Tag: finance

Authored by Tom Luongo via Gold, Goats, ‘n Guns blog,

The carnage for following President Trump’s lead on ending the JCPOA continues for India.

From SputnikNews last week comes this note about the Farzad-B oil and gas field and Iran.

Close on the heels of breaking the Chabahar-Zahedan rail project agreement, Iran appears set to deny India’s state-run ONGC Videsh Limited (OVL), exploration and production rights for the key Farzad B gas field.

The granting  of rights to OVL was already delayed with New Delhi moving slowly on the issue, but came to a complete standstill after the 2018 imposition of US sanctions on Tehran.

Now that threat looks to be a reality.

Turkish news agency Anadolu Agency quoted India’s External Affairs Ministry (EAM) as saying on Thursday Tehran would develop the Farzad-B gas field in the Persian Gulf region “on its own” and might engage India “appropriately at a later stage”.

Translation: “Stop stalling for Trump’s sake and make good on your promises or the project goes to China.”

Because that’s where this leads in light of the announced mega-deal between Iran and China worth a reported $400 billion.

I wrote last week I thought India has lost its way on the New Silk Road. Losing the contract to build the railway it pushed for to bypass Pakistan and assert independence from China’s OBOR plans should have been a clear enough signal.

But apparently it wasn’t.

India’s involvement in the Farzad-B gas field is now more than a decade delayed because of U.S. interference through sanctions nominally over Iran’s nuclear ambitions.

Work was supposed to begin in 2012 but President Obama sanctioned Iran, forcing OVL, ONGC’s international arm, to stop. Work was set to begin again after ratification of the JCPOA in 2015 and Trump nixed that in 2018 when he pulled the U.S. out of the deal.

Not only did this stop India’s work on the field but it also put the kibosh on any new pipeline into India.

I reported in November of 2017 that Russian Energy Minister Alexander Novak announced preliminary development work on a new version of the Iran-Pakistan-India (IPI) pipeline. That talk abruptly ended with Trump’s pulling out of the JCPOA.

Some version of IPI has been opposed by the U.S. for two decades now, preferring instead to thread the TAPI pipeline through the needle of failed geopolitics.

Gazprom already operates in three major Iranian oil fields, including Farzaz-B, and IPI was supposed to be a venture tying Iran and India together with Gazprom supplying the expertise and money to get it done.

Remember, pipelines are the stitching that bind nations together. This is why the U.S. is so adamant about stopping ones that don’t serve its or its allies’ interests, in this case the Saudis.

So, while we are regaled incessantly about the dangers of Iran obtaining a nuclear weapon, the real reason for the pulling out of the JCPOA was always about Energy Dominance, Trump’s plans to further solidify the U.S.’s hold over global energy flows.

Because once Trump did that, multiple projects under development with European and Indian oil majors ended abruptly. Companies like Italy’s ENI, France’s Total and others were all forced to sell their interests in these major oil and gas development projects.

And China came in to scoop some of them up, presaging where we are today.

The same thing happened in the fallout from the coup in Ukraine in 2014 which led to Crimea’s reunification with Russia.

That prompted onerous sanctions which forced U.S. oil majors out of major deals to develop Russian oil and gas blocs in the Arctic as well as the development of Nordstream 2 and Turkstream.

Speaking recently about the U.S.’s opposition to Nordstream 2, Alexander Mercouris of The Duran connected these dots back to Exxon-Mobil having to pull out of its projects with Russia because of Crimea sanctions (starts at 4:52 in).

Germany, for its part, is fully hacked off about what Trump and Pompeo are threatening over Nordstream 2 and this will be the wedge issue which forces a split in policy direction between them, including counter-sanctions from Germany.

Threats eventually become actions especially when we are dealing with something as fundamental to the future of Germany and the European Union as Nordstream 2. So we should finally see some teeth from Germany if Pompeo goes through with these sanctions.

Remember also, that CAATSA, the updated version of the Magnitsky Act, took sanctions policy out of the hands of the President by a spiteful Congress (spearheaded by John McCain) and placed it in the hands of the Secretary of State and the Treasury Secretary.

In this sense Trump is a tourist in his own foreign policy.

The bottom line here is that Iran and China are countering to up the pressure on India to finally decide where their energy future lies, because the last ten years have been terrible for them in securing their energy future constantly bowing to external pressure.

