Tag: finance

Authored by Rajan Menon via TomDispatch.com,

Why Arms Races Never End

Hypersonic weapons close in on their targets at a minimum speed of Mach 5, five times the speed of sound or 3,836.4 miles an hour. They are among the latest entrants in an arms competition that has embroiled the United States for generations, first with the Soviet Union, today with China and Russia. Pentagon officials tout the potential of such weaponry and the largest arms manufacturers are totally gung-ho on the subject. No surprise there. They stand to make staggering sums from building them, especially given the chronic “cost overruns” of such defense contracts — $163 billion in the far-from-rare case of the F-35 Joint Strike Fighter.

Voices within the military-industrial complex — the Defense Department; mega-defense companies like Lockheed Martin, Northrup Grumman, Boeing, and Raytheon; hawkish armchair strategists in Washington-based think tanks and universities; and legislators from places that depend on arms production for jobs — insist that these are must-have weapons. Their refrain: unless we build and deploy them soon we could suffer a devastating attack from Russia and China.  

The opposition to this powerful ensemble’s doomsday logic is, as always, feeble.

The (Il)logic of Arms Races

Hypersonic weapons are just the most recent manifestation of the urge to engage in an “arms race,” even if, as a sports metaphor, it couldn’t be more off base. Take, for instance, a bike or foot race. Each has a beginning, a stipulated distance, and an end, as well as a goal: crossing the finish line ahead of your rivals. In theory, an arms race should at least have a starting point, but in practice, it’s usually remarkably hard to pin down, making for interminable disputes about who really started us down this path. Historians, for instance, are still writing (and arguing) about the roots of the arms race that culminated in World War I. 

The arms version of a sports race lacks a purpose (apart from the perpetuation of a competition fueled by an endless action-reaction sequence). The participants just keep at it, possessed by worst-case thinking, suspicion, and fear, sentiments sustained by bureaucracies whose budgets and political clout often depend on military spending, companies that rake in the big bucks selling the weaponry, and a priesthood of professional threat inflators who merchandise themselves as “security experts.”  

While finish lines (other than the finishing of most life on this planet) are seldom in sight, arms control treaties can, at least, decelerate and muffle the intensity of arms races. But at least so far, they’ve never ended them and they themselves survive only as long as the signatories want them to. Recall President George W. Bush’s scuttling of the 1972 Anti-Ballistic Missile Treaty and the Trump administration’s exit from the Cold War-era Intermediate-Range Nuclear Forces (INF) Treaty in August. Similarly, the New START accord, which covered long-range nuclear weapons and was signed by Russia and the United States in 2010, will be up for renewal in 2021 and its future, should Donald Trump be reelected, is uncertain at best. Apart from the fragility built into such treaties, new vistas for arms competition inevitably emerge — or, more precisely, are created. Hypersonic weapons are just the latest example.

Arms races, though waged in the name of national security, invariably create yet more insecurity. Imagine two adversaries neither of whom knows what new weapon the other will field. So both just keep building new ones. That gets expensive. And such spending only increases the number of threats. Since the end of the Cold War in 1991, U.S. military spending has consistently and substantially exceeded China’s and Russia’s combined. But can you name a government that imagines more threats on more fronts than ours? This endless enumeration of new vulnerabilities isn’t a form of paranoia. It’s meant to keep arms races humming and the money flowing into military (and military-industrial) coffers.

One-Dimensional National Security

Such arms races come from the narrow, militarized definition of “national security” that prevails inside the defense and intelligence establishment, as well as in think tanks, universities, and the most influential mass media. Their underlying assumptions are rarely challenged, which only adds to their power. We’re told that we must produce a particular weapon (price tag be damned!), because if we don’t, the enemy will and that will imperil us all.  

Such a view of security is by now so deeply entrenched in Washington — shared by Republicans and Democrats alike — that alternatives are invariably derided as naïve or quixotic. As it happens, both of those adjectives would be more appropriate descriptors for the predominant national security paradigm, detached as it is from what really makes most Americans feel insecure.

Consider a few examples.

Unlike in the first three decades after World War II, since 1979 the average U.S. hourly wage, adjusted for inflation, has increased by a pitiful amount, despite substantial increases in worker productivity. Unsurprisingly, those on the higher rungs of the wage ladder (to say nothing of those at the top) have made most of the gains, creating a sharp increase in wage inequality. (If you consider net total household wealth rather than income alone, the share of the top 1% increased from 30% to 39% between 1989 and 2016, while that of the bottom 90% dropped from 33% to 23%.) 

Because of sluggish wage growth many workers find it hard to land jobs that pay enough to cover basic life expenses even when, as now, unemployment is low (3.6% this year compared to 8% in 2013). Meanwhile, millions earning low wages, particularly single mothers who want to work, struggle to find affordable childcare — not surprising considering that in 10 states and the District of Columbia the annual cost of such care exceeded $10,000 last year; and that, in 28 states, childcare centers charged more than the cost of tuition and fees at four-year public colleges.  

Workers trapped in low-wage jobs are also hard-pressed to cover unanticipated expenses. In 2018, the “median household” banked only $11,700, and households with incomes in the bottom 20% had, on average, only $8,790 in savings; 29% of them, $1,000 or less. (For the wealthiest 1% of households, the median figure was $2.5 million.) Forty-four percent of American families would be unable to cover emergency-related expenses in excess of $400 without borrowing money or selling some of their belongings.

That, in turn, means many Americans can’t adequately cover periods of extended unemployment or illness, even when unemployment benefits are added in. Then there’s the burden of medical bills. The percentage of uninsured adults has risen from 10.9% to 13.7% since 2016 and often your medical insurance is tied to your job — lose it and you lose your coverage — not to speak of the high deductibles imposed by many medical insurance policies. (Out-of-pocket medical expenses have, in fact, increased fourfold since 2007 and now average $1,300 a year.)

