Tag: finance

Authored by Matthew Piepenberg via GoldSwitzerland.com,

Dying Capitalism & The New Feudalism

American exceptionalism, as current COVID and capitalism disasters confirm, has morphed into a distortion that resembles more of a comorbidity than a guiding light.

Despite a prior reputation for leading the world in innovation, problem solving and health care, the U.S. is witnessing record hospitalizations in a nation comprising 5% of the global population yet 25% of its COVID infections.

Regardless of one’s politics, the COVID crisis is now an open symptom of failure, not exceptionalism.

The same is true of the current crisis facing American capitalism.

In its purest form, capitalism is an exceptional system, yet sadly one that is morphing into something that is anything but exceptional.

A CRITICAL TURNING POINT

Regardless of legitimately debatable views on how individuals and policy makers (from central bankers to health organizations) have handled the pandemic, we can all agree that COVID represents a turning point.

The question now is whether it will be a turning point for the worse or the better.

One way to forecast this direction is by tracking the current health of U.S. capitalism.

CAPITALISM RE-ASSESSED

Today, with central banks engaged in open Wall Street socialism wherein artificially repressed rates and unlimited QE have directly benefited the two largest asset classes in America, namely real estate and stocks, we can’t deny the cause-and-effect powers (as well as beneficiaries) of such “accommodation.”

It’s an objective fact that 80 % of those assets are owned by the top 10%.

Does that feel like capitalism working at a national level, or something far more targeted and far less “free-market” driven?

The very concept of central-bank supported (and Congress-lobbied) capitalism is itself an oxymoron, and requires on honest re-assessment (and some hard questions) regarding the true meaning of capitalism.

Can any system, market or sector, for example, that is directly and exclusively supported by trillions in fiat money creation and decades of artificially repressed (and unnaturally low) interest rates by definition be labeled “free market,” “natural” or even “capitalistic”?

Be honest.

And has the $6+ trillion in Fed money creation since 2008 truly “trickled down” to the real economy or has it primarily benefited risk asset markets like stocks on the S&P 500…

…or real estate owners and commission-based brokers:

Again: Be honest.

Whether you be in the top 10% or the bottom 10%, the answer to such primary questions is empirically obvious.

Such asset price inflation (i.e. bubbles) in everything from tech stocks to beach front real estate is not symbolic of the lauded and natural “Darwinism” of competitive, free-market capitalism.

Instead, such bubbles for the top 10% and the consequent wealth disparity that followed for the rest of the country are dangerous indicators of a kind of post-modern feudalism wherein a questionable cabal of policy makers subsidizes a distinct minority of beneficiaries and then calls the result “economic stimulus” as the rest of the country gets poorer by the day.

But again, is that capitalism?

Capitalism, whether defined by Adam Smith or abused by Gordon Gecko, is a dynamic, full-body contact sport of almost blood-thirsty competition played on a level playing field of new ideas, equal capital costs and individual effort.

In addition, true capitalism, the kind our fathers knew, was equally designed to create a broad rather than narrow class of winners and prosperity over time.

Do the above charts suggest a broad class of winners?

Capitalism, of course, should reward executives. But by how much?

Since 1978, CEO compensation has grown by 940%, whereas worker compensation for the same period has grown by 12%. In 1965, the average ratio of CEO to median employee salaries was 21:1, today it’s over 320:1.

For Jeff Bezos at Amazon, the ratio is 1.2 million to 1.

Is such data a sign of an evolving capitalism or an indicator of something far more disturbing?

FAIR COMPETITION VS. A RIGGED GAME

Unfortunately, there are other and increasingly clear signs of rigged policies (from the Fed, Congress, SEC or White House) which have less to do with fair competition and compensation—the keystones of healthy capitalism—and far more do with an extended yet media-ignored paradigm of favoritism—i.e. cheating.

Today, a kind of pseudo capitalism has emerged which is neither empathetic toward (or beneficial to) its host nation.

Instead, we have a distorted model of capitalism whose benefits and empathies are uniquely targeted to a singular (parasitic?) group of companies, individuals and markets.

For every member of Congress, for example, there are at least four financial lobbyists (from banks and big-tech) scurrying to influence (i.e. purchase) favorable policy decisions.

This suggests healthy capitalism is under the influence of bribery not policy, and backroom deals rather than fair competition.

Of course, any system that is inherently rigged, like the 1919 World Series, is inherently flawed.

Capitalism, when rigged, is no less disgraceful.

We see this rigged game playing out in real time as the weak majority get weaker and the strong minority get stronger in a backdrop that is not a capitalistic “survival of the fittest,” but rather a feudalistic survival of the best-connected.

Record breaking wealth disparity as well as the open and shameful disconnect between a tanking economy and a rising (Fed-supported) securities market is not an homage to capitalism, but rather open proof of its failure.

TESLA, APPLE AND AMAZON—THE NEW CAPITALISM?

Take Tesla. It’s a visionary company, but its stock has been skyrocketing on growth projections and historically low borrowing costs, easily managed by exaggerated share price inflation.

In March, it was the 4th most valuable auto company in the world, today it is now the most valuable, worth more than Daimler, Toyota and Volkswagen combined.

Or Apple. It took 12 years to get a $1 trillion market cap, but only 5 months to recently reach $2 trillion.

Are such growth stories a consequence of fair, legitimate and natural free-market capitalism, or have they enjoyed an unfair advantage from the policy jocks?

Consider Amazon.

With online sales skyrocketing as citizens are locked at home, Amazon has hired hundreds of thousands of minimum-wage warehouse workers to keep boxes coming to your doorsteps.

We can applaud Amazon for its job creation and raising of the minimum wage.

But let us not forget the larger picture in which AMAZON has gamified municipalities through its absurd HQ2 plan which transfers wealth from city police, fire and school districts to its shareholders.

Nor should we forget that despite years of a profitless balance sheet and legal tax avoidance, Amazon’s share price bubble has allowed it to literally kill, gut and bury small businesses across the nation.

At the same time, by owning the rails and engaging in anti-competitive behavior while dumping products and prices due to their access to cheap capital (against which no other companies can compete), Amazon has slaughtered rather than leveled the fair “playing field” upon which true capitalism was designed to be played.

Instead, names like Amazon, Tesla and Apple have prompted openly pro-capitalist thought leaders like Scott Galloway to question whether the pandemic was created, or at least co-opted, for taking the top 10% into the top 1% while sending the remaining 90% downward.

TWO AMERICAS, ZERO CAPITALISM

A recent study by the Robin Hood Foundation, for example, revealed that 32% of the people in New York, the homefield of Wall Street, have been forced to go to a food bank since the onset of the pandemic.

That’s more people in the Empire State seeking free food than those who possess a college degree.

