Houthi rebels in civil-war torn Yemen have threatened to start attacking oil tankers and warships sailing under Saudi coalition flag, unless Riyadh lifts its naval blockade of Yemen which threatens the lives of millions in the war-torn country.

The threat of a military response to the ongoing blockade was made after Houthi leader Maj. Gen. Yousef al-Madani met leaders of the naval, coastal defense and coast guard forces Saturday. On that day, Houthi leader Abdel-Malek al-Houthi posted a message on Facebook assuring that “international navigation will remain safe as it was before,” making clear that “only those who attack our country” will be targeted.

“Battleships and oil tankers of the aggressor and its movements will not be immune from the fire of Yemeni naval forces if directed by the senior leadership,” Al Masirah news cited the country’s navy and coast guard as saying Sunday. A military spokesman for the Houthi rebels, Gen. Sharaf Ghalib Luqman, said that “systematic crimes of aggression” and the “closure of ports” compels the Houthi forces “to target all sources of funding” of the aggressor. He added the country is ready to “respond to the escalation of the Saudi-US aggression promptly.”

The Saudi-led military coalition announced last week that it was temporarily shutting all of Yemen’s land border crossings as well as its air and sea ports in response to a ballistic missile that targeted Riyadh on November 4. The kingdom accused Houthis of launching an Iran-supplied ballistic missile at the Saudi capital last weekend, and responded with bombing raids on the Yemeni capital, Sana’a. Iran has denied allegations that it supplies weapons to the Houthis, but concedes it backs the rebels’ cause. The Houthis, which are loyal to Yemen’s former president, are currently in control of most of Yemen, despite the two-year war with the Saudi Arabian-led coalition that began in defense of the exiled incumbent, Abd-Rabbu Mansour Hadi.

Following the November 6 closure of all ports of entry into Yemen, a range of UN bodies expressed concern over the fate of civilians in the country, where nearly 7 million people are starving while others depend on humanitarian assistance amidst a deadly cholera epidemic. According to the United Nations, the blockade could result in the death of millions from famine. Although Saudi Arabia says access of aid workers to the crisis-stricken country is open, aid agencies, according to Reuters, have claimed that they have not been able to enter it.

“The recent closure of the Yemen’s airspace, sea and land ports has worsened the already shrinking space for the lifesaving humanitarian work. It is blocking the delivery of vital humanitarian assistance to children in desperate need in Yemen. And it is making a catastrophic situation for children far worse,” Meritxell Relano, the UNICEF Representative in Yemen said Friday. Also describing the situation in Yemen as “catastrophic,” a spokesperson for the UN Office for the Coordination of Humanitarian Affairs (OCHA) urged the Saudis to lift the blockade, as up to 90 percent of Yemen’s daily needs are served through humanitarian aid. “That lifeline has to be kept open and it is absolutely essential that the operation of the United Nations Humanitarian Air Service (UNHAS) be allowed to continue unhindered,” Jens Laerke said.

UN spokesman Stephane Dujarric warned that the Saudi-led blockade “has had a tremendously negative impact on a situation that is already catastrophic.” While Mark Lowcock, the UN under-secretary-general for humanitarian affairs, said that unless Saudi Arabia lifts the blockade, “it will be the largest famine the world has seen for many decades, with millions of victims.”

Last week, the UN Security Council demanded that the Saudi-led coalition keep Yemen’s air and sea ports open to aid deliveries into the country following a session discussing Riyadh’s draconian measures.

To date, no UN warnings and threats have had any impact. The Saudi-led coalition has been waging a military campaign against Shiite Houthi rebels in Yemen since March 2015. According to the latest UN figures, the three-year-old conflict has so far claimed the lives of over 5,000 civilians, in addition to nearly 9,000 people that have been injured.

via http://ift.tt/2yXnBM6 Tyler Durden

Authored by James Howard Kunstler via Kunstler.com,

It must be exciting to wake up on a gilded bed somewhere in Riyadh and realize that you are Saudi Crown Prince Mohammad bin Salman, mover and shaker of Middle East order. Actually, exciting just to have woken up at all.

Perhaps Prince MBS checks to make sure that there aren’t seventy-two virgins in the room before he rises to prayers, state business, and the prospect of World War Three.

The Kingdom of Saudi Arabia (KSA) has been a giant gasoline bomb waiting to explode for decades. It occupies one of the geographically least hospitable corners of the earth. Its existence as a modern (cough cough) state relies strictly on the reserves of oil discovered as recently as the late 1930s, that is, within the lifetime of people still reading this blog. The oil supply is in steep decline, and so, of course, is the stability of the kingdom.

Politically, it’s a super-medieval operation, an absolute monarchy tied to a severe religious order with the law floating precariously between the two, and old-fashioned customs such as the public beheading of criminals (for misdeeds such as “adultery,” “atheism,” and “sorcery”). The Saud clan has controlled the throne all these years, and its grip on power is slipping as the country itself slips into the prospective next era of its history, minus the endless gusher of oil that has made its existence possible – hence, a true existential crisis without the usual pseudo-intellectual bullshit.

How are they going to support the thirty or forty million people who will still be there when the oil exports dribble down? Most of the work done in the country is performed by foreign “guests.” The indigenous folk don’t even remember how to milk a camel, let alone run routine maintenance on a desalinization plant. (And what are you going to run the de-sal plant on when the oil runs down?) These are questions that must drive thoughtful Saudi royalty mad.

Hence, the Kingdom is going mad. The current king, Salman bin Abdulaziz Al Saud, is the latest in a line of geriatric monarchs. His brother and predecessor, Abdullah, spent his last years in a limbo of medical life-support (virgins standing by), and Salman is reputed to be dotty. Crown Prince MBS has assumed more of the king’s duties by necessity, but the land is filled with thousands of other princes, many of them frustrated, angry, and jealous of the Crown Prince’s prerogatives.

One can only imagine the clouds of intrigue wafting through the ornate corridors of wealth and power. Crown Prince MBS is lately out to deprive his many royal rivals of those two critical assets, and a couple of said rival princes – Abdul Aziz bin Fahd and Mansour bin Muqrin – were offed altogether (gunfight, helicopter crash) two weeks back. A score of non-royal public officials and business poobahs have also been arrested, including top ministers (Finance, Economy & Planning), the former CEO of the national airline, and a brother of Osama bin Laden, whose family ran the country’s biggest construction company.

It really amounts to a nascent civil war and it comes around at exactly the moment that the Kingdom’s arch-enemy, Iran, is feeling comfortably aggressive. Iran, formerly known as Persia, is a much sturdier old polity that has been around long before there was much ado about oil. They were fighting the ancient Greeks and Romans back in the day, and won a few rounds. But, of course, Iran has a good deal of oil, too. And having pissed off the Americans not so long ago by overrunning the US embassy and all, our country has been striving to punish them ever since — especially making it difficult for them to sell oil to our “friends” in Europe. As it happens, there are plenty of customers elsewhere for Iran’s oil — and, yes, they will eventually face their own depletion problems, but they do have the world’s largest untapped reserve stash next door in Iraq, which they are steadily and increasingly coming to control. And they do have that millennium-and-a-half beef with Arabia’s Sunni branch of Islam headquartered in KSA.

