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Authored by Jeff Thomas via InternationalMan.com,

A popular game amongst young ne’er-do-wells in the US in the 1950s was “chicken,” in which two drivers drove their cars at rapid speed toward each other. Whichever one veered away first was deemed the “chicken.”

Of course, any sane, mature individual would regard both drivers as not only potentially suicidal, but also extraordinarily stupid. (As can be imagined, the game sometimes ended disastrously.)

At that same time, Adlai Stevenson, who was twice the democratic candidate for president, created the term “brinkmanship,” a term that was defined by John Foster Dulles as quoted in the above image.

Brinkmanship is essentially “chicken,” except that it’s played by men in suits and is potentially far more disastrous.

There’s a general assumption that people in suits and people “in charge” are somehow more rational and/or more intelligent than teenagers who enter into a motorized spitting contest, but this is not the case. The people in suits merely put a better spin on their idiocy and risk the lives of tens of millions in doing so.

Brinkmanship became the byword for US policy toward Russia and, by extension, Cuba.

In an international shoving match that lasted into the 1960s, the US would give Russia a Dulles-inspired shove. The Russians would shove back and so on, each aware that he could not be the first to back down, or, as Mister Dulles said, he would be lost.

This reached its peak in the Cuban missile crisis of 1962. The USSR shipped missiles with nuclear warheads to Cuba and the US discovered it. President Kennedy blockaded Cuba and, for twelve days, the world lived on the very brink of nuclear war.

Mister Kennedy, of course, brought in the Joint Chiefs of Staff of the Military—the most respected and experienced generals in the US armed forces. Their joint recommendation was for Mister Kennedy to “push the button—now!” They stated that the Russians unquestionably had their finger placed just above their own button and the “winner” would be the one who pressed first.

In spite of their unanimous and vehement recommendation, Mister Kennedy held out hope that armageddon might be avoided. He contacted USSR Premier Khrushchev, whose generals were also reportedly telling him to “push the button—now!”

But, amazingly, the two leaders had cool enough heads to work out an agreement in which each would back off substantially from the situation.

It’s important to emphasize that this was a highly unusual development. Almost never in history do we see two major leaders put their egos aside, act in a calm and responsible manner, and place the well-being of millions above their own desire to be the “winner.”

Clearly, the military leaders of both empires disagreed with the decision. They were eager to play “chicken” and worry about the results at a later date (if there were one).

Surely, Mister Dulles would have agreed with them, had he been consulted.

Another individual who is on record as having agreed with them was Fidel Castro. Although his country would have unquestionably been devastated first in such a conflict, he was furious that he hadn’t been a party to the discussion between the leaders of the two empires. He was far less concerned with the future of the Cuban people (and humanity in general) than he was about being recognized as an important player in the discussion.

Of course, Mister Castro was also a military man and, as history shows, military men have a marked tendency to “shoot first and ask questions later.” Throughout history, Napoleon, Stalin, Hitler, Churchill, Patton, MacArthur and countless others have demonstrated that they will sacrifice any number of lives in order to come out in the end as the “winner.”

Trouble is, in warfare, the generals on both sides (as evidenced in the Cuban missile crisis) are equally determined to be the winner – a condition which virtually guarantees untold death and destruction. History is full of examples of national leaders who continued to wage war until the death of the last man—then threw women and children in to continue the fight, long after all hope for winning was gone.

There are very few Kennedys and Khrushchevs in history. However, there are countless Napoleons, Pattons, MacArthurs, etc. All were great tacticians; however, all were also guilty of allowing their egos to override their common sense, and each was prone to being recklessly aggressive, sometimes leading to defeat.

It should also be mentioned that, in 1962, the US Secretary of Defense was not a military man, but a business executive. As a businessman, Robert McNamara believed that negotiation was always preferable to blind aggression, and he was instrumental in supporting Mister Kennedy’s desire to work with the Russians toward a solution.

Again, this is an historic rarity. In the present US, that post is held by one General “Mad Dog” Mattis and the National Security Advisor is one John Bolton—as hawkish and obsessive a man as has ever held this post.

Added to this is a president who, in describing his attitude toward Iran said, “I would bomb the shit out of ‘em!” (Not quite the essence of diplomacy.)

And so, once again, the US government has chosen brinkmanship as its national policy and, once again, it’s provoking Russia. In the Cuban missile crisis, China was quick to throw its military weight behind Russia, and we can expect this once again.

The primary difference between 1962 and today is that the world at large sees the US very much as the aggressor—not as a defender of democracy, as the US promotes itself. And today, the US has far fewer cards to play.

So, if the Cuban situation was an historic anomaly, what is the rule, historically?

Well, the US most certainly didn’t invent brinkmanship. It’s common for one nation or empire to push another until the situation explodes. Prior to World War I, all of Europe was spoiling for war and a minor event—an assassination by one man—was enough to light the powder keg.

In 1941, Japan only attacked Pearl Harbour after the US had cut off its supply of oil.

The Spanish-American War was justified by the sinking of a ship in Havana Harbour—and to this day, it’s uncertain whether it was caused by an engine-room accident.