One of India’s persistent issues is the vulnerability of its currency due to its intense energy import needs. The rupee is the antithesis of stable in part because of its energy imports.

Even with drastically lower energy import prices the rupee has been in free fall versus the U.S. dollar for two years now, and nothing the Modi government has done has alleviated India’s reliance having to buy oil only sold for U.S. dollars.

During the Obama sanction years (2012-15) India and Iran famously traded goods for oil. Under the current environment thanks to CAATSA that option is off the table. Keeping Iran and India at arm’s length is meant to protect the petrodollar system rather than the two countries trading in local currencies.

What I find most ironic is that every attempt to stop Iran and India from coming closer together on energy projects has forced India to develop closer ties to Russia’s Rosatom for nuclear power.

Rosatom is the main equipment supplier and technical consultant in the construction of  Kudankulam nuclear power station in the southern state of Tamil Nadu.

The first and second reactors at the plant are already in service with the third and fourth due to come online in 2023 and 2024, according to Kremlin mouthpiece Tass. 

Russia and India are also planning the construction of a second nuclear power station. There are plans for up to six Russian-designed nuclear power plants in India.

Each and every time the U.S. pressures one of its ‘allies’ back into the narrow box of acceptable energy sources, the net result is a win for either China or Russia.

The story of the development of Farzad-B is yet another instance of this.

*  *  *

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Global stock markets plunged Friday as tensions between the US and China spiral out of control. 

Stocks in Hong Kong and mainland China tumbled after Beijing ordered Washington to cease all operations at its consulate in the city of Chengdu. This came days after Washington ordered the Chinese consulate in Houston, Texas, to close. 

Investors are becoming fearful the tit-for-tat spat between the US and China will escalate into August. Today’s equity selling in Asia, Europe, and the US is evident in derisking.

We must note, derisking has been stealthily occurring under the surface for two months. While President Trump and Barstool Sports’ Dave Portnoy pump stocks, the smart money has been quickly dumping US-listed firms that do business in China because of increasing tensions. 

Fathom’s proprietary China Exposure Index (CEI) tracks US-listed firms that have 15% and 85% of their revenues from China. The CEI shows investors have been dumping these companies since the start of June. 

Readers may recall, a plunging CEI in early February preceded the stock market crash that started later in the month. 

Read: In Latest Sign Of Imminent Market Collapse, Investors Dump Everything’ China’

So the question we ask today: Is today’s CEI plunge hinting the stock market is set to tank again?

Authored by Ted Dabrowski and John Klingner via Wirepoints.org,

School reopenings have become the next major political football in America, and the opening of Chicago Public Schools is no exception. The Chicago Teachers Union says they don’t want in-school teaching and prefer to maintain online learning, while the school district officials are planning for a hybrid opening. 

But how risky is it really for CPS children to return to school? What are the chances of students catching and spreading the virus? What are the chances of them bringing it home? And how risky is a reopening for teachers?

Here are seven facts Chicago parents and teachers should know:

1. Only two Chicago children aged 17 and younger have died from COVID-19 since the virus first appeared, according to the city of Chicago’s latest coronavirus data. While every death is a tragedy, fortunately Chicago’s children haven’t fallen victim to COVID-19.

2. CPS children face more risk from suicide, accidents and gun deaths. Since March 1, the approximate “start” of the coronavirus, nearly 100 Chicago children under the age of 19 have died from causes other than COVID. Four from suicide. Twelve from car- or drug-related accidents. And an outrageous 46 have died from gun violence.

3. One nationwide estimate of the infection fatality rate for children is just 0.004 percent. The Women’s Institute for Independent Social Enquiry says nationwide there have been 317,711 reported cases of children with COVID-19, with 805 intensive care hospitalizations and 77 deaths. However, they estimate there are 1.9 million children infected when taking into account undetected cases. That results in a fatality rate of 0.004 percent.

The actual fatality rate could be even lower once antibody testing can capture just how many children have actually been infected by the virus. 

4. More than three-quarters of teachers in CPS are under the age of 50. And 60 percent are under the age of 40. That means as a group they’re at far less risk of suffering death from COVID-19. That’s particularly true when comorbidities are taken into account (next section).

In total, 231 Chicago adults under the age of 50 have died from COVID since March. There are over 34,000 known cases in that age group, but the real number of people infected is certainly far larger. The CDC’s best estimates assume there are 10 times more undetected cases of COVID-19 than detected. Based on their estimate, the group fatality rate for those adults younger than 50 is at 0.064 percent.

