Lyndon Johnson’s Terrible Legacy

Authored by Patrick Barron via The Mises Institute,

Recently my wife and I spent a morning at the Lyndon Baines Johnson Presidential Library in Austin, Texas. The damage done by this big bully is incalculable. His library reminds us of the start of the blizzard of government expansion during Johnson's presidential term, which lasted from the Kennedy assassination in October 1963 to his decision not to run for a full second term in 1968, which usually is attributed to his failure to end the war in Vietnam.

Johnson was an admirer of FDR and was determined to revive and complete what he believed should have been integral parts to FDR's New Deal. Johnson called his program The Great Society.

As if ignorance of the consequences of this socialist expansion of domestic control by government was not enough, LBJ expanded the war in Vietnam, promising America both Guns and Butter. Even today we live with this expansion of government domestic programs and seemingly never-ending wars as the modern Welfare/Warfare state.

The Johnson Treatment

I called Johnson a big bully in the paragraph above. I believe my assessment is justified by what actually is celebrated at his presidential library. The displays proudly explain and document "the Johnson touch" in print, photograph, and actual recorded telephone interviews. Johnson was a big man who towered over most people. He had a habit of getting very close to someone, leaning over at the waist, and forcing his partner in conversation to bend over backwards to avoid an uncomfortable encounter with LBJ's face. There is a large picture of Johnson giving Supreme Court Associate Justice Abe Fortas this "Johnson Treatment", literally face-to-face. Fortas, who was a long time LBJ supporter, appears to be taking the "Treatment" in good humor, but it is easy to see how it would be almost impossible to keep one's dignity with the president of the United States performing this obviously uncomfortable act.

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Surprisingly the JBJ Library celebrates the Johnson Treatment with recorded phone conversations. One conversation was with powerful US Senator Richard Russell, a long time LBJ colleague. Johnson wanted Russell as his personal eyes and ears on the Warren Commission, tasked with investigating the Kennedy assassination. In the recorded phone conversation we hear Russell politely tell LBJ that he is honored but that he has no respect for Supreme Court Justice Earl Warren and must decline the offer. LBJ then badgers and bullies Russell into accepting the position. He says that he wants Russell to ensure that the commission does not investigate whether the Russians or Cubans had any role in the assassination. Russell's vociferous objection in writing to the Warren Commission's "single bullet" theory seemed to justify his opinion of Warren and the commission. The commission's staffers jumped through rhetorical hoops to claim that the report had the unanimous approval of all members.

That Which Is Seen and That Which Is Unseen

The library is full of typical memorabilia. The entrance has a huge display of pens with which Johnson signed hundreds of pieces of mostly domestic legislation. For example, Johnson authored and signed sixty pieces of legislation that effectively federalized education. Of course, the library is full of specious statistics that attempt to "prove" that all this legislation was effective, citing, for example, that the poverty rate decreased and that the percentage of Americans with college degrees increased. Even if one accepts such "facts" at face value, an Austrian economist would point out that all such so-called advances came at the cost of diverting resources from other, more highly sought preferences. Education is an economic good, as is healthcare, retirement savings, food, etc. If Americans valued higher education so much, they would have applied more of their limited resources to this end. The LBJ library ignores the cost, including the social cost, of all these programs and gives the impression that government supplied goods and services could be provided without any change in the nation's production of other goods and services. Thus, the famous "Guns and Butter" claim that we can have it all…a claim that survives to this day.

Perhaps the most enduring legacy of the LBJ years is that his Guns and Butter policies put the US on a path that ended the gold exchange standard, agreed upon at Bretton Woods in 1944, by which the US pledged to honor central bank dollar convertibility to gold at thirty-five dollars per ounce. In the 1950's Eisenhower's budget deficits were very modest and he actually balanced the budget for a short time. But Johnson's Guns and Butter policy caused huge deficits and prompted unprecedented money printing by the Fed. The Austrian economists in Charles de Gaulle's France understood the consequences–that the US did not actually have enough gold to honor central bank redemptions at thirty-five dollars per ounce–and began a run on the US gold supply that eventually drove the US off the gold standard in 1971. (Let me make it clear…the French did NOT cause the run on the US gold supply. The Fed caused the run by printing dollars to pay for LBJ's Guns and Butter policy.)

Vietnam Exposed the Limits of the Johnson Touch

The LBJ library openly shows us that Johnson never had a method for winning the war in Vietnam or extricating the US from what became known as a quagmire. In another telephone recording from early in his administration library visitors hear LBJ tell a partisan that he doesn't know how to win or how to bring the troops home honorably. That is a very bitter revelation to someone who had comrades in arms who died in Vietnam and others who endured captivity in the infamous "Hanoi Hilton". Repeatedly Johnson tried to get the North Vietnamese to a peace conference. This is pure LBJ hubris, convinced that everything is negotiable and that he can use the famous Johnson Touch on Ho Chi Minh. His pathetic bombing pauses to signal our desire to negotiate merely convinced the North Vietnamese that American involvement eventually would end.

What Have We Learned?