Similarly, the American Revolution was kicked off by a standoff between colonists and British regulars, in which someone on one side or the other, perhaps out of nervousness, squeezed the trigger of his musket too tightly, causing chaos.

The list of such spark points to war is endless. Virtually all wars in the last hundred years have been precipitated by brinkmanship, followed by a relatively minor “trigger” event. In each case, the war was promised to be brief and victorious by those who recommended full-scale retaliation, and invariably, they were manifestly incorrect.

Once again, leaders are playing with brinkmanship. When war breaks out, it may well be the result of a minor event, a false flag event, or a failure of a military commander to restrain himself as ordered. Events will then escalate, as they always do and, in a year or two, the world will be asking, “How did this ever get so out of hand?”

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It is official. Consumers in Baltimore appear to be tapped out.

The Central-Bank-free-money-anything-goes-induced restaurant bubble in the most dangerous city in America: Baltimore, has begun a violent period of deflation — on par with a possible collapse.

At least 24 restaurants have closed since the start of 2018, “including Federal Hill stalwart Regi’s American Bistro, Hampden’s popular Corner Restaurant and Charcuterie Bar and Canton’s Fork and Wrench,” said the Baltimore Sun.

Chris LeBarton, a market economist for CoStar Market Analytics, warned that increased vacancy rates for small commercial real estate spaces reflect the recent wave of closures.

“Vacancy rates for spaces up to 3,000 square feet – often home to independent restaurants – rose to 8.1 percent at the end of March, up from 6.8 percent at the end of September, when the city underwent a previous wave of closures. That rate is at its highest since 2010,” LeBarton added.

According to the U.S. Bureau of Labor Statistics, the total number of Baltimore restaurants and bars declined 4.6 percent in 2013 and 2016 – from 1,613 to 1,539. This was not the case nationally, food and drinking establishments soared 5.7 percent, 8.9 million in 2013 to 9.4 million in 2016.

One consumer analyst told The Baltimore Sun that some factors behind the surge in restaurant closures include, “natural cycles of the industry, millennials’ preference for convenience and value and – more particular to this area – competition in the suburbs and high crime rates that ward off suburbanites.”

Downtown Partnership President Kirby Fowler said restaurants are an extremely speculative industry and often have a three- to five-year life cycle.

“There might be issues involving the city’s reputation, but it as well could be an explanation of what the restaurant is doing or not doing,”Fowler said of the factors driving local closures. “To open a restaurant is a risky endeavor, but it’s what we all want to happen more and more.”

Brandon Chicotsky, a business faculty member at Johns Hopkins University, blamed millennials for the recent wave of closures, who want to “eat conveniently,” which means they are too broke and must resort to at-home dining options, including saving money by shopping at grocery stores and or using Grubhub or Uber Eats.

Chicotsky said, “the 18-to-35 age group, in particular, has had 50 percent fewer restaurant visits per capita in the past 10 years, and they go out at a lower rate than older millennials and Generation X, those born between the mid-1960s and early ’80s.”

“Restaurants that are now perceived to offer convenient delivery, high-quality food, and a healthy or sustainable brand association are succeeding more than restaurants, many of which are debt-financed, that invest in dining experiences, reservation services, and parking,” he added.

Chicotsky pointed out that many restaurants are debt-financed, which suggests many operators are financing operations through short-term or medium-term loans possibly pegged to the London Interbank Offered Rate (LIBOR). Since late 2015, the Federal Reserve unleashed an impressive round quantitative tightening, which has sent the one-month Libor near the 2 percent level for the first time since 2008. In other words, restaurants with weak balance sheets, who took on too much leverage are becoming increasingly unsustainable.

Cecilia Benalcazar co-owned Federal Hill’s In Bloom, which shuttered its doors last month. Benalcazar told The Baltimore Sun that millennials are demanding $12-to-$18 price point on meals or more happy hour deals, which puts a tremendous strain on her chefs, who used high-quality, trendy ingredients that frequently cost more.

Benalcazar was among other restaurateurs, consumer analysts, and customers who told The Baltimore Sun that many are fleeing the city, either for safety concerns — or because the price points are too high.

In Bloom was one of the 24 restaurants that have so far collapsed since the start of 2018.

According to official Baltimore City Police Department data, violent crime in the region surged to two-decade highs, following the 2015 Baltimore Riots which forced the Maryland Army National Guard to lockdown the city for more than a week. The opioid crisis is also fueling a massive increase in violent crime, including homicides, shootings, and robberies across the city.

Besides blaming the millennials and violent crime, the restaurateurs, consumer analysts, and customers failed to mention the severe wealth divide which plagues the city. Many residents have been left behind in the Central-Bank induced economic expansion over the past eight years. In return, there are tens of thousands of Baltimorons who are too broke to consume.