5. The risk for teachers is even lower: More than 92 percent of Chicago COVID-19 victims had pre-existing conditions. Age alone should not be the concern for teachers since pre-existing conditions are the determining factor in COVID-19 deaths. Chicago city data shows that over 92 percent of COVID-19 victims in Chicago suffered from one or more comorbidities, i.e., hypertension, obesity, heart disease and diabetes. We’ve provided a full list of Chicago’s COVID-19 deaths and their comorbidities here. The source is the Cook County Medical Examiner’s Office.

Taking comorbidities into account means even fewer teachers are targets of the virus.

For sure teachers with pre-existing conditions will need to consider the risk to themselves and others, but what we know of the virus so far can help mitigate those risks. Limiting activities that require close student/teacher contact, keeping students together in teaching groups, making use of schools’ most-open spaces like gyms – all are sensible ideas. Older students can practice better hygiene and social distancing while younger students, as shown below, catch and transmit the virus at very low rates.

For older teachers and/or those with pre-existing conditions, there is still the option of teaching online for those who need it or even early retirement, if necessary. 

6. Students, particularly young children, are low vectors for the virus

Though much more needs to be learned about the interaction of COVID-19 with children, and there is some conflicting evidence, most studies are demonstrating the virus has a limited impact.

For example, Science magazine recently reported “several studies have found that overall, people under age 18 are between one-third and one-half as likely as adults to contract the virus, and the risk appears lowest for the youngest children.”

More surprisingly, it appears parents should be more concerned about giving COVID to their children instead of worrying that children will bring the virus home with them.

The Netherland’s health ministry advises that “Data from the Netherlands also confirms the current understanding: that children play a minor role in the spread of the novel coronavirus. The virus is mainly spread between adults and from adult family members to children. The spread of COVID-19 among children or from children to adults is less common.”

And a recent rapid literature review of pediatric COVID studies concluded:

“Low case numbers in children suggest a more limited role than was initially feared. Contact tracing data from Asia, the USA, Europe and Israel have all demonstrated a significantly lower attack rate in children than adults, including testing of asymptomatic household contacts on both PCR and serology. Coupled with low case numbers would suggest that children are less likely to acquire the disease…Limited data on positive cases in schools have not demonstrated significant transmission, except within adolescent populations. Studies of younger children in schools have found low rates of transmission, but with very low case numbers.”

– Boast A, Munro A, Goldstein H. An evidence summary of Paediatric COVID-19 literature, Don’t Forget the Bubbles, 2020.

7. Chicago COVID-19 deaths have collapsed to an average of just 2 a day over the last week.

Once a hotspot nationally, Chicago deaths have collapsed from nearly 50 a day in early May to about 2 a day in the last week. The city is at a level consistent with many European countries when they began to successfully reopen schools.

In fact, Chicago and New York City are now the only two major cities in the country that have an average daily infection rate of less than 5 percent – epidemiologists’ generally-accepted public health threshold for keeping COVID-10 under control.

*  *  *

COVID-19 is scary, but until and only if the virus changes targets, kids are more at risk from violence, accidents and from not being in school. 

Keeping schools shut has had an increasingly negative impact on children’s lives. More and more evidence shows that children missing school is leading to isolation, anxiety, the loss of critical development time, and not to mention, lost instructional time – remote learning didn’t work. There’s also the increased risk of unreported child abuse and teen suicide.

Younger children in particular are ill-served by remote learning, according to a new report issued by the National Academies of Science, Engineering and Medicine that recommends students return to the classroom. That report echoes the opinion of the American Academy of Pediatrics, which recommends that “all policy considerations for the coming school year should start with a goal of having students physically present in school.”

The science and data of COVID-19 in Chicago agree.

Senior editor Ash Bennington is joined by editor Max Wiethe to reflect on a week of divergent price action. Ash and Max analyze the extreme rallies in precious metals, with Max describing his macro framework through the lens of his Real Vision Live interview with Greg Weldon. Ash then explores the rapidly approaching fiscal cliff, which leads into a philosophical discussion on financial journalists’ penchant for making uncertain connections between news headlines and moves in asset prices. Max describes his view on the dollar, and Ash and Max close by examining the dislocations between and within different equity indices. In the intro, Jack Farley goes over the latest economic data and explores the recent bid to rescue Brooks Brothers from bankruptcy.

