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Authored by John Rubino via DollarCollapse.com,

In a normal business cycle, the economy expands for a while and businesses hire lots of new people at somewhat higher wages, generating enough tax revenue to shrink the government’s budget deficit – and in rare cases produce a surplus. So, for a while, the government borrows less money.

Not this time. The current recovery is nearly ten years old and the labor market is so tight that desperate companies are trying all kinds of new tricks to attract workers – including higher wages.

Yet the US just announced its intention to borrow $1.3 trillion in this fiscal year, the most since the depths of the Great Recession.

And this isn’t a one-shot deal. Trillion-dollar deficits are now projected for as far as the eye can see:

What does this mean? The US has decided that since we’ve borrowed a lot of money in the past and are still here, debt must not matter.

Voters don’t care, the markets don’t care, so why not spend money we don’t have on cool stuff in the here-and-now. A new generation of super-weapons? Sure. A wall across 3,000 miles of southern border, check. Tax cuts for people who already more than they’re able to spend? Why not?

But here’s the problem – or the short-term one, anyhow: Using debt to push an expansion beyond its natural lifetime (this one is approaching the longest ever) makes the imbalances that normally end expansions much, much worse. The aforementioned labor shortage, for instance, will only become more extreme if the economy keeps growing. Interest rates, already rising, will keep going up.

So think of the current bout of late-cycle New Age fiscal stimulus as an experiment in the style of QE and ZIRP. That is, something that hasn’t been done in the past but – given the alternatives – seems like the least risky option.

And as with QE, the US isn’t alone. Japan has given up trying to balance its budget and is now looking for new things to buy with fresh-off-the-press yen. China, faced with a manufacturing slowdown and incipient trade war, is “going for growth” via a domestic infrastructure program – after a decade of the biggest infrastructure build-out in world history.

It’s useful to note that even Keynesianism, generally the most debt-friendly (or debt-oblivious) school of economic thought, views deficit spending as a cyclical stabilizer. That is, in bad times governments should borrow and spend to keep the economy growing while in good times governments should scale back borrowing – and ideally run surpluses – to keep things from overheating.

But now we seem to have turned that logic on its head, with fiscal stimulus ramping up in the best of times, when unemployment is low, stock prices high and inflation stirring. New Age fiscal policy seems to call for continuous and growing deficits pretty much forever.

As I said, unprecedented and definitely ominous.

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The New York Times‘ newest editorial board member, Sarah Jeong, was outed as a bigot yesterday after dozens of tweets from less than four years ago were unearthed, revealing extreme hatred of white people. 

The Times, in response, claimed to have known about the tweets – and said they were simply Jeong imitating racists. 

“Her journalism and the fact that she is a young Asian woman have made her a subject of frequent online harassment. For a period of time she responded to that harassment by imitating the rhetoric of her harassers.” -NYT

Except this was quickly dispelled when several tweets of Jeong’s in which she drops casual bigotry such as “fuck white women” out of the blue were caught by other Twitter users. 

Now, as the Daily Caller‘s Amber Athey reports, Jeong’s Twitter history also reveals hatred for cops and men.

The NYT claimed that Jeong was “imitating” the behavior of people who harassed her online, but this does not explain why she was tweeting “fuck the police” and encouraging people to “kill all men.”

A search for “cops” and “police” on Jeong’s Twitter reveals an extensive history of anti-cop sentiment and a lack of sympathy for police who are injured on the job.

In one tweet from 2014 she wrote, “let me know when a cop gets killed by a rock or molotov cocktail or a stray shard of glass from a precious precious window.”

“Cops are assholes,” she said in 2015.

“If we’re talking big sweeping bans on shit that kills people, why don’t we ever ever ever ever talk about banning the police?” a tweet from 2016 asserts. –Daily Caller

New York Times Columnists New Hire Sarah Jeong tweets Called for Dead Cops — “I WOULD FIGHT THE COPS WITH MY GUNS” “Cops Could Die” pic.twitter.com/IAwKy3ZZ3w

— Blue Lives Matter (@RetiredNYCPD) August 3, 2018

Jeong also fantasized about killing men, joking that even if only “bad men” were killed, it would still include all men. 

How can you kill all the men without a good vampy lipstick

— sarah jeong (@sarahjeong) January 20, 2014

@jilliancyork kill more men

— sarah jeong (@sarahjeong) March 30, 2014

It all makes perfect sense, right?  