Here are the Baltimore restaurant and bar closures in 2018:

After six years, Fork & Wrench, the Canton restaurant on Boston Street, closed in early May. (Source: Lloyd Fox / Baltimore Sun)

After a fire May 1, owner, Tony Weir said he hoped Charles Village Pub could reopen within two to three weeks. (Source: Christina Tkacik / Baltimore Sun)

Modern Cook Shop, at 901 S. Wolfe St. in the Union Wharf apartment building, will serve its last meals May 5. (Source: Kenneth K. Lam / Baltimore Sun)

The Corner Restaurant and Charcuterie Bar, at 850 W. 36th St. in Hampden, will close for good Monday, April 30. (Source: Gene Sweeney Jr. / Baltimore Sun)

Bistro Rx in Canton closed in mid-April. The bar and restaurant is slated to be replaced by a to-be-named concept. (Source: Tom Brenner / Baltimore Sun)

HarborQue in Federal Hill closed in April. The owners plan to take their business on the road with food trucks and catering services. (Source: Michelle Gienow/For City Paper)

Regi’s American Bistro in Federal Hill closed in April after 40 years in business, the last 15 of which were overseen by owner Alan Morstein. (Source: Barbara Haddock Taylor / Baltimore Sun)

Mussel Bar and Grille in Harbor East closed at the start of April due to construction and street closures surrounding its building. The restaurant plans to reopen in April 2019. (Source: Colby Ware for the Baltimore Sun)

Aggio, Bryan Voltaggio’s last remaining restaurant in Baltimore, closed in March after four years at Power Plant Live. (Source: Kim Hairston, Baltimore Sun photo)

In Bloom in South Baltimore (1444 Light St.) closed in April after it was rebranded from Liv2Eat last year. (Source: Algerina Perna / Baltimore Sun)

8 Ball Bar & Grill, which debuted as 8 Ball Meatballclosed early in April after two years in business in Fells Point. (Source: Barbara Haddock Taylor / Baltimore Sun)

The Tilted Kilt in White Marsh closed abruptly in March. (Source: Colby Ware/ Baltimore Sun)

Wine Market Bistro in Locust Point closed in March after 14 years in business. The wine shop portion of the space remains open. (Source: Colby Ware / Baltimore Sun)

Bluegrass in South Baltimore closed for a rebrand. It’s unclear what will take its place. (Source: Algerina Perna / Baltimore Sun)

Play Cafe in Hampden closed in March. Source: (Barbara Haddock Taylor / Baltimore Sun)

The Bun Shop closed its Light Street location in downtown Baltimore in March. Its original location in Mount Vernon remains open, and another shop in Towson is in the works. (Source: Caitlin Faw / Baltimore Sun)

The Foreman Wolf Restaurant Group closed Petit Louis Bistro in Columbia and replaced it with Lupa, an Italian restaurant. Petit Louis in Roland Park is still open. (Source: Dylan Singleton, Baltimore Sun)

Jack’s Bistro closed in January in Canton, where the Regal Beagle is temporarily taking its place. (Source: Kenneth K. Lam / Baltimore Sun)

Waterfront Kitchen in Fells Point closed in January and was replaced by Ampersea, a rebranded restaurant under the same ownership. (Source: Doug Kapustin / Baltimore Sun)

The Life of Reilly Irish Pub in Butchers Hill closed in January. (Source: Handout)

Dinosaur Bar-B-Que closed in Harbor East in January. (Source: Kim Hairston / Baltimore Sun)

Ryan’s Daughter Irish Pub & Restaurant in Belvedere Square closed in January. (Source: Barbara Haddock Taylor / Baltimore Sun)

Ryder’s closed in January in Upper Fells Point and was soon replaced by a new bar called Happy Hour Heaven. (Source: Barbara Haddock Taylor / Baltimore Sun)

Bagby Pizza Co. closed its Harbor East flagship restaurant in January. (Source: Doug Kapustin / Baltimore Sun)

In Summary, the coming restaurant apocalypse seems to have reared its ugly head in the Baltimore region, where crime, millennial trends, surging short-term rates, and widening wealth inequality have popped yet another Central-Bank induced bubble. Good luck Baltimore, you will need it.

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Authored by Mike Shedlock via MishTalk,

Day of Reckoning: Hundreds of thousands of interest-only loan terms expire each year for the next few years.

The Reserve Bank of Australia (RBA), Australia’s central bank, warns of a $7000 Spike in Loan Repayments as interest-only term periods expire.

Every year for the next three years, up to an estimated 200,000 home loans will be moved from low repayments to higher repayments as their interest-only loans expire. The median increase in payments is around $7000 a year, according to the RBA.

What happens if people can’t afford the big hike in loan repayments? They may have to sell up, which could see a wave of houses being sold into a falling market. The RBA has been paying careful attention to this because the scale of the issue is potentially enough to send shockwaves through the whole economy.

Interest Only Period

​

In 2017, the government cracked down hard on interest-only loans. Those loans generally have an interest-only period lasting five years. When it expires, some borrowers would simply roll it over for another five years. Now, however, many will not all be able to, and will instead have to start paying back the loan itself.

That extra repayment is a big increase. Even though the interest rate falls slightly when you start paying off the principal, the extra payment required is substantial.