Apparently, not much. Today Johnson's Guns and Butter policy is alive and well. Few, if any, Great Society programs have been repealed. The federal government continues to wage war in faraway places and promises ever more goods and services, funded by fiat money set free from any semblance of a gold standard. There is no talk of eliminating any domestic programs or ending any of our wars. On the contrary our government seems determined to provoke new wars in Korea and possibly with Iran and even Russia. The legacy debt for all the federal government's programs–i.e., the unfunded obligations emanating from the government's entitlement programs — has been calculated to be well over a hundred trillion dollars. It is clear that it can be paid only nominally and not with money of even today's reduced purchasing power. So, was LBJ's presidency a success? Unfortunately for America, LBJ would say yes!

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Bitcoin Soars To Record High Above $8000 After Mugabe Speech

With Bitcoin trading at $13,499 on Golix, the chaotic environment in Zimbabwe has spread to the global price of the cryptocurrency driving it beyond $8000 for the first time in history as President Mugabe fails to resign in a national address following the nation's coup.

It appears many Zimbabweans have found an alternate way to store/transfer wealth away from Mugabe's prying (and confiscatory) eyes.

In September we noted the hyperbitcoinization occurring in Zimbabwe. In October, Zimbabwe demand started to impact the global price of the cryptocurrency, and two weeks ago we noted the doubling of the price of Bitcoin in Zimbabwe as uncertainty about the nation's stability sent citizens into a decentralized currency that was out of Mugabe's reach.

image courtesy of CoinTelegraph

Now, after the 'successful' military coup but failure of Mugabe to resign – as expected – Bitcoin is trading at over $13,499 on Zimbabwe exchange Golix – a premium of over 80% over the USD exchange price as demand surged.

As CoinTelegraph reports, the Zimbabwean army assaulted Harare on November 14 following a week of confrontation with the administration of President Robert Mugabe. According to the army, the move was aimed at preventing an expected violent and deadly civil war in the country. Mugabe has been the country’s head since 1980.

Due to the political crisis, the demand for Bitcoin in the country has skyrocketed to new highs because of a shortage of hard currency. The situation was exacerbated by the lack of national currency in Zimbabwe. In 2009, the country’s government adopted several fiat currencies like the US dollar and South African rand as a legal tender after hyperinflation turned the local dollar virtually worthless.

According to Golix, it has processed over $1 million worth of transactions in the past 30 days, a sharp increase from its turnover of $100,000 for the entire year of 2016.

According to Golix co-owner Taurai Chinyamakobvu, the prices for Bitcoin are determined by supply and demand. The sellers of the digital currency are paid in US dollars that are deposited electronically. The money, however, can only be converted into hard cash at a sizeable discount on the black market.

On November 15, an “electronic” dollar can purchase around eight South African rands, compared with the market exchange rate of 14.32 rands.

image courtesy of CoinTelegraph

According to a local trader, bitcoin isn’t just being bought by individuals, but by businesses with bills to pay.

Bitcoin, as every bitcoiner would expect, is helping people in the country survive times of economic uncertainty, as Zimbabwe has been embroiled in a crisis for years.

*  *  *

As CoinTelegraph noted previously, Zimbabwe is beginning to act like an interesting case study for what happens when a country begins to collapse around its monetary system – it is also being witnessed in Venezuela.

Moving money out of Zimbabwe is starting to become impossible, and as people try and flee monetarily out of the crumbling state, they are finding refuge in Bitcoin.

Soon, banks in Zimbabwe have stated that Visa debit cards would no longer be usable for international payments without prior arrangements and pre-funding with hard currency.

“You will be required to make prior limit arrangements with the bank,” Stanbic said in a message to depositors last week.

Econet Wireless has also stopped foreign payments on its MasterCard linked EcoCash mobile money debit card.

Bitcoin as a refuge

Because of the decentralized nature of Bitcoin, there is no impact on it from this political upheaval, in fact, it is only benefiting from it. The Bitcoin premium of almost 100 percent is not because of the political issues, rather the high demand surrounding worry of collapse.

Bitcoin again shows its potential and power when the banking system again shows its potential for mass collapse and hysteria.

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Arab League Holds Emergency Session: Iran And “Terrorist” Hezbollah Must Be Stopped

Saudi Arabia's foreign minister, in opening remarks to the Arab League today, declared that the kingdom “will not hesitate to defend its national security to keep its people safe” while requesting that joint action be taken to stop Iranian "aggression" and attacks on Arab states. 

Last weekend Saudi Arabia called an emergency session of the Arab League to address what it labeled "Iranian interference" after the bizarre series of events related to MBS' aggressive internal purge, which included the detention of Lebanese ex-PM Hariri, left the kingdom in an unprecedented state of strife and uncertainty.  The destabilizing events were precipitated by a November 4 attack claimed by Shiite Huthi rebels in Yemen, which the Saudis called a "violation" committed by Iran, though Iran denied that it had anything to do with the rare ballistic missile launch out of Yemen. 


Arab League meeting in Cairo on Sunday. Image source: AFP

Arab foreign ministers from member states met at League headquarters in Cairo on Sunday and in predictable fashion blasted Iran and Hezbollah for sowing instability and discord within Arab countries, citing Iranian "aggression" and expanding influence. The meeting is only the 12th such emergency summit to be held since the Arab League's founding in 1945 – a fact which hints at Saudi Arabia's increased desperation to confront Hezbollah while also shifting blame from its own self-made crisis at home.