Next fall more than 36 universities will be racing at the “Indy Autonomous Challenge” – an all autonomous race that will be held at Indianapolis Motor Speedway. The race is a 20 lap head to head contest with a $1.5 million cash prize at stake. The purpose of the race is to help advance autonomous driving, according to WSJ. We’ll tune in for the same reason we watch most other motor sports – to see if anyone crashes. 

Among the participants are some of the worlds most prestigious engineering schools, including the Massachusetts Institute of Technology, the Korea Advanced Institute of Science and Technology, and the Graz University of Technology in Austria.

Teams are responsible for developing their own “neural nets, computer vision and other artificial intelligence systems” for the race. All teams will be using the same, extremely badass looking Dallara Automobili IL-15 racing car, shown in the photo below. 

Matt Peak, a managing director at nonprofit Energy Systems Network, said: “Self-driving cars have so much potential, but their commercialization efforts are slow; the technologies are still expensive.” He hopes the race will help further emerging technologies in autonomous driving. 

Race speeds are expected to approach 200 mph, putting the AI responsible for driving through the test of professional racing conditions.

Dr. Madhur Behl, an assistant professor at the University of Virginia said: “To us, racing is a proving ground. It’s the stress test for AI, for autonomous vehicles.”

The teams signed up last year and are prepping for a simulation of the race in preparation for the full race in February 2021. The simulation, built by a company called Ansys, will help the teams test their software and will provide data for the teams to use to improve their AI. 

Ajei Gopal, Ansys’s president and chief executive, said: “We can create, with physics, multiple real-life scenarios that are reflective of the real world. We can use that to train the AI, so it starts to come up to speed.” 

Peak commented: “Real students are putting their minds, passions, personalities, energies into this and working behind the scenes in ways that you could not imagine. We have no doubt they are going to be the industry leaders in years to come.”

He concluded: “I certainly think this won’t be the last autonomous race that we will be seeing.”

For wider adaptation, experts still believe that autonomous driving will require faster connectivity standards than 5G and further research. But this race could be the next step in the process – or at the very least, very fun to watch. 

We wonder how long it’ll be – or how much popularity and news coverage the event will have to get – before Elon Musk finds a way to butt in to try and steal the spotlight…

Authored by Robert Aro via The Mises Institute,

Imagine if a member of the Federal Reserve’s Board of Governors said the following :

“When governments manipulate exchange rates to affect currency markets, they undermine the honest efforts of countries that wish to compete fairly in the global marketplace. Supply and demand are distorted by artificial prices conveyed through contrived exchange rates.

Or something honest like:

“The Fed should focus on stable money as a key factor in economic performance. Given that central banks today are the world’s biggest currency manipulators, it’s imperative that the next chairman prioritize the integrity of the dollar.”

And what if they showed an understanding of both history and sound money principles with something intelligent:

“For all the talk of a “rules-based” system for international trade, there are no rules when it comes to ensuring a level monetary playing field. The classical gold standard established an international benchmark for currency values, consistent with free-trade principles.

While she’s not a governor yet, the quotes were from Trump’s appointee Judy Shelton, approved this week by the Senate banking committee on party line at a vote of 13-12. To be nominated to the board of directors, Ms. Shelton will now be put forward to be voted on by the full senate, 53 of the 100 being Republicans.

Yet below, we can see everything wrong with the Mainstream Media (MSM), mainstream economists, and American politics starting with theNew York Times article entitled, God Help Us if Judy Shelton Joins the Fed. Former counselor to the Treasury secretary during the Obama administration, Steven Rattner began with :

Trump’s latest unqualified nominee to the Federal Reserve Board must be rejected.

The defaming article shows Mr. Rattner has no care nor understanding of economics. According to him, Ms. Shelton is known for taking “long-discredited positions in the monetary system,” referring to the gold standard, as he claims it was the “culprit in deepening the Great Depression.” Clearly he is no fan of (or perhaps isn’t educated enough to have heard of) Mises or Rothbard.

In what some may described as laudable on Ms. Shelton’s behalf, Mr. Rattner, fueled by ignorance, continues:

Among other heretical stances, she has supported the abolition of the Federal Reserve itself, putting her in a position to undermine the very institution she is being nominated to serve.