Crown Prince MBS may see war as a unifying theme for his domestic difficulties. He has a fifty-plus years’ stock of American war toys that have hardly been used – except for turning neighboring Yemen into a landfill. The USA has been KSA’s staunch ally all these years, and MBS has every reason to believe we have his back, as Iran probably believes Russia has its back. And then there is Israel in the background with its nuclear-armed subs… Israel, which actually took seriously Iran’s declaration a few years ago to wipe it off the face of the earth – and which now much of the world castigates Israel for so doing.

And in the middle of all this, poor, feckless, Hezbollah-haunted Lebanon, and the boneyard formerly known as Syria. The region is seriously coming apart. Someone is going to make a dangerous misstep.

The Golden Golem of Greatness has been off far away sampling General Tsao’s chicken and Singapore noodles.

And this country is completely preoccupied with Sex Among the Stars. Thank goodness the stock market only goes up.

via http://ift.tt/2zFv1Rd Tyler Durden

Via The Daily Bell

223 years ago today, “The Dreadful Night” occurred in Western Pennsylvania, after an uprising called The Whiskey Rebellion.

The United States was brand new. Soldiers who had fought for independence from Great Britain found themselves on opposite sides of a skirmish. Some were having their rights violated practically before the ink was dry on the Bill of Rights. Other Veterans of the Revolution were doing the oppressing at Alexander Hamilton’s behest.

The Whiskey Rebellion saw farmers stand up to an unfair tax handed down by the federal government, and the government responded with the force of a monarchy. It may have all sprung from Alexander Hamilton’s desire for glory. Or Hamilton, the first Secretary of Treasury, may have had other motives for setting the precedent of force which still lives on today.

It all started after the Revolution, in 1791, when the federal government was in debt, and had no official money. The notes they paid to soldiers were worth fractions of what was promised, but many had no choice but to accept the funds and go home in order to try to survive.

But the soldiers were not the only ones who needed to be paid after the war. There were a number of rich investors and bankers who had provided the capital needed to win the Revolution. They too were awaiting repayment.

Alexander Hamilton had a better relationship with these financiers than with the soldiers. Hamilton was one of the leading banking figures of the time. He proposed a tax which would have two purposes. The tax would raise the revenue necessary to pay back the wealthy financiers of the Revolution. But the tax would also bring under the jurisdiction of the federal government a group of pioneers living in rural western Pennsylvania. The tax was to be levied on the production of whiskey, and not just at a commercial level. Everyone who made whiskey owed the tax. This would be the first federal tax on domestic goods.

This was a problem for the people of western Pennsylvania. Most people in this area used whiskey as a currency. Whatever surplus grain a family had would be converted into whiskey in order to preserve it. Whiskey would still have the calories of grain and was drank by almost everyone. It could be used for preserving and making some medicines.

Whiskey didn’t spoil, was widely used, and easy to transport. This made it an ideal currency. No need for banks, no need for paper money the worth of which can be manipulated. These people had tangible goods with intrinsic value absent of government mandate.

But Alexander Hamilton and the federal government insisted that the tax on whiskey be paid in coin.

For western Pennsylvanians, this amounted to an income tax. But even worse, now they had to find a way to convert their whiskey into coin. They had no use for coin since they used whiskey as a currency. But now the federal government would require them to use more time and effort just to pay the tax.

But it gets worse. Producers of whiskey were given a choice. They could pay a flat tax or pay a per gallon price. For commercial distillers who produced a lot of whiskey, the flat rate was cheaper than the per gallon rate. But for individuals, the per gallon rate was cheaper.

This was a political reward that Hamilton gave to commercial whiskey distillers in the area. They would now have the cheapest whiskey available since the flat tax worked out to a lower per gallon rate than home-distillers were forced to pay.

Hamilton did this to gain a foothold of support in the area (his enforcer was a large scale distiller) and to convert the economy of western Pennsylvania away from a whiskey-based currency. The sooner everyone was brought under the jurisdiction of the federal government, the sooner the government could raise money to pay for spending.

The tax destroyed the way of life for your average rural Pennsylvanian. First, they were singled out for a tax that most city dwellers would not be affected by. Next, they were forced to find a way to earn coin in order to pay the tax. Then, the tax made their whiskey more expensive compared to commercial distillers. This meant it was harder to sell, making it harder to convert the whiskey into coin to pay the tax.

Many people from this area moved out west to avoid the intricacies of society and government. Some were veterans of the Revolution. They would not accept this tax.

They were outraged that this tax was levied against them while the Northwest Indian War was going badly for the U.S. making the area unsafe. Seeing the tax as an advantage to grain growers (who owed no tax) and big distillers in the east (who owed a flat rate) also fueled western Pennsylvanian’s anti-federal sentiment.

They decided that if this was the way the new country was to treat its people, they wanted no part in it. They refused to pay the tax and served vigilante justice to tax collectors and other sympathizers of the federal government. They reacted similarly to how the United States reacted to unfair British taxes which sparked the Revolution.

By 1794 the climax of the situation unfolded. A U.S. Marshall was sent to the area and a showdown ensued. Some rebels were shot in a skirmish and their leader, a veteran of the Revolution, was killed. The tax collector and U.S. Marshall were captured only to later escape, and the fury of western Pennsylvanians peaked.

There was talk among the rebels that they should secede from the United States and form their own country. The plan that emerged was a watered down version of protest in which the rebels would march through Pittsburgh nonviolently. This was meant to send a message that they would not back down against what they saw as Hamilton’s attempts to pay back the wealthy by taxing the ordinary citizen.

President George Washington decided it was time to send in the army. A commission he sent to western Pennsylvania returned and recommended using the military to enforce the tax laws, and restore order.

By October 1794 Washington was seeing troops off, and heading back east, much to the dismay of some moderate locals including Congressman William Findley. He saw Washington as a fair president who just wanted to do what was right. Alexander Hamilton was the real force behind the army heading west, according to Findley, who was included on Hamilton’s list of possible rebels to be arrested.

Hamilton went with the army of nearly 20,000 as a civilian adviser. He was instructed by Washington to maintain the utmost discipline among the troops. As they advanced toward their target in western Pennsylvania, Hamilton was to prevent any breach of law by the troops, such as pillaging the countryside.

Officers harshly punished any soldier caught stealing, but the soldiers were doing so because of the lack of rations and clothing. Hamilton decided to solve this by making the theft of these goods legal. According to William Hogeland in his book The Whiskey Rebellion:

The quartermaster corps, [Hamilton] announced, would impress civilian property along the way. Now families watched helplessly as bayonet-wielding soldiers–no longer freelancing thieves but officials, authorized by the president–commandeered hard-won winter supplies of grain, meat, firewood, and blankets on behalf of the government of the United States. A steady, freezing rain meant the arrival of winter. Families whose sustenance was carted away faced grim months ahead (218).

Once the army and Hamilton finally arrived at the target county in western Pennsylvania, they contonued their oppression. They did not care much to follow the due process laid out in the Bill of Rights in new Constitution, despite Hamilton’s assurances to the President.

Many residents had signed oaths of support for the U.S. government. By signing, they risked local vigilante justice. But the U.S. promised that they would be pardoned as punishment was served to the region for failing to pay the new tax, and leading an insurrection against officials of the federal government.

