Tag: finance

Update (1315ET):  Turkey’s Erdogan says deal reached with Russia for Kurdish fighters to move out of Syrian border area within 150 hours establishing a “safe zone” inside Syria.

As Haaretz reports, Russian President Vladimir Putin said on Tuesday that talks with his Turkish counterpart Tayyip Erdogan had yielded what he called momentous results for Syria.

Erdogan and Putin agreed to establish a “safe zone” inside Syria, a senior Turkish official said shortly after the two leaders’ 6-hour-long meeting pic.twitter.com/PhfC3LNTz2

— Bloomberg TicToc (@tictoc) October 22, 2019

Putin and Erdogan reportedly agreed during their meeting that the Turkish operation in Syria can continue up to 32 kilometers inside Syria’s border, Russian Foreign Minister Sergey Lavrov said.

The Turkish Lira jumped 1% on the headlines, erasing yesterday’s losses…

Source: Bloomberg

Additionally, President Trump has authorized $4.5 million in direct support to the White Helmets, and Kurdish fighters have reportedly completed their pullout from a zone along the Syrian border as required under a U.S.-brokered cease-fire deal hours before it was set to expire Tuesday, U.S. and Kurdish official said.

*  *  *

As we detailed earlier, just hours before the end of the 120-hour deadline of the ceasefire agreement negotiated between US and Turkey, President Putin hosted Turkey’s Erdogan in Sochi, reportedly with an aim to learn of Ankara’s plans in its northern Syria operation against the Kurds, and to capitalize on Russia’s position as main driver in the region in the wake of a US withdrawal. 

This as Secretary of State Mike Pompeo said on Tuesday that “some progress has certainly been made” ahead of the ceasefire’s expiration. “The President used America’s economic might, our economic power, to avoid a kinetic conflict with a NATO ally,” Pompeo said. 

Putin and Erdogan reportedly met for over four hours behind closed doors, with only the personal translator for each present, in a meeting expected to be long and comprehensive.

Erdogan is expected to seek Putin’s blessing on the Turkish administered ‘safe zone’ in northeast Syria, after also boasting the Turkish operation has already wrested some 160 settlements along the border from the Kurdish-led Syrian Democratic Forces. Kurdish YPG militia are required to withdraw from a 120km long strip of border area to make way for a Turkey-administered ‘safe zone’ inside Syria, according to the US-Turkey brokered plan. 

“If the promises made by the U.S. to our country are not kept, we will resume our offensive from where we left it, and this time with great determination,” Erdogan told reporters just before heading to Sochi Tuesday. And Putin over a week ago said in a state broadcast interview: “Syria must be free from other states’ military presence. And the territorial integrity of the Syrian Arab Republic must be completely restored.”

Only Putin and Erdogan, with each’s translator, were in the room for the bilateral summit:

This is interesting:

Erdogan and Putin had tete-a-tete in Sochi with only presence of an Russian translator pic.twitter.com/VnfR750bbs

— Ragıp Soylu (@ragipsoylu) October 22, 2019

We noted previously that with the Trump White House wiping its hands of Syria involvement, and now rapidly moving some 1,000 troops into western Iraq, Putin is poised for a ‘deal of the century’ that would cement Russia’s role as final mediator in the eight-year long Syria war.

The reunion of the Kurdish-led Syrian Democratic Forces (SDF) with Assad, to the consternation of Washington hawks, has already been hailed as a great Moscow victory. 

Erdogan is actually pushing for a proposed 300-mile-long safe zone; the deal negotiated with Vice President Pence in Ankara last Thursday delineates a 120-mile strip along the border. Putin is unlikely to agree to anything other than a very temporary Turkish-administered zone, if at all, given he’s been adamant that all sovereign Syrian territory is eventually returned to Damascus’ control. 

The WSJ commented of Russia’s role in northeast Syria, and Erdogan’s desire for an extended zone of control:

Moscow’s commitment to securing the remaining three quarters will be essential because the Russian-backed army of Syrian President Bashar al-Assad last week struck an agreement to work with the Kurdish militia. Taking advantage of the void created by departing U.S. troops, Mr. Assad’s soldiers have been deployed in several border towns held by the Kurds.