Or, speaking of insecurity, consider the epidemic in opioid-related fatalities (400,000 people since 1999), or suicides (47,173 in 2017 alone), or murders involving firearms (14,542 in that same year). Child poverty? The U.S. rate was higher than that of 32 of the 36 other economically developed countries in the Organization for Economic Cooperation and Development.

Now ask yourself this: how often do you hear our politicians or pundits use a definition of “national security” that includes any of these daily forms of American insecurity? Admittedly, progressive politicians do speak about the economic pressures millions of Americans face, but never as part of a discussion of national security.

Politicians who portray themselves as “budget hawks” flaunt the label, but their outrage over “irresponsible” or “wasteful” spending seldom extends to a national security budget that currently exceeds $1 trillion. Hawks claim that the country must spend as much as it does because it has a worldwide military presence and a plethora of defense commitments. That presumes, however, that both are essential for American security when sensible and less extravagant alternatives are on offer.  

In that context, let’s return to the “race” for hypersonic weapons.

Faster Than a Speeding Bullet

Although the foundation for today’s hypersonic weaponry was laid decades ago, the pace of progress has been slow because of daunting technical challenges. Developing materials like composite ceramics capable of withstanding the intense heat to which such weapons will be exposed during flight leads the list. In recent years, though, countries have stepped up their games hoping to deploy hypersonic armaments rapidly, something Russia has already begun to do.

China, Russia, and the United States lead the hypersonic arms race, but others — including Britain, France, Germany, India, and Japan — have joined in (and more undoubtedly will do so). Each has its own list of dire scenarios against which hypersonic weapons will supposedly protect them and military missions for which they see such armaments as ideal. In other words, a new round in an arms race aimed at Armageddon is already well underway.

There are two variants of hypersonic weapons, which can both be equipped with conventional or nuclear warheads and can also demolish their targets through sheer speed and force of impact, or kinetic energy. “Boost-glide vehicles” (HGVs) are lofted skyward on ballistic missiles or aircraft. Separated from their transporter, they then hurtle through the atmosphere, pulled toward their target by gravity, while picking up momentum along the way. Unlike ballistic missiles, which generally fly most of the way in a parabolic trajectory — think of an inverted U — ranging in altitude from nearly 400 to nearly 750 miles high, HGVs stay low, maxing out about 62 miles up. The combination of their hypersonic speed and lower altitude shortens the journey, while theoretically flummoxing radars and defenses designed to track and intercept ballistic missile warheads (which means another kind of arms race still to come). 

By contrast, hypersonic cruise missiles (HCMs) resemble pilotless aircraft, propelled from start to finish by an on-board engine. They are, however, lighter than standard cruise missiles because they use “scramjet” technology.  Rather than carrying liquid oxygen tanks, the missile “breathes” in outside air that passes through it at supersonic speed, its oxygen combining with the missile’s hydrogen fuel. The resulting combustion generates extreme heat, propelling the missile toward its target. HCMs fly even lower than HGVs, below 100,000 feet, which makes identifying and destroying them harder yet. 

Weapons are categorized as hypersonic when they can reach a speed of at least Mach 5, but versions that travel much faster are in the works. A Chinese HGV, launched by the Dong Feng (East Wind) DF-ZF ballistic missile, reportedly registered a speed of up to Mach 10 during tests, which began in 2014. Russia’s Kh-47M2 Kinzhal, or “Dagger,” launched from a bomber or interceptor, can reportedly also reach a speed of Mach 10. Lockheed Martin’s AGM-183A Advanced Rapid Response Weapon (ARRW), an HGV that was first test-launched from a B-52 bomber this year, can apparently reach the staggering speed of Mach 20.

And yet it’s not just the speed and flight trajectory of hypersonic weapons that will make them so hard to track and intercept. They can also maneuver as they race toward their targets. Unsurprisingly, efforts to develop defenses against them, using low-orbit sensors, microwave technology, and “directed energy” have already begun. The Trump administration’s plans for a new Space Force that will put sensors and interceptors into space cite the threat of hypersonic missiles. Even so, critics have slammed the initiative for being poorly funded.

Putting aside the technical complexities of building defenses against hypersonic weapons, the American decision to withdraw from the ABM Treaty and develop missile-defense systems influenced Russia’s decision to develop hypersonic weapons capable of penetrating such defenses. These are meant to ensure that Russia’s nuclear forces will continue to serve as a credible deterrent against a nuclear first strike on that country.

The Trio Takes the Lead

China, Russia, and the United States are, of course, leading the hypersonic race to hell. China tested a medium-range new missile, the DF-17 in late 2017, and used an HGV specifically designed to be launched by it. The following year, that country tested its rocket-launched Xing Kong-2 (Starry Sky-2), a “wave rider,” which gains momentum by surfing the shockwaves it produces. In addition to its Kinzhal, Russia successfully tested the Avangard HGV in 2018. The SS-19 ballistic missile that launched it will eventually be replaced by the R-28 Samrat. Its hypersonic cruise missile, the Tsirkon, designed to be launched from a ship or submarine, has also been tested several times since 2015. Russia’s hypersonic program has had its failures — so has ours — but there’s no doubting Moscow’s seriousness about pursuing such weaponry.

Though it’s common to read that both Russia and China are significantly ahead in this arms race, the United States has been no laggard. It’s been interested in such weaponry — specifically HGVs — since the early years of this century. The Air Force awarded Boeing and Pratt & Whitney Rocketdyne a contract to develop the hypersonic X-51A WaveRider scramjet in 2004. Its first flight test — which failed (creating something of a pattern) — took place in 2010.

Today, the Army, Navy, and Air Force are moving ahead with major hypersonic weapons programs. For instance, the Air Force test-launched its ARRW from a B-52 bomber as part of its Hypersonic Conventional Strike Weapon (HCSW) this June; the Navy tested an HGV in 2017 to further its Conventional Prompt Strike (CPS) initiative; and the Army tested its own version of such a weapon in 2011 and 2014 to move its Advanced Hypersonic Weapon (AHW) program forward. The depth of the Pentagon’s commitment to hypersonic weapons became evident in 2018 when it decided to combine the Navy’s CPS, the Air Force’s HCSW, and the Army’s AHW to advance the Conventional Prompt Global Strike Program (CPGS), which seeks to build the capability to hit targets worldwide in under 60 minutes.