These oaths were ignored and many who had signed them were arrested by Hamilton and the army anyway. A month earlier the first arrests of a few rebels had been made, prompting the most guilty among the rebels to flee. Anyone left in western Pennsylvania had minimal roles in the insurrection, and had certainly not led it. The most violent rebels, who had committed the worst acts against government officials, had already fled.

“The Dreadful Night” began in the middle of the night on November 13, 1794. Hamilton had created three lists of people: those who were not to be arrested, those who would be arrested, and those who were to be brought in as witnesses for questioning. The first list was not provided to the generals. Hamilton gave them the authority to arrest anyone they suspected of having participated in the rebellion, aided the rebels, raised liberty poles, or robbed the mail. He also authorized the troops to arrest local officials who failed to suppress the insurrection. The officers and soldiers who were passed these orders were delighted to finally have some excitement and authority on this trip west.

One particularly unstable officer named White was put in control of  the 40 prisoners which Hamilton thought would give the most valuable intelligence on the whole situation. These prisoners “were brought to a dark log structure” where they were tied up and seated on the muddy floor, and guarded by soldiers instructed to keep the prisoners away from the warmth of the fire. The tavern keeper was told he would be killed if any prisoners received food, and thus for more than two days the sadistic officer in charge:

…starved and dehydrated his shivering, exhausted captives, steadily cursing and castigating them, glorying in their helplessness and describing their imminent hanging. Even White’s troops became concerned about the captives who seemed barely alive (222).

The prisoners were then marched 12 miles in bad weather to be held in another jail, still without being charged with any crime. Following interrogation, most of them were eventually released without any criminal proceedings. This was unsurprising since most of those arrested were indeed innocent.

The arrests and brutality went on for several days throughout western Pennsylvania. This served as a reminder to all residents not to speak out against the federal government. Hamilton made it clear to the presiding judge that regardless of innocence, a good number of detainees would need to be marched back to Philadelphia in order to give the impression that the federal government had accomplished its goal, and put down a violent, unjustified rebellion. The judge held a number of rebels for trial even with what he considered lack of evidence, fearing that the army would revolt if too many prisoners were let go.

The prisoners that remained in custody were marched back to Philadelphia with great show in order to create the illusion of glory. It was essentially a photo op for Hamilton and Washington, who could now say, see, look what we did, look at the problems we solved. The prisoners were paraded on Christmas Day 1794 before 20,000 Philadelphians.

It was a disappointing show to the spectators who knowing that thousands of rebels had marched against the government, were surprised to see only twenty prisoners. Twelve cases went to trial, and two rebels were convicted. The rest weren’t released until 1796. They were left to find their way home if they could afford it. The whiskey tax remained hard to collect until it was repealed in 1801 by President Thomas Jefferson.

From the beginning of this country, the federal government has not been very good at abiding by the Constitution. Clearly, the due process rights of most of the “rebels” arrested were violated. Also violated were the rights of the farmers whose food and property was confiscated along the way in order to supply the army.

Cruel and unusual punishment was used on the prisoners, prior to them even being charged. What a precedent to set at the birth of a “free” country. They tore up the Bill of Rights before the ink had time to set.

With Hamilton’s broad presence in the foundation of the country’s banking and finances, is it any wonder that his vision has led us to where we are today? The government still uses taxes to give some businesses an advantage. The government still levies taxes which are meant to change the way citizens live their lives.

But remember that the government still found it hard to enforce and collect the whiskey tax. And today we can arrange our lives in a similar fashion, and make it difficult for the government to collect their unfair taxes. Let the spirit of rebellion inspire you.

via http://ift.tt/2mn2Jb9 TDB

It sounds like something out of the plot of a mob movie: Two corrupt government employees offer a third party who discovers one of their schemes a cut of the profits. When he refuses to accept their dirty money, he is promptly “taken care of."

Unfortunately, that fictitious trope is suspiciously close to reality in the strangulation death of Sgt. Logan Melgar, a green beret who was found dead back in June while he was participating in a special forces mission in Mali, where a cohort of US military “advisers” have been assisting French and local forces in rooting out terrorist groups affiliated with the Islamic State and Al Qaeda.

According to the Daily Beast, military investigators now suspect that two of Melgar’s colleagues who were members of the elite Navy SEAL team six murdered him after he discovered they were illegally skimming money from a fund used to pay informants.  The SEALS offered to cut him in, but Melgar declined, according to the Daily Beast’s sources.

A few days later, he was found dead.

Sgt. Logan Melgar

Nobody knows – or at least nobody would tell the DB – what specifically started the June 4 altercation at 5 am. But the fight quickly escalated and ended with Melgar losing consciousness. He also stopped breathing. The SEALs attempted to open an airway in Melgar’s throat, officials said. It is unknown whether Melgar died immediately. The SEALs and another Green Beret, according to former AFRICOM officials, drove to a nearby French clinic seeking help. Melgar was dead when he arrived at the clinic, the official said. Asphyxiation was the cause of death. While his death was initially ruled an accident, NCIS investigators now suspect that he was strangled to death. Melgar had been working directly with the SEALs during the intelligence mission in Mali.

The fact that the SEALs apparently did such a poor job of covering their tracks has greatly aided investigators. With Melgar dead, an apparent panic set in. The SEALs told superiors that Melgar was drunk during so-called combatives—that is, hand-to-hand fighting exercises – and that he was becoming dangerously violent. However, Petty Officer Anthony E. DeDolph, one of the SEALs, was a mixed-martial arts pro. A source told The Daily Beast the SEALs filed at least one operational report about the incident and possibly two. At least one of the reports included an account that Melgar was drunk.

However, when an autopsy was performed, doctors found no signs that Melgar had been drinking or using drugs at the time of his death. At least one of the DB’s sources said Melgar didn’t drink alcohol. Another said it was “the worst excuse they [the SEALs] could’ve possibly come up with."

At least one Africa Command official said Brig. Gen. Donald Bolduc, then commander of Special Operations Command-Africa, was skeptical of the initial reports of Melgar’s death from the outset. He alerted Army Criminal Investigation Command and told commanders in Mali to preserve evidence.

Melgar’s wife, Michelle, was also suspicious. She raised concerns about the cause of death and allegations of drinking, including providing investigators emails sent by her husband about problems he was having with the SEALs.

But perhaps the most disturbing detail provided by Michelle Melgar was the account of a phone call she shared with her late husband just days before his death. Melgar told his wife that he had a bad feeling about two of his SEAL team partners.

Not wanting to say much more, Melgar said he’d fill Michelle in on the rest of the story when he got back home.

Military officials interviewed by the DB were hard-pressed to come up with another example of elite US special forces troops turning on each other like this.

Just 34 years old when he died, Melgar, a Texan, was an Afghanistan veteran twice over. His hometown paper, the Lubbock Avalanche-Journal, reported that Melgar was a 2006 graduate of Texas Tech. He enlisted in 2012 and joined the Army as an 18X – an off-the-street Special Forces recruit. He graduated from the Special Forces Qualification course in 2016.

“Staff Sgt. Melgar did what most only dream of and excelled at every turn!” wrote a Melgar family representative on social media. “His life was epic! He is missed dearly every single day, but his legacy lives on."

As the Daily Beast explains, the US has a “minimal” troop presence in Mali – much smaller than the 800 troops in neighboring Niger, another West African nation that hosts a sizable special operations cadre.