Meanwhile, 1/3 of greater America is worried about paying their rent.

By pure math, we now live in a Dickinsonian backdrop by which it is the “best of times” for a tiny minority (from Face-shot real estate brokers to Facebook tech investors) and the “worst of times” for the broader population.

Is it truly fair to castigate the real America as “losers” in a so-called Capitalistic competition whose rigged rules and policies ensured who the winners would be before the game could even start?

The rigged game playing right under our noses in the U.S. is not free market capitalism, just as an S&P sitting atop a big, fat, $7+ trillion Fed air-bag, sure as hell aint a free market.

Natural price discovery, as all honest Wall Street veterans know, died years ago. Nod to Greenspan, Bernanke, Yellen and Powell.

As a member of the Wall Street elite who benefited from such anti-capitalistic capitalism, I can’t ignore facts to alleviate a fake conscience.

The simple truth is that current U.S. markets, competition and politics have nothing to do with fair competition and hence nothing to do with capitalism.

THE NEW FEUDALISM

As Galloway recently observed, “we are barreling toward a nation where 3 million lords are being served by 350 million serfs,” simply because US policy decided to favor corporations over populations as capitalism “collapses upon itself.”

Nor can this modern version of so-called capitalism rely on the “better angel” generosities of billionaires like Bezos or Musk to save the system.

The moral character of overpaid CEO’s will not bring the dying middle class back to its glory days.

Frankly, it’s up to the citizens themselves to get informed rather than angry.

Knowledge begets better results than pitch forks.

America is falling not just because capitalism lost its way or policy-supported CEO’s lack the character and accountabilities of the past.

It’s because citizens and their lobbied (bribed) leaders—red, blue and purple–have lost their sanity and are screaming at each other rather than opening a single economics, math, ethics, history or anti-trust book.

Today, the crowd gets its education from tweets and twits, not informed thoughts, sound leadership and patient knowledge or actual book reading.

BREAD & CIRCUS, FEAR & DIVISION

This, of course, makes the mal-informed majority (i.e. the bottom 90%) easier to trick and manipulate.

Decision-makers on top, from ancient Rome to Herr Goebbels, have always understood, and hence exploited, such wide-spread ignorance.

In short, policy anti-heroes serve a mal-informed population a mixed cocktail of either: 1) bread & circus (from Netflix to celebrity virtue-signaling) or 2) fear (from “social-distancing” to COVID death rates) to keep the crowd ignorant, divided and afraid.

Today, most U.S. citizens are blind to the rudimentary basics of Fed policy, currency debasement, lobbying tricks, anti-trust principles, or even viral facts.

Thus, as the middle-class flounders and a new financial feudalism replaces genuine capitalism, the mad crowd has no idea where to place its madness other than at each other in an historically divisive era of identity politics replacing anything resembling informed and unifying politics or policies.

Meanwhile, Amazon’s stock climbs as true capitalism crawls, and ancient assets like gold rise, as broken currencies like the dollar, fall.

Such are the symptoms of modern feudalism. Get ready for more.

Just one day after Wells Fargo issued a rare upgrade on beaten down energy giant Exxon, late on Tuesday Goldman did what it hasn’t done since 2016, and it upgraded Exxon from Neutral to a Buy – just two months after it upgraded the major from a Sell – with a $52 price target given Exxon’s “potential for capital/cost reductions, Guyana and Chemicals upside, improved free cash flow versus history, underweight positioning and our constructive view on crude.”

As analyst Neil Mehta explains, “we have been skewed more cautious on Exxon for multiple years given a history of weak returns, concerns around capital discipline, room for a clearer decarbonization strategy, a dividend policy that added leverage to the business and lackluster earnings execution.” And while each of these concerns are still an issue that management will need to respond to, the rate of change is moving in the right direction, and with the stock trading at only 10.1x Goldman’s 2022 P/E estimate (versus 10-year history of 15x), the analyst believes “investors are able to acquire the stock at a reasonable valuation level.” Furthermore, with XOM shares down 38% in 2020, the bank now sees “much of these risks as priced into the story and see low hanging fruit to make progress on each of these concerns.”

Some more details behind the four key points underpinning Goldman’s upgrade.

First, the company has meaningfully lowered its capital spending outlook from $30-$35 bn to $17-$19 bn in 2021 and $20-$25 bn in 2022-2025.

Second, while not our base case, we no longer see a potential dividend cut as a negative catalyst given the leverage guard rails the company has put around it. We continue to believe a variable dividend strategy has potential to be well-received by the market.

Third, we see value in the company’s growth assets including in Guyana and Chemicals.

Fourth, we see more attractive valuation following underperformance, with XOM now trading at an EV/DACF discount to Buy-rated CVX versus its historical premium.

Of these, perhaps the most important point is the impact of a potential dividend cut. Here are the details on that:

We continue to view the merits of a variable dividend strategy positively and believe that XOM could benefit from such a strategy. In our view, a variable dividend strategy could enable the company to reduce the need for increasing debt at the bottom of the cycle and drive outsized capital returns to shareholders in better pricing environments. We also believe it would allow the company to balance cash returns to shareholders with investment in attractive projects that could contribute to long term value and returns generation for he company. We do not currently base case a dividend reduction or implementation of a variable dividend model.

Goldman’s conclusion:

We revise our 12-month price target to $52 from $42 in this note. We update our methodology to now include a P/E component to our equal weighted EV/DACF and FCF yield valuation. We apply a 15x P/E multiple (in line with XOM’s 10-year historical average) to normalized EPS (defined as an average of 2021-2025, consistent with the time frame for our normalized FCF yield component). We also update our EV/DACF multiple from 7.5x to 8.0x to be more in line with the multiple we use on CVX and now assume a normalized Brent price of $59/bbl in our valuation (from $55.50 previously). For illustrative purposes, we construct an upside case using the 10-year average multiples of 15x P/E and 9.75x EV/DACF, as well as 15-year average FCF yield of 5%, which drives an incremental $10/share of value or a $62/share implied valuation, all else equal.

We note that historically Exxon has been one of the poorest earnings executors in the S&P500. However, as we look forward, we actually see potential for consistent upward consensus revisions. Over the past twenty quarters, XOM has only beaten EPS estimates 55% of the time. However, we are well above consensus for 2021, 2022 and 2023 EPS, with our EPS of $2.70/$4.18/$3.82 on average 36% above consensus of $1.57/$3.14/$3.72.

And the risks:

Capital spending surprises to the upside as commodity prices recover. We currently forecast XOM headline capital spending at $22 bn on average in 2022-2025, within the company’s guidance range of $20-$25 bn. Our model assumes an average Brent price of $61/bbl over that period, which we recognize is above the current forward curve. To the extent XOM does not remain committed to the lower capital spending outlook as commodity prices recover, we would see higher FCF breakevens, which could impact our positive view on the stock.