That’s not all. The Center for Public Integrity’s R. Jeffrey Smith reports that Congress passed a bill last year requiring the United States to have operational hypersonic weapons by late 2022. President’s Trump’s 2020 Pentagon budget request included $2.6 billion to support their development. Smith expects the annual investment to reach $5 billion by the mid-2020s.

That will certainly happen if officials like Michael Griffin, the Pentagon’s undersecretary for research and engineering, have their way. Speaking at the McAleese and Credit Suisse Defense Programs conference in March 2018, he listed hypersonic weapons as his “highest technical priority,” adding, “I’m sorry for everybody out there who champions some other high priority… But there has to be a first and hypersonics is my first.” The big defense contractors share his enthusiasm. No wonder last December the National Defense Industrial Association, an outfit that lobbies for defense contractors, played host to Griffin and Patrick Shanahan (then the deputy secretary of defense), for the initial meeting of what it called the “Hypersonic Community of Influence.”

Cassandra Or Pollyanna?

We are, in other words, in a familiar place. Advances in technology have prepared the ground for a new phase of the arms race. Driving it, once again, is fear among the leading powers that their rivals will gain an advantage, this time in hypersonic weapons. What then? In a crisis, a state that gained such an advantage might, they warn, attack an adversary’s nuclear forces, military bases, airfields, warships, missile defenses, and command-and-control networks from great distances with stunning speed.

Such nightmarish scenario-building could simply be dismissed as wild-eyed speculation, but the more states think about, plan, and build weaponry along these lines, the greater the danger that a crisis could spiral into a hypersonic war once such weaponry was widely deployed. Imagine a crisis in the South China Sea in which the United States and China both have functional hypersonic weapons: China sees them as a means of blocking advancing American forces; the United States, as a means to destroy the very hypersonic arms China could use to achieve that objective. Both know this, so the decision of one or the other to fire first could come all too easily. Or, now that the INF Treaty has died, imagine a crisis in Europe involving the United States and Russia after both sides have deployed numerous intermediate-range hypersonic cruise missiles on the continent. 

Some wonks say, in effect, Relax, hi-tech defenses against hypersonic weapons will be built, so crises like these won’t spin out of control. They seem to forget that defensive military innovations inevitably lead to offensive ones designed to negate them. Hypersonic weapons won’t prove to be the exception.

So, in a world of national (in)security, the new arms race is on. Buckle up.

Hunter Biden is the ultimate fail-son, or black sheep.

For those who are unfamiliar with the term, it has emerged in recent years to describe the spoiled, sloppy and clumsily power-hungry offspring of powerful individuals. Hunter Biden is more infamous for his often drug-fueled antics, and the brief and embarrassingly public romance he shared with his deceased brother’s widow, than he is for being a successful businessman. But now his business career has been exposed for what it truly is: Foreign players hoping to use the younger Biden as a backdoor connection to the White House, and the American political elite.

Often, Biden dropped hints about how these connections could be useful, though there’s not much of a record of him actually using his connections (that is, actually being useful) on his employer’s behalf (which doesn’t mean it didn’t happen).

According to the FT, Biden’s business interests “often show up in unexpected places.” While Democrats obviously prefer to focus on their impeachment investigation, there’s no denying that Biden’s business dealings in Ukraine, China and elsewhere clearly raise questions about potential conflicts that existed while his father was in office. Joe Biden has denied wrongdoing, but questions linger over his role in the ouster of a top Ukrainian prosecutor, which some have suggested was done to help protect Hunter.

When Hunter joined the Navy Reserves in May 2013, he required several waivers (at 42, he was above the age of enlistment, and there was an unspecified ‘drug-related’ incident that also would have disqualified him).

Despite his apparent eagerness to join, Biden was discharged from the Navy the following year after testing positive for cocaine. Soon after, his more successful older brother, Beau, passed away, and his wife Kathleen filed for divorce, citing Hunter’s “spending extravagantly on his own interests including drugs, alcohol, prostitutes, strip clubs and gifts for women with whom he has sexual relations.”

Next, he started dating his brother’s widow.

But in between trips to rehab and legendary drug benders. In 2016, shortly after he started dating Hallie Biden, Beau’s widow, Hunter made plans to stay at a detox center in Arizona. But he somehow got sidetracked during a stopover in Los Angeles, and ended up missing the next wing of his flight. Instead, he traveled to Skid Row, where he was reportedly held up at gun point, but nevertheless apparently succeeded in buying and using crack, causing him to return several times over the following days. Eventually, Hunter Biden took a Hertz rental car to his treatment center in Arizona, but workers at the Hertz office called the police after finding a crack pipe and baggie of crack, along with Biden’s license and a badge from Beau’s time as Delaware AG.

Prosecutors declined to pursue the case, claiming a lack of evidence, but it definitely wasn’t a good look for Hunter. More recently, Hunter has been in the headlines for his whirlwind marriage to a South African Instagram model, and for a paternity suit brought by a woman claiming Hunter is the father of her newborn son. 

Of course, none of these transgressions have stopped Biden from earning millions of dollars off his family name and connections. In Wednesday’s issue, the FT published a breakdown of Biden’s foreign business interests.

Burisma Holdings:

Role: Board member (2014-2019)

Pay: $50,000 a month.

Burisma, Ukraine’s leading privately owned natural gas producer, obtained some of its most prized production assets while its founder Mykola Zlochevsky headed a ministry that doled out gas licences under the kleptocratic administration of ex-president Viktor Yanukovich. After Mr Yanukovich fled to Russia in 2014, investigators started probing the company.