Meanwhile, perhaps to be expected, the mainstream media is already lamenting Washington effectively ceding all leverage to Moscow. 

For example Business Insider on Tuesday decried that the “US is now left watching Syria’s fate being decided by two other nations: Turkey and Russia.”

In a curious twist, just two hours after Dealers were falling over themselves to sell Bills to the Fed (at the highest Bid to Cover yet for the Fed’s recently relaunched POMO of 5.5x), moments ago the US Treasury sold $40BN in 2Y paper to what was stellar demand for the short-end.

The auction stopped at 1.594%, the second lowest yield since October 2017, with only August’s 1.516% lower, and also stopped through the When Issued by a whopping 1.2 bps. This was tied with the biggest stop through since March, with only May 2016 notably greater at 2.3bps.

The bid to cover of 2.695 was also a solid improvement to last month’s 2.695, and was notably above the 6-auction average of 2.59. In fact, only May’s 2.745 was higher going back to last August.

Finally, the internals were also quite solid, with Indirects taking down 54.83%, slightly below last month’s 57.01% but far above the recent average of 48.40%. And with Directs taking down 14.0%, below the six auction average of 21.4%, Dealers were left holding 31.2%, one pp above the 30.2% average.

Why the dramatic spike in demand? It was not immediately clear, however with banks such as JPMorgan expecting the Fed to branch out beyond just buying Bills (or else risk more money market turmoil), it is quite likely that the Fed will have to purchase 2Y TSYs in the coming months, and so primary buyers are just arbing the upcoming selling prices, which since the Fed is perfectly price indiscriminate, would mean a guaranteed profit to anyone who buys today unless, of course, there is a burst of inflation hitting the US economy which would force the Fed to halt both QE and raise rates. And since that is very unlikely, today’s buyers are merely locking in assured profits from flipping this paper back to the Fed in a few months time.

Authored by Peter Schiff via SchiffGold.com,

This Is Not a Printing Press! (Or Is It?)

Rene Magritte’s 1929 painting “The Treachery of Images,” depicts a tobacco pipe with a caption that reads “Ceci n’est pas une pipe,” (French for “This is not a pipe”). Everyone who has taken a course in modern art knows that Magritte’s exercise in contradiction was meant to draw a distinction between a real thing and a representation of that thing.

Perhaps we should send Federal Reserve Chairman Jerome Powell a beret and an easel as he is attempting a similarly surrealistic take on monetary policy.

On Oct. 8, the chairman announced a new, as yet unnamed, Fed program through which the bank will now buy regular amounts of short-term U.S. government debt. Seeking to counter the rumblings that a new form of quantitative easing would be seen as an admission that the economy may be in trouble, Chairman Powell asserted during the annual meeting of NABE on October 8, “This is not QE. In no sense is this QE.”

In other words, “Ceci n’est pas QE.”

The New York Fed put some meat on the bone by detailing that the program will buy $60 billion per month of Treasury Bills, at least through the second quarter of next year. (R. Miller & C. Condon, Bloomberg) In addition, at least through January 2020, the Fed will continue with $75 billion in overnight repurchases and $35 billion in term repurchases twice per week. (N. Timiraos & P. Kiernan, Dow Jones Newswire) As a result, it is estimated that the Fed’s balance sheet will reach roughly $4.2-$4.3 trillion sometime in Q2 2020. Of course, since the actual size of the purchases required to keep interest rates from rising could be much larger, the Fed’s balance sheet could be significantly larger as well.

The Fed even put out a Frequently Asked Questions page last week that among other things highlighted how the current moves differ from the original version of QE in 2008. It stresses that whereas the old version of QE was designed to spur economic growth in a sluggish economy, the current moves are simply designed to patch leaky financial pipes that are very much removed from the real economy. A statement on the FAQ page reads, “These operations have no material implications for the stance of monetary policy,” and should not have “any meaningful effects” on household and business spending or the overall level of economic activity. Instead, the Fed just wants to make sure there is enough cash sloshing around the system — because lately there hasn’t been.

But as the reliable American folk wisdom states: if something “looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck.” In this case, Powell can call the new Fed program anything he wants, but it certainly quacks like QE.