The extraordinary session was also urged by close allies among the Gulf Cooperation Council (GCC) – UAE, Bahrain, and Kuwait – all of which also backed the Saudi diplomatic and economic war against Qatar which erupted early last summer. Among the many Saudi charges against Qatar is included supposed Iranian infiltration of the tiny oil-rich nation. 

According to Bloomberg, Arab League head Ahmed Aboul Gheit said in a press conference carried on al-Arabiya that a resolution referred to Hezbollah as a "terrorist organization". Furthermore, he said that though the Arab league won’t declare war against Iran at the moment, the resolution is a clear condemnation of Iranian interference in the region.

In addition, Hossam Zaki, Arab League Assistant Secretary, struck a hardline tone when he told Asharq al Awsat newspaper, "What Iran is doing against some Arab countries calls for taking more than one measure to stop these violations, interferences and threats, which are carried out through many various means." 

Much of Sunday's meeting focused on Lebanon, with Bahrain's foreign minister announcing that the country has come under the "total control" of Iran-backed Hezbollah. "The Lebanese Republic, in spite of our relations with it as a brotherly Arab nation… is under the total control of this terrorist party," said Bahraini FM Sheikh Khalid bin Ahmed Al-Khalifa, in reference to Hezbollah. "Iran's biggest arm in the region at the moment is the terrorist Hezbollah arm," he charged further. Bahrain recently joined Saudi Arabia in ordering its citizens out of Lebanon in what could be early signs of a looming regional war. 

Of course, there was not even a hint of Arab League condemnation of Saudi Arabia effectively kidnapping Lebanese Prime Minister Saad Hariri, who is currently in an awkward state of limbo – or an exile of sorts – in Paris at the invitation of France's President Emmanuel Macron, though Hariri is vowing to return to Beirut this week. 

As many astute pundits have pointed out, it's now "blame Iran time" according to the official Saudi (and allies) narrative of events in order to set the stage for public support for potential military action against Iran. Though it's unlikely that the Gulf states would take direct military action against Hezbollah and Iran, there could be efforts underway to give political backing for an Israeli incursion into Lebanon.

Meanwhile the Lebanese are increasingly aware that their country has fallen in the cross hairs of an unusual alliance between Saudi Arabia, Israel, and anti-Iranian interests which see Hezbollah and pro-Iranian proxies as the number one threat and scapegoat for all of the region's problems. Lebanese President Michel Aoun has accused Saudi Arabia of effectively kidnapping Hariri and holding him hostage, though Hariri himself has since given bizarre excuses for his prolonged absence.

As discussed previously, Iran is currently being scapegoated for just about all tensions which have exploded in the gulf over the past month, including the following growing list of grievances:

  • the civil war in Yemen,
  • sowing internal discord and rebellion among Shia communities within the gulf monarchies,
  • the Qatar economic blockade and isolation over accusations that it is "Iran friendly",
  • the latest civil unrest in Bahrain and the alleged bombing of a major oil pipeline there,
  • ratcheting up tensions with Israel in support of Hezbollah,
  • destabilizing Lebanon itself leading to PM Saad Hariri's "resignation" – all of this precipitating the Saudi "night of the long knives".
  • the war in Syria and sectarian strife

It may not come immediately, but there could be war on the horizon as Saudi Arabia and its regional allies grow increasingly desperate for "action" against Iran and Hezbollah.

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Weinstein Watershed – Here’s A List Of The 42 Men Accused Of Sexual Misconduct (So Far)

Since The New York Times published allegations of sexual harassment and assault against Hollywood mogul Harvey Weinstein in October, there has been a watershed as multiple men in entertainment, media and politics in the U.S. and beyond face allegations ranging from inappropriate behavior to forced sexual misconduct to rape.

As The Associated press reports, the #MeToo moment is also prompting re-examination of past sexual misconduct claims against powerful men, including Democratic former President Bill Clinton in the 1990s. He was impeached and then acquitted of perjury and obstruction of lawmakers’ investigation into his sexual encounters with a White House intern, and he settled a sexual harassment lawsuit stemming from his time as Arkansas governor.

A look at some of the men accused since the Weinstein accusations emerged:

Entertainment:

— Producer Harvey Weinstein— Accused by dozens of women of sexual harassment or sexual assaults, including rape. Fired by The Weinstein Co. and expelled from various professional guilds. Under investigation by police departments in New York, London, Beverly Hills and Los Angeles. Weinstein denies all allegations of non-consensual sex, but he has apologized for causing “a lot of pain” with “the way I’ve behaved with colleagues in the past.”

— Celebrity chef John Besh — Accused by 25 women of sexual harassment. He has stepped down from the company he founded.

— Comedian Louis C.K. — Accused by five women of sexual misconduct. Planned release of film “I Love You, Daddy” halted. Netflix special canceled. He says the allegations are true and has apologized.

— Cinefamily executives Hadrian Belove and Shadie Elnashai — Accused of sexual misconduct. Movie theater shut down in the wake of allegations due to crippling debt.

— Actor Richard Dreyfuss — One woman alleges sexual harassment. He denies the allegation.