That year Burisma appointed prominent westerners to its board, including Hunter Biden, who reportedly earned $50,000 per month for this role. Mr Trump’s calls for his Ukrainian counterpart Volodymyr Zelensky to investigate Burisma over links to Joe Biden, his potential Democratic rival in next year’s presidential election, triggered the impeachment probe.

In tweets and in a July phone call with Mr Zelensky, Mr Trump and Rudy Giuliani, his personal lawyer, alleged that Joe Biden protected Burisma and his son’s interests while he was vice-president. Ukraine’s western backers deny this narrative.

Paradigm Companies

Role: investor and employee

Pay: $1.2 million salary

In 2006, Hunter Biden acquired a stake in Paradigm, a hedge fund group, following a failed attempt to buy the entire company through LBB, a limited liability partnership set up with his uncle James Biden. Hunter Biden recently told the New Yorker that, while the failed deal sounded “super attractive”, it fell apart after he and his uncle learned that the company was worth less than they had thought.

Both James and Hunter Biden faced a lawsuit from Anthony Lotito Jr, a former business partner, who accused them of defrauding him over the failed deal. The Bidens countersued Mr Lotito, accusing him of hiding company debts and falsely claiming he held securities licences. An independent audit of the fund conducted in 2008 found accounting problems at the firm including “failure to timely prepare financial statements” and “failure to reconcile Investment Advisors reimbursement of fund expenses”.

Paradigm itself was founded by James Park in 1991, the son-in-law of one of the founder’s of the Korean Unification Church, which some have called a cult. In 2009, a fund run by Paradigm became associated with Allen Stanford, a Texas financier, who was later convicted of running an $8bn Ponzi scheme. Stanford’s company was responsible for marketing one of Paradigm’s funds of hedge funds, and also invested millions of dollars in it. At the time, a lawyer representing Paradigm said neither Hunter nor James Biden had ever met Stanford.

The Bidens filed for voluntary liquidation of the company in 2010.

Seneca Global Advisors

Role: Founder, consultant

Pay: n/a

Hunter Biden launched his consultancy in September 2008, weeks after his father Joe Biden had been announced as Barack Obama’s running mate on the Democratic presidential ticket. Mr Obama was elected president in November 2008, with Joe Biden as his vice-president.

The consultancy pitched itself as a firm that could help small and midsized companies expand across the US and into foreign markets. Clients included Achaogen, a pharmaceutical company focused on anti-bacterial treatments that filed for bankruptcy in April 2019, and GreatPoint Energy, an energy technology start-up.

In 2012, GreatPoint received a $420m investment from China Wanxiang Holdings, an industrial conglomerate. It was the largest venture capital investment into the US that year. It is unclear if Hunter Biden was directly involved in securing this investment.

Rosemont Seneca Partners

Role: Co-founder, consultant

Pay: n/a

Hunter Biden co-founded Rosemont Seneca Partners in 2009 with Christopher Heinz, stepson of John Kerry, the former secretary of state, and scion of the Heinz processed food fortune, and Devon Archer, a financier and former Abercrombie & Fitch model who attended Yale with Mr Heinz.

In 2014, Rosemont Seneca was involved in an attempted $1.5bn fundraise for a new fund launched by Harvest Fund Management and Bohai Industrial Group, the Chinese asset manager, according to a Wall Street Journal report at the time. The Bank of China International Holdings was one of the biggest stakeholders in Bohai at the time.

Mr Archer first connected with Mykola Zlochevsky, co-founder of the Ukrainian gas company Burisma, in 2014 when he travelled there to pitch a Rosemont-linked real estate fund that he managed. Mr Archer joined Burisma’s board in 2014. Hunter joined soon after.

BHR Partners

Role: Director, consultant, 2013-today

Pay: n/a

BHR Partners, of which Hunter remains a director, is a private investment fund backed by some of China’s largest state banks, local government and the national pension fund.

At its inception in 2014, BHR listed Rosemont Seneca Thornton LLC, an investment firm co-founded by Hunter Biden, as a shareholder that owned 30% of the fund.

A year later, the two partners in RST, a consortium of Rosemont Seneca and Thornton Group, a Massachusetts-based firm with local political ties, split their shares in BHR. Rosemont Seneca took 20% and Thornton 10%. Rosemont Seneca unloaded its BHR stakes in 2017, while Thornton kept its shares.

BHR is known for being an early investor in some of the fastest-growing technology start-ups, including Didi Chuxing, the digital transport group. It has also invested in Megvii, a facial recognition start-up whose technology has been used in Chinese government surveillance of Uighur populations in China’s western provinces.

Li Xiangsheng, CEO of BHR, told local media that the fund’s strong government background would allow it to make super-big investments, saying the fund could take loans from its shareholders such as China Development Bank and Bank of China to complete transactions.

Hunter Biden’s investment in the fund totalled $420,000, according to one of his lawyers, implying the fund’s total value sits at $4.2m. The New Yorker reported in July that Hunter and his partners said they had not yet received a payment from BHR.

BHR Portfolio Companies (per FT):

Didi Chuxing:

Cashed out. China’s largest ride-hailing service. BHR invested in Didi in 2015 and exited two years later.

Megvii

Current. Leading facial recognition company whose technology was linked to Beijing’s mass surveillance of Uighurs in Xinjiang. BHR was an investor in Megvii’s Series C funding round in 2017.

Sinopec Petroleum Sales

Current. Retail unit of one of world’s largest oil refiners. Sinopec participated in China’s mixed ownership reform of the state sector by selling shares in its retail business in 2014 to an investor group that includes BHR. The fund paid Rmb6bn for a 1.7% stake.

Yancoal Australia

Current. Australian subsidiary of China’s third-largest coal producer. BHR teamed up with two Chinese banks in 2016 to purchase a nine-year bond issued by Yancoal Australia and valued at $950m.

