, a research group situated in the area, said the economic pain caused by the border’s shutdown in November severely damaged the services and tourism sector.

On the day of the shutdown, almost 60,000 restaurants and hotels in the Tijuana and Rosarito Beaches metropolitan area suffered a collective loss of $6.7 million, Espitia estimated.

“Events like the migrant caravan, without proper response or preventive measures, can have an economic impact in the daily lives of people in this area,” he said.

The migrant caravans have usually been welcomed in Mexico. But as soon as tourism collapsed in the Baja California region, some residents have begun criticizing the migrant caravan for the loss of business.

“They came here with an arrogant attitude, demanding things, and abused the help we offered them, arguing they are fleeing violence or poverty, but we all are poor!” said Jorge Medina, a manager of the Bombay Beach nightclub in Rosarito.

He said business activity had collapsed in the last two months.

“Life is not easy for us either,” Medina added.

“We have our own set of problems, including violence, and it is unfair that our lives are disrupted because of them.”

Medina agreed with the harsher measures taken by the US government to deter migrants, including deploying the Army and the use of tear gas at the border, and President Trump’s goal to build a border wall.

Argiles, along with other business owners, is formulating a new social media campaign that shows Rosarito is ready for business, again.

“We have to recover from this,” he said.

However, with the Trump administration’s increasingly hostile anti-immigration policies, it seems that Rosarito Beach and other resort towns in Mexico’s Baja California peninsula could experience longer-term economic losses, if not collapse.

via ZeroHedge News http://bit.ly/2FMqzpI Tyler Durden