Chemicals business remains weak. We expect the company’s investments in performance products projects in the Chemicals business to drive improved returns in the coming years. We see potential for multiple expansion in chemicals as the macro environment and integrated HDPE margins improve relative to 2019 and early 2020 levels. That said, to the extent the margin environment for chemicals deteriorates or the projects do not realize the returns we underwrite, we would see downside risk to our estimates.

Production growth metrics surprise to the downside. While some production growth for XOM has likely been pushed out given the near-term capital spending cuts, we still expect investment in the Permian and Guyana to drive production growth going forward. To the extent the company faces execution or other issues that prevent the production growth from materializing, we would see downside risk to our earnings forecasts.

Commodity prices are weaker than we expect. We have an above consensus view on oil prices going forward, with a $55/$65/$60 per barrel Brent price view in 2021/2022/2023. If oil prices persist at something closer to the forward curve, which is at ~$49/bbl, our earnings and cash flow forecasts would see downside risk.

According to ABC7 in New York, the New York Police Department (NYPD) is set to receive a new Boston Dynamics robot dog with special features, including an arm to open doors and move objects. 

“This dog is going to save lives, protect people, and protect officers and that’s our goal,” NYPD Technical Assistance Response Unit Inspector (TARU) Frank Digiacomo told ABC7. 

Dubbed “Digidog,” the Boston Dynamics robot weighs 70 pounds and is able to move at a maximum 3 mph.

Digidog’s new tricks are shown in the video below: 

“This robot is able to use its artificial intelligence to navigate things, very complex environments,” NYPD TARU’s Deepu John said.

This is the department’s only robot dog, and during the latest testing phase, it has been used a few times in the field. The existence of the robot came to light in late October after it assisted in a suspect’s arrest in Brooklyn.

This particular robot model, known as Spot, has been put to work in other applications this year, including work on an oil rig, nuclear power plant, car plant, and military base. 

Digidog is capable of two-way communication and could also be used by NYPD to enforce mask-wearing – this was seen earlier this year in Singapore. 

With stocks at record highs (prices and valuations), and credit spreads at record tights (despite record leverage), most expect ‘more of the same’ from The Fed’s finally statement and press conference tomorrow in terms of promises to do more but not actually doing it… and applying more verbal pressure for fiscal support (heaven forbid they step in and bail out Washington’s utterly devastating gridlock on the COVID Relief Bill).

In fact, as WSJ’s Michael Derby reports, some suspect The Fed may even lift rates (just not the way most think).

Downward pressure in the Federal Reserve’s fed funds rate could drive the Fed to lift its interest on excess reserves rate at the end of its Federal Open Market Committee meeting. For a variety of reasons, financial markets are facing downward pressure on money market rates, and to ensure the fed funds rate trades in the middle of the 0% to 0.25% range, some see the Fed making technical adjustments.

Scott Skyrm of money market trading firm Curvature Securities says that instead of lifting the IOER rate as it has in the past, the Fed could instead lift the reverse repo rate. As with these sorts of changes that have taken place in the past, such a change would be purely technical and signal no change in monetary policy.

But, Standard Chartered’s Steve Englander and John Davies believe instead that, for Jay Powell and his merry men (and women), there is too much uncertainty not to act, and they will take an even more dovish stance.

• We see duration extension as likely: least offensive to hawks and useful with or without fiscal stimulus

• The case for Fed stimulus is likely to be weaker as time goes on

• End-2020, early 2021 could be difficult with COVID-19 surging, without fiscal stimulus

• Increased Fed stimulus could be explicitly limited in duration or conditional on economic targets

Fed easing limited by desire to maintain FOMC consensus

We expect the FOMC to ease monetary policy on 16 December, most likely by increasing the duration of its Treasury portfolio. It may also increase asset purchases or otherwise signal its willingness to support the economy and asset markets, but these may be explicitly temporary or tied to economic outcomes. FOMC meeting minutes and Fed comments suggest that the FOMC could give some longer-term guidance on what would eventually lead to a slowing or ending of asset purchases.

Taken together, these steps may be enough to limit the backing up of bond yields on a fiscal deal in Congress and encourage yields lower, faster, absent a deal. Paradoxically, there may be more need for increased asset purchases in the event of a deal, because of the need to demonstrate a soft commitment to capping bond yields. The key question is whether the Fed is concerned simply about a run-up in yields rather than its underlying drivers. Yield spikes in March and June were primarily driven by the real yield component, but the recent steepening bias has been driven by the breakeven, reflecting recovery and reflation optimism (Figure 1).

A Fed easing move associated with fiscal stimulus would be USD-negative, in our view, with the USD selling both on associated asset market optimism and a Fed move that could put further downward pressure on real rates. Easing in the absence of stimulus probably would not offset USD appreciation on pessimism. We think the USD would appreciate on fiscal stimulus unless the Fed limited bond yield increases. This would raise the risk of a taper tantrum at the long end of the yield curve.

FOMC faces uncertainty on multiple fronts

Sometimes the economy is bad, but policy is easy because there are few options other than to ease. Sometimes the economic outlook is more middling, but there are so many dimensions of uncertainty that the policy decision is more difficult.

The uncertainty on fiscal stimulus is well discussed. As of 14 December, it looks as if some progress towards an agreement is being made, but we have been in this position before. Congress is aware that special unemployment measures for those affected by COVID-19 will expire 26 December, so there could be some significant income stresses among those who have no savings or ability to borrow.

Policy makers and market participants have become somewhat inured to large spending numbers. If policy makers gave a USD 300 per week supplement for 20mn unemployed for 20 weeks, the cost would be about USD 120bn. An outright grant of USD 600 per person to the 250mn poorest US residents (roughly 75% of the US population, USD 2,400 for a family of four) would cost USD 150bn. These are big income support numbers, but much smaller than the packages under discussion. USD 900bn spent over four months is 14% of GDP over that period (not annualised).

Personal income has been higher since April than the pre-COVID-19 February high, with transfers more than making up for lost wage and salary income. Without stimulus, personal income would very likely fall below February 2020 levels in January 2021, but possibly in November or December 2020. The 5 November FOMC meeting minutes alluded to strong household savings as a factor that could mitigate the impact of a fiscal impasse. A duration increase or even added QE would do little to maintain aggregate demand if the fiscal talks failed, but could reduce the degree of financial-market tension. This is especially the case because the year-end, the end of exceptional unemployment benefits and the end of Section 13 (3) Fed programmes will essentially coincide. If a fiscal deal is passed, the duration move would limit the backing up of yields.

If not now, then when?