Loan Payments

 

RBA Unconcerned

For now, the RBA is unconcerned: “This upper-bound estimate of the effect is relatively modest,” the RBA said.

Good luck with that.

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The Venezuelan Army could be nearing a collapsing point, as high-ranking military officers and enlisted troops “are joining the exodus of Venezuelans to Colombia and Brazil, fleeing barracks and forcing President Nicolas Maduro’s government to call upon retirees and militia to fill the void,” said Bloomberg.

Venezuela’s economic crisis keeps getting worse, as high desertion rates are now plaguing military bases in Caracas and the countryside, which poses significant security challenges in the upcoming presidential election on May 20. By law, the military oversees all voting centers throughout the country, including the electoral materials and voting machines.

“The number is unknown because it used to be published in the Official Gazette. Now, it is not,” said San Miguel, director of Control Ciudadano, a military watchdog group in Caracas. She said soldiers are fleeing for the same reason citizens are: “Wages are low, the quality of food and clothing isn’t good.”

A massive shortage of enlisted troops and military officers comes as more than one million Venezuelans have escaped the collapsed economy, according to the International Organization for Migration. Hyperinflation has made the country’s currency worthless, which has sparked a biblical humanitarian crisis across the failed state.

According to one unnamed retired officer, military personnel who rank as high as generals were recently “called in and quartered for several days at their units.” The government has called in retired officers and militia members, as the hemorrhaging continued before the election in twelve days. “Government officials are training these fill-in personnel for the election,” said a second anonymous retired officer.

Bloomberg said the U.S. and regional organizations would not “recognize the balloting as legitimate,” due to the military’s deep involvement with the election process.

“As the once-prosperous nation fell apart, Maduro consolidated power by creating an all-powerful assembly to bypass the national legislature. The regime jailed and banned opponents and launched a wave of arrests before the May 20 vote. The U.S. and regional organizations have refused to recognize the balloting as legitimate, and the main opposition coalition has promised a boycott in the face of what it says will be a rigged contest.

Venezuelan elections are overseen by its military, the strongest force in the country and one increasingly intertwined with Maduro’s regime. The rush to fill out units is required by the so-called Plan Republica, the security deployment of the Defense Ministry that begins on the eve of election day and lasts until the day after. By law, the armed forces are guarantors of peace and security, guarding ballots and voting machines at all 14,000-odd voting sites. They transport these materials and machinery to each voting center, often a school, and guard it,” said Bloomberg.

Control Ciudadano’s San Migue said in March that the level of desertion from the Fuerza Armada Nacional Bolivariana has increased to dangerous levels in the last year, noting that the exodus is primarily enlisted troops. She said 10,000 troops have recently asked to retire.

“Since 2015 there has been an increase in military detainees accused of treason, desertion and other crimes,” she added. “Our estimate is that there are 300 people who are imprisoned, mostly troops. A few are senior officers, others are civilians linked to the military.”

Gonzalo Himiob, director of Foro Penal, a human-rights group, said, “those who ask to retire are put into arrest for a week at the military counterintelligence headquarters.”

Himiob added, “that’s how worried the government is.” He also said most flee the country after they are released from jail. In recent days, the government has run out of jail cells for military personnel who have asked to retire.

A flashpoint could be developing as President Maduro suggested that he will start an armed revolution if his opposition comes into power that wants to hand the country’s “riches” to “imperialist” forces [Americans]. In a campaign speech last week, President Maduro — who is hoping to win a new six-year presidential term in the highly disputed May 20 election — attacked his opposition rival, Henri Falcón, of wanting to sell the country’s vast natural resources to “the gringos.”

Nevertheless, Venezuela could soon face the first full-blown civil war the Western world has experienced in more than 100-years, as it now appears the country’s military is imploding before an election that the U.S. will not recognize the results.

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Authored by Chris Hamilton via Econimica blog,

Global energy consumption appears to be in the process of a secular roll over in demand…and this very much includes China.  However, due to the multitude of dynamics impacting price (beyond demand), I have no strong sense as to which way the price of energy will be heading.  I’m solely focused on the demand side.  To make the case for decelerating consumption, alongside innovation and conservation, I show total primary energy consumption (by region and by type) as well as the changing 15 to 64 year old population.  Make of it what you will.

Global Primary Energy Consumption by region in the chart below.  The story since 2005 has been declining consumption in North America, Europe, Eurasia offset by soaring Chinese consumption, rising Asia (x-China) and the Middle East, and far slower growth in Central / South America and Africa.  But since the chart below is too busy to glean much from, I’ll break out each region below to show how this narrative is changing…

I show each region’s total energy consumption (yellow line, quadrillion BTU’s) versus the annual change in the 15 to 65 year old population (blue columns…this is no estimation through 2030 as this population has already been born and will simply take the current generations place.  These numbers also assume current rates of immigration/emigration are maintained).

The quantity and rate of core population growth seems to impact energy consumption and economic activity multiples beyond what the raw numbers would indicate, creating an exponential function in the creation of new housing, new infrastructure, new factories, new suppliers. etc. etc.  As this core population growth decelerates or outright declines, the multiplier effect declines or outright disappears.  Once that population growth multiplier weakens or is gone, a multitude of federal government and central bank activities are undertaken to cut interest rates, incent rising levels of debt, undertake monetization, etc., etc..