As it was originally defined just a few short years ago, QE was the attempt by central banks to buy and hold government debt in an effort to pull down interest rates and inject liquidity into stressed financial markets. Okay, check and check. The only difference between then and now is that in 2008-2014 the Fed targeted the longer-dated end of the bond market, and this time it is targeting the shorter end…at least for now. But bond maturity length never figured much into the definition anyway, so that doesn’t really seem to matter.

Another distinction that Powell makes is that the current program is more modest in scope than the full-blown QE programs of 2009-2014, which added more than $4 trillion to the Fed’s balance sheet, according to data from the St. Louis Fed, (the vast majority of which it still holds to this day). And while it’s true that the $180 billion or so that the Fed has pumped into the markets over the last month is just a spit in the bucket compared to what it had amassed in the early part of this decade, please remember that the Fed has just started…give it time! $180 billion in one month is actually a much faster pace than what was seen at the height of the QE era (which topped out at $85 billion per month).

Should anyone really expect that the new program will end in the middle of next year as the Fed now suggests? It has never fully ended any of its prior stimulus plans, why would this one be any different? In fact, thanks to the Fed, the U.S. economy will be even more heavily indebted in eight months than it is now. So the Fed will be forced to buy even more debt to keep interest rates from rising in an economy even more vulnerable to higher rates than it is today. Like any drug habit, the more drugs you consume today, the more you will have to consume tomorrow to achieve the desired effect.

If we can agree that it makes no difference what we call the program, it is nevertheless important to focus on the differences between QE then and QE now. Back in 2009, the program was all about reliquifying the long bond market that had been decimated by billions of dollars of worthless subprime bonds. But a decade later, the home mortgage market is relatively calm, at least for now. Long-term interest rates are already rock bottom, and mortgage delinquencies are not currently causing panic in the banking system. Today, problems are popping up in a very different place, the very short-end of the bond market, particularly in the overnight “repos” where banks lend spare cash to one another on a very short-term basis.

As it turns out, the Fed’s $50 billion per month of bond sales, which began early in 2018 and ended in the second quarter of this year, drained liquidity from the overnight market at the same time increased government borrowing was sucking up all available cash. Last year’s tax cuts, combined with increased Federal spending, pushed this year’s deficit past $1 trillion for the first time since 2012. (G. Heeb, Markets Insider, 9/14/19) Deficits are currently expected to stay north of $1 trillion per year for the foreseeable future. That means more new government bonds than expected are likely to hit the market.

Contrary to his campaign promise, President Trump has actually shortened the maturity of the national debt. (US Govt. Finance: Debt, Yardeni Research, Inc., 10/10/19) Shorter maturities mean that more debt will need to be refinanced each month. Banks have dutifully bought those bonds, as they are often required to do by capitalization laws that were put in place since the Crisis of 2008. But this has not left enough cash to keep the overnight market well-lubricated.

This problem erupted into broad daylight just a few weeks ago, when yields on overnight bonds skyrocketed to 10% or more. Rates that high in an overlooked, but vital, part of the financial system could have caused the economy to seize up, so the Fed intervened with all guns blazing. It bought approximately $53 billion of overnight loans in just the first day of the crisis.

At that point, most market observers believed that the problem was caused by a confluence of temporary events that would last just one day, or maybe a week. But those hopes quickly faded, and we have been left with a crisis that now appears permanent. In light of this, it is not surprising that the Fed expanded its intervention into the short-end of the Treasury market. But don’t expect the problems to end there. The debt crisis is like a cancer that I believe will continue to spread. The Fed is out of miracle cures. In fact, it never had any.

This all reminds me of when Fed Chairman Ben Bernanke first introduced the QE program in 2009, stressing that that it did not constitute “debt monetization” (the situation where a government buys its own debt) because QE was “temporary” and the bonds that the Fed was buying in an emergency would be sold back to the market once the crisis abated. (Testimony before U.S. House Budget Committee, 6/3/09) At the time, I predicted, when virtually no one else on Wall Street did, that the Fed would never be able to sell those assets back into the market. It turns out, the Fed was only able to sell less than 25% of what it had bought before it encountered a crisis that forced it to scrap the whole process.