The intensification of COVID-19 is likely to last at least through the holiday season; lockdowns are increasing, and initial and continuing unemployment claims are rising. The next two or three months are likely to be the nadir in activity. For the Fed, we see it as pointless to move at the end-January 2021 meeting, because much of the damage will likely have already been done and the beneficial impact of the vaccine would be on the horizon. We earlier made the case that the Fed could move intra-meeting if economic conditions deteriorated (FOMC could move before 16 December), but the deterioration in labour-market conditions has only recently become visible. The logic of ‘if you are going to move, sooner is better than later’ still applies. The FOMC minutes and some recent speakers indicated that an increase in the average duration of the Fed portfolio is more acceptable than an increased pace of buying.

Does the Fed feel lucky today?

The Fed might be able to get away with doing nothing and sending the message that it is poised to move quickly if conditions deteriorate.

The question is whether it wants to take this chance. The Fed could reasonably indicate that it was acting preemptively to prevent bond yields and risk spreads from rising prematurely, and willing to take the risk that the added measures would turn out to be unnecessary in retrospect.

Compromise with conditional move?

The FOMC compromise could be to act on the duration and possibly the size of asset purchases, but make the move temporary or set to unwind if economic conditions improved.

This would give the economy and financial markets the immediate benefit of added liquidity and avoid the question of how aggressively the Fed wants to informally cap rates until it is confident of self-sustaining recovery.

What message does the FOMC want to send on the balance sheet?

Investors have been debating and the Fed has been reticent to disclose how the Fed expects to use the balance sheet to hit economic targets. The FOMC minutes and some recent Fed speakers suggested that Fed policy makers were closer to agreement on the role of the balance sheet.

We and many in the market expect the FOMC to indicate that the balance sheet will stop increasing before policy rates are raised. We doubt that they will provide Taylorrule specificity for the use of asset purchases. Most likely the FOMC will indicate that the beginning of the pullback in the balance sheet will be driven by the judgment that the effective lower bound is no longer a binding restraint, so there is no need to act on the long end because there is no policy option at the short end.

Fed guidance on how far the balance sheet will shrink will likely be vaguer. The FOMC may indicate that in recovery the balance sheet will be shrunk as much as possible without risking a shortage of reserves or steep backing up of financial conditions.

UST impact of any duration extension may depend on fiscal progress

The latest survey evidence shows that the consensus expectation is not for the Fed to extend the duration of its UST purchases at this meeting. Only 23% of those polled in a recent Bloomberg survey expected such a decision. Even fewer expected the Fed to increase the pace of its QE purchases. Hence, if the Fed does take the duration extension option this week, this could be a UST-positive surprise, especially if it also provides reasonably dovish forward guidance around the outlook for its QE programme. Such a decision, in our view, would provide a clear signal that the Fed remains concerned about the risk of sustained curve steepening, near-term at least, given the deteriorating COVID backdrop.

Since April, we have held the view that the Fed’s UST buying activity in March suggested it was uncomfortable with the 10Y UST yield rising much above 1%. We felt this view was supported by the ultra-dovish language at the 10 June FOMC meeting following the sudden jump in yields at the start of that month. In both March and June, however, the real yield component played a key role in the rise in the nominal 10Y yield, which we argued would have sat very uneasily with the Fed from a theoretical standpoint. More recently, the breakeven component has been the driver of the rise in the nominal yield, reflecting vaccine-based reflation and recovery optimism (Figure 1).

A decision to extend duration at this point would therefore signal that the Fed remains wary of nominal long-end yields rising too far, too fast. While the immediate response by the UST curve to such a decision should be some modest bull flattening, it is rarely a case of ceteris paribus. The other main source of event risk for the UST market in the very near term is the lingering possibility that Congress will pass a fiscal support package. While any duration extension is supportive of long-end UST demand, a fiscal support package is likely to increase long-end UST supply via primary-market issuance and secondary-market reflation speculators. Hence, the arrival of a fiscal support package shortly after or before the December FOMC meeting would likely limit the scope for bull flattening. So far, speculation on the likelihood of fiscal stimulus has been the biggest driver of bond yields, in our view. To push rates well below current levels, a clear indication may be needed of how far the Fed will tolerate rates backing up, combined with a commitment to act on it.

A modest duration extension decision this week would probably not offset the impact of a fiscal support deal, especially if there were some conditionality or indication that the move was temporary. If the surprise were bigger and if overall QE were increased, investors could take away a sense of sufficiently significant Fed commitment that the Fed move would emerge as the main yield driver.

The key upside risk to UST yields this week would therefore be a fiscal support deal in Congress but an on-hold Fed. However, we would still be sceptical that the 10Y UST yield would move sharply above 1% as a result, given COVID-related economic challenges ahead and the possibility that a duration-extension has only been delayed until early next year. The same Bloomberg survey showed 43% of those polled expected such a policy move during Q1.

Conversely, the downside risk to yields is a duration extension decision but no fiscal package. We believe the curve steepening bias seen over recent months has been driven by a combination of fiscal support hopes and vaccine optimism. We think this explains why the 10Y UST term premium has decoupled from the pull of the expanding global stock of negative-yielding debt (Figure 2).

If fiscal support hopes were denied, at least for the near term, we would expect a swift pull-back in the term premium to realign more closely with the level of negative-yielding debt.

Alongside potential obstacles such as job loss, financial insecurity, and a subsequent inability to cover many upcoming bills, Visual Capitalist’s Avery Koop notes that many Americans are now facing potential home loss as well.

According to a recent survey by the U.S. Census Bureau, of the estimated 17 million adults who are not current on their rent or mortgage payments, a whopping 33% of them could be facing eviction or foreclosure in the “next two months”.

Note: While this survey was conducted Nov 11-23, 2020, respondents’ interpretations of “the next two months” ranged between Nov 2020–Jan 2021.

Millions Facing Home Loss

Although people across the country face similar risks, Texas stands out with an estimated 718,000 people facing foreclosures or eviction. In fact, more than 7.1 million people in the state may be expecting a loss of employment income in the coming four weeks.

Other states looking at high percentages of potential home loss include Louisiana, New Mexico, Mississippi, Wyoming, and Missouri.

To get a closer look, here are the top 10 metro areas with the highest percentages of people who will potentially be facing eviction or foreclosure:

Home for the Holidays?

On the other end of the spectrum, there are states that appear to have less need for concern, as the percentage of people likely to experience foreclosure or eviction in these places stands between 15% and 20%. However, this level of relative home security is the case for only Delaware, Vermont, Maryland, and Utah.

Everyone else is floating in a proverbial gray area, between a majority who may still be in their same home after Christmas, and those who may need to find a new place in the months following the holidays.

Even in the states with extremely low percentages like Delaware (15%), there are still thousands people who are highly likely to face the possibility of losing their home.

Going Forward

It goes without saying that with nearly 17 million Americans behind on mortgage and rent payments, there could be significant consequences down the road.