— Director-producer Gary Goddard — Accused by one man of sexually molesting him when the man was 12. He denies the allegation.

—Casting employee Andy Henry — Admitted to urging women to take off their clothes during coaching sessions in 2008 while working on the “CSI” series. He was fired by his current employer.

— Actor Dustin Hoffman — Accused by woman of sexual harassing when she was 17. He has apologized for his behavior.

— Actor Robert Knepper — Accused by one woman of sexual assault. He denies the allegations.

— Showrunner Andrew Kreisberg — Accused by 19 women of sexual harassment and inappropriate touching. The “Supergirl” and “Arrow” showrunner has been suspended by Warner Bros. Television Group. He told Variety he has made comments on women’s appearances and clothes “but they were not sexualized.”

— Actor Jeremy Piven — Accused by three women of sexual misconduct. He denies all allegations.

— Filmmaker Brett Ratner — Accused by at least six women of sexual harassment. Playboy shelved projects with Ratner and Ratner stepped away from Warner Bros. related activities. He denies the allegations.

— Comedy festival organizer Gilbert Rozon — Accused by at least nine women of sexually harassing or sexually assaulting them. Rozon stepped down as president of Montreal’s renowned “Just for Laughs” festival and apologized “to all those I have offended during my life.”

— Producer Chris Savino — Accused of harassing up to 12 women. Fired from Nickelodeon. He has apologized for his behavior.

— Actor Steven Seagal — Accused by two women of rape. He denies the allegations.

— Actor Tom Sizemore — Accused of groping an 11-year-old actress in 2003. Utah prosecutors declined to file charges, citing witness and evidence problems. He denies the allegation.

— Actor Kevin Spacey — Accused by at least 24 men of sexual misconduct or assault. London police reportedly investigating a sexual assault. Fired from “House of Cards” and replaced in Ridley Scott’s completed film “All the Money in the World.” Massachusetts prosecutors are investigating one allegation. His former publicist has said he is seeking unspecified treatment.

— Actor Jeffrey Tambor — Two women — an actress on his show “Transparent” and his assistant — allege sexual misconduct. He denies the allegation, saying in a statement that he has “never been a predator — ever.”

— Actor George Takei — One man alleges sexual assault. He denies the allegation.

— Writer-director James Toback — Accused by hundreds of women of sexual harassment. Beverly Hills police investigating complaints. He has denied the allegations to the Los Angeles Times.

— “Mad Men” creator Matthew Weiner — Accused by one woman of sexual harassment. He denies the allegation.

— Actor Ed Westwick — Accused by two women of sexual assault. The BBC pulled an Agatha Christie adaptation from its television schedule and halted production on a second sitcom starring the former “Gossip Girl’ actor. Los Angeles police are investigating. He denies the allegations.

Media, publishing and business:

— Billboard magazine executive Stephen Blackwell — Accused of sexual harassment by one woman. He has resigned from the magazine.

— Penguin Random House art director Giuseppe Castellano — Accused by one woman of sexual harassment. Penguin Random House is investigating. Castellano has not commented.

— New Republic publisher Hamilton Fish— Multiple sexual harassment allegations. He has resigned from the magazine.

— Journalist Mark Halperin — Accused of harassing about 12 women while at ABC News. Book contract terminated. Fired from job at NBC News. He has denied some of the allegations.

— Artforum publisher Knight Landesman — Accused by multiple women of sexual harassment and sued by one woman. He has resigned from the magazine.

— NPR news chief Michael Oreskes — Accused of inappropriate behavior or sexual harassment by at least four women while at The New York Times, NPR and The Associated Press. He has been ousted from NPR.

— Amazon executive Roy Price — Accused by one woman of sexual harassment. He resigned from Amazon.

— Webster Public Relations CEO Kirt Webster — Accused of sexual assault by one woman. Firm renamed and Webster is “taking time away.”

— Rolling Stone publisher Jann Wenner — Accused by one man of sexual harassment. He says he did not intend to make the accuser uncomfortable.

— New Republic editor Leon Wieseltier — Accused of sexually harassing numerous women. Removed from the masthead of The Atlantic magazine. He has apologized for his behavior.

— NBC News booker Matt Zimmerman — Accused of inappropriate conduct by multiple women at the network. He was fired from NBC.

Politics:

— U.S. Sen. Al Franken (D-Minn.) — Accused of forcibly kissing a woman while rehearsing for a 2006 USO tour; Franken also was photographed with his hands over her breasts as she slept. Franken has apologized, while maintaining that he remembered the rehearsal differently. Senate Majority Leader Mitch McConnell has called for an ethics investigation of Franken.

— U.S. Senate candidate Roy Moore (R.-Ala.) —Accused of sexually assaulting two women decades ago when they were teenagers; about a half-dozen other women have accused Moore of inappropriate conduct. The former state Supreme Court chief justice denies the allegations. He has rebuffed pressure from national Republican leaders to step aside; the state GOP is standing by him.

— Former President George H.W. Bush — Accused of patting seven women below the waist while posing for photos with them in recent years, well after he left office. The 93-year-old Republican has issued repeated apologies through a spokesman “to anyone he has offended,” with the spokesman noting that the former president uses a wheelchair and that his arm sinks below people’s waists when they take photos with him.