CGN Power Group

Current. Major nuclear power company that was placed under US export blacklist in August over accusations of stealing US technology for military use. BHR was a cornerstone investor in CGN’s Hong Kong IPO in 2014.

Tuniu

Current. Major online travel agency. BHR invested in Tuniu in 2016.

Contemporary Amperex Technology

Current. World’s largest lithium-ion battery maker. BHR invested Rmb100m in CAT in 2015 and cashed out for Rmb197m three years later.

3SBio

Current. Leading Chinese biopharmaceutical firm in which BHR has invested.

Tenke Copper Mine

Cashed out. BHR paid $1.1bn for a 24% stake in DRC’s Tenke copper mine, one of the world’s largest, from Canada-based Lundin Mining. BHR acted as middleman in the deal, as it later sold its stake to China Molybdenum, a state-backed miner, allowing the latter to gain full control of Tenke.

Henniges Automotive

Current. In 2015, BHR teamed up with Chinese state-owned Avic Auto to acquire Michigan-based Henniges Automotive, which makes auto components. The deal, valued at $600m, gave BHR a 49% stake in Henniges. A research institute under Avic Auto’s parent company, China’s largest defence contractor, was added to the US export blacklist in 2014.

Gemini-Rosemont Realty

Current. In 2015, Gemini Investments Limited, the investment arm of China’s state-owned Sino-Ocean Land Holdings, purchased a 75 per cent stake in Rosemont Realty, Devon Archer’s sister company of Rosemont Seneca, where Hunter Biden was a partner. The deal resulted in a joint venture — Gemini-Rosemont Realty that owns 135 buildings in 22 US states.

Jilin Zhishi Dairy Co   

Current. BHR-invested dairy product maker based in northeastern China.

Chengdu Xijiao Rail Transportation Technology Co   

Current. Leading railway technology firm in which BHR has a 10% stake.

Source: Financial Times

Authored by Danny Sjursen via TruthDig.com,

The man is so beautifully bland. In fact, I’d wager that only a tiny segment of Americans could name the current Secretary of Defense—and far fewer could pick him out of a lineup. Perhaps that’s the point. President Trump, a celebrity ham, has tired of sharing the stage with big-name advisers such as Defense Secretary Jim Mattis and national security adviser John Bolton. So they’re both gone. In their place, Trump has installed faceless bureaucrats to run the most powerful national security state in human history. And the rest of us hardly notice.

Trump’s appointment of Mark Esper as head of the largest and most active Cabinet department, and the new Defense Secretary’s near unanimous approval by the U.S. Senate, is no less of a scandal than Trump’s apparent efforts to seek foreign interference in the 2020 elections. Only it isn’t.

Still, the nomination of Esper, a recent lobbyist for the defense contracting corporation Raytheon, ranks as one of the most egregious illustrations of the “revolving door” between lobbyists and the Defense Department. It’s crony capitalism in fatigues, and while nothing new, a clear indication that things have only worsened under our reality-show-mogul-president.

Of course, seen through the rose-colored glasses of American empire, Esper is highly qualified to head the Defense Department. He’s a West Point graduate, former Army infantry officer, recipient of a master’s degree in public administration from Harvard and a doctorate in public policy from George Washington University, and has past experience working in the Pentagon.

If one digs further, however, Esper is wildly problematic—loaded with conflicts of interest, a veteran of the (should be) discredited neoconservative Bush-era DOD, and little more than a corporate “company man.” He didn’t just work for Raytheon, he lobbied on the defense contractor’s behalf only recently. Under rather sharp questioning by Sen. Elizabeth Warren during his confirmation hearings, Esper refused to recuse himself from participating in government business involving Raytheon. In typically lifeless language, Esper replied that “On the advice of my ethics folks at the Pentagon, the career professionals: No, their recommendation is not to.” How’s that for accepting responsibility? No matter, he was swiftly and quietly confirmed by a vote of 90-8 in the Senate.

Expect another banner year for Raytheon. It’s already the third-largest U.S. defense contractor, and produces, among other tools of destruction, Paveway precision-guided missiles—the very weapons that Congress recently sought to stop shipping to Saudi Arabia due to (rather tardy) concerns about the heads of Yemeni civilians upon which they’re dropped.

I predict more deals and more taxpayer billions for Raytheon with Esper at the Defense helm. Not that the company has done poorly during the Trump years. In 2018, Raytheon CEO Thomas Kennedy candidly quipped that “It’s the best time that we’ve ever seen for the defense industry.” Not for indebted taxpayers, bombed-out Middle Easterners or U.S. soldiers still dying in endless wars, it’s not. But sure, it truly is the best of times for what prominent American leaders—once upon a time—labeled the “merchants of death.”

Conflicts of interest, sliding seamlessly between defense contracting boards and the Pentagon, and securing post-government largesse on corporate boards, that’s an old story indeed. Looking back to 2001, most Defense Secretaries have troublesome private sector connections. Donald Rumsfeld entered the Pentagon after a 24-year business career; Robert Gates was on the board of directors of Fidelity Investments and the Parker Drilling Company; Chuck Hagel served on the boards of Chevron and Deutsche Bank; Ash Carter—an exception—was mostly an academic and a bureaucratic wonk, but still consulted for Goldman Sachs. All made millions.

That covers the Bush and Obama years. What we’ve seen in the Trump administration, is, however, something far more brazen. His three Secretaries of Defense (one of whom, Patrick Shanahan, was only acting head) have been unapologetically ensconced in the world of defense contracting and corporate lobbying.

“Saint” Jim Mattis had, while still a general, encouraged the military to buy the blood test products of Theranos, then dropped the service and joined its corporate board. But Theranos’ products did not work, the deal described by the Securities and Exchange Commission as an “elaborate, years-long fraud.” Mattis also served, both before and after his Pentagon stint, on the board of General Dynamics, the nation’s fifth largest defense contractor. Nonetheless, Mattis easily slid through his confirmation and was praised by all types of mainstream media as the administration’s “adult in the room.”