As I have said many, many times, quantitative easing is a monetary Roach Motel: Once central bankers check-in, they can never check out. For now, Chairman Powell is occupying a different room in this particular motel than had his predecessors. But rest assured, not only will he occupy that room, but I expect he will also be expanding into many more. None of the rooms will have a good view and all will have dirty linen.

The real question is when investors will get wind of the stench? The Fed has been successful in fooling the markets regarding the temporary nature of zero-percent interest rates, the efficacy of QE, and its ability to normalize rates and shrink its balance sheet. Had the markets not been fooled, the program would have produced a much different result. Its “success” was purely a function of the belief that the policy was temporary and reversible. The realization that it is neither could cause a flight from the dollar and Treasuries that could usher in a financial crisis far worse than what was experienced in 2008.

More than half of the world’s banks are at risk of collapse in the next global downturn if they don’t start preparing for late-cycle shocks, McKinsey & Company warned in its latest global banking outlook. 

The consultancy firm warned on Monday, in a 55-page report titled The last pit stop? Time for bold late-cycle moves, that 35% of banks globally are “subscale” and will have to merge or sell to larger firms if they want to survive the next crisis. 

“A decade on from the global financial crisis, signs that the banking industry has entered the late phase of the economic cycle are clear: growth in volumes and top-line revenues is slowing, with loan growth of just 4% in 2018—the lowest in the past five years and a good 150 basis points (bps) below nominal GDP growth. Yield curves are also flattening. And, although valuations fluctuate, investor confidence in banks is weakening once again,” McKinsey said. 

Kausik Rajgopal, a senior partner at McKinsey, told Bloomberg that “we believe we’re in the late economic cycle and banks need to make bold moves now because they are not in great shape,” adding that, “in the late cycle, nobody can afford to rest on their laurels.”

The report warned that 60% of global banks are experiencing “returns below the cost of equity.” And even warned that when the next recession strikes, “negative interest rates could wreak further havoc.” 

McKinsey said fin-tech startups are rapidly evolving the industry, and legacy banks risk “becoming footnotes to history” if they don’t immediately invest in technology. For instance, the report said, Amazon and Ping An are two technology firms that are quickly acquiring market share from the traditional banking sector. 

Fin-tech firms allocate at least 70% of their budgets to technological advancements, while legacy banks only invest 35%.

Rajgopal also told Bloomberg that legacy banks “need to get much more comfortable with external partnerships and being able to leverage talent externally.” 

Mergers and acquisitions will be the only way these at-risk legacy banks survive. 

McKinsey called for global banks to make “bold late-cycle moves” to avoid collapse before the next recession strikes.

Authored by Alex Kimani via OilPrice.com,

Theoretically, two lone nuclear reactors running on small pellets could power the entire planet, safely and cleanly. That’s the promise of nuclear fusion. So, why are we still relying on fossil fuels?

For decades, scientists have viewed nuclear fusion as the Holy Grail for clean, abundant and sustainable power. Based on the same principle that powers the stars, including our own sun, a couple of nuclear reactors running on small pellets could power our planet without the risk of a catastrophic meltdown and zero greenhouse gas emissions. 

Still, we depend on fossil fuels for 80% of our energy needs. 

So, what’s stopping us from building these reactors everywhere?

After all, scientists have been working on nuclear fusion technology since the 1950s and have always been optimistic that the final breakthrough is not far away. Yet, milestones have fallen time and again and now the running joke is that a practical nuclear fusion power plant could still be decades away.

Well, you can blame some kinky laws of physics for this sad state of affairs.

Source: Pixabay

Extreme challenge

It turns out that the conditions necessary for nuclear fusion to take place present an extreme challenge for us earthlings. 

Fusion works on the basic concept of forging lighter elements into heavier ones. When two hydrogen atoms are smashed together hard enough, they fuse to form helium. The new atom is less massive than the sum of its parts, with the balance converted to energy in the E=MC2 mass-energy equivalence.

Ok, that’s a bit simplistic since hydrogen atoms do not fuse together directly but rather in a multi-step reaction. Anyway, the long and short of it is that nuclear fusion produces net energy only at extreme temperatures – in the order of hundreds of millions of degrees celsius. That’s hotter than the sun’s core and far too hot for any known material on earth to withstand.

To get around this quagmire, scientists use powerful magnetic fields to contain the hot plasma and prevent it from coming into contact with the walls of the nuclear reactor. That uses a lot of power. 