— Florida Democratic Party Chairman Stephen Bittel — Accused of sexually inappropriate comments and behavior toward a number of women, Bittel resigned. Meanwhile, Democratic state Sen. Jeff Clemens resigned after a report that he had an extramarital affair with a lobbyist, and Republican state Sen. Jack Latvala is being investigated by the Senate over allegations of harassment and groping. Latvala has denied the allegations.

— Kentucky House Speaker Jeff Hoover — Stepped down as speaker this month after news surfaced that the Republican had settled a sexual harassment claim from a GOP caucus staffer. Hoover denied the harassment allegation but said he sent consensual yet inappropriate text messages. He remains in the Legislature.

— British Defense Secretary Michael Fallon — Accused of inappropriate advances on two women, the Conservative resigned. Sexual harassment and assault allegations have also emerged against a number of other U.K. political figures. Labour Party legislator Carl Sargeant is believed to have taken his own life after harassment allegations cost him his post as the Welsh government’s Cabinet secretary for communities and children. He had asked for an independent inquiry to clear his name.

Sports:

— International Olympic Committee member Alex Gilady — Accused by two women of rape and by two others of inappropriate conduct. Gilady denied the rape accusations, said he didn’t recall one of the other allegations, but acknowledged a claim he’d propositioned a woman during a job interview 25 years ago was “mainly correct.” He stepped down as president of an Israeli broadcasting company he founded. The IOC has said it is looking into the allegations.

— Former South African soccer association president Danny Jordaan — Accused by former member of parliament Jennifer Ferguson of raping her in 1993. Jordaan denies the accusation.

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“I Should Have Left Them In Jail” – Trump Slams UCLA Player’s Parents Indignation

A clearly frustrated President Trump raged over Twitter this afternoon at the father of a UCLA basketball player who downplayed Trump’s importance in getting his son released from shoplifting charges in China…

As a reminder, LaVar's son, LiAngelo, and two other players were arrested and accused of shoplifting from a Louis Vuitton store while the UCLA basketball team was on a trip to China for its season-opening game.

The players faced potential jail sentences for the charge, but Trump reportedly spoke to Chinese President Xi Jinping about resolving the situation. The players were released, and landed in the United States last week.

Trump took credit for their release, and questioned in a tweet whether the players would thank him.

The players subsequently held a press conference last week and apologized for the incident and thanked Trump.

However, as The Hill reports, ESPN on Friday asked LaVar Ball, the outspoken father of LiAngelo and Lakers rookie Lonzo Ball, about Trump’s role in bringing his son back to the United States.

"Who?" Ball responded.

 

"What was he over there for? Don't tell me nothing. Everybody wants to make it seem like he helped me out."

 

"As long as my boy's back here, I'm fine," LaVar Ball told ESPN.

 

"I'm happy with how things were handled. A lot of people like to say a lot of things that they thought happened over there. Like I told him, 'They try to make a big deal out of nothing sometimes.'

 

I'm from L.A. I've seen a lot worse things happen than a guy taking some glasses. My son has built up enough character that one bad decision doesn't define him."

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Think Bitcoin Is A Bubble? Here’s Your Chance To Short It

Has the fact that the price of a single bitcoin has risen nearly eight-fold so far this year prompted you to turn bearish on the world's most valuable digital currency?

Well, here’s your chance to short it. 

A Swiss asset-management firm called Vontobel launched a new futures product on Friday that will make it easier for retail investors to short bitcoin.

Bitcoin of course recently bounced back to all-time highs after a more-than $1,000 drop last week. Traders who were short made a killing on their positions. But cashing in on the drop would’ve been far easier with new futures products designed to let customers bet against the bitcoin price.

The contracts, which will trade on the SIX Exchange, will enable investors to profit even if the currency – which has proven vulnerable to vicious selloffs – falls in value. According to Reuters, the company will release two mini futures, a type of derivatives instrument that represents a fraction of the value of standard futures, making it easier for retail traders to access the market.

According to Eric Blattmann, head of public distribution of financial products at Vontobel, the news comes at a time when traditional traders are simply looking for more options when it comes to trading cryptocurrencies.

Swiss investment solutions provider Leonteq Securities AG also announced the launch of a separate product. Leonteq’s product has a two-month maturity, while Vontobel’s is longer, but investors can of course exit their positions early since each product will trade on an exchange.

He said in statements:

"We have seen big demand for our long tracker certificate from investors interested in playing the upside potential of bitcoin and now they have also the possibility to hedge their position or go short."

Manuel Durr, head of public solutions at Leonteq, said clients appreciate being able to open long or short positions in bitcoin.

“The initial feedback has been extremely positive,” said Manuel Dürr, head of public solutions at Leonteq. “Clients do very much appreciate the possibility of choosing between a long or a short investment in bitcoin.”

The move comes after US derivatives exchange CME Group announced it would start trading bitcoin derivatives next month.

Already, New York-based startup LedgerX is offering live cryptocurrency futures trading, with $1 million traded in its first week.