Media: “Trump voters are white racists and Nazis and racism is why Trump won.”

NYT: “Racism is fine if you’re crapping on white people.” https://t.co/zsK5mX99PG

— Doctor Jesse Kelly® (@JesseKellyDC) August 2, 2018

Of course, the MSM is already starting to cover for Jeong – as evidenced by journalist Tim Pool’s observation that the BBC “stealth edited” an article to change the word “racist” to “inflammatory” without noting the update:

Stealth editing is beyond unethical. Too many large news organizations do it.

The BBC, by altering the article without notice, makes my quoting of them seem like I’m editorializing.

Did you know most large news organizations do this? https://t.co/0axXdbU8bn pic.twitter.com/5IhGgWHCYk

— Tim Pool (@Timcast) August 3, 2018

The BBC also added quotation marks to the phrase “Racist Tweets” to suggest they aren’t actually racist.

Nothing to see here folks, just the NYT hiring and then defending a bigot who openly hates white people, men and cops. Of course, the Times also said of ABC’s decision to cancel Roseanne: “The network’s decision to cancel “Roseanne” over a racist comment will cost it. But when people decide to let racism slide, it costs the rest of us.” 

Unless it’s one of their own… 

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Stoking the flames of the relentless trade war between the US and China, earlier today Beijing unveiled a list of $60 billion of some 5,207 goods imported from the United States that will be taxed with extra tariffs ranging from 5 to 25%, should the U.S. follow through on a plan to impose duties on $200 billion of Chinese goods as early as next month.

Here are some facts and figures about the products (via BBG):

• Taxation breakdown:
  • 2,493 products fall under the 25% category;
  • 1,078 products will be taxed at 20%,
  • 974 at 10%
  • 662 at 5%
• Liquefied natural gas to be taxed at 25%
• Agricultural products may face levies between 10% and 25%
• Machinery is mainly taxed in 20%, 10% and 5% categories
• Mining, mineral and metal products face tariffs of 10%-25%; natural and synthetic chemicals are taxed under all four brackets
• Sports equipment is mainly taxed under 10% and 20% categories
• Motor vehicles, together with their parts and accessories, fall mostly within the 5% bracket

Will this be the final trade war salvo? Certainly not: in response to China’s sanctions announcement, earlier today Larry Kudlow told Bloomberg that Trump will keep pressing China for trade concessions as the administration views China’s $60BN response as “weak” although together with the last tariff rounds, it pretty much exhausts the amount of imports that China takes from the US in any given year, and so China can’t impose further sanctions even if it wants to.

“We’ve said many times: no tariffs, no tariff barriers, no subsidies. We want to see trade reforms. China is not delivering, OK?,” Trump’s top economic advisor Larry Kudlow said. “Their economy’s weak, their currency is weak, people are leaving the country. Don’t underestimate President Trump’s determination to follow through.”

That said there is some hope for a ceasefire: U.S. and Chinese officials have held “hardly any conversations” in the past month, but there’s “some hint” the Chinese may be warming to the idea of negotiations, Kudlow said. There’s recently been some communication at the highest levels, he also told reporters outside the White House, although with neither leader willing to appear weak, it is virtually certain that unless both parties agree on a ceasefire at the same time, the trade war will continue.

Meanwhile, Chinese authorities – bracing for economic fallout – have taken a range of measures in recent weeks to bolster the economy. On Friday officials stepped in to cushion the yuan, which has been battered by trade tensions and was approaching the key level of seven to the dollar, and the PBOC announced it would impose a reserve requirement of 20% on trading of foreign-exchange forward contracts, making it far more difficult to short the yuan.

Commenting on the Yuan devaluation, which many saw as greenlighted by Beijing, Kudlow said the weaker yuan indicates that investors have questions about the strength of China’s economy, adding a lack of intervention to prop up the yuan is helping cushion the impact of the trade war for China, although that clearly changed in the course of the day.

“Some of the currency fall though, I think, is just money leaving China cause it’s a lousy investment and if that continues that will really damage the Chinese economy,” Kudlow said.