The special operations forces “advisers”  aid US diplomats, Malian soldiers and their French partners in gathering intelligence on a confluence of capable local militants trending Islamist. As the elite troops do in so many countries, they operate in the shadows, with comparatively little oversight – and what their actions actually look like on the ground can be much dirtier than the heroic image the Pentagon prefers to portray.

Of course, Melgar’s death isn’t the only suspicious death of a green beret in Africa this year. Last month, four green berets were killed in Niger after reportedly being ambushed by Al Qaeda-affiliated militants.

After lawmakers and the soldiers’ families demanded more information on exactly what happened, it was revealed a few days ago that the body of Sgt. La David Johnson was discovered in a state suggesting he had been captured and then executed, according to eyewitness accounts. Readers might remember Johnson as the soldier at the center of the Donald Trump “condolence call” controversy that occupied headlines for about a week last month as Trump feuded with a Florida Congresswoman who had been friendly with Johnson’s family.

via http://ift.tt/2zG7TCi Tyler Durden

 

 

The Cost of Endless War Since 9/11

Posted with permission and written by Rory Hall, The Daily Coin

 

 

 

If it were just Federal Reserve Notes that were stolen that would be one thing, but the fact of the matter is we have happily handed over our freedom, individual sovereignty and our national identity. Currently, as a people and as a nation, we are completely lost.

 

For those that remember, Donald Rumsfeld announced on 9/10, you know the day before 9/11, that the Pentagon, the Pentagon that Rumsfeld had been overseeing for years, could not account for $2.3 TRILLION dollars – then you know he and the Pentagon accountants are nothing more than thieves. How do you lose 2.3 trillion of anything? You don’t. You either knowingly give it to someone or you steal it. Either way, you know exactly where 2.3 trillion “widgets”, dollars or grains of sands were placed.

 

Now we learn the Pentagon has spent 3 times more than was originally estimated on the never ending un-Constitutional war. The un-Constitutional invasions of Libya, drone strikes on Yemen and the absolute destruction of Iraq have cost us a lot more than trillions of dollars. If we just focus on the spending for a minute, we see that our country should be the shining city on the hill, but instead, we are the indebted cesspool of corruption and war criminals.

 

Let’s not forget that “ISIS” was trained, armed and funded by the CIA – you know, another group of warmongers that we the tax payers are responsible for paying – read here, here and here for starters to learn about the CIA’s role in the formation of ISIS.

 

THE COST OF WAR FOR THE U.S. TAXPAYER SINCE 9/11 IS ACTUALLY THREE TIMES THE PENTAGON’S ESTIMATE

The United States military has spent more than $5.6 trillion on conflicts since 2001, more than three times the Pentagon’s actual estimate, according to a new study.

The Department of Defense reported earlier this year that it had spent around $1.5 trillion on conflicts, including putting putting troops on the ground in Iraq and Afghanistan, air raids in Syria and Iraq to battle the Islamic State militant group (ISIS) and a drone campaign and raids against extremists in Pakistan.

But that figure appears to underplay the real cost of war for the American taxpayer, at least according to the Watson Institute of International and Public Affairs at Brown University. It puts the total cost at $5.6 billion, or $23,000 per taxpayer.

The Pentagon’s initial estimate put the taxpayer cost at $7,740 per person for the conflicts since the Al-Qaeda-hatched 9/11 attacks in New York that killed almost 3,000 people.

“War costs are more than what we spend in any one year on what’s called the pointy end of the spear,” the study’s author, Neta Crawford, told the Wall Street Journal, which first reported its findings.

“There are all these other costs behind the spear, and there are consequences of using it, that we need to include.”

A picture taken on July 9 shows smoke billowing following an airstrike by the U.S.-led international
coalition forces targeting the Islamic State (ISIS) group in Mosul, Iraq. AHMAD AL-RUBAYE/AFP/GETTY

The image above represents what used to be a neighborhood where families lived, worked and prayed. It is now nothing but a pile of rubble with bodies strewn about like so many bricks or pieces of meaningless nothing. The warmongers want more death, like what you see above, because it means more profits for them. More of our tax dollars move out of our accounts and into these murderers’ accounts. Look at that image of what used to be a neighborhood. What have we become?

 

Newsweek article continues:

 

The study examines not only the money spent by the Pentagon but also the State Department, the Department of Veterans Affairs and the Department of Homeland Security, for resources dedicated to the “war on terrorism.”

The total costs include financial support for allies in the battle against extremist groups, mostly from eastern Europe, such as Croatia, Georgia, Hungary, Poland, and Romania, and a trillion dollars added for the care of veterans who may have received injuries in the conflicts.

The U.S. has spent 16 years in Afghanistan, a conflict that is set to continue with President Donald Trump announcing in September an expansion of the U.S. military presence there to battle the Taliban and ISIS.

The U.S. withdrew from Iraq in 2011 after a decade of occupation but has continued to support and advise Baghdad’s troops. The U.S. airforce has led a coalition of international forces to conduct air raids against ISIS and wrestle back large tracts of territory from the group in western and northern Iraq.

However, the study does not consider U.S. military assistance outside of these countries against ISIS, such as Tunisia, the Philippines or Egypt. Source

These funds represent death and destruction, not peace and prosperity. Look at the image above. This is what we have become and the warmongers want more, always more.

 

Will it ever end? Will we ever see a return of humanity to our country? We will ever see a return of the rule of law, morals or a sense of decency? The black hole our country has slipped into seems to be engulfing the landscape and unless we can slow this out-of-control runaway train we are going to continue moving into the darkness never to see Light again. Is this who we are; is this who we have become?

 

 

Questions or comments about this article? Leave your thoughts HERE.

 

 

 

The Cost of Endless War Since 9/11

Posted with permission and written by Rory Hall, The Daily Coin

 

via http://ift.tt/2zUICXJ Sprott Money

Authored by Zainab Calcuttawala via OilPrice.com,

Tesla’s unveiling of its mass market Model 3 sparked a global interest in making electric vehicles the next big thing in automobile manufacturing. But can the category’s green agenda keep up with its metal and recycling needs?

The concept of bunking the traditional engine for a non-gas guzzling counterpart has been here for decades, but creating an ecosystem for battery charging and bringing vehicle costs down was a challenge for decades.

The sheer force of Elon Musk’s vision is building the infrastructure needed to sustain millions of electric cars in the United States, Europe, and elsewhere. Most major manufacturers have joined the enthusiasm to ditch old-school engines to construct the international fleet of tomorrow.

But this new step doesn’t solve all of the world’s environmental pollution issues related to transportation. The extraction of rare earth minerals, the disposal of lithium-ion batteries, and the sourcing of the energy that powers charging stations are all issues that plague the future of the green argument for electric vehicles.

As Wired notes in an article from last year, electric vehicles are most efficient when they’re light. That way, they need minimal energy to transport their valuable cargo. In search for a light material to carry and conduct batteries, scientists discovered the power of lithium – a highly conductive metal that adds little burden to the vehicle’s frame.

Discovered in 1817, this key ingredient is mostly extracted from deposits in the United States, Chile, and Australia. The most cost-effective method for lithium processing involves pumping salt-rich waters into special evaporation ponds that eventually produce lithium chloride. Then, a special plant adds sodium carbonate to turn the former lithium chloride into lithium carbonate, a white powder.