North America…Total energy consumption has been stagnating since 2000, when core population growth began decelerating.  Despite ZIRP, all the debt undertaken, and the massive growth in central bank balance sheets…total energy consumption (the best proxy for real economic activity) continues declining.

North America year over year change in energy consumption by energy type, 1984 through 2015.  2008 was just the start of the trouble, according the continually decelerating population growth and likewise for energy consumption.

Europe…Decelerating and now declining core population since ’05 going hand in hand with declining energy consumption…and is likely to accelerate on the downside.  The population growth (chart below) already anticipates ongoing trend immigration…and absent a fast growing jobs base, high rates of immigration aren’t likely to spur much economic activity or energy consumption growth.  Europe is in trouble with a capital “T”.

Europe year over year change in energy consumption by energy type, 1984 through 2015.  The declines since ’08 are a secular trend likely picking up speed.

Asia/Oceania (x-China)…again, a deceleration of core population growth being met with a stalling energy consumption.  A stall in total energy consumption is likely while the core population growth continues decelerating and the primary importers of the world (N. America/Europe/Japan) are outright declining.

Asia/Oceania (x-China) year over year change in energy consumption by energy type, 1984 through 2015.  The slowing growth since ’08 is pretty clear and given the decelerating domestic and international growth…this decelerating growth is likely to be felt all over the world.

Eurasia…pretty much the former Soviet Union and the post Soviet rebound has ended with the now declining core population.

Eurasia year over year change in energy consumption by energy type, 1984 through 2015.

Middle East…Likely the most dynamic and positive region despite the clear, but relatively smaller, deceleration in core population growth.

Middle East year over year change in energy consumption by energy type, 1984 through 2015.  There does appear to be a little slowing in the growth of energy consumption visible in the year over year chart.  Given the slowing in the other regions and ongoing deceleration of population growth in the region, I’m betting on further relatively minor slowing in the rate of growth…but still growing.

Central and South America…different chart, same dynamics.

Central/South America year over year change in energy consumption by energy type, 1984 through 2015.  Like the Middle East, the situation will almost surely be worsening.

Africa…a miniscule total energy consumption rising in lockstep with a gargantuan population increase (consumption per capita, on a relative basis is incredibly low and shows no signs of  changing).  Africa’s population growth simply isn’t translating into any significant total level or growth in energy consumption.

Africa year over year change in energy consumption by energy type, 1984 through 2016.  The global secular slowdown seems to be negatively impacting Africa as despite the massive population growth, total energy consumption growth is decelerating.

China…China domestic dynamics are very clear (and adding in that the importers of 90% of China’s exports are now likewise in decline)…and the clear deceleration in energy consumption in China is likely just getting started.

China year over year change in energy consumption by energy type, 1984 through 2016.  Clearly, China is attempting to reduce coal consumption by substituting renewable and natural gas but it is clear that the offsets are just replacing coal…as growth in energy consumption appears to have begun the topping process.  This is not likely to be a straight line but China has already deluged it’s corporations and local governments with bad debt beyond belief…and the excess capacity is epic.  So, given this, perhaps a straight line fall should be the base case?!?

I’ll be very curious given the significantly higher oil prices (dashed red line, chart below) if China maintains its commitment to reducing coal…or if relatively cheaper coal makes a comeback in China?

Just for reference, the charts below suggest which regions paired to which energy types are most likely to fall or sustain their consumption.

Coal consumption by region, 1980 through 2015.  Despite the goals to reduce carbon emissions…I’m betting on a resurgence in coal consumption if oil prices maintain (or surpass) the current $70/barrel level.

Oil consumption, by region 1980 through 2015.  I’ve previously made the case for decelerating demand HERE.

Natural Gas consumption by region, 1980 through 2015.

Nuclear & Renewable energy consumption by region, 1980 through 2015.

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A former UK-based WikiLeaks employee who leaked chat logs to The Intercept in February which he says reveal a preference for a 2016 GOP election win is back for more – this time with additional screenshots and colorful commentary. 

In response to the February article, Assange hit back in a series of Twitter rebuttals – pointing out that The Intercept‘s author, Micah Lee, failed to do basic fact checking, such as noting that the WikiLeaks account has a rotating staff (i.e. anyone could have written the controversial messages), and the article used “messages from late Oct 2016 when I infamously had no internet access.”

– the @WikiLeaks account is run by a rotating staff as has been repeatedly stated over the years: https://t.co/RYrYbLeaNt
– basic fact checking would have shown this. another example: the article uses messages from late Oct 2016 when I infamously had no internet access.

— Julian Assange ⌛ (@JulianAssange) February 14, 2018

And now, the WikiLeaks “defector” known only as “Iain” is back to take another bite at the anti-Assange apple in The Daily Beast – which makes the same assumption that the chat messages were all written by Assange.