After Mattis resigned, he being unable to countenance even Trump’s hints at modest withdrawal from the wars in Syria and Afghanistan, Patrick Shanahan stepped in as interim defense chief. Unlike his predecessor, Shanahan didn’t emerge from the military, but rather from yet another defense contractor, Boeing, for which he’s worked some 30 years. Trump thought that was dandy and nominated him to officially replace Mattis, but Shanahan decided to withdraw due to alleged personal scandals. Enter Mark Esper, Raytheon lobbyist extraordinaire.

Esper’s in good company in Washington’s military-industrial swamp. Recent reports by the Project on Government Oversight (POGO)—a vital organization that hardly any American has heard of—identified “645 instances in the past 10 years in which a retired senior official, member of Congress or senior legislative staff member became employed as a registered lobbyist, board member or business executive at a major government contractor.” POGO also noted that “those walking through the revolving door included 25 generals, nine admirals, 43 lieutenant generals and 23 vice admirals.”

All of which begs some questions and provides some disturbing answers. Perhaps we ought to ditch the myth that the Defense Secretary simply heads the Pentagon, and admit that Esper is really the emperor of a far grander military-industrial complex that includes a veritable army of K-Street lobbyists and venal arms dealers. Maybe it’s time to concede that unelected national security czars, and not a stalemated bought-and-sold Congress, run national defense and set the gigantic Pentagon budget. Perhaps we should confess to ourselves that the nation’s vaunted soldiers are little more than political pawns in a game that’s far bigger, far more Kafkaesque, than those troopers could begin to fathom. And, finally, let’s admit one last thing: Few of us care.

*  *  *

Danny Sjursen is a retired U.S. Army Major and regular contributor to Truthdig. His work has also appeared in Harper’s, The LA Times, The Nation, Tom Dispatch, The Huffington Post and The Hill. He served combat tours with reconnaissance units in Iraq and Afghanistan and later taught history at his alma mater, West Point. He is the author of a memoir and critical analysis of the Iraq War, “Ghostriders of Baghdad: Soldiers, Civilians, and the Myth of the Surge.” He co-hosts the progressive veterans’ podcast “Fortress on a Hill.” Follow him on Twitter at @SkepticalVet.

According to a new Census Bureau report, people who work from home were the highest earning workers in the “median earnings by means of transportation to work” category. Bloomberg highlighted this in a new report that also noted that in 2018, people who took public transportation to work had higher median earnings than those who didn’t.

From the public transportation angle, the statistics are mostly a reflection of where buses, subways and commuter trains are located. Places like New York, Chicago and San Francisco accounted for a large portion of Americans who took public transportation to work, and pay is notably higher in those areas.

People who work from home gain their income advantage from the kind of work that can be done remotely. For instance, white-collar work is much more likely to be done from home than blue-collar work. Perhaps this is a reason why, in 2010, those who worked from home made 11% less than those who drove to work, but in 2018, they made 5% more.

Over the same period of time, the number of people who reported working at home has risen to 8.3 million from 5.9 million. The rise began in the early 2000’s, as broadband connections at home made it easier for people to accomplish work tasks while not in the office.

As Bloomberg notes, the survey can also leave some people out:

The annual American Community Survey from which the current data 1 are derived asks people how they usually got to work the previous week. This misses out on lots of people who didn’t happen to work from home that particular week but do sometimes. A 2016 Gallup survey found that 43% of American employees worked remotely at least occasionally. The European Union’s Eurostat tracks whether people work at home “usually” or “sometimes,” and over the past decade the former group hasn’t grown as a share of the EU workforce but the latter has.

But in general, the trend toward working at home seems to be a good one. Studies have shown that employees who are given the opportunity to work from home are more productive and happier with their jobs. They can also save time and money by not commuting.

People who work at home also get the advantage of being able to live in scenic places, like Boulder, Colorado or the Catskills.

And another portion of the study shows that people who work at home either make a significant sum of money, or not very much at all. This could be due to some people working at home just as part-timers looking to supplement household income. Others, who make $75,000 or more, are likely white-collar executives or work in technology. Remote work websites like Upwork are also becoming popular for people to take on full-time workloads from remote locations.

Finally, the study showed that working at home seems to still predominantly be the most popular with white people.

Authored by Daisy Luther via The Organic Prepper blog,

According to a report by Business Insider, the title of the most miserable city in the United States goes to…

…Gary, Indiana.

The 50 “most miserable cities” are made so mostly by poverty and a lack of opportunities to pull oneself out of poverty.

We’ve identified the 50 most miserable cities in the US, using census data from 1,000 cities, taking into consideration population change (because if people are leaving it’s usually for a good reason), the percentage of people working, median household incomes, the percentage of people without healthcare, median commute times, and the number of people living in poverty. (source)

Business Insider also took into account the havoc wrought by natural disasters, blight (abandoned houses), crime, and addiction rates. This spreadsheet shows how they arrived at their conclusions using data from the US Census Bureau.

Why is Gary, Indiana so miserable?

Gary used to be a hub of manufacturing, but those jobs have long-since gone elsewhere. When the jobs went away, so did many of the residents. Of the ones who remain, barely 50% are employed and 36% live under the poverty line.

The only positive effect of the struggling population is that when people left, certain crimes left, also.

A drug-enforcement agent who grew up in the area told The Guardian in 2017: “We used to be the murder capital of the US, but there is hardly anybody left to kill. We used to be the drug capital of the US, but for that you need money, and there aren’t jobs or things to steal here.” (source)

But Gary isn’t the only place that people can’t get ahead.

Three states have several miserable cities.

If you’ve been paying attention to the homelessness crisis and the fecal matter in the streets, you will probably be unsurprised to hear that California has more miserable cities than any other state, with 10 falling into the 50 most miserable list.

California is followed by New Jersey, with nine miserable cities, and Florida, with six.