The whole process requires power, which more often than not is sourced from fossil fuels, not renewables or nuclear energy. This is similar to the issue electric-car charging stations face when evaluating the efficiency of their establishments in eliminating pollution from the environment. In most parts of the U.S., if the stations source their electricity from the grid, they’re just increasing demand for fossil fuels since coal, oil, and natural gas power the majority of the country anyway. Some states, like California, are obvious exceptions because of their heavy investments in green energy, but for the most part, the pattern holds.

Moreover, lithium batteries need proper facilities in order to be recycled once they reach the end of their lifespan. Tesla’s Gigafactory, which promises to produce the electric car manufacturer’s batteries in an environmentally conscious way, says it will lead a program to recycle the hardware responsibly.

“The challenge that we have with recycling these rare metals is enormous,” author David Abraham, from The Elements of Power, says, “because the products that we have now use metals in such a small quantity that it’s not economic to recycle.”

But larger batteries should make a more convincing argument to start responsive recycling programs. Reusing the metal resources in these devices will lower the emissions and mining of rare minerals from the planet, paving the way for a healthier environmental report for future electric vehicles.

“The more batteries that are out there, in various devices, the more interest there is in figuring out how to recycle them or to recapture rare earth metals [from them],” electric car advocate Chelsea Sexton told Wired.

It truly has become a demand issue. As electric cars become increasingly popular, more services will be needed to deal with their production and disposal, accelerating the development of the vehicle category’s branding as the technology of tomorrow’s green Earth.

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This week’s economic calendar features several key data releases and Fedspeak. The main data release in US include: CPI inflation, retail sales, industrial production, housing data and monthly budget statement. We also get the latest GDP and CPI reading across the Euro Area; the employment report in the UK and AU, Japan GDP, China IP, retail sales and FAI. In Emerging markets, there are monetary policy meetings in Indonesia, Chile, Egypt and Hong Kong.

Market participants will also want to pay close attention to tax reform progress in Washington. The House Ways and Means Committee had voted along party lines (24-16) to deliver its bill to the full House. The Senate Finance Committee’s proposal was also revealed last week and is slated for markup this week. Both versions are essentially opening gambits by the two chambers and the hard work begins when the two bills are “reconciled”. As a reminder, the Senate version is likely to be closer to the final version. In our view, there is a decent chance that some version of tax reform can be achieved, but this is likely to be a Q1 event and there are numerous potential stumbling blocks along the way.

With respect to the data, October inflation and retail sales reports are the main focus. Tuesday, DB expects headline PPI (+0.1% forecast vs. +0.4% previously) to moderate following a spike in gasoline prices last month due to hurricane-related supply disruptions. However, core PPI inflation (+0.2% vs. +0.1%) should firm. Analyst will focus on the healthcare services component of the PPI, as this is an input into the corresponding series in the core PCE deflator—the Fed’s preferred inflation metric. Recall that healthcare has the largest weighting in the core PCE.

According to Deutsche Bank, the decline in gas prices will have a similar effect on headline CPI (0.1% vs. +0.6%) released on Wednesday. Core CPI prices (+0.2% vs. +0.1%) are expected to firm but the year-over-year growth rate should remain at 1.7%, down from 2.3% at the beginning of the year. While the market anticipates core inflation to remain tame nearterm, there are signs of an inflection point on inflation. Inflation lags output growth by about six quarters, and in this regard, some of the recent weakness reflects the soft-patch in growth in late 2015/early 2016.

Regarding retail sales, the headline (+0.1% vs. +1.6%) will likely cool due to motor vehicle sales, which slipped to a still robust 18 million units in October following a surge in hurricane impacted regions of the country. Sales excluding automobiles should fare a bit better (+0.3% vs. +1.0%). Per usual, focus will fall on retail control (+0.4% vs. +0.4%), which excludes autos, building materials and gas stations and is the portion of retail sales used to estimate goods spending in GDP. Market participants should also be mindful of revisions, which can be meaningful.

There is also a spate of manufacturing data this week beginning with the New York Fed Empire survey (26.6 vs. 30.2), which could slow after reaching multiyear highs. Thursday’s Philadelphia Fed survey (23.5 vs. 27.9) is also expected to slip but still remain firmly in growth territory. The six-month outlook for capital spending in the latter survey is notable as this has been near historic highs over the past several months and is a reliable leading indicator of capex spending.

Also on Thursday, we get the October industrial production (+0.8% vs. +0.3%) report, which should post a sturdy gain given the increase in manufacturing hours worked and utilities output last month. Indeed, there could be upside risk given hurricane disruptions to the energy and chemical refining complexes.

Rounding out this week’s data releases are Thursday’s NAHB housing market index (66 vs. 68) and Friday’s housing starts (1.220 million vs. 1.127 million) and building permits (1.230 million vs. 1.225 million). There has been some recent weakness in the housing data, and given that the NAHB has come out opposed to the House GOP plans to limit the mortgage interest deduction, sentiment could slip. That said, we anticipate a modest bounce in building activity, which should get a slight tailwind near-term from rebuilding efforts in hurricane-impacted regions.

This week’s Fedspeak may shed more light on monetary policymakers’ views on a December rate hike. Fed Chair Yellen and Chicago Fed President Evans (voter) appear on Tuesday at an ECB conference on “Communications Challenges for Policy Effectiveness, Accountability and Reputation”. Also speaking will be the ECB’s Draghi, BoE’s Carney and BoJ’s Kuroda. Also scheduled to speak throughout the day are the Fed’s Bullard, Evans and Bostic and the ECB’s Coeure and de Galhau. If that wasn’t enough then politics will also get its fair share of attention with President Trump due to attend the East Asia Summit and UK PM Theresa May’s Brexit legislation the subject of two days of examination in the House of Commons.

We may not get much from either given the topic. However, while Yellen appears intent on steering the FOMC in the direction of another rate hike next month,  Evans has been lukewarm given the soft-patch in inflation. We may hear more from Evans on Wednesday when he appears at a conference but his remarks will come before the CPI release. St. Louis’ Bullard (non-voter) will be speaking later Tuesday morning on the US economy and monetary policy and though he is admittedly the most dovish at the Fed, his presentations are often insightful.