While some exchanges have allowed customers to open short positions on margin, the Vontobel contract has become the easiest way for retail traders to short the digital currency. We wonder: Could this help inject more two-way volatility and slow, or perhaps even reverse, bitcoin's meteoric rise?

But if you’re looking to short the world’s most valuable digital currency, The Vontobel mini-futures are probably your best bet.

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Israeli Tank Fires On Syrian Targets After “Violation Of 1974 Ceasefire”

Two weeks after a “secret” Israeli military cable leaked, indicating coordination between Israel and Saudi Arabia over Syria and constituting the first formal proof that the Saudis and Israelis are deliberately coordinating to escalate the situation in the Middle East, by using Syria as a false flag scapegoat, moments ago the IDF announced that an Israeli tank had fired upon Syrian army positions near the Israeli border in the Golan Heights on Sunday, following what the IDF called a “violation of the 1974 ceasefire.”


Israeli forces near a border fence between the Israeli side of the Golan Heights and Syria

According to JPost, the IDF fired upon Syrian army positions Sunday evening near the Israeli border in the Golan Heights on Sunday, the IDF spokesperson’s office reported.

This was the second “warning shot” by Israel into Syrian territory in two days. According to the JPost, a similar incident occurred on Saturday, when an IDF tank fired a warning shell near Syrian forces after identifying a Syrian army-built outpost in the demilitarized zone between Syria and Israel, similarly contrary to ceasefire agreements.

According to preliminary reports, Syrian forces had been working to fortify a military outpost in the buffer zone, in violation of ceasefire agreements, and an IDF tank fired deterring shots in response.

According to the IDF spokesman, the outpost was located close to the Druse village of Hader on the Syrian-controlled side of the Golan Heights. Earlier this month, following intense fighting in the village, the IDF said it was willing to provide assistance and prevent the capture of the Druse village by anti-regime forces.

“The IDF is ready and prepared to assist the residents of the village, and will prevent the harming or conquering of the village of Hader because of our deep commitment to the Druse population,” said IDF Spokesman Brig.-Gen. Ronen Manelis.

IDF Chief of Staff Lt.-Gen. Gadi Eisenkot, Northern Command commander Maj.- Gen. Yoel Strick and Commander of the Bashan Division Brig.-Gen. Yaniv Ashur were said to be assessing the situation on Israel’s northern border.

It is unclear if Syria (or Russia, or Iran) were planning a retaliation.

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MSNBC Guest Exclaims “White Men Pose The Biggest Threat To Americans” After FBI Report On ‘Black Extremists’

Jamira Burley appeared on “MSNBC Live” Saturday, claiming that white men "pose the biggest threat to Americans every single day."

As The Daily Caller's Justin Caruso details, in a segment about the Justice Department looking at “Black Identity Extremist” groups, Burley said:

“Again it continues to try to undermine and criminalize our leaders in a way that undermines the movement. We saw that with MLK when J. Edgar Hoover wrote letters telling him to commit murder, we saw that when Fred Hampton was actually assassinated by police.”

She continued:

“And so I think this is nothing new, what is interesting though is that white men continue to be the–pose the biggest threat to Americans every single day.

 

It’s been documented and verified that they are more likely to burn down churches, more likely to commit mass murders and mass shootings and so Jeff Sessions’ reality and his assessment on these people is both lacking in facts and both reality.”

The irony is that Burley's discussion was meant to buffer The FBI's recently released report on the rise on black "extremists" and are increasingly targeting law enforcement.

"I have never met a black extremist. I don’t know what the FBI is talking about," said Chris Phillips, a filmmaker in Ferguson.

Before the Trump administration, the report might not have caused such alarm.

The FBI noted it issued a similar bulletin warning of retaliatory violence by "black separatist extremists" in March 2016, when the country had a black president, Barack Obama, and black attorney general, Loretta Lynch.

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Mnuchin On Bond-Villain Comparison: “I Guess I Should Take That As A Compliment”

Treasury Secretary and noted Hollywood producer Steven Mnuchin provoked criticisms from his political opponents after photos surfaced last week of Mnuchin and his wife Louise Linton posing with a sheet of newly printed dollar bills bearing Mnuchin’s signature.

Asked by Fox News Sunday host Chris Wallace what it was like being compared with a bond villain after the photos went viral, Mnuchin said he took it as a compliment.

“I heard that. I never thought I’d be quoted as looking like a villain from the James Bond [movies]. I guess I should take that as a compliment that I look like a villain in a great, successful James Bond movie,” Mnuchin said.

 

“I was very excited about having my signature on the money and it’s something I’m very proud of being the secretary and helping the American people.”

Mnuchin said he thought nothing of it at the time the photo was taken, saying he didn’t expect it to be so widely shared on the Internet.

“I didn’t realize the pictures were public and going on the internet and viral but people have the right to do that people can do that that’s the great thing about social media today people can say what they want.”

Asked why he chose to print his signature in script instead of using cursive, Mnuchin explained that he felt his ordinary signature was too sloppy to print on US currency.

“I had a very, very messy signature that you could barely read, and I felt that since it’s going to be on the dollar bill forever that I should have a very clean signature,” Mnuchin said.

An Associated Press photographer captured Mnuchin and Linton posing with the sheet of dollar bills – the first to include Mnuchin’s signature – at the Bureau of Engraving and Printing last week, according to Politico.