Iain (The Daily Beast has agreed not to use his last name) is a 41-year-old writer, artist, and musician based in Edinburgh who joined a small circle of key WikiLeaks supporters after meeting with Assange in 2013, and remained connected to the group until October 2016. –The Daily Beast

Iain began working with WikiLeaks in 2012. The longtime liberal anti-war activist became directly involved in the organization after WikiLeaks came under fire for the Chelsea Manning leaks. Iain gained Assange’s trust “through supportive posts on Twitter and his now-dormant website, titled Martha Mitchell Effect and later Hazelpress,” however he said that after it became clear that the Wikileaks staff wanted to fight the US establishment. 

He finally found what he sees as a kind of Rosetta Stone into Assange’s thinking in a leaked email Assange wrote way back in 2007 while soliciting support for the nascent WikiLeaks concept. One of the goals for WikiLeaks, Assange wrote, “is total annihilation of the current U.S. regime and any other regime that holds its authority through mendacity alone.” –Daily Beast

“I never understood at the time that these people are really quite fanatical, and not in a good way,” said Iain. “They will lie to your face, they will lie on Twitter… The pressure is being piled on, the lies are being piled on.”

Previously unpublished portions of the message logs show that Assange harbors lasting animus for those he views as opponents and traitors. While strategizing a response to a critique by former WikiLeaks volunteer James Ball, Assange lays out the need “to create doubt that he’s an accurate narrator.” Of Birgitta Jónsdóttir, an Icelandic politician who worked with Assange on the first big WikiLeaks release, he writes, “There’s no trust, one cannot trust a back-stabber, but there is an alignment of interests.” –The Daily Beast

Another message from February 2016 reads “WL enemies end badly… Sometimes it is because we cause it to happen, other times it seems like fate.”

After Iain became disaffected with WikiLeaks, he gathered logs from the chat group which he organized called “WikiLeaks Plus 10,” described as a “low-security channel for some very long term and reliable supporters who are on Twitter.” 

Iain said he felt compelled to leak the messages after the revelation that Assange held friendly, supportive online conversations with Donald Trump Jr. during the election. Before then, Iain had struggled to understand WikiLeaks’ sudden embrace of the alt-right. After the Trump Jr. chats emerged, Iain went back over the logs of the WikiLeaks Plus 10 group chats and also dug into Assange’s pre-WikiLeaks history. “What happened in 2016 was just so shocking to me. I was just trying to figure out, What was that? Where did it come from? And so I started looking back.”

The Daily Beast then goes on to mention WikiLeaks tweeting about “Hillary Clinton’s health, Pizzagate, and even Democrats engaging in satanic rituals at the same time it was releasing genuine material stolen from the Democratic National Committee and the Clinton campaign.”

And the article’s grand, underlined shocker? 

This was not, as it might appear, a cynical bid to garner Donald Trump’s favor; nor was it simple pandering to a new funding base, argues Iain. It was part and parcel of Assange’s alignment with Russian President Vladimir Putin against their common adversary, the United States.

Speaking of Assange’s “WikiLeaks Party” – a failed 2013 bid to win an Australian Senate seat, Iain says “The party’s website content now operated solely to legitimize Russian propaganda by placing it under the umbrella of WikiLeaks’ valuable brand of truth and transparency,” said Iain.

“Information and false information have always been weapons, used at all levels of society, from the family structure to the state, and WikiLeaks… uses both, and not just to inform or mislead society, but to literally reshape it according to a singular viewpoint,” said Iain. “It is a viewpoint that speaks of ‘annihilation’ and then acts in the taking of political ‘scalps.’”

We await Julian Assange’s reply – as soon as he’s allowed to use the internet again. 

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Authored by Ron Paul via The Ron Paul Institute for Peace & Prosperity,

One of the few positive things in the ill-named USA FREEDOM Act, enacted in 2015 after the Snowden revelations on NSA domestic spying, is that it required the Director of National Intelligence to regularly report on its domestic surveillance activities. On Friday, the latest report was released on just how much our own government is spying on us. The news is not good at all if you value freedom over tyranny.

According to the annual report, named the Statistical Transparency Report Regarding Use of National Security Authorities, the US government intercepted and stored information from more than a half-billion of our telephone calls and text messages in 2017.

That is a 300 percent increase from 2016. All of these intercepts were “legal” under the Foreign Intelligence Surveillance Act (FISA), which is ironic because FISA was enacted to curtail the Nixon-era abuse of surveillance on American citizens.

Has the US government intercepted your phone calls and/or text messages? You don’t know, which is why the surveillance state is so evil. Instead of assuming your privacy is protected by the US Constitution, you must assume that the US government is listening in to your communications. The difference between these is the difference between freedom and tyranny. The ultimate triumph of totalitarian states was not to punish citizens for opposing its tyranny, but to successfully cause them to censor themselves before even expressing “subversive” thoughts.

We cannot celebrate our freedom or call ourselves an exceptional nation as long as we are under control of the kind of surveillance that would have turned the East German Stasi green with envy. We know the East German secret police relied on millions of informants, eager to ingratiate themselves with their totalitarian rulers by reporting on their friends, neighbors, even relatives.