* * *

A breakdown of key global events on a day-by-day basis, courtesy of DB’s Jim Reid:

• Monday: Central bank speakers will occupy most of the focus at the start of the week with the Fed’s Harker, ECB’s Constancio and BoJ’s Kuroda all scheduled to speak. President Trump and Secretary of State Rex Tillerson are also due to take part in the US-ASEAN summit in Manilla. Data-wise the monthly budget statement in the US is the sole release. PM May will be the keynote speaker at the banquet for the City of London’s new lord Mayor. Elsewhere the Senate Finance Committee will commence mark-ups of its draft tax bill, while the House’s tax bill is expected to go to Chamber vote this Thursday / Friday.
• Tuesday: A packed 24 hours from start to finish. The data highlights will likely be China’s industrial production, fixed asset investment and retail sales data for October, the final revisions to October CPI reports in Germany and the UK, Q3 GDP for the Euro area (second reading), US PPI for October and the late evening release of Q3 GDP in Japan. Away from the data the ECB’s Draghi, Fed’s Yellen, BoE’s Carney and BoJ’s Kuroda are all scheduled to participate on a policy panel hosted by the ECB. Also scheduled to speak throughout the day are the Fed’s Bullard, Evans and Bostic and the ECB’s Coeure and de Galhau. If that wasn’t enough then politics will also get its fair share of attention with President Trump due to attend the East Asia Summit and UK PM Theresa May’s Brexit legislation the subject of two days of examination in the House of Commons.
• Wednesday: Another fairly packed calendar from start to finish. The overnight release in Japan includes September industrial production. In Europe we’ll receive the final October CPI report in France and the September/October employment stats in the UK. In the US the big focus will be the October CPI print while October retail sales, November empire manufacturing and September business inventories are also due. There is plenty more central bank speak scheduled with the ECB’s Lane, Praet and Hanson all due along with the Fed’s Evans and BoE’s Haldane. NAFTA negotiators from the US, Canada and Mexico are also scheduled to meet for round 5 of discussions.
• Thursday: Following all the regional revisions during the week, Thursday will see the final October CPI report for the Euro area released. UK retail sales data for October and Q3 employment data for France will also be released.  In the US weekly initial jobless claims, Philly Fed PMI for November, import price index for October, industrial production for October and NAHB housing market index for November will be released. The BoE Carney’s, Broadbent and Haldane will all participate at a public plenary session while the ECB’s Villeroy de Galhau and Constancio are due to speak, along with the Fed’s Williams, Mester and Kaplan.
• Friday: A slightly quieter end to the week although the ECB’s Draghi is due to give a keynote address early in the morning in Frankfurt. The Bundesbank’s Weidmann is also slated to speak while the Fed’s Williams speaks in the evening. US housing starts for October and the Kansas City Fed’s manufacturing activity index for November are the data highlights.

Finally, here is Goldman’s detailed take on event just in the US, together with consensus expectations:

The key economic releases this week are the Consumer Price Index on Wednesday and the Philadelphia Fed manufacturing index on Thursday. There are several speaking engagements by Fed officials this week.

Monday, November 13

• There are no major economic data releases.

Tuesday, November 14

• 03:05 AM Chicago Fed President Evans (FOMC voter) speaks: Chicago Fed President Charles Evans will speak on economic and monetary policy issues at an ECB conference in Frankfurt. The topic of his remarks is “The future of Odyssean and Delphic guidance.” Audience Q&A is expected.
• 05:00 AM Federal Reserve Chair Yellen (FOMC voter) speaks: Federal Reserve Chair Janet Yellen will participate in a panel discussion with ECB President Mario Draghi, Bank of England Governor Mark Carney, and Bank of Japan Governor Kuroda at a conference hosted by the ECB. The topic of the panel is, “At the heart of policy: challenges and opportunities of central bank communication.”
• 06:00 AM NFIB small business optimism, October (consensus 104.0, last 103.0):
• 08:15 AM St. Louis Fed President Bullard (FOMC non-voter) speaks: St. Louis Fed President James Bullard will give a speech on the U.S. economy and monetary policy at an Economic Update Breakfast jointly hosted by the Association for Corporate Growth and the St. Louis Fed in Louisville, Kentucky. Audience Q&A is expected.
• 08:30 AM PPI final demand, October (GSe flat, consensus +0.1%, last +0.4%); PPI ex-food and energy, October (GSe +0.1%, consensus +0.2%, last +0.4%); PPI ex-food, energy, and trade, October (GSe +0.2%, consensus +0.2%, last +0.2%): We estimate a flat reading in headline PPI in October, reflecting some deceleration in core producer prices and weaker energy prices. We expect a 0.2% increase in the PPI ex-food, energy, and trade services category. The September report showed firm increases in core finished and intermediate producer prices.
• 01:05 PM Atlanta Fed President Bostic (FOMC non-voter) speaks: Atlanta Fed President Raphael Bostic will give a speech on the economic outlook and monetary policy at the 35th Annual Economics Forum at Auburn University in Alabama. Audience Q&A is expected.

Wednesday, November 15

• 03:00 AM Chicago Fed President Evans (FOMC voter) speaks: Chicago Fed President Charles Evans will speak on economic and monetary policy issues at a UBS European Conference in London. Audience and media Q&A is expected.
• 8:30 AM CPI (mom), October (GSe +0.10%, consensus +0.1%, last +0.4%); Core CPI (mom), October (GSe +0.20%, consensus +0.2%, last +0.1%); CPI (yoy), October (GSe +2.04%, consensus +2.0%, last +2.2%); Core CPI (yoy), October (GSe +1.74%, consensus +1.7%, last +1.7%): We estimate a 0.20% increase in October core CPI (mom sa) and we expect the year-over-year rate to remain at +1.7%, though risks are skewed to the upside. Our forecast reflects stronger new car prices and a rebound in the lodging away from home category. On the other side, promotions from wireless carriers could weigh on the communications category. We estimate a 0.10% increase in headline CPI, primarily reflecting a drag from energy prices. This would leave the year-over-year rate two-tenths lower at 2.0%.
• 08:30 AM Retail sales, October (GSe -0.1%, consensus flat, last +1.6%); Retail sales ex-auto, October (GSe +0.1%, consensus +0.2%, last +1.0%); Retail sales ex-auto & gas, October (GSe +0.3%, consensus +0.3%, last +0.5%); Core retail sales, October (GSe +0.2%, consensus +0.3%, last +0.7%): Our forecast reflects an expected pullback in grocery store sales from elevated levels likely boosted by Hurricane Irma, as well as a sequential decline in auto sales and gasoline prices. On the positive side, we expect a boost in the building materials category from post-hurricane construction activity.
• 08:30 AM Empire state manufacturing survey, November (consensus +25.0, last +30.2)
• 10:00 AM Business inventories, September (consensus flat, last +0.7%)
• 04:00 PM Total net TIC flows, September (last -$125.0bn)
• 04:00 PM Boston Fed President Rosengren (FOMC non-voter) speaks: Boston Fed President Eric Rosengren will give remarks at the Economic Policy Forum at Northeastern University in Boston.