A similar tone was found in the National Review, a magazine which defines itself using the highly nebulous and ill-defined “modern conservative movement.” Going back several months the “controversy” surrounding Judy Shelton was shared in an oxymoronic write-up called: The Wrong Kind of ‘Intellectual Diversity’ at the Fed. It is nothing more than a rant showing the senior editor also knows little about history or economics, but being in a position to publish, does so with a vociferous opinion. He begins with the usual appeal to popularity:

First, she has been a single-minded advocate of a policy that most economists rightly reject: the revival of the gold standard.

What is popular is not always true, especially regarding economics. The article cites quotes from 2009 to the Wall Street Journal in an attempt to discredit her by showing she has not always been consistent in her stances over the span of the past decade. By contrast, the rant implies all other members of the Fed and economists have.

Unfortunately, some people claim to like diversity, but not when it’s different from their own bias. The senior editor who wrote the hit piece can be found on twitter.

Unlike the New York Times and National Review, surprising as it may seem, CNBC’s position was more neutral when discussing the senate hearing, noting :

She faced persistent and at-times hostile questions about her support for the gold standard, her beliefs on whether bank deposits should be insured and whether the Fed should be independent of political influences.

Last but not least, the Wall Street Journal wrote it best , much to the chagrin of its rivals:

the news write-ups inevitably described her with adjectives like “controversial.” She should take it as a badge of honor, given how she would provide needed intellectual diversity at the Fed.

Only in a world this backwards where, in a supposed free country, socialism is considered good and capitalism bad that Shelton could receive so much scorn. To think, 1 out of 7 members of the board could have ideas other than inflationist dogma but they would be shunned for speaking up, says a lot of the society in which we are living. Perhaps the real reason is, if appointed, it could set Judy Shelton in line to the position of Federal Reserve Chair?

Ironically enough, as long Congress stays partisan, we may see her in one of the most powerful central banking positions in the world. It won’t “End the Fed” overnight, but maybe it’s one step closer!

As we’ve observed previously, the Trump administration appears bent on framing downward spiraling American-Sino relations through a new Cold War paradigm. 

Ironically this was on display most on the occasion yesterday of Pompeo’s speech meant to commemorate when President Richard Nixon became the first US president to travel to China. Perhaps the central Cold War style rhetorical appeal to the American public which hearkens back to that 20th century period marked chiefly by “fear” when the US and Soviets had nuclear missiles pointed at each other came here: 

“If we bend the knee now, our children’s children may be at the mercy of the Chinese Communist Party, whose actions are the primary challenge today in the free world,” Pompeo said.  

And then there’s the very title of the speech given at the Nixon Library: “Communist China and the Free World’s Future,” underscoring the new Cold War mentality driving the worsening tit-for-tat.

And then this: 

“We can’t face this challenge alone….Maybe it’s time for a new grouping of like-minded nations, a new alliance of democracies…If the free world doesn’t change Communist China, Communist China will change us.”

He also openly advanced “color revolution” type appeals, a huge poke in the eye to Beijing, with talk of “empowering” the Chinese people to change the “behavior” of the tyrannical Communist Party (CCP).

The Communist Party “fears the Chinese people’s honest opinions more than any foe,” Pompeo said, therefore Washington “must also engage and empower the Chinese people.”

Speaking of the Houston consulate affair, State Dept. spokesperson Morgan Ortagus previously said that they “had to make the decision to close down this consulate due to this massive, massive theft of our research and our intellectual property.”

While the immediate driving context remains the issue of “at least $1 billion” in theft of trade secrets and research (including coronavirus data) from the United States, in remains that the US and Chinese militaries are increasingly in sharp competition. 

In this newly advanced Trump administration modern day Cold War narrative, this military expansion angle should not be forgotten (now perhaps a remote threat, soon to be more immediate).

Indeed amid this week’s huge diplomatic rift centered on Chinese diplomatic outposts as “spy centers,” there’s been little commentary on a bombshell Reuters investigation from days ago which forecasts that within the next decade, the People’s Liberation Army (PLA) will have used its amphibious forces and PLA Marines to establish itself as a serious military power far beyond Asia.

“We are currently only seeing the tip of the iceberg,” a Chinese military specialist, Ian Easton, was quoted in the report as saying.

And further:

“Ten years from now, China is almost certainly going to have marine units deployed at locations all over the world. The Chinese Communist Party’s ambitions are global. Its interests are global. It plans to send military units wherever its global strategic interests require.”