It was a messy system but it served the purpose of preventing any “unwelcome” political views from taking hold. No one was allowed to criticize the policies of the government without facing reprisals.

Sadly, that is where we are headed.

Our advanced technological age provides opportunities for surveillance that even the most enthusiastic East German intelligence operative could not have dreamed of. No longer does the government need to rely on nosy neighbors as informants. The NSA has cut out the middleman, intercepting our communications – our very thoughts – at the source. No one who calls himself an American patriot can be happy about this development.

Not even the President is safe from the surveillance state he presides over! According to a news report last week, federal investigators monitored the phone lines of President Trump‘s personal lawyer, Michael Cohen, even when he was speaking to his client – the president!

An all-powerful state that intercepts its citizens’ communications and stores them indefinitely to use against them in the future does not deserve to be called the leader of the free world. It is more the high-tech equivalent of a Third World despotism, where we all exist subject to the whim of those currently in political power.

Edward Snowden did us all an enormous favor by risking it all to let us know that our government had come to view us as the enemy to be spied on and monitored. If we are to regain the liberty that our Founders recognized was granted to us not by government, but by our Creator, we must redouble our efforts to fight against the surveillance state!

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Just days after an unredacted section of a House Intel Committee report revealed a whole new set of lies and distortions promulgated by senior officials at the FBI during the tenure of former Director James Comey, the “A Higher Loyalty” author was back making the media rounds. But this time he focused his anger on a former colleague: Former New York Mayor and US Attorney Rudy Giuliani.

In an interview with Bloomberg News, Comey said he is “disappointed and disgusted” with Republican attacks on Special Counsel Robert Mueller’s Russia investigation – a comment that was clearly directed at Giuliani, given his widely publicized anti-Mueller media blitz last week (during which he famously divulged some information that deviated from the White House’s message).

Giuliani, echoing a now-famous line frequently tweeted by Trump, blasted the Mueller probe as a witch hunt that has overreached from its original purpose of investigating whether the Trump campaign colluded with Russia.

“The special counsel so far seems to think that Comey is Moses,” Giuliani said. “And I happen to think Comey is Judas.”

The former prosecutors also suggested that Comey may have intentionally lied to Mueller about his interactions with Trump to create a “perjury trap” for the president.

Comey had most recently taken umbrage over Giuliani’s comment likening the FBI agents who carried out the Michael Cohen raids to “stormtroopers”, which Comey claimed was tantamount to calling them nazis. Of course, Giuliani denied that this was his intent.

“They’re not just criticizing the investigators,” Comey said Tuesday in an interview with Bloomberg News. “They’re attacking the entire institutions of justice, and that’s what makes this unprecedented in my experience.”

Comey, 57, a longtime Republican who was fired a year ago by Trump, said he no longer considers himself a member of the party.

“I’m shocked, disappointed and disgusted,” Comey said of the GOP. “I don’t know what it stands for honestly, and it’s going to have to answer those questions.”

Mueller’s appointment followed Trump’s ouster of Comey on May 9 of last year. “Happy anniversary,” quipped Comey, who’s on an extended tour to promote his best-selling book, “A Higher Loyalty,” which tears into Trump as morally unfit for the presidency and compares his actions to those of a Mob boss.

On the subject of a potential White House subpoena, Comey said he wasn’t sure whether a sitting president could be forced to comply with a prosecutor’s subpoena.

Comey said he wasn’t sure if Mueller can compel Trump to testify by subpoena if he refuses to sit down for a voluntary interview, or if a sitting president can be indicted by the Justice Department. While an existing legal memo from the department’s Office of Legal Counsel rules out an indictment, Comey said it could be rescinded and changed.

But in perhaps the interview’s most baffling moment, Comey praised Mueller for, among other things, running a tight ship with “no leaks”. Never mind that the Mueller team has tolerated a torrent of embarrassing leaks about Trump and his associates.

“My view is, having participated in complex investigations, this one is moving very quickly and a whole lot of evidence of the productivity has emerged in the charges they’ve brought publicly — guilty pleas and indictments,” Comey said. “The way Bob Mueller is operating is the way it’s supposed to operate. No leaks. No updates on the progress of his investigation other than public charges. Our justice system is just designed that way.”

The attacks on Mueller’s investigation could indicate a consciousness of guilt, Comey said.

“What it definitely demonstrates is an utter lack of appreciation for the core values of this country and the things that matter above all the normal everyday disputes in this country,” Comey said, returning to his concern about what he considers the compromises being accepted by supporters of the president.

“Tax cuts are important. Immigration is important. Guns are important,” he said. “But none of them are as important as the values that make this country what it is. I just think it’s a fool’s bargain, including among faith leaders who think they’re making a trade to gain something. All we have is our values.”

And in what was probably his most sanctimonious moment, Comey declared that while tax cuts that boost the pay of middle class workers and immigration laws that keep America safe are “important” – these priorities can never be subordinated to America’s “values.”

What those might be, we leave to you.