Thursday, November 16

• 8:30 AM Initial jobless claims, week ended November 11 (GSe 235k, consensus 235k, last 239k); Continuing jobless claims, week ended November 4 (consensus 1,910k, last 1,901k): We estimate initial jobless claims fell 4k to 235k in the week ended November 11, reflecting some normalization in a few states where claims appeared elevated in the most recent week. Continuing claims – the number of persons receiving benefits through standard programs – are expected to edge higher.
• 08:30 AM Import price index, September (consensus +0.4%, last +0.7%)
• 09:15 AM Industrial production, October (GSe +0.6%, consensus +0.5%, last +0.3%); Manufacturing production, October (GSe +0.5%, consensus +0.5%, last +0.1%); Capacity utilization, October (GSe 76.2%, consensus 76.3%, last 76.0%): We estimate industrial production rose 0.6% in October, recovering further after the sharp fall in August on storm-related disruptions. We expect manufacturing production rose 0.5% in October.
• 09:10 AM Cleveland Fed President Mester (FOMC non-voter) speaks: Cleveland Fed President Loretta Mester will give a keynote address at a conference on monetary policy at the Cato Institute in Washington, DC. Audience and media Q&A is expected.
• 10:00 AM Philadelphia Fed manufacturing index, November (GSe 25.3, consensus 24.1, last 27.9): We estimate the Philadelphia Fed manufacturing index pulled back in November (-2.6pts to 25.3), though still remaining at expansionary levels, consistent with other recent manufacturing surveys.
• 10:00 AM NAHB homebuilder sentiment, November (consensus 67, last 68)
• 01:10 PM Dallas Fed President Kaplan (FOMC voter) speaks: Dallas Fed President Robert Kaplan will participate in a moderated Q&A at the CFA Society in Houston. Audience and media Q&A is expected.
• 03:45 PM Fed Governor Brainard speaks (FOMC voter) speaks: Federal Reserve Governor Lael Brainard will deliver a keynote speech at a conference on FinTech at the University of Michigan.
• 04:30 PM New York Fed Executive Vice President Potter speaks: New York Fed Executive Vice President Simon Potter will give a speech on the Fed’s balance sheet at the Federal Reserve Bank of New York.
• 04:45 PM San Francisco Fed President Williams (FOMC non-voter) speaks: San Francisco Fed President John Williams will give the keynote speech at the San Francisco Fed’s 2017 biennial Asia Economic Policy Conference. Audience and media Q&A is expected.

Friday, November 17

• 8:30 AM Housing starts, October (GSe +5.0%, consensus +5.8%, last -4.7%): We estimate housing starts rose 5.0% in October, reflecting recovery from the disruptions related to Hurricanes Harvey and Irma, which likely lowered starts in September in the South region. While the impact of higher mortgage rates has likely weighed on single family demand and construction this year, we suspect this drag is now waning (particularly given the pullback in mortgage rates since March).
• 11:00 AM Kansas City Fed manufacturing index, November (consensus +20, last +23):
• 05:30 PM San Francisco Fed President Williams (FOMC non-voter) speaks: San Francisco Fed President John Williams is scheduled to speak with reporters present at he San Francisco Fed’s 2017 Asia Economic Policy Conference.

Source: BofA, DB, GS

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Last week, UBS released its Global Economic Outlook forecast for 2018-2019, which coming in at over 220 pages and with more than 270 charts, is rather “difficult to summarize” as UBS’ chief economist Arend Kapteyn snarkily notes. Still, as Kapteyn helpfully summarizes, the 3 charts below capture some of the main themes from the report, the first of which is a doozy and crushes the Trump “economic recovery” narrative .

Message 1: The 2017 global growth acceleration was largely (70%) a commodity bounce. This applies even to the US which was 20% of the global growth improvement but, as the 1st chart below shows, it was entirely energy investment. Once you strip that out ‘underlying’ growth is only 1% or so (ex inventories) – the slowest since 2010 – and a significant amount of rotation now needs to take place from energy to non-energy investment just to sustain the current growth pace. The surveys suggest that is possible but the surveys have also consistently overstated growth so far. As Kapteyn adds, due to “skepticism about that rotation is why we are about 20bp below consensus for US growth next year.” It also means that contrary to conventional wisdom, the US consumer has not only not turned the corner, but continues to retrench and with the personal savings rate plunging to 10 years lows, there is little hope that personal consumption expenditures will be a significant driver of US growth for the foreseeable future.

More details from UBS:

In Figure 5 we show what we think the contributions to US headline growth have been from the energy sector (structures and equipment investment combined). This is depicted as the grey area. The blue line is headline growth (ex-inventories) and the red line is headline growth minus the energy sector investment contribution, which we call ‘underlying growth ex-energy’. Taken at face value, the chart suggests underlying US growth has been slowing dramatically, from about 2.6% in 2015 to only around 1% in 2017. We do not quite interpret it that way, and view it more as a story of stability and ‘adding-up constraints’. The economy can only produce so much, and when one sector is strong (energy), it absorbs labour disproportionately, while other sectors pull back. Furthermore, when investment is weak the consumer accelerates. US growth post-crisis has hovered around a 2% average and nothing in our recession probability models suggests that there is anything ominous going on. But the point of Figure 5 is to show that as energy investment runs out of steam, other sectors will need to accelerate 
significantly to maintain the current pace of growth.

Message 2: The one (developed market) country that no one thinks can generate inflation (Japan) is likely to create more inflation than any other developed market.

“Japan is cyclically 2 years ahead of most other countries and it has a textbook Phillips curve with higher Phillips curve wage and price coefficients than all the other countries we looked at. The labour market is already extraordinarily tight.”

If unemployment goes to 2.5% by end-2018 UBS sees (BoJ) core inflation going up towards 1.5% (70bp above consensus) and Yield Curve Control starting to get tweakend (10y  JGB to drift higher.

Message 3 : The Fed is going to $4 trillion in US Treasuries by 2025 even absent a recession, $1.5 trillion more than they hold today. The is because the Fed will hit a trough determined by the ‘floor system’ for monetary policy coupled with some other balance sheet changes, of around $ 3 ¼ trillion by mid-2020 and currency in circulation growth then starts to drive the dynamics of the balance sheet. If they still want to roll off the MBS book they need to buy UST. That is part of the reason that the aggregate size of the G3 central balance sheet by 2025 will still be roughly as large as where it was late last year. And that’s with some fairly aggressive assumptions about BoJ balance sheet roll-off. So good for term premium.

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Authored by Lance Roberts via RealInvestmentAdvice.com,

Turn on financial television or pick up a financially related magazine or newspaper and you will hear, or read, about what an analyst from some major Wall Street brokerage has to say about the markets or a particular company. For the average person, and for most financial advisors, this information as taken as “fact” and is used as a basis for portfolio investment decisions.

But why wouldn’t you?

After all, Carl Gugasian of Dewey, Cheatham & Howe just rated Bianchi Corp. a “Strong Buy.” That rating is surely something that you can “take to the bank”, right?

Maybe not.

For many years, I have been counseling individuals to disregard mainstream analysts, Wall Street recommendations, and even MorningStar ratings, due to the inherent conflict of interest between the firms and their particular clientèle. Here is the point:

• YOU, are NOT Wall Street’s client.
• YOU are the CONSUMER of the products sold FOR Wall Street’s clients.

Major brokerage firms are big business. I mean REALLY big business. As in $1.5 Trillion a year in revenue big. The table below shows the annual revenue of 32 of the largest financial firms in the S&P 500.

(The combined revenue of the 32 largest firms last year was in excess of $1 Trillion with the revenue of the 97 financial firms in the S&P 500 bringing in $1.5 Trillion.)

As such, like all businesses, these companies are driven by the needs of increasing corporate profitability on an annual basis regardless of market conditions.

This is where the conflict of interest arises.

When it comes to Wall Street profitability the most lucrative transactions are not coming from servicing “Mom and Pop” retail clients trying to work their way towards retirement. Wall Street is not “invested” along with you, but rather “use you” to make income.

This is why “buy and hold” investment strategies are so widely promoted. As long as your dollars are invested the mutual funds, stocks, ETF’s, etc, brokerage firms collect fees regardless of what happens in the market. These strategies are certainly in their best interest – they are not necessarily in yours.

But those retail management fees are simply a sideline to the really big money.