After photos of the couple posing with the sheet of newly minted $1 bills went viral, twitter users poked fun at the pair's expensive tastes, with one joking they were shopping for 'bathroom mats' and another calling the sheet of bills, 'their new line of luxury toilet paper.'

This isn’t the first time Mnuchin and his wife have been criticized for appearing out-of-touch: The mockery comes just months after Louise Linton was roundly mocked for a tone-deaf Instagram post authored in response to criticisms of her posing next to a taxpayer funded jet.

Before that, the two were cleared after an investigation into whether they timed a flight in another taxpayer funded chartered jet to coincide with the solar eclipse that happened back in August.

The new bills are expected to enter circulation next month.

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The Stage Has Been Set For The Next Financial Crisis

Authored by Constantin Gurdgiev via CaymanFinancialReview.com,

Last month, the Japanese government auctioned off some US$4 billion worth of new two-year bonds at a new record low yield of negative 0.149 percent. The country’s five-year debt is currently yielding minus 0.135 percent per annum, and its 10-year bonds are trading at -0.001 percent. Strange as it may sound, the safe haven status of Japanese bonds means that there is an ample demand among private investors, especially foreign buyers, for giving away free money to the Japanese government: the bid-to-cover ratio in the latest auction was at a hefty US$19.9 billion or 4.97 times the targeted volume. The average bid-to-cover ratio in the past 12 auctions was similar at 4.75 times. Japan’s status as the world’s most indebted advanced economy is not a deterrent to the foreign investors, banking primarily on the expectation that continued strengthening of the yen against the U.S. dollar, the U.K. pound sterling and, to a lesser extent, the euro, will stay on track into the foreseeable future. See chart 1

In a way, the bet on Japanese bonds is the bet that the massive tsunami of monetary easing that hit the global economy since 2008 is not going to recede anytime soon, no matter what the central bankers say in their dovishly-hawkish or hawkishly-dovish public statements. And this expectation is not only contributing to the continued inflation of a massive asset bubble, but also widens the financial sustainability gap within the insurance and pensions sectors. The stage has been set, cleaned and lit for the next global financial crisis.

Worldwide, current stock of government debt trading at negative yields is at or above the US$9 trillion mark, with more than two-thirds of this the debt of the highly leveraged advanced economies. Just under 85 percent of all government bonds outstanding and traded worldwide are carrying yields below the global inflation rate. In simple terms, fixed income investments can only stay in the positive real returns territory if speculative bets made by investors on the direction of the global exchange rates play out.

We are in a multidimensional and fully internationalized carry trade game, folks, which means there is a very serious and tangible risk pool sitting just below the surface across world’s largest insurance companies, pensions funds and banks, the so-called “mandated” undertakings. This pool is the deep uncertainty about the quality of their investment allocations. Regulatory requirements mandate that these financial intermediaries hold a large proportion of their investments in “safe” or “high quality” instruments, a class of assets that draws heavily on higher rated sovereign debt, primarily that of the advanced economies.

The first part of the problem is that with negative or ultra-low yields, this debt delivers poor income streams on the current portfolio. Earlier this year, Stanford’s Hoover Institution research showed that “in aggregate, the 564 state and local systems in the United States covered in this study reported $1.191 trillion in unfunded pension liabilities (net pension liabilities) under GASB 67 in FY 2014. This reflects total pension liabilities of $4.798 trillion and total pension assets (or fiduciary net position) of $3.607 trillion.” This accounts for roughly 97 percent of all public pension funds in the U.S. Taking into the account the pension funds’ penchant for manipulating (in their favor) the discount rates, the unfunded public sector pensions liabilities rise to $4.738 trillion. Key culprit: the U.S. pension funds require 7.5-8 percent average annual returns on their assets to break even on their future expected liabilities. In 2013-2016 they achieved an average return of below 3 percent. This year, things are looking even worse. Last year, Milliman research showed that on average, over 2012-2016, U.S. pension funds held 27-30 percent of their assets in cash (3-4 percent) and bonds (23-27 percent), generating total median returns over the same period of around 1.31 percent per annum.

Not surprisingly, over the recent years, traditionally conservative investment portfolios of the insurance companies and pensions funds have shifted dramatically toward higher risk and more exotic (or in simple parlance, more complex) assets. BlackRock Inc recently looked at the portfolio allocations, as disclosed in regulatory filings, of more than 500 insurance companies. The analysts found that their asset books – investments that sustain insurance companies’ solvency – can be expected to suffer an 11 percent drop in values, on average, in the case of another financial crisis. In other words, half of all the large insurance companies trading in the U.S. markets are currently carrying greater risks on their balance sheets than prior to 2007. Milliman 2016 report showed that among pension funds, share of assets allocated to private equity and real estate rose from 19 percent in 2012 to 24 percent in 2016.