In an order issued by the CDC under the Public Health Service Act, it was stated that an eviction moratorium could help with the effectiveness of COVID-19 prevention measures like quarantining, social distancing, and self-isolation. However, while evictions were temporarily halted under this order on September 4th, the extent of this protection runs out on the last day of 2020.

President-elect Joe Biden expressed his desire for measures such as rent forgiveness back in March 2020, but it remains unclear what actions will be taken under the new administration when inauguration occurs on January 20th, 2021.

Authored by Omid Malekan,

Some years ago, when I first began telling people about crypto, a friend pushed back and said that the government would never allow Bitcoin to succeed.

“Money is power” he said, “and no self-respecting government is going to give that power up.”

I told him that I agreed, but that Bitcoin was still too small for governments to take seriously. By the time it became big enough to register as a threat, it would be too late.

Then came the 2017 bubble, and a ten-fold jump in value in a matter of months. But that rally happened too fast for anyone to react, and collapsed just as quickly, alleviating any concern that cryptocurrencies might someday contend for significance in broader society. There was a regulatory crackdown around initial coin offerings, but it had more to do with securities violations than the threat of a new kind of money.

The current rally feels different. Both blockchain and crypto have had almost three years to prove their utility and seep into the cultural zeitgeist, and digitally native solutions that are not controlled by any corporation or government seem more appealing in a continuously fracturing post-Trump and post-Brexit environment. The pandemic is bound to change everything, so why not money? The current rally is also driven by institutions, so it has staying power. Paul Tudor Jones and MassMutual are more likely to stay with Bitcoin for the long haul than that YouTuber who used to shill XRP.

The slowly unfolding governmental crackdown on this domain feels different, too. Everything from the actions against Bitmex to the latest French KYC requirements to the rumors about onerous new guidelines coming from the US Treasury smacks of anti-crypto bias. Western governments that supposedly value private innovation and civil liberties are increasingly acting like their Chinese counterparts, inventing crimes out of thin air just to have an excuse to punish someone.

For example, the same US Justice Department that has always avoided criminal prosecution of Wall Street execs for potential involvement with money laundering actually arrested the chief technology officer of a foreign crypto exchange. More Bitmex executives were criminally prosecuted for what may have happened with crypto than Goldman execs for their proven involvement with 1MDB. The takeaway? Look the other way while minor crypto money laundering takes place and the Feds come knocking. Participate actively in one of the largest theft, bribery and money laundering schemes in history and you get a slap on the wrist.

To be fair, cryptocurrencies do exist in certain legal gray zones, and some closing of the regulatory gap was always inevitable, and healthy. Regulations can introduce standards and help build trust around a financial system. They also pave the way for institutional adoption. Unlike some of the more radical elements of the crypto community, the money managers and corporations who have the firepower to really drive prices prefer their markets regulated. It also goes without saying that fraud, money laundering and terrorism financing are serious crimes that need to be prosecuted whenever and however they happen.

But what is most disturbing about the current crackdown are the ways in which it would make the crypto economy even more regulated than traditional financial services. We can attribute some of the more ridiculous proposals to ignorance, but tellingly, whatever regulators and lawmakers don’t understand about this world always leads to more onerous requirements, not less. Put together, the rules coming out of places like the US and Western Europe turn the crypto-economy into a retired Stasi agent’s dream come true, one where every financial transaction is traced and monitored, and every participating is presumed to be doing something nefarious.

To wit: forcing crypto exchanges to only allow withdrawals to KYC’ed wallets (as some have proposed) is sort of like forcing ATM machines to only allow cash withdrawals after clients disclose how they plan on spending each $20 bill. Regulating stablecoins like securities is akin to forcing consumers to report every debit card swipe to the IRS. If the requirements stated in the pending STABLE ACT were applied to all payment companies, not just blockchain-based ones, then PayPal and Square would be forced to shut down tomorrow. There are many so-called “alternative” assets where tax reporting is left up to the investor, including the ten trillion dollar real-estate market or the multi-trillion dollar private securities market. But the IRS doesn’t ask you to disclose whether you own any of those assets at the top of the form 1040 the way it now does for crypto assets.

The officials pushing these draconian measures cite the usual concerns about terrorists and drug dealers, but seldom offer credible data. If you didn’t know any better, and only listened to their grandstanding, then you’d assume that ISIS accounts for a substantial portion of Bitcoin mining and El Chapo is a top contributor to the Sushiswap USDT/DAI liquidity pool. So let it be said once and for all that the vast majority of crypto users, well over 99%, are not doing anything illegal. You know this to be true because you know who these people are. They are your friends, schoolmates and family members. They are Naval Ravikant, Ricardo Salinas Pliego and Spencer Dinwidddy.

Yes, the pseudonymity of crypto makes it somewhat appealing to certain criminals. But no, the underworld is not about to switch to a kind of money where every single transaction is recorded on a public ledger. Yes, Silk Road used Bitcoin, but no, the world’s meth addicts aren’t loading up on Ledger Nanos. I’ll go out on a limb and state that more drug deals get committed using cash in a single week than has ever been committed with crypto (the annual drug trade, measured in dollars, is bigger than the total market cap of all 7000 cryptocoins, combined). Crypto can also help solve crimes, because unlike duffel bags full of $100 bills, coins have a memory.

Financial fraud is a fact of life, regardless of the money used or payment method in question. There is close to $30b worth of credit card fraud committed every year, and California just paid out $2bn in fraudulent unemployment claims. You know what wouldn’t make sense? Using these stats to argue that most people who use a credit card or apply for government benefits are doing something wrong.

The spurious “crypto is for criminals’’ narrative predates Bitcoin. It was also used by government authorities to try to prevent public access to strong cryptography in the early days of digital communication. There was even a time when the US government tried to get domestic hardware manufacturers to install a NSA-designed encryption chip with a built-in back door for government snooping. That proposal, which was eventually abandoned, would have done little to stop the real crooks. They would have just adopted stronger encryption. But it would have made all telecommunication less secure and more likely to be compromised by hackers or North Korea. It would have also killed the American tech sector.

Trying to keep strong security tools out of the hands of the general public because criminals might also use them is like barring homeowners from installing door locks because doing so might make it a little harder for the cops to raid a drug den. The drug dealers would install the locks anyway, while the rest of us would be less safe. Remember the crippling WannaCry ransomware attack that was sensationalized because the hackers asked to be paid in cryptocurrency? It was built using a Windows exploit developed by the NSA. Had the Feds reported the vulnerability to Microsoft as soon as they discovered it then the attack may have never happened. But the government decided that keeping the entire digital domain less secure to preserve their own back door was more important, with predictable results.