Wall Street’s real clients are multi-million, and billion, dollar investment banking transactions, such as public offerings, mergers, acquisitions and bond offerings which generate hundreds of millions to billions of dollars in fees for Wall Street each year.

In order for a firm to “win” that business, Wall Street firms must cater to those prospective clients. In this respect, it is extremely difficult for the firm to gain investment banking business from a company they have a “sell” rating on. This is why “hold” is so widely used rather than “sell” as it does not disparage the end client. To see how prevalent the use of the “hold” rating is I have compiled a chart of 4625 stocks ranked by the number of “Buy”, “Hold” or “Sell.”

See the problem here. There are just 2.8% of all stocks with a “sell” rating.

Do you actually believe that out of 4625 stocks only 124 should be “sold?”

You shouldn’t.  But for Wall Street, a “sell” rating is simply not good for business.

The conflict doesn’t end just at Wall Street’s pocketbook. Companies depend on their stock prices rising as it is a huge part of executive compensation packages.

Corporations apply pressure on Wall Street firms, and their analysts, to ensure positive research reports on their companies with the threat that they will take their business to another “friendlier” firm.  This is also why up to 40% of corporate earnings reports are “fudged” to produce better outcomes.

Earnings Magic Exposed, an article written by Michael Lebowitz last year, provides details on the games played on Wall Street when it comes to forecasting corporate earnings. He summarized the article as follows:

Consider the ploy that companies and Wall Street are using to fool the investing public.

• First, they grossly overestimate earnings for the upcoming year. By overestimating earnings, they tout financial ratios based upon inaccurate expected earnings and sell investors on a bright future. How many times have analysts claimed that forward looking price to earnings ratios are constructive for price gains? How “constructive” would they be if the expectations were reconciled to reality and lowered by 75%?
• Second, they progressively lower expectations prior to the earnings release so that financial results are effectively underestimated. The same analysts that peddled double digit earnings growth a year earlier somehow can now claim that earnings are better than they expected.

If actual earnings varied somewhat randomly from above expectations to below expectations, we would likely fault the analysts and corporations with being poor forecasters. But when such one-directional forecasting errors routinely and consistently occur, it is more than bad forecasting. At best one can accuse Wall Street analysts and the companies that feed them information of incompetence. At worst this is another pure and simple case of institutions gaming the system through a fraud designed to prop up stock prices.  Take your pick, but in either case it is advisable to ignore the spin that accompanies earnings releases and apply the rigor of doing your own analysis to get at the veracity of corporate earnings.

Wall Street Needs You To Sell Product To

When Wall Street wants to do a stock offering for a new company they have to sell that stock to someone in order to provide their client, a company, with the funds they need. The Wall Street firm also makes a very nice commission from the transaction.

Generally, these publicly offered shares are sold to the firm’s biggest clients such as hedge funds, mutual funds, and other institutional clients. But where do those firms get their money? From you.

Whether it is the money you invested in your mutual funds, 401k plan, pension fund or insurance annuity – at the bottom of the money grabbing frenzy is you. Much like a pyramid scheme – all the players above you are making their money…from you.

In a study by Lawrence Brown, Andrew Call, Michael Clement and Nathan Sharp it is clear that Wall Street analysts are clearly not that interested in you. The study surveyed analysts from the major Wall Street firms to try and understand what went on behind closed doors when research reports were being put together. In an interview with the researchers John Reeves and Llan Moscovitz wrote:

“Countless studies have shown that the forecasts and stock recommendations of sell-side analysts are of questionable value to investors. As it turns out, Wall Street sell-side analysts aren’t primarily interested in making accurate stock picks and earnings forecasts. Despite the attention lavished on their forecasts and recommendations, predictive accuracy just isn’t their main job.”

The chart below is from the survey conducted by the researchers which shows the main factors that play into analysts compensation.  It is quite clear that what analysts are “paid” to do is quite different than what retail investors “think” they do.

“Sharp and Call told us that ordinary investors, who may be relying on analysts’ stock recommendations to make decisions, need to know that accuracy in these areas is ‘not a priority.’ One analyst told the researchers:

 

‘The part to me that’s shocking about the industry is that I came into the industry thinking [success] would be based on how well my stock picks do. But a lot of it ends up being “What are your broker votes?”‘

 

A ‘broker vote’ is an internal process whereby clients of the sell-side analysts’ firms assess the value of their research and decide which firms’ services they wish to buy. This process is crucial to analysts because good broker votes result in revenue for their firm. One analyst noted that broker votes ‘directly impact my compensation and directly impact the compensation of my firm.'”

The question really becomes then “If the retail client is not the focus of the firm then who is?”  The survey table below clearly answers that question.

Not surprisingly you are at the bottom of the list. The incestuous relationship between companies, institutional clients, and Wall Street is the root cause of the ongoing problems within the financial system.  It is a closed loop that is portrayed to be a fair and functional system; however, in reality, it has become a “money grab” that has corrupted not only the system but the regulatory agencies that are supposed to oversee it.

Why You Need Independence

So, where can you go to get “real investment advice” and a true consideration of the value of YOUR money?

Thankfully, starting at the turn of the century, the rise of independent, fee-only, financial advisors, private investment analysts, research and rating firms began to infiltrate the system. 

Here is an example of the difference.

As an independent money manager, I use valuation analysis to determine what equities should be bought, sold or held in client’s portfolios. While there are many measures of valuation, two of my favorites are Price to Sales and the Piotroski f-score among others. I took the same 4625 stocks as above and ranked them by these two measures.

See the difference. Not surprisingly, there are far fewer “buy” rated, and far more “sell” rated, companies than what is suggested by Wall Street analysts.

Here is something even more alarming.

Just after the “dot.com” bust, I wrote a valuation article quoting Scott McNeely, who was the CEO of Sun Microsystems at the time. At its peak the stock was trading at 10x its sales. (Price-to-Sales ratio) In a Bloomberg interview Scott made the following point.

“At 10 times revenues, to give you a 10-year payback, I have to pay you 100% of revenues for 10 straight years in dividends. That assumes I can get that by my shareholders. That assumes I have zero cost of goods sold, which is very hard for a computer company. That assumes zero expenses, which is really hard with 39,000 employees.That assumes I pay no taxes, which is very hard. And that assumes you pay no taxes on your dividends, which is kind of illegal. And that assumes with zero R&D for the next 10 years, I can maintain the current revenue run rate. Now, having done that, would any of you like to buy my stock at $64? Do you realize how ridiculous those basic assumptions are? You don’t need any transparency. You don’t need any footnotes. What were you thinking?

How many of the following “Buy” rated companies do you currently own that are currently carrying price-to-sales valuations in excess of 10x?

So, what are you thinking?

As more and more “baby boomers” head into retirement the need for firms that can do organic research, analysis and make investment decisions free from “conflict,” and in the client’s best interest, will continue to be in high demand in the years to come.

This is particularly the case when the next downturn occurs and the dangers of passive ETF indexing and robo-advisors are readily exposed.

Independent advice can help remove those emotional biases from the investing process that lead to poor investment outcomes over time. There are a raft of advisors with the the right team, tools and data, who can spend the time necessary to manage portfolios, monitor trends, adjust allocations and protect capital through risk management.

The next time someone tells you that you can’t “risk manage” your portfolio and just have to “ride things out,” just remember, you don’t.

You, and your money, deserve better.

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