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Via Global Macro Monitor,

The S&P500 could not hold the 50-day moving average today, setting, yet again, a nice bull trap to hang out the MoMo crowd.  Seeing a lot more traps, both bull and bear,  these days.  It is the result of the increasing dominance of machine trading.   They are above our human emotions.  Smug, don’t you think?

We wrote in our recent Week In Review post,

• S&P500 generated a very rare back-to-back bear trap (broke and closed above 200-day) days on Thursday and Friday.  It has occured only 0.76% of the trading days since 1962

What a market.

Back-to-back bear traps followed by today’s bull trap.  Three traps, three days in a row.

Bull Traps In This Correction  

Since the March 2009 low in the S&P500, there have only been 128 bull traps, as defined by the cash S&P piercing the 50-day moving average in an intraday move only to close back through it.  This example of a bull trap has occurred only 1.13 percent of the 11,309 trading days since the 2009 low.

During the correction that began on January 29th, there have already been 8 bull traps, or 11.59 percent of the the 69 trading days.

Pennant Forming

It looks like a pennant is forming here, which is bullish if you ignore rising interest rates and oil prices, tighter money, rising inflation, and geopolitics.   Macro traders cannot adhere solely to technical patterns but must consider them.  Just another arrow in the global quiver.

Upshot

We believe most of the positive earnings and macro news are pretty much priced, and the markets have not fully discounted the risk of a negative outcome in any one of the macro swans that are looming and flying around out there.  The economic locomotive is running near full speed and close to overheating, and unless policymakers create a new economic bullet train,  this seems to be “as good as it gets.”

Moreover,  we find it ridiculous the market catapults 100 S&P points in a few days because the Oracle of Omaha is accumulating Apple shares.   Mr. Market does what Mr. Market does, listens to who it listens to.

Warren, Charlie, and Bill dropped a big duce on Bitcoin over the weekend, and though it did retreat from $10k,  the sell-off was tame for Bitcoin standards.

Warren, a Hall of Famer, in our book, but doesn’t seem to fair so well when he and Charlie venture into large cap tech, however.

IBM was always a curiosity for Buffett followers. He’d spent years telling them that technology companies were outside his area of expertise then plowed more than $10 billion into the company in 2011.

Flawed Valuation

Back then, Buffett’s investment was a huge vote of confidence for the aging computer-services firm and its leadership. But things soon went south. IBM struggled with declining sales, forcing Buffett to defend the pick. For awhile, he even added some to his holdings.

Last year, however, he’d had enough. Just before Berkshire’s annual meeting in May, he acknowledged that his valuation had been flawed and that he’d begun to cut back on the investment.  – Bloomberg, February 2018

Fan Of AAPL Innovation,  Not APPL Financial Engineering 

We were Apple’s biggest fan early in the decade.  See here.

Can’t buy the stock here, however, because of the following chart and until the dark cloud of  our trade spat with China looks to be clearing.  May trade it but taking it down as a medium-term investment (1-12 months) is a big no no in our house.

The Oracle is probably going to be right long-term on Apple.

Sooner or later the company will come up with another world changing gadget.  Until then, financial engineering just doesn’t tickle our fancy nor does it help Main Street or the economy.  Of course, we will always entertain a trading opportunity.

Moreover,  Apple has become just too large.   The company’s annual revenues exceed the GDPs of Greece and Peru, and 75 percent of the world’s country GDPs.

Senior management thus has a huge revenue nut to cover, and must wake up the first day of every year and begin their quest to sell enough electronic gadgets in size to surpass the GDP of Ireland.   That is a big, big, nut.

Apple is trying to increase recurring revenues.  Services now account for about 14 percent of total revenues, or $33 billion over the past four quarters.   Not there yet for an almost $1 trillion market cap, however, and, at the end of the day,  Apple is still an iPhone company with flat to negative unit sales growth over the past two years.

What The Stock Bulls Need Now, And Soon

Enough with Apple.

It is imperative the S&P bulls:  1)  hold the 20-day moving average at 2,663.04;  2) bust and close above the 50-day at 2,679.56.   The slope of the 50-day is now negative and in a downtrend, which, on its own, is bearish,  and 3) take out, close , and stay above the recent high at 2,717.49

Relentless Pounding Of The 200-day Moving Average

A lower swing high, that is below 2.717,  will almost seal the fate the bears will take out the 200-day sometime very soon.  They have been relentlessly pounding the 200-day during this correction.

In bull markets, the 200-day may be tested maybe once or twice over a short period then bounce big and continue the uptrend.  Not test it every third day as it seems to be doing recently.

Some believe what doesn’t kill you makes you stronger.

Personal character?  Absolutely.

Technical support levels?  We don’t think so.

Eventually,  the front line will crack, even if it is the robots defending it.  And, what if they decide to all retreat at the same time and go offer only, as they did in the flash crash?

When contemplating the constant hammering of the S&P500’s 200-day moving average, think the financial equivalent of Chairman Mao’s “human wave theory.”

“overwhelm the defenders by the sheer weight of numbers” – Wikipedia

Stay frosty, Oscar Mike.

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