The risk of criminal use is not the primary motivator behind the current crackdown on cryptocurrency. The real reason the Empire is Striking Back is because my friend was right. The most important soft-power on earth is the power to control money, with a close second being control of the banking system. The governmental monopoly on both is now being threatened. Not by a corporation that can be co-opted or by a foreign government that can be coerced, but by an idea.

An idea that money should be a tool of the people, not a weapon of the state. An idea that saving in the currency of your choice and earning a positive rate of interest is a universal right. An idea that cheap and efficient financial services belong to the poor and unbanked as much as they do the privileged and over-entitled. Bitcoin, DeFi and Dai represent a form of money and an approach to financial services that belongs to the people. That’s why our monetary overlords and the private actors who asymmetrically benefit from their existence are starting to worry.

If that sounds hyperbolic to you, consider the following: government mandated know-your-client and sanctions requirements, as enforced through the legacy banking system, make it literally illegal for banks to take on hundreds of millions of impoverished or undocumented people as their clients. A disproportionate percentage of those people are minorities. Being locked out of banking forces them to rely on expensive prepaid debit cards or exorbitant remittance services to survive. Stablecoins (such as the proposed Libra/Diem) solve this problem, because anyone with a smartphone can now access digital dollars and transmit them for mere pennies. And yet, no lesser champions of the poor and minorities as congresswomen Rashida Tlaib and Maxine Waters are leading the charge against “dollars on the blockchain.” Their proposed regulations and speeches make it obvious they don’t really understand the technology they want to curtail, but once again, those in power default to doing more, not less. Why? Because they feel threatened.

The timing of the current crypto rally is rather unfortunate for the powers that be. It would be a lot easier for the Federal Reserve to argue that printing money to directly subsidize Apple’s share buyback program is the best way to help the unemployed, or for the European Central Bank to argue that monetizing the majority of the continent’s debt won’t end badly, or for banking regulators to demand even greater surveillance and control over our financial lives if there wasn’t an alternative. Don’t like what’s happening with the Dollar or the Euro? Prefer a financial system that doesn’t lock out poor people? Think your favorite restaurant deserves more of your money than Visa? Concerned about the financial surveillance state? Tired of being treated like a criminal when you’ve done nothing wrong? Well, now there’s a blockchain for that.

If the stewards of the old guard had any confidence in their increasingly radical Monterey and banking schemes, they would welcome the competition. Why care about Bitcoin or DeFi if you were certain that negative interest rates — a condition that has never existed in the 10,000 year history of money — can cure a virus. That the Treasury officials and central bakers of the world do care shows that deep down inside, they know they are on thin ice. Even the most obtuse bureaucrat must recognize by now that decades of money madness has failed to produce anything other than wealth inequality and populist uprisings. But they’ve painted themselves in a corner, because thanks to their artificially low interest rates and endless bailouts there is more debt than ever, and the mega-corporations and billionaires who governments care most about can’t withstand any kind of reset. So the money madness must continue, and will soon take on a new form.

As with digital communication, a technology that cannot be corrupted by those in power will soon be co-opted by them. Enter central bank digital currencies, or CBDCs. The same central bankers who saw nothing interesting about blockchain a few years ago are now looking into using it to digitize their own currencies. They talk a big game about the need to upgrade money, curtail transaction fees or increase financial inclusion, but the real reason institutions like the ECB are on a crash course with digital euros is because of the additional tools CBDCs enable. Economists are already unhappy about the fact that physical money gives ordinary people a way to opt out of insane policies like negative interest rates. CBDCs will eliminate that option, and by virtue of switching society unto digital cash, introduce centralized control levers that would make Stalin’s economic planners drool with envy. No longer will central bankers have to fiddle with interest rates or the bond market to add stimulus or create inflation. The next time there’s a financial crisis, global pandemic or alien invasion (all things economists believe can be fixed with inflation) then the bureaucrats will just program all of our digital tokens to magically grow! Parisians who go to bed with 100 digital euros in their smartphone wallet will wake up to find 102, and Voilà, instant inflation. Baguette prices will rise, the oceans will recede and there will finally be peace for our time.

CBDCs will enable monetary control to an extent that has never existed before. If inflation proves not to be a cure all, then governments can try even more radical solutions. How about programming money that sits in people’s wallets for too long to shrink? Or paying digital benefits that must be spent within a week before they disappear? (and further programming those benefits to only be spendable at certain businesses, the executives of which just happen to have close ties to those in power). CBDCs will also make life easier for overly-aggressive cops with little respect for your constitutional rights. They’ll no longer have to bother getting a warrant to get past the legal department of your commercial bank. They’ll just call up the tech department of your central bank.

But as far as stopping the crypto juggernaut is concerned, co-option won’t work either. CBDCs will only increase the appeal of decentralized money, in the same way that the US government’s proposed surveillance chip accelerated the development of better private encryption tools such as PGP, or how Edward Snowden’s revelations of NSA snooping led to end-to-end encryption being deployed by most commercial chat apps. The drive towards central bank digital currencies is extremely bullish for the likes of Bitcoin and Ether. They add credibility to the underlying blockchain infrastructure while exposing the farce that fiat currency has become. They also normalize technical elements like private keys and digital wallets, making the transition from centralized money to the decentralized variety easier than ever.

Government attempts at restricting this migration will only backfire. Bitcoin is already being upgraded to improve user privacy, and privacy coins like Monero are starting to rally. The more the Emperor tries to stop us from wearing whatever we want, the more obvious it becomes that he’s buck naked.

None of this inevitable, and governments the world over still have all the power they need to prevent the coming monetary migration. They can always stop the printing presses, stop enslaving our children with record amounts of debt, stop using the commercial banking system as a foreign policy tool and stop excluding tens of millions of poor and underprivileged people from financial services because a few might do something illegal. But then the stock market would fall a little bit, Trump would tweet a lot and “politically independent” Fed officials might be forced to have their first original thought in thirty years.

In other words, it ain’t gonna happen. The Empire will continue to strike back, with predictable results. Plan accordingly.

As if the Fed didn’t have far bigger problems on its plate – like, for example, what it will do when the inflation it has been doing everything in its power to create finally materializes and how it will tighten financial conditions without sparking the biggest tantrum in history and sending risk assets plummeting, on Tuesday morning the following bizarre headline hit terminals around the world:

• FED FORMALLY JOINS NETWORK FOR GREENING THE FINANCIAL SYSTEM

Immediately there were questions: does this mean the Fed will literally make it rain dollar bills to “green” the financial system, or is this another pathetic, desperate attempt to deflect attention from the Fed’s catastrophic actions that have pushed the world to the verge of collapse and only purchasing $1.3 trillion in assets every hour is preventing an all out collapse?