The reason for this is that the insurance companies, just as the pension funds, re-insurers and other longer-term “mandated” investment vehicles have spent the last eight years loading up on highly risky assets, such as illiquid private equity, hedge funds and real estate. All in the name of chasing the yield: while mainstream low-risk assets-generated income (as opposed to capital gains) returned around zero percent per annum, higher risk assets were turning up double-digit yields through 2014 and high single digits since then. At the end of 2Q 2017, U.S. insurance companies’ holdings of private equity stood at the highest levels in history, and their exposures to direct real estate assets were almost at the levels comparable to 2007. Ditto for the pension funds. And, appetite for both of these high risk asset classes is still there.

The second reason to worry about the current assets mix in insurance and pension funds portfolios relates to monetary policy cycle timing. The prospect of serious monetary tightening is looming on the horizon in the U.S., U.K., Australia, Canada and the eurozone; meanwhile, the risk of the slower rate of bonds monetization in Japan is also quite real. This means that the capital values of the low-risk assets are unlikely to post significant capital gains going forward, which spells trouble for capital buffers and trading income for the mandated intermediaries.

Thirdly, the Central Banks continue to hold large volumes of top-rated debt. As of Aug. 1, 2017, the Fed, Bank of Japan and the ECB held combined US$13.8 trillion worth of assets, with both Bank of Japan (US$4.55 trillion) and the ECB (US$5.1 trillion) now exceeding the Fed holdings (US$4.3 trillion) for the third month in a row.

Debt maturity profiles are exacerbating the risks of contagion from the monetary policy tightening to insurance and pension funds balance sheets. In the case of the U.S., based on data from Pimco, the maturity cliff for the Federal Reserve holdings of the Treasury bonds, Agency debt and TIPS, as well as MBS is falling on 1Q 2018 – 3Q 2020. Per Bloomberg data, the maturity cliff for the U.S. insurers and pensions funds debt assets is closer to 2020-2022. If the Fed simply stops replacing maturing debt – the most likely scenario for unwinding its QE legacy – there will be little market support for prices of assets that dominate capital base of large financial institutions. Prices will fall, values of assets will decline, marking these to markets will trigger the need for new capital. The picture is similar in the U.K. and Canada, but the risks are even more pronounced in the euro area, where the QE started later (2Q 2015 as opposed to the U.S. 1Q 2013) and, as of today, involves more significant interventions in the sovereign bonds markets than at the peak of the Fed interventions.

How distorted the EU markets for sovereign debt have become? At the end of August, Cyprus – a country that suffered a structural banking crisis, requiring bail-in of depositors and complete restructuring of the banking sector in March 2013 – has joined the club of euro area sovereigns with negative yields on two-year government debt. All in, 18 EU member states have negative yields on their two-year paper. All, save Greece, have negative real yields.

The problem is monetary in nature. Just as the entire set of quantitative easing (QE) policies aimed to do, the long period of extremely low interest rates and aggressive asset purchasing programs have created an indirect tax on savers, including the net savings institutions, such as pensions funds and insurers. However, contrary to the QE architects’ other objectives, the policies failed to drive up general inflation, pushing costs (and values) of only financial assets and real estate. This delayed and extended the QE beyond anyone’s expectations and drove unprecedented bubbles in financial capital. Even after the immediate crisis rescinded, growth returned, unemployment fell and the household debt dramatically ticked up, the world’s largest Central Banks continue buying some US$200 billion worth of sovereign and corporate debt per month.

Much of this debt buying produced no meaningfully productive investment in infrastructure or public services, having gone primarily to cover systemic inefficiencies already evident in the state programs. The result, in addition to unprecedented bubbles in property and financial markets, is low productivity growth and anemic private investment. (See chart 2.) As recently warned by the Bank for International Settlements, the global debt pile has reached 325 percent of the world’s GDP, just as the labor and total factor productivity growth measures collapsed.

The only two ways in which these financial and monetary excesses can be unwound involves pain.

The first path – currently favored by the status quo policy elites – is through another transfer of funds from the general population to the financial institutions that are holding the assets caught in the QE net. These transfers will likely start with tax increases, but will inevitably morph into another financial crisis and internal devaluation (inflation and currencies devaluations, coupled with a deep recession).

The alternative is also painful, but offers at least a ray of hope in the end: put a stop to debt accumulation through fiscal and tax reforms, reducing both government spending across the board (and, yes, in the U.S. case this involves cutting back on the coercive institutions and military, among other things) and flattening out personal income tax rates (to achieve tax savings in middle and upper-middle class cohorts, and to increase effective tax rates – via closure of loopholes – for highest earners). As a part of spending reforms, public investment and state pensions provisions should be shifted to private sector providers, while existent public sector pension funds should be forced to raise their members contributions to solvency-consistent levels.

Beyond this, we need serious rethink of the monetary policy institutions going forward. Historically, taxpayers and middle class and professionals have paid for both, the bailouts of the insolvent financial institutions and for the creation of conditions that lead to this insolvency. In other words, the real economy has consistently been charged with paying for utopian, unrealistic and state-subsidizing pricing of risks by the Central Banks. In the future, this pattern of the rounds upon rounds of financial repression policies must be broken.

Whether we like it or not, since the beginning of the Clinton economic bubble in the mid-1990s, the West has lived in a series of carry trade games that transferred real economic resources from the economy to the state. Today, we are broke. If we do not change our course, the next financial crisis will take out our insurers and pensions providers, and with them, the last remaining lifeline to future financial security.

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