Of course, China’s intervention, apart from being seen as a from of soft capital controls to prevent any further capital flight from the nation by keeping the yuan stable, will also have the result of putting further pressure on the Chinese economy which will no longer be able to offset US tariffs via a weaker currency, effectively providing an easing of monetary conditions for the US.

The full list of US products subject to 25% tariffs is shown below. Unfortunately, China’s Ministry of Finance saw it fit to only provide a non-English version.

 

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A Calgary indiginous woman who knocked out a white woman’s tooth on November 1 while yelling “I hate white people” did not commit a hate crime, according to privincial court Judge Harry Van Harten. 

The victim, Lydia White, was standing outside a Calgary pub talking to another person whne Crowchief walked up and yelled “I hate white people,” before punching White in the face – knocking out a tooth. Upon her arrest, Crowchief told police “the white man was out to get her,” according to the Calgary Herald. 

Yet Judge Van Harten didn’t see any racial motivation whatsoever…

Provincial court Judge Harry Van Harten, in a written decision, said Tamara Crowchief’s motivation for striking Lydia White was not related to racial bias.

Crown prosecutor Karuna Ramakrishnan, who had sought a sentence of 12 to 15 months, argued Crowchief’s unprovoked attack last Nov. 1, amounted to a hate crime.

But Van Harten agreed with defence counsel Adriano Iovinelli that there was insufficient evidence to establish Crowchief attacked White because of the colour of her skin.

“There is no evidence either way about what the offender meant or whether . . . she holds or promotes an ideology which would explain why this assault was aimed at this victim,” said Van Harten during his ruling. “I am not satisfied beyond a reasonable doubt that this offense was, even in part, motivated by racial bias.”

At a court hearing earlier this year, White said she’s still confused by the assault.

“I still get angry when I think about it,” she said. “I don’t understand why this woman did this. I never did anything to her. Never even spoke to her.”

Crowchief, who had been in jail over six months before Trial, was given 12 months probation “and ordered her to get psychological and psychiatric counselling, as well as counselling for substance abuse,” the Herald reported. She is also banned from drinking or going to a business that specializes in the sale of alcohol. 

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Authored by Patrick Buchanan via Buchanan.org,

A war with Iran would define, consume and potentially destroy the Trump presidency, but exhilarate the neocon never-Trumpers who most despise the man.

Why, then, is President Donald Trump toying with such an idea?

Looking back at Afghanistan, Iraq, Libya, Syria and Yemen, wars we began or plunged into, what was gained to justify the cost in American blood and treasure, and the death and destruction we visited upon that region? How has our great rival China suffered by not getting involved?

Oil is the vital strategic Western interest in the Persian Gulf. Yet a war with Iran would imperil, not secure, that interest.

Mass migration from the Islamic world, seeded with terrorist cells, is the greatest threat to Europe from the Middle East. But would not a U.S. war with Iran increase rather than diminish that threat?

Would the millions of Iranians who oppose the mullahs’ rule welcome U.S. air and naval attacks on their country? Or would they rally behind the regime and the armed forces dying to defend their country?

“Mr Trump, don’t play with the lion’s tail,” warned President Hassan Rouhani in July: “War with Iran is the mother of all wars.”

But he added, “Peace with Iran is the mother of all peace.”

Rouhani left wide open the possibility of peaceful settlement.

Trump’s all-caps retort virtually invoked Hiroshima:

“Never, ever threaten the United States again or you will suffer consequences the like of which few throughout history have suffered before.”

When Trump shifted and blurted out that he was open to talks – “No preconditions. They want to meet? I’ll meet.” — Secretary of State Mike Pompeo contradicted him: Before any meeting, Iran must change the way they treat their people and “reduce their malign behavior.”

We thus appear to be steering into a head-on collision.

For now that Trump has trashed the nuclear deal and is reimposing sanctions, Iran’s economy has taken a marked turn for the worse.

Its currency has lost half its value. Inflation is surging toward Venezuelan levels. New U.S. sanctions will be imposed this week and again in November. Major foreign investments are being canceled. U.S. allies are looking at secondary sanctions if they do not join the strangulation of Iran.

Tehran’s oil exports are plummeting along with national revenue.

Demonstrations and riots are increasingly common.

Rouhani and his allies who bet their futures on a deal to forego nuclear weapons in return for an opening to the West look like fools to their people. And the Revolutionary Guard Corps that warned against trusting the Americans appears vindicated.