Below are some key excerpts from the lengthy report published at the start of this most tumultuous week of Washington-Beijing standoff…

* * *

Experts on amphibious forces note the PLA already has powerful army units that are trained and equipped to make the kind of landings necessary for an invasion of Taiwan. In expanding the marines, they argue, PLA military planners are looking at operations across the globe, in places where China has extensive offshore investments. These commercial interests are likely to multiply as Beijing presses ahead with its Belt and Road Initiative, an ambitious bid to put China at the center of global trading routes.

China’s marines will also be important to man what is expected to become a network of strategic military bases around the world, including fortifications on territory Beijing has seized in the South China Sea, according to Chinese and Western military commentators.

Beijing has already deployed marines and their armored vehicles to its first overseas base at Djibouti on the Horn of Africa, according to Pentagon reports. Marines are also deployed on the flotillas China sends on naval anti-piracy missions to the Gulf of Aden, these reports said.

* * *

Chinese military commentators quoted in official media say China’s shipyards are now building and launching amphibious ships so rapidly it is like “dropping dumplings” into water.

The military rivalry between China and the United States is only growing sharper. Last week, U.S. Secretary of State Mike Pompeo declared most of Beijing’s claims of sovereignty in the South China Sea illegal, throwing Washington’s weight behind the rival claims of Southeast Asian nations over territory and resources in the strategic waterway that were supported by international law. China said the U.S. position raised tensions in the region and undermined stability.

China’s nascent amphibious forces still lag far behind those of the United States, but the speed of China’s military rise has already shifted the balance of power in Asia. Over the past two decades, China has deployed an arsenal of missiles and a massive surface and sub-surface fleet to deter potential enemies from sailing in its coastal waters. Now, as part of an accelerated modernization of the PLA since Chinese President Xi Jinping came to power in 2012, these new amphibious ships and the specially trained marines they carry will boost Beijing’s firepower and political influence far from its shores, according to Chinese and Western military analysts.

* * *

As shipyards churn out amphibious vessels, China is expanding its force of marines under the command of the PLA Navy. These troops are being trained and equipped to make landings and fight their way ashore. China now has between 25,000 and 35,000 marines, according to U.S. and Japanese military estimates. That’s a sharp increase from about 10,000 in 2017.

…Short of war, capable amphibious forces will also become a powerful diplomatic or coercive tool for Beijing, military analysts say. So far, Washington has had a monopoly on this type of engagement with other governments, routinely sending marine expeditionary units abroad for port visits, joint training exercises and disaster relief.

* * *

Read the rest of the full report here.

Authored by Ryan McMaken via The Mises Institute,

Social scientists have been trying for many years to blame homicides on the presence of guns. A favorite tool in this quest is the use of studies that show a correlation between gun ownership and crime. These studies are then reported as “evidence” that the presence of guns causes crime.

But there’s always been a problem with this attempt at showing causality between guns and homicides: causality can just as plausibly go the other way. That is, in times and places where the local population feels they are in danger of being crime victims, people are more likely to purchase guns for protection. So, rather than saying “guns cause crime,” we should be saying “crime causes guns.”

New Gun Purchases Soar as Uncertainty and Violence Increase

We’re likely seeing this phenomenon at work now.

In recent months, according to the firearm industry’s trade group National Shooting Sports Foundation (NSSF), Americans have purchased millions of guns:

The early part of 2020 has been unlike any other year for firearm purchases—particularly by first-time buyers—as new NSSF® research reveals millions of people chose to purchase their first gun during the COVID-19 pandemic.

Fox News reports:

Gun sales have skyrocketed during the past three months, and a record-breaking 80.2 percent increase in sales was reported in May compared to last year, according to the shooting foundation. April’s data showed a 71.3 percent increase from 2019, and there was an 85.3 percent increase in March, according to information previously released by Small Arms Analytics and Forecasting.

Many new gun owners during this period feared general unrest as a result of the government-mandated lockdowns. Potential first-time buyers still on the fence about buying a firearm in May were perhaps confirmed in their fears by the riots that erupted after the killing of George Floyd by Minneapolis police officers. Then, in the wake of the riots, serious violent crime appeared to spike. It was widely reported, for instance, that homicides in New York City spiked “21 percent in first six months of 2020.” Crime in other cities increased as well, ranging from a jump of over 200 percent in Nashville to 23 percent in Kansas City, Missouri.