Turns out it was the latter, because it turns out that headlines was refering to a Fed announcement according to which the central bank formally joined the Network of Central Banks and Supervisors for Greening the Financial System, or NGFS as a less idiotically sounding acronym, as a member. Why is the Fed engaging in the disgusting virtue signaling of epic proportions? This is what it said: 

By bringing together central banks and supervisory authorities from around the world, NGFS supports the exchange of ideas, research, and best practices on the development of environment and climate risk management for the financial sector. The Board began participating in NGFS discussions and activities more than a year ago.

“As we develop our understanding of how best to assess the impact of climate change on the financial system, we look forward to continuing and deepening our discussions with our NGFS colleagues from around the world,” said Federal Reserve Board Chair Jerome H. Powell.

Oh, so now the Fed cares about the environment? That’s so touching. But once we pass the virtue signaling stage, maybe Federal Reserve Board Chair Jerome H. Powell can explain why the Fed’s explicitly enabled the emission of billions of CO2 gasses in the atmosphere as a result of its policy of keeping zombie companies – such as uber-polluting shale corporations – alive by depressing yields so low that any junk bond issue by an insolvent shale was snapped up in millisecond by yield starved managers of other people’s money.

What’s that? The Fed won’t touch that topic and instead it will point all media inquiries to its noble pursuit of “greening the financial system?” Well, that’s a surprise: one almost wonders if the Fed is joining this group, which also includes the European Central Bank, the Bank of England and the Bank of Japan, just so it has a way to deflect questions that touch on the Fed’s true nature of being – along with its Chinese central bank peer – the biggest enabler of massive global pollution.

And not just the Fed: one wonders if the true motive of all those billionaires who take their private jets to Davos year after year (their gargantuan carbon footprint clearly exempt from the rules they impose upon ordinary peasants) and virtue signal for days on end how the world has to fight global warming (without ever pointing the finger at their biggest sponsor, China), is likewise not quite as pure. But that’s impossible: it would suggest that the world’s “through leaders”, top politicians and top 0.001% richest are… hypocrites!?

Perish the thought. But before you do, consider that we have officially hit peak stupid, because in a note published by Bank of America last week, the bank’s chief economist actually asked the dumbest question possible: “Can the Fed address climate change?” Here is her answer:

Well, if the Fed is really committed to “greening”, it can start by hiking rates and making it impossible for shale zombies to keep raising billions in capital year after year, keeping their toxic operations. We won’t be holding our breath.

Submitted by Joseph Carson, former chief economist at Alliance Bernstein

Data on federal tax receipts paints a grim picture of the state of the US economy. Weak tax receipts are sending a signal of economic distress. Congress needs to act with urgency and pass federal support legislation to help broad parts of the economy.

Federal withheld income tax receipts represent hard contemporaneous data. Tax receipts are current and complete, unlike other economic data series such as household and payroll employment, which are based on a sampling of a small percentage of the working population and businesses.

The pandemic hit the economy in March, triggering widespread job loss and partial and full closing of many small businesses. In November, 9 months into the pandemic, federal gross withheld income tax receipts were off 13% from a year ago. That is roughly in line with the average decline of 15% recorded over the 9-month span, March through November.

Checking the tax data records from the US Treasury the decline in tax receipts over the last 9 months is the largest on record. The only comparable period is the 14% drop in 2009 during the Great Financial Recession.

But the decline in withheld tax receipts in 2009 was in part driven by the tax cuts passed by Congress. A report by the Congressional Budget Office (CBO) found that the 2009 decline in tax receipts consisted of a sharp drop in household income, especially among the top 1 percent earners, and through a reduction in withholding taxes. Recall in 2009, finance, a sector that employs a lot of the top-wage earners lost a record 300,000 jobs, and those that kept their jobs saw a sharp reduction in pay and bonuses.

In 2020 Congress did not pass any tax cut, and top-wage earners, especially in finance, have seen increases in jobs and income. So the record decline in federal income tax receipts in 2020 is of a different ilk.

It’s too early to ascertain the main source of the tax receipt collapse in 2020. But I would be willing to bet that in addition to the income loss associated with job loss in travel, entertainment, and recreation, a big chunk is also due to the income losses incurred by small businesses.

According to the National Federal of Businesses of Independent Businesses, 75% of small firms operate as “unincorporated pass-through entities. That means the small business owners pay the personal tax rate, which is calculated on the business owners total earnings. So taxes paid by small businesses show up alongside workers taxes in federal withheld income tax receipts. That probably helps explain the gap between the 15% decline in tax receipts over the past 9 months and the 7% decline in employment.

Congress has been negotiating for several months a second federal stimulus package. But political fighting over the scale and who gets support and who doesn’t has so far stymied a bi-partisan deal. I don’t support big government, but the federal government is supposed to step up during a crisis.

Taxes are sending an S.O.S signal, saying that significant parts of the economy are experiencing severe distress. Anyone in Congress that is on the fence over whether a second stimulus bill is necessary needs to look no further than the tax data.

Investors have been patient, banking on Congress to build a bridge of fiscal support until medical science develops a vaccine. Medical science has done its job, but Congress has not. If Congress doesn’t act soon the speculative gains in the equity markets could quickly reverse in scale.

Despite Dr. Fauci’s cries about how all vulnerable Americans should make sure to get their flu shots to protect against a deadly vortex of a COVID-19-supercharged flu season “twindemic”, it appears influenza-related infections, hospitalizations and confirmed cases over the past couple of months have been much, much lower than the ‘experts’ had anticipated.

And on Tuesday, one day after publishing an editorial written by bossman Michael Bloomberg where the billionaire urged Joe Biden to “lead” on the fight against climate change (he even suggested Biden mandate sleepy ESG-focused financial disclosures), the financial news behemoth has decided to boldly question the accepted “science” (accepted by Bloomberg and many of its competitors, at least) about the brutality of the 2020-2021 flu season.

Scientists initially feared the most vulnerable people might be infected with both viruses simultaneously, prompting deaths to explode. Instead, rates of confirmed flu cases have plummeted – not just this winter, but earlier in the spring as well (though some have posited that the overwhelming impact of COVID may have had an impact) as COVID hammered the US, and particularly cities like NYC.

In an “Opinion” piece (though, we must confess, these sound more like facts to us), Bloomberg writer Justin Fox declares that the “Twindemic” can be relegated to the scrap heap of inaccurate projections related to COVID-19.

He starts by pointing out that by virtually every measure, flu cases in the US (and also in Europe, Australia and elsewhere) have fallen substantially since the beginning of the pandemic.

NYC, which keeps some of the best records on ER-related flu visits, has seen a startling drop.

Other hospitals appear to have seen something similar.

The slump in the number of positive tests would seem to confirm that cases are down across the country.