Stars have it easy in this regard because their ludicrously powerful gravitational fields hold everything together. 

Unfortunately, every fusion experiment so far has been energy negative, taking in more energy than it generates thus making it useless as a form of electricity generation. 

Getting the initial fusion reaction is not a problem – keeping it going is, not to mention that building nuclear reactors takes some extremely sophisticated feats of engineering.

International megaproject

But now scientists are confident that they are close to building a nuclear reactor that will produce more energy than it consumes. 

The Saint-Paul-les-Durance, France-based upcoming International Thermonuclear Experimental Reactor (ITER) is the world’s largest fusion reaction facility that aims to develop commercially viable fusion reactors.

Funded by six nations including the US, Russia, China, Japan, South Korea and India, ITER plans to build the world’s largest tokamak fusion device, a donut-shaped cage that will produce 500 ME of thermal fusion energy. 

The device will cost ~$24 billion with a delivery date set at 2035. The giant machine – the biggest fusion machine ever built –  will weigh in at an impressive 23,000 tonnes and will be housed in a building 60 meters high.

Source: ITER.org

So, what’s different this time around?

Scientists have successfully developed a new superconducting material – essentially a steel tape coated with yttrium-barium-copper oxide, or YBCO, which allows them to build smaller and more powerful magnets. This lowers the energy required to get the fusion reaction off the ground.

According to Fusion for Energy – the EU’s joint undertaking for ITER – 18 niobium-tin superconducting magnets aka toroidal field coils will be used to contain the 150 million degrees celsius plasma. The powerful magnets will generate a powerful magnetic field equal to11.8 tesla, or a million times stronger than the earth’s magnetic field. Europe will manufacture 10 of the toroidal field coils with Japan manufacturing nine.

However, it will be another decade before a full-scale demonstration power plant will be built using lessons learned from ITER. The industrial fusion power plants will thereafter be connected to the grid.

ITER, however, is not the only fusion energy player on the scene. Commonwealth Fusion Systems is collaborating with MIT to build its fusion reactor. The team has planned a fusion experiment they have dubbed called Sparc which is about 1/65th the volume of ITER. The experimental reactor will generate about 100MW of heat energy in pulses of about 10 seconds – bursts big enough to power a small city. The team anticipates that the output will be more than twice the power used to heat the plasma thus overcoming the biggest technical hurdle in the field: positive net energy from fusion.

The other good news: the Sparc team has set an ambitious target to have the reactor running in just 15 years.

American forces withdrawing from Syria into western Iraq have not been issued permission to stay in the country, an official Iraqi government statement has warned, saying further only brief “transit” approval has been given. 

US Defense Secretary Mark Esper days ago claimed the additional US forces currently pulling out of Syria, at nearly 1000, will joint troops already stationed in Iraq for their anti-ISIS mission and “to help defend Iraq”.

“All U.S. forces that withdrew from Syria received approval to enter the Kurdistan Region so that they may be transported outside Iraq. There is no permission granted for these forces to stay inside Iraq,” the Iraqi military said according to Reuters.

The surprise resistance from Baghdad officials comes amid growing popular anger at continued US presence and a movement underway in parliament to expel all remaining American troops, largely due to a spate of Israeli drone strikes over the past few months on Iran-backed Iraqi paramilitary bases, mostly in and around Baghdad. 

The between 700 and 1,000 US forces exiting Syria toward bases in western Iraq are expected to bolster the already more than 5,000 American forces stationed in the country.

Given this latest warning out of Baghdad, a senior Pentagon official noted to Reuters that the situation remains “fluid and plans could change”.

Meanwhile, the looming Tuesday night expiration of the ‘120-hour ceasefire’ deal which went into effect last Thursday could mean all hell is ready to break loose in northern Syrian once again, though sporadic fighting has remained in effect, with both sides accusing the other of already breaching its terms. 

A more permanent ceasefire as part of the Pence-brokered plan is conditioned on all parties observing the temporary “pause” — which is hours away from expiring. 