The other miserable cities on the list are scattered across the country. Things are so bad in many of these cities that it’s safe to say, the SHTF has quietly arrived and set up camp, while the rest of the country remains relatively oblivious to their plights.

Why makes these cities so “miserable?”

The most miserable cities have stories of violence, natural disasters, drug addiction, and crumbling infrastructures. Quite a few have factories that have moved elsewhere, leaving a large swath of the population unemployed and living in poverty. It’s easy to tell people they need to get jobs. But people in these places know that for many, there are no jobs to get. Housing is unaffordable on the local average wages for those who do have jobs.

Foreclosures and repossessions are common themes. A few of the cities are dealing with thousands of immigrants they must try to house and feed. Others have corrupt local governments or governments that have managed finances poorly. Several are far too densely populated.

And here are some things you might not expect in the United States of America. In quite a few cities on the list, clean running water is not a given. Pollution and sanitation are serious issues for thousands of people.

I’ve written before about how a high percentage of Americans have no emergency funds and are struggling to pay for basic necessities like rent, food, and healthcare. The folks in these cities know all too well about that which I’ve written.

Here are the 50 most miserable cities in the United States of America.

These cities are the 50 “most miserable” according to data collected during the last census.

50 – Lancaster, California

49 – St. Louis, Missouri

48 – Pasadena, Texas

47 – Macon-Bibb County, Georgia

46 – Danville, Virginia

45 – Shreveport, Louisiana

44 – Hemet, California

43 – Mansfield, Ohio

42 – San Bernadina, California

41 – Compton, California

40 – Montebello, California

39 – Harlingen, Texas

38 – Reading, Pennsylvania

37 – Hallandale Beach, Florida

36 – Palmdale, California

35 – Anderson, Indiana

34 – Fort Pierce, Florida

33 – North Miami Beach, Florida

32 – Jackson, Mississippi

31 – Saginaw, Michigan

30 – Plainfield, New Jersey

29 – West New York, New Jersey

28 – Miami Gardens, Florida

27 – Cleveland, Ohio

26 – Youngstown, Ohio

25 – North Miami, Florida

24 – Huntington, West Virginia

23 – Hammond, Indiana

22 – El Monte, California

21 – Lynnwood, California

20 – Huntsville, Texas

19 – Paterson, New Jersey

18 – Albany, Georgia

17 – Trenton, New Jersey

16 – Cicero, Illinois

15 – Union City, New Jersey

14 – Bell Gardens, California

13 – Hialeah, Florida

12 – Brownsville, Texas

11 – New Brunswick, New Jersey

10 – Huntington Park, California

  9 – Warren, Ohio

  8 – Camden, New Jersey

  7 – Flint, Michigan

  6 – Pine Bluff, Arkansas

  5 – Newark, New Jersey

  4 – Passaic, New Jersey

  3 – Detroit, Michigan

  2 – Port Arthur, Texas

  1 – Gary, Indiana

For details on why each city made the list, go here.

It was just days ago that we published a massive article detailing countless disasters people have encountered using Tesla’s “Smart” Summon feature. We’ve also reported that the NHTSA has opened an inquiry into the feature.

Now, Consumer Reports is having their say, calling the feature “glitchy” and a “science experiment” in a new review. Smart Summon “doesn’t match the marketing hype,” according to the review. 

They tested the feature over several days at their facility and concluded that the “automation was glitchy and at times worked intermittently, without a lot of obvious benefits for consumers.”

Authored by Michael Snyder via The End of The American Dream blog,

Our story could have ended very differently.  If America had embraced the truth, that would have put us on a far different road than the one we are on today.  Instead, we are steamrolling toward oblivion, and only a small handful of brave watchmen are even warning about the ominous fate that lies directly ahead of us.  We live at a time when “evil” is called “good” and “good” is called “evil”, and just about every form of human degradation that you can possibly imagine is absolutely exploding in our society. 

For years I have been warning that if we stay on the path that we are currently on, there is no future for America.  I think that a lot of people assumed that I was exaggerating, but I wasn’t.  Other societies throughout human history have believed that they could stay ahead of the consequences of their evil ways, but of course the truth is that justice is a relentless predator.  We have completely rejected all of the values that this nation was founded upon, we have embraced wickedness on an industrial scale, and the blood of millions upon millions of our victims cries out to us from the ground.  And those that would dare to warn us to turn from our evil ways are some of the most hated members of our entire society.

I am not in the habit of talking about Hollywood movies, but I believe that “Joker” may be a perfect movie for such a time as this, because ultimately the character so brilliantly portrayed by Joaquin Phoenix is a clear reflection of where our entire society is at this point.

In the movie, the Joker doesn’t really believe in anyone or anything.  His entire existence is focused on himself and his own pain, and anything that makes him happy is justified no matter what it may mean for others.

One of the best reviews for the film that I have seen was written by John Nolte of Breitbart.com…

But I saw what I saw, and what I saw is this…

An artist who turned his legitimate frustrations with the Antifa-Occupy-Black Lives Matter-Resistance crybabies, these anarchist-fascists who seek to marginalize men like Todd Phillips for who he is, punish him for his success, and then censor his art. I think Phillips took all of that and turned it into his muse, not only to create the stunning Joker, but to reinvent himself as an artist.

“Joker is you!” Phillips is saying. “Joker is the godless god you spoiled losers worship; a sociopath who believes in nothing, who wants to burn down society because he’s not happy all the time — your leader is Madness, Anarchy, Intolerance, Jealousy, Envy, Bigotry, and Hate.”

I think that what Nolte has said there is very insightful, but by pointing a finger at the left he is only covering half of the equation.

The truth is that the Joker is all of us.

We so desperately want to blame someone else for our problems and for the problems of society as a whole, and in many cases it is quite true that “the other side” is made up of really bad guys.

But what we don’t realize is that “our side” is often made up of really bad guys too.