At one point in the article, Fox lists the fact that people may be afraid to seek treatment, or get tested, if they have the flu, and that this could be one reason for the drop. But given the similarity in symptoms, we imagine most people who get the flu will probably panic and get tested, and that – doctors being doctors – they will get tested for COVID, and, failing that, the flu (and given what we know about the massive false positive farce in PCR testing), the “lack” of flu ‘cases’ seems quite oddly coincident with the “surging wave” of COVID ‘cases’. Some among the more vulnerable might panic and seek emergency care, only to learn that what they’re suffering from is a mild case of the flu, not the onset of a potentially lethal bout with COVID.

Comparing this flu season to the last few years, it’s worth noting that, for whatever reason, overall deaths were higher during the winter of 2017-2018 than they have been so far this winter. While it’s important to remember that correlation is not causation and there are probably multiple factors at play here, if nothing else, it’s a reminder that COVID-19 deaths must also be looked at in the context.

Offering up a revised forecast in its own piece pointing out the obvious reality that the spike in flu cases hasn’t been nearly as bad as feared, the NYT quoted a source saying “it looks like the Twindemic isn’t going to happen.”

Here’s what readers can expect according to a forecast based on the numbers through the first week of December.

One wonders just how much of that vast gap between a ‘normal’ flu season and 2020 is filled by false-positive-PCR-Test-based COVID cases?

Circling back to the Bloomberg piece, Fox offers up what he says is probably the most convincing explanation for the drop in flu cases: recommendations like social distancing and mask-wearing (however effective, marginally effective, or ineffective it actually may be) have been even more effective at preventing influenza than Covid because influenza is so much less contagious than Covid.

Well, folks. There you have it.

Now, are we supposed to believe Dr. Fauci & Co. weren’t able to anticipate this back in the summer?

Or were the warnings about the “twindemic” instead pushed subtly by big pharma to keep sales growing and, perhaps, provide more “buffer” to pour into development of the new COVID-19 vaccine…or at least maybe that’s what they would like you to believe.

Paul Craig Roberts from the IPE expanded on all of this in a recent piece:

Is there no flu this year or is flu “the second wave of Covid?” Don’t expect any honest answer from health authorities. They have the fear running strong, so strong that people are submitting to needless lockdowns that are causing economic havoc to their lives and to mask mandates that do more harm than good.

What is it all about?

Is it simply about vaccine profits for Big Pharma?

Or is it about getting people accustomed to arbitrary orders unsupported by legislation? Isn’t what we are experiencing a takeover of our lives by the executive part of government?

Or is it about reducing human fertility? Experts report that the American vaccine contains anti-fertility elements that will make a percentage of the female population infertile. Why is there no public discussion of this? There are also expert concerns about the novelty of the way the vaccine is supposed to work. It is an approach never before used and has not had sufficient trials to know the consequences.

Just some food for thought.

Authored by Pat Buchanan via Buchanan.org,

2020 will surely qualify as an “annus horribilis” in the history of the Republic.

By New Year’s, one in every 1,000 Americans, 330,000, will be dead from the worst pandemic in 100 years. The U.S. economy will have sustained a blow to rival the worst year of the Great Depression.

And by the end of December, much of the nation will be back in lockdown, with Joe Biden repeatedly predicting a “dark winter” ahead.

Only at the apex of World War II has the U.S. deficit and debt been so large a share of our economy.

In the wake of George Floyd’s death in Minneapolis, the summer of 2020 produced riots the extent of which rivaled the week after the murder of Martin Luther King in 1968.

Also revealed by the BLM uprising of 2020 was an unknown depth of hatred many U.S. citizens have for their country’s history, as they pulled down and smashed statues of men once revered as the greatest leaders — Washington, Jefferson, Jackson, Lee, Grant, Theodore Roosevelt, Woodrow Wilson.

By year’s end, tens of millions were denying the legitimacy of the designated president-elect, who was to take office on Jan. 20. Both parties were charging the other with trying to “steal” the presidency.

Can a nation so distracted, so divided, so at war with itself continue to meet all of the duties, obligations and commitments that are ours as the self-proclaimed “leader of the free world”? Are we still the people and country we used to be?

While we tear ourselves apart, we remain obligated to defend nearly 30 nations of Europe from Russia. We are committed to ostracizing and isolating Iran and going to war if she should seek to build nuclear weapons like those held by her neighbors Israel, Pakistan, India, Russia and China.

Why is this our duty?

We are strategically “pivoting” to Asia to contain a China that is the rising power of the new century and whose economy and armed forces rival our own, while its population is four times larger.

If South Korea is attacked by the North, or Japan or the Philippines find themselves fighting China over rocks in the South and East China seas, we are obligated to treat any Chinese attack as an attack upon us.

Three decades ago, historian Paul Kennedy used the term “imperial overstretch” to describe what happens to great powers when their global commitments become too extensive to sustain.

This happened to the British at the end of World War II when, bled, broken and bankrupted by the six-year war with Germany, she began to shed her colonies. In the fall of 1956, Prime Minister Anthony Eden, Churchill’s foreign secretary, was ordered by President Eisenhower to get his troops out of Suez under an American threat to sink the British pound.

The British Empire was finished.

The imperial overstretch of the Soviet Empire was exposed from 1989 to 1991, with the withdrawal of its forces from Afghanistan, the fall of the Berlin Wall and the collapse of the Iron Curtain. The captive nations of Eastern Europe broke free. The USSR then disintegrated along ethnic and tribal lines into 15 nations.

Its diversity tore the Soviet Union apart.

On Dec. 2, at Brookings Institution, joint chiefs chair Gen. Mark Milley said:

“There’s a considerable amount that the United States expends on overseas deployments, on overseas bases and locations, etc. Is every one of those absolutely, positively necessary for the defense of the United States?” The Defense Department, Milley added, must “take a hard look at what we do, where we do it.”

In a separate talk at the United States Naval Institute, the chairman added that U.S. permanent basing arrangements are “derivative of where World War II ended.”

Indeed, NATO was formed and its war guarantees were issued to Western Europe in 1949, seven decades ago. War guarantees to South Korea, Japan, the Philippines and Australia were all issued from 1950 to 1960.

These commitments to go to war for other nations were issued when Stalin was in the Kremlin, a 400,000-man Red Army sat on the Elbe in Germany, and Mao and his madness had just come to power in Peking.

How long must we sustain all these alliances and soldier on in the “forever wars” of the Middle East? Do we Americans still have the national unity, sense of purpose, and disposition to sacrifice for the cause of Western civilization we had in the early days of the Cold War?

Or has our own Suez moment arrived?

President Trump did not extricate us from the “forever wars,” but he did draw down our troop levels in Afghanistan and Iraq. And he did raise the question of how many more decades must we defend a rich Europe from a declining Russia that has a fourth of its population and a tenth of its wealth.