Turkey’s President Erdogan in new statements has vowed to restart the major Syria offensive “more strongly” if the US “breaks its promises”. This after on Tuesday he boasted the Turkish operation had wrested 160 settlements along the border from the Kurdish-led Syrian Democratic Forces. Kurdish YPG militia are required to withdraw from a 120km long strip of border area to make way for a Turkey-administered ‘safe zone’ inside Syria. 

Interestingly, on the final day of the US-brokered ceasefire Erdogan is in Sochi, Russia where he is meeting with Vladimir Putin to discuss Syria. Putin has positioned Russia as the final power broker in the region as Washington departs. 

Authored by Matt Taibbi via RollingStone.com,

America laughed at Hillary Clinton’s remarks about Tulsi Gabbard, but her ideas fit perfectly in the intellectual mainstream…

Hillary Clinton, not long ago the nominee of the Democratic Party, had some choice words about the state of American politics Friday.

“I’m not making any predictions, but I think they’ve got their eye on somebody who is currently in the Democratic primary and are grooming her to be the third-party candidate,” Clinton said on a podcast with former Barack Obama aide David Plouffe. “She’s the favorite of the Russians.”

Clinton appeared to be talking about Hawaii congresswoman Tulsi Gabbard, a combat veteran. She wasn’t done, teeing off on former Green Party candidate Jill Stein:

“[Jill Stein’s] also a Russian asset… Yeah, she’s a Russian asset — I mean, totally. They know they can’t win without a third-party candidate.”

She went on to talk about Donald Trump:

“I don’t know what Putin has on him, whether it’s both personal and financial … I assume it is.”

Hillary Clinton is nuts. She’s also not far from the Democratic Party mainstream, which has been pushing the same line for years.

Less than a week before Clinton’s outburst, the New York Times — once a symbol of stodgy, hyper-cautious reporting — ran a feature called, “What, Exactly, is Tulsi Gabbard Up To?” The piece speculated about the “suspicious activity” surrounding Gabbard’s campaign, using quotes from the neoconservative think-tank, the Alliance For Securing Democracy, to speculate about Gabbard’s Russian support.

This was the second such article the Times had written. An August piece, “Tulsi Gabbard thinks we’re doomed,“ hit nearly all the same talking points, quoting Clint Watts, an ex-spook from the same think-tank, calling Gabbard “the Kremlin’s preferred Democrat” and a “useful agent of influence.” The Times article echoed earlier pieces by the Daily Beast and NBC.com that said many of the same things.

After Clinton gave the “Russian asset” interview, it seemed for a moment like America’s commentariat might tiptoe away from the topic. Hillary Clinton has been through a lot over the course of a career, and even detractors would say she’s earned latitude to go loonybiscuits every now and then. A few of the Democratic presidential candidates, like Beto O’Rourke and Andrew Yang, gently chided Clinton for her remarks. But when Gabbard (who’s similarly been through a brutal media ordeal) snapped back and called Hillary “Queen of the warmongers,” and Donald Trump followed by calling Clinton “crazy,” most pundits doubled down on the “asset” idea.

Neoconservative-turned-#Resistance hero David Frum blasted Trump for defending Stein and Gabbard, noting sarcastically, “He was supposed to pretend they were not all on the same team.”

Ana Navarro on CNN said, “When both the Russians and Trump support someone, be wary.”

An MSNBC panel noted, in apparent seriousness, that Gabbard “never denied being a Russian asset.”

CNN media critic Brian Stelter tried to suggest Hillary only seemed wacko thanks to a trick of the red enemy, saying, “It feels like a disinformation situation where the Russians want this kind of disinformation.”

(The “Russians caused us to say that crazy thing about Russians” meme has been a recurring theme. When Luke Harding of The Guardian was criticized for a thinly-sourced report that Julian Assange had met with Trump aide Paul Manafort in the Ecuadorian embassy, an anonymous CIA official penned an editorial in Politico suggesting that if the story was fake, “the most logical explanation” was a Russian disinformation effort to discredit journalists.)

Everyone is foreign scum these days. Democrats spent three years trying to prove Donald Trump is a Russian pawn. Mitch McConnell is “Moscow Mitch.” Third party candidates are a Russian plot. The Bernie Sanders movement is not just a wasteland of racist and misogynist “Bros,” but — according to intelligence agencies and mainstream pundits alike — the beneficiary of an ambitious Russian plot to “stoke the divide” within the Democratic Party. The Joe Rogan independents attracted to the mild antiwar message of Tulsi Gabbard are likewise traitors and dupes for the Kremlin.