Iran’s leaders have now threatened that when their oil is no longer flowing freely and abundantly, Arab oil may be blocked from passing through the Strait of Hormuz out to Asia and the West.

Any such action would ignite an explosion in oil prices worldwide and force a U.S. naval response to reopen the strait. A war would be on.

Yet the correlation of political forces is heavily weighted in favor of driving Tehran to the wall. In the U.S., Iran has countless adversaries and almost no advocates. In the Middle East, Israelis, Saudis and the UAE would relish having us smash Iran.

Among the four who will decide on war, Trump, Pompeo and John Bolton have spoken of regime change, while Defense Secretary James Mattis has lately renounced any such strategic goal.

With Israel launching attacks against Iranian-backed militia in Syria, U.S. ships and Iranian speedboats constantly at close quarters in the Gulf, and Houthi rebels in Yemen firing at Saudi tankers in the Bab el-Mandeb entrance to the Red Sea, a military clash seems inevitable.

While America no longer has the ground forces to invade and occupy an Iran four times the size of Iraq, in any such war, the U.S., with its vastly superior air, naval and missile forces, would swiftly prevail.

But if Iran called into play Hezbollah, the Shiite militias in Syria and Iraq, and sectarian allies inside the Arab states, U.S. casualties would mount and the Middle East could descend into the kind of civil-sectarian war we have seen in Syria these last six years.

Any shooting war in the Persian Gulf could see insurance rates for tankers soar, a constriction of oil exports, and surging prices, plunging us into a worldwide recession for which one man would be held responsible: Donald Trump.

How good would that be for the GOP or President Trump in 2020?

And when the shooting stopped, would there be installed in Iran a liberal democracy, or would it be as it was in Hosni Mubarak’s Egypt, with first the religious zealots taking power, and then the men with guns.

If we start a war with Iran, on top of the five in which we are engaged still, then the party that offers to extricate us will be listened to, as Trump was listened to, when he promised to extricate us from the forever wars of the Middle East.

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On the surface, today’s jobs report was solid: despite the headline miss, July payrolls were in line with expectations when one strips out Toys “R” Us job losses and the volatile summer vacation-linked occupations. Wages also came in line, rising at 2.7% Y/Y (a number which however was the most negative since 2012 when adjusted for inflation).

However, looking deeper between the lines reveals a potentially troubling problem.

Consistent with historical experience however, the breakdown in job creation by wage has evolved throughout the expansion. At first, more of the new jobs are for people with skills. As the cycle matures, job creation rotates in favor of lower-wage positions. Lower-wage workers are more easily replaced and have less bargaining power, so benefits from the economic expansion do not trickle down until the labor market is especially tight.

What this means in practical terms – as DB’s Torsten Slok explains – is that over the last three years, i.e. during the later stage of the current expansion, cumulative low-wage employment has risen by 104%, outperforming the high-wage segment which increased by only 64% over the same period. In the three years preceding that, high-wage jobs were created at a much higher rate, increasing 251% compared to only 28% for low-wage jobs.

And, as shown in the chart below, this means that high wage jobs have actually been declining throughout 2018 as employers have shifted their hiring to low-wage occupations, and replacing existing highly-paid workers with less productive, but cheaper, surrogates.

This has significant consequences for wage growth: the greater the portion of low wage jobs as a percentage of total, the more subdued overall hourly earnings growth will be. Which is precisely the phenomenon we have observed in recent years, and is what has stumped the Fed for which wage inflation has repeatedly been defined as a “mystery.”

There is another major problem: in their pursuit of semi-skilled workers, and low wage employment in general, potential employers have aggressively lowered their selection criteria. As a result, according to the BLS, over the past 3 months the vast majority of the total workers hired, some 1.1 million, are high school graduates or those without a high school diploma.

What about workers with some college degree or higher? Here the US economy has actually lost 233K workers!

Pink Floyd was right: American workers indeed no longer need any education.

Alas, there are extensive negative consequences of hiring workers who have – at best – graduated from high school. First and foremost, a chronic lack of productivity, which incidentally is also the key reason why this has been the slowest economic expansion in US history. And as the latest data reveals, the recent surge in hiring of less than college grads, confirms two things: wage growth will remain anemic at best, and productivity – that key component of GDP – will continue to shrink.

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