Naturally, seeing these news stories, many potential gun owners are more likely to conclude that they need a gun for personal protection. This is especially true when combined with a perception that police organizations cannot be relied upon to engage in crime prevention and enforcement. And this has indeed been the perception in many places where police have appeared unwilling to intervene in June’s riots.

Many normal people would see these events as an illustration of how gun purchases result from fears over crime and uncertainty.

But now, perhaps predictably, left-wing media organizations like the Washington Post are trying to turn this narrative around: people aren’t buying guns as a reaction to violence and social disarray, the Post insists. All those new gun purchases are what’s causing the violence in the first place.

Says the Post:

Americans purchased millions more guns than usual this spring, spurred in large part by racial animosity stoked by widespread protests over the killing of George Floyd in Minneapolis, as well as anxiety over the effects of the covid-19 pandemic.

That gun-buying binge is associated with a significant increase in gun violence across the United States.

The Post cites two new reports, one from the Brookings Institution and another from the University of California, both of which conclude that the rise in gun purchases has likely caused more “gun violence.”

Note the careful use of language here, though: the gun purchases are “associated” with an increase in gun violence, since causality cannot be established. Indeed, near the bottom of the Post article, the author admits:

The authors [of the Brookings and UC reports] caution that a study of this nature cannot prove causality, particularly at a time of massive social upheaval in a country dealing with an unprecedented public health crisis as well as a nationwide protest movement.

Of course, if one is already committed to the idea that guns cause crime, it makes perfect sense that millions of Americans in early 2020—after passing a criminal background check—will buy guns, and then almost immediately use those guns to commit crimes.

Moreover, it’s unclear that the two studies referenced by the Post article even imply that homicides result from more gun purchases.

The Brookings study, for instance, is more of an op-ed than a study. It’s simply a review of some past events which were followed by surges in gun purchases, including the Sandy Hook and Parkland shootings. This appears to be true indeed, and is a helpful reminder that people do often purchase firearms in light of concerns over personal safety, or at least in light of concerns about future access to firearms.

The UC study is a bit more specific, but even this is far too general to be of any use in concluding that gun purchases lead to violence. Because of data limitations, the UC report, of course, doesn’t establish that the people who bought firearms this year are responsible for any increase in crime that may be occurring. But it’s not even established that surges in gun purchases correlate with surges in crime at the city or neighborhood levels. This is critical, since trends in homicides are not really on a statewide or even metro-wide level. Homicide trends in the US tend to be dominated by homicides in a relatively small number of cities and neighborhoods. For example, the homicide rate in Baltimore is ten times that of the US overall. But this doesn’t mean homicides in Maryland are remarkably high.

So, have firearms purchases surged near the neighborhoods in Chicago, New York, and Kansas City where surges in crime have also occurred? It’s possible, since people bordering the most violent neighborhoods may feel the most at risk. On the other hand, it’s also entirely possible that firearms sales are occurring in places relatively distant from the places with surging homicides. The UC study only appears to give a state-level reading on this. In other words, the study really tells us very little.

President Trump sat down Dave Portnoy on Thursday after the White House reached out for an interview.

President @realDonaldTrump sat down with @stoolpresidente today to discuss the role that sports plays in the #GreatAmericanComeback. 🇺🇸

…and, of course, pizza. 🍕 pic.twitter.com/gDlRq5o1va

— Mallory Blount (@MalloryBlount45) July 24, 2020

The two covered a broad range of topics, from sports figures kneeling in support of Black Lives Matter, to Trump’s tweeting habits – which the President admitted occasional regrets over.

“It used to be, in the old days, you’d write a letter, and you’d say, ‘This letter’s really big.’ You’d put it on your desk, and then you go back tomorrow and you say, ‘Oh, I’m glad I didn’t send it.’ Right? But we don’t do that with Twitter. Right? We put it out instantaneously, we feel great, and then you start getting phone calls: ‘Did you really say this?’” -President Trump

The two then discussed Trump’s decision to leave his cushy life in the private sector and enter politics – driving many on the left to abandon support for the billionaire. 

“You’re the most famous person in the world. My guess is nobody ever said ‘Hey, I don’t like Donald Trump’ before he became president. Now everyone has an opinion, and your life has changed forever when – seemingly, you had the dream life beforehand,” said Portnoy. 