If you’re keeping score, that’s pretty much the whole spectrum of American political thought, excepting MSNBC Democrats. What a coincidence!

Democrats now are assuming the role once played by Republicans of the Tom Delay era, who denounced everyone opposed to the War on Terror as “Saddam-lovers.” In the midst of this in 2003, the Washington Post protested the way American journalism was “infected with jingoism and intolerance.” That was after Rupert Murdoch’s New York Post ran a headline, “Don’t aid these Saddam-lovers” about “appeasement-loving celebs” like Laurence Fishburne, Tim Robbins, Samuel L. Jackson, Sean Penn, Danny Glover, and Susan Sarandon.

Today, the New York Post is the paper crying out against the “sad, sick conspiracy theories” about Gabbard (an “Assad-lover” instead of a “Saddam-lover”), but some of the other players are the same. Sarandon is regularly denounced now by Democrats instead of Republicans, this time for having supported Stein in 2016, an act seen as equivalent to having tongue-kissed Putin on live TV. She was also one of a handful of celebrities noted for a “controversial” political donation in the Daily Beast’s red-baiting May article about the suspicious contributors to Gabbard’s campaign.

The #Resistance has come up with all sorts of words for such fifth-columnists and deviationists: they are “false-balancers” or “false equivalencers,” “neo-Naderites,” “purity-testers,” “both-sidesists,” “whataboutists,” “horseshoe theorists,” “Russia skeptics” or “Russia denialists,” and “anti-anti-Trumpers.” Such heretics are all ultimately seen as being on “team Putin.”

This witch-hunting insanity isn’t just dangerous, it’s a massive breach from reality. Trump’s campaign was a clown show. He had almost no institutional backing. His “ground game” was nonexistent: his “campaign” was a TV program based almost wholly around unscripted media appearances. Trump raised just over half the $1.2 billion Hillary pulled in (making him the first presidential candidate dating back to 1976 to win with a funds deficit). He didn’t prepare a victory speech, for the perfectly logical reason that he never expected to win.

Even if you posit the most elaborate theories of Russian interference (which I don’t, but of course I’m denialist scum), what happened in 2016 was still almost entirely a domestic story, with Trump benefiting from long-developing public rejection of the political establishment.

Rather than confront the devastating absurdity of defeat before an ad-libbing game show host who was seemingly trying to lose – a black comedy that is 100% in America’s rich stupidity tradition – Democrats have gone all-in on this theory of foreign infiltration. House speaker Nancy Pelosi even said as much in a White House meeting, pointing at Trump and proclaiming: “All roads lead to Putin.”

All? Seriously? Is this ever going to end?

Earlier this morning, when discussing today’s oversubscribed term repo and latest funding squeeze, we previewed today’s T-Bill POMO saying,  “and now we await today’s T-Bill Pomo result for the final proof of funding deterioration, as we expect today’s operation will be the most oversubscribed yet, confirming that dealers are scrambling to convert their “safe” assets into dollars as fast as possible.”

Less than two hours, that’s precisely what happened, when the Fed announced that in its third $7.5 Billion Treasury Bill POMO, the Fed received a whopping $41.472 billion in “liquidity” requests, i.e. Dealers submitted $41.5BN in bids for the maximum $7.5BN in Fed “Reserve Management” (note: not QE) purchases.

As such, the operation was 5.5x oversubscribed, a notable increase from the first two POMOs conducted last week, when operations were 4.3x and 4.8x oversubscribed.

While we already predicted the punchline earlier, here it is again: demand for the Fed’s permanent liquidity injection is increasing with every operation, even as overnight repo saw a modest increase in dealer interest while term repo was oversubscribed for the first time in 4 weeks.

As such the question we have been asking for the past month – and one which Elizabeth Warren should also consider asking of Steven Mnuchin – remains: why are banks still so desperate for liquidity even though the Fed has now made clear the Fed’s balance sheet will expand to accommodate all reserve needs, and why do they so stubbornly refuse to approach the interbank market for their funding needs? In short, what do they know about the banking system that we don’t?

Authored by Patrick Buchanan via Buchanan.org,

What happens when democracy fails to deliver? What happens when people give up on democracy?

What happens when a majority or militant minority decide that the constitutional rights of free speech, free elections, peaceful assembly and petition are inadequate and take to the streets to force democracy to submit to their demands?

Our world may be about to find out…

Chile is the most stable and prosperous country in Latin America.

Yet when its capital, Santiago, recently raised subway fares by 5%, thousands poured into the streets. Rioting, looting, arson followed. The Metro system was utterly trashed. Police were assaulted. People died. The rioting spread to six other cities. Troops were called out.

President a Sebastian Pinera repealed the fare hike and declared a national emergency, stating, “Chile is at war against a powerful, implacable enemy who does not respect anything or anyone and is willing to use violence and crime without any limits.”

How does a democracy that has spawned within itself a powerful and implacable enemy deal with it?

Last week, tens of thousands of Lebanese of all faiths and political associations rioted in Beirut and Tripoli to demand the overthrow of the regime and the ouster of its president, speaker of parliament and Prime Minister Saad Hariri. All must go, the masses demand.

In Barcelona, Friday, half a million people surged into the streets in protest after the sentencing in Madrid of the secessionists who sought to bring about the independence of Catalonia from Spain in 2017.

In all of China, few enjoy the freedoms of the 7 million in Hong Kong. Yet, for five months, these fortunate and free Chinese, to protest a proposal that would have allowed Hong Kong residents to be extradited to China, stormed into the streets to defy the regime and denounce the conditions under which they live.

These protests have been marked by riots, vandalism, arson and clashes with police. “Hong Kong streets descended into chaos following an unauthorized pro-democracy rally Sunday,” writes the Associated Press. Protesters “set up roadblocks and torched businesses, and police responded with tear gas and a water cannon. Protesters tossed firebombs and took their anger out on shops with mainland Chinese ties.”

What are the Hong Kong residents denouncing and demanding?

They are protesting both present and future limitations on their freedom. The appearance of American flags in the protests suggests that what they seek is what the agitators behind the Boston Tea Party and the boys and men at Concord Bridge sought — independence, liberty and a severing of the ties to the mother country.

Yet, because the Communist regime of Xi Jinping could not survive such an amputation, the liberation of Hong Kong is not in the cards. The end to these months of protest will likely be frustration, futility and failure.

Perhaps it is that realization that explains the vehemence and violence. But the rage is also what kills the support they initially received.

In 1960s America, the first civil rights demonstrations attracted widespread sympathy. But the outburst of urban riots that followed in Harlem, Watts, Newark, Detroit and 100 cities after Martin Luther King’s assassination sent millions streaming to the banners of Gov. George Wallace in the campaigns of 1968 and 1972.

When the “yellow vest” protests broke out in 2018 in Paris, over a fuel tax, the demonstrators had the support of millions of Frenchmen.

But that support dissipated when protesters began smashing windows of boutique shops on the Champs-Elysee, assaulting police and desecrating monuments and memorials.

This reversion to violence, ransacking of stores and showering of police with bricks, bottles and debris, is costing the protesters much of the backing they enjoyed. In the trade-off between freedom and order, people will ultimately opt for order.

Yet, one wonders: Why are these outbursts of violent protests and rioting taking place in stable, free and prosperous societies?

Chile is the most stable and wealthy country in South America. Catalonia is the most prosperous part of Spain. Paris is hardly a hellhole of repression. And Hong Kong is the freest city of China.

If the beneficiaries of freedoms and democratic rights come to regard them as insufficient to produce the political, economic and social results they demand, what does that portend for democracy’s future?

For, despite the looting, arson and attacks on cops in Hong Kong, Xi Jinping is not going to order his satraps to yield to popular demands for autonomy or independence. Nor is Madrid going to accept the loss of Barcelona and secession of Catalonia. Nor is the conservative Chilean government going to yield to the street rebels and revolutionaries. Nor is Paris going to back down to the “yellow vests.”

Yet, one wonders: If the “end of history” and worldwide triumph of democratic capitalism thesis has, as most agree, been disproven, is it possible that the Age of Democracy is itself a passing phase in the history of the West and the world?