To which Trump replied: “I was in so many rap songs, like 79. This is before I did this,” adding “The best day in my life in terms of business and life and everything was the day before I announced I’m running for president.”

Watch:

(PART 1) – I did not expect to interview @realDonaldTrump at the White House yesterday but here we are pic.twitter.com/ouWDXSS62u

— Dave Portnoy (@stoolpresidente) July 24, 2020

(PART 2) – @realDonaldTrump @WhiteHouse pic.twitter.com/O8G9JPwGR3

— Dave Portnoy (@stoolpresidente) July 24, 2020

(PART 3) – @realDonaldTrump @WhiteHouse pic.twitter.com/Rx74t5OUyh

— Dave Portnoy (@stoolpresidente) July 24, 2020

Authored by Charles Hugh Smith via OfTwoMinds blog,

Sclerotic, hidebound institutions optimized for linear stability and permanent growth are simply not designed to adapt to non-linear change and disruption of permanent growth.

Since the first news of pandemic in late January, I’ve been discussing potential accelerants to the unraveling of our fragile financial system: second-order effects (initial travel restrictions and layoffs were first-order effects, new waves of layoffs are second-order effects) and the shift from linear dynamics (add 1 to inputs, that changes output by 1) to non-linear: (add 1 to inputs, that changes output by 10).

The system appears stable until a catalyst pushes it off the cliff. Catalysts come in a variety of forms, from the apparently modest “straw that breaks the came’s back” to a broad awakening that the status quo simply isn’t capable of adapting successfully to new realities.

Financial catalysts tend to result in sudden, cataclysmic collapses in liquidity, solvency and sentiment. While the Federal Reserve can “fix” liquidity crises by creating currency out of thin air, that doesn’t make bankrupt firms solvent or make employers hire employees. Once complacent confidence slides into cautious fear, massive liquidity injections to keep the system from crashing are understood as last-ditch desperation.

Social-political catalysts are slower but much more difficult to reverse. While the media’s attention has been focused on the protests stemming from long-standing institutional bias, As Mark, Jesse and I discuss in Salon #14: Jobageddon and the Coming Education Revolts, two other social-political catalysts are gathering momentum:

1. The failure of our education complex to provide workable childcare/learning solutions

2. The hope of a V-shaped recovery in employment collapses.

As I mention in the podcast, there is a class dynamic in these potential catalysts that few mainstream pundits follow to the logical conclusion. When socio-economic distress is limited to the politically powerless working class–for example, the blatant exploitation of gig-economy and contract workers–the power structure can safely ignore the brewing crisis because the distressed workforce has insufficient economic-political power to threaten the rule of the Power Elites.

But when the top 20% of the workforce that accounts for 50% of all consumer spending and 80% of the citizenry’s political voice is in distress, the Power Elites better pay attention. Nobody in power really cared if lower-income households struggled with juggling childcare and getting to work; but when Mr. and Ms. Technocrat are struggling, suddenly it’s an issue that can’t be ignored.

The same dynamic is also in play in the 21% unemployment that’s accelerating to 25% unemployment. As long as it was the marginal workforce that was losing jobs, the power structure reckoned unemployment was a solution.

But as the second-order effects gain momentum, middle-class jobs will start vanishing and unemployment won’t be enough to pay bloated mortgage payments, property tax bills, etc., and the defaults of student loans, credit cards, auto loans and mortgages will start piling up.

As people awaken to the fact that the V-shaped recovery was a fantasy, sentiment will slide from confidence to angst. The failure of institutions to adapt to new realities will be impossible to deny, and the choices may boil down to opting out (i.e. assemble informal groups of households that pool resources to hire a private tutor for home-schooling their children) to organized revolt (i.e. teachers’ union strikes).

Sclerotic, hidebound institutions optimized for linear stability and permanent growth are simply not designed to adapt to non-linear change and disruption of permanent growth. Systems stripped of buffers are fragile, systems stripped of feedback are fragile, systems that optimize doing more of what’s failed spectacularly are fragile, systems that are little more than fractals of incompetence are fragile, systems that rely on the artifice of denial and fantasy are fragile.

Fragile systems break. This is why the unraveling is accelerating.

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My recent books:

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World ($13)
(Kindle $6.95, print $11.95) Read the first section for free (PDF).

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($6.95 (Kindle), $12 (print), $13.08 ( audiobook): Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 (Kindle), $8.95 (print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).

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