By pointing out the depravity of the other side, that does not make us the good guys.  We can see examples of this in the world of politics all the time.  A politician can give endless speeches denouncing a certain practice, but then if he votes for a bill that specifically funds the practice that he denounced, in the end he has as much blood on his hands as all of the other politicians.

It is certainly true that “Joker” is a bloody movie, but our society as a whole is absolutely drenched in blood.  We are deeply obsessed with ourselves, but we are seething with hate toward others.  We are always wanting more of everything, but no matter how much we get it is never enough.  Americans are unhappier than they have ever been before, and “deaths of despair” are at an all-time high.

And what do we do with our sociopaths?

We send them to Washington to represent us.

How long can we possibly keep traveling down this road?

How long will be too long?

Among those that I regularly interact with, there is an increasing realization that time is running out for our nation.

The book is about to close on the late great United States of America, but most Americans have absolutely no idea that this is about to happen.

My wife and I were recently sent a dream by a friend named Joanie Stahl, and when I read it I thought that it really speaks to where we are as a country right now, and so I got her permission to share it with all of you…

In the 2nd week of September I had a dream. I am not sure what day it was exactly but I know for sure that it was the 2nd week of September. Here is what I dreamed.

DREAM

In the dream I saw myself in a car in the passenger seat. The man that is with me in my dreams (mostly), was driving. He pulled up to a very horrible looking house. He did not park in front of it, but next door to it. He got out of the car and we got out. Not knowing what was happening, I followed him to that hideous looking house. The front yard was large but no grass, only dirt, and very dead weeds that were sparse, and so dead they were pale yellow. The dirt was so dry that it was hard, rocky and dusty. Nothing at all was alive around the house. Only dead, ugly things.

The house was like a shack, very ugly, dark moldy looking wood. Every square inch of it was depressing and dark. The windows were covered with an ugly drape, that was more like a sheet or blanket. I followed the man to the front door, and he knocked, and then opened it. I followed him inside, and it was so dark, so depressing that it made me physically sick to my being as I stood there taking it all in.

There was no light in there, just a dim gray hue, and everything in there, the furniture and kitchen items were nothing short of being so old it deserved to go to the garbage heap. Everything was old, filthy, broken and there was a feeling of great sadness in it, great depression and a grievous darkness. I just wanted to leave. Then the man I was with turned to leave and he walked out of the house, and for some reason, I stood looking at everything in that horribly sad, dark house that was full of sorrow and even a sense of death.

I turned to leave and then shut the door behind me, and saw the man waiting for me in the street by the car. As I left I looked at the dead dirt, and dead weeds that were more than twice dead. I went out into the street and gave it one more look and wondered about it. I then woke up.

End of Dream

That following Friday my husband was home, and since he is new to this area that I grew up in, he asked about all the neighborhoods nearer to the ocean which is in and near our neighborhood. We live in an apartment, but just a few blocks away are fabulous coastal homes. I told him that I would give him a tour of the area.

I took him to a street I have always known about, but never had any reason to visit, even as a child and through the years. It is a very expensive area full of million dollar homes. In fact, that entire pocket is reserved for the exclusive rich. But I thought I would let him see it. As we turned down the street and driving very slowly to take in the beauty of the magnificent homes and views, I could not believe my eyes. I yelled out, “Stop the car!” My husband stopped the car, and there it was. That house I dreamed about. I was in awe because it was exactly as I had seen it in my dreams to the very detail, even the depressing, shabby sheet as a curtain in the window.

I was speechless. My husband said, “What, what?” I said, “Jonathan! You see that house! I just dreamed of that house a few nights ago, and it is exactly as I saw it to every inch of detail. He said, “Whoa, look at the address…it is 2020!” We both sat there staring at it, as it was sandwiched in between the most gorgeous homes you can imagine and I wondered about it, because I have never seen it before in my life. It was such a vivid picture of what I believe God was showing me what this next year is going to be. I did not sense at all that it was personal either. But a view of what is to come.

That horrible house inbedded between all the gorgeous, stellar homes I believe represented this coming year as I said. The imagery and feelings and what I saw speak to it.

Of course Joanie is not the only one that is sounding the alarm.

Over the past few months, my wife and I have felt an urgency like we have never felt before.  We have watched the elements of “the perfect storm” coming together, but meanwhile most of the country still appears to be sleeping.

Why can’t more people understand the signs of the times?

Is it because they don’t want to see them?

Back in August, our friend Marty Breeden sent us a very alarming dream that really shook him up.  In this particular dream, a great storm is rapidly approaching, but most people are completely oblivious…

August 9, 2019
I had a Very vivid dream of being at a beach.
The beach was full of people playing in the waters and also on the beach itself.
As everyone else was playing, I recall looking out over the ocean.
I saw in the distance a large storm gathering.
I was IMMEDIATELY struck by the size of this storm!

As I looked back over the people they seemed totally oblivious to this coming storm!

I then ran to the shore as quickly as I could to get a better look and the storm had GROWN MASSIVELY and I could see the swirling Blue, Gray and Black clouds and it was coming DIRECTLY for us!

Now this may seem insignificant, but I feel it’s not.
I knew I was going to need some supplies for myself and others.
I ran back to my room and tried to gather a few things.
I found a large fixed blade knife that I knew would be useful.
It was a Military knife.

(I know this because I have one of these KABAR knives, I think this is HIGHLY significant because it represents our Military!)

However, I realized the blade was broke off at the handle…
COMPLETELY broken in half!

I ran back outside for one more look and the storm was upon us…
MUCH FASTER than I or ANYONE could have anticipated!

It hit with the FORCE OF A HURRICANE…
As best I could see, no one else seemed to notice it was even coming and they were caught in the very midst of it!!

I awoke…..

My friends, without being too dramatic, I can tell you that the storm clouds of Armeggedon are gathering on the horizon, and soon many will hear the hoofbeats of the “4 Horseman of the Apocalypse”!

PREPARE!!!

I know that I have laid a lot of heavy stuff on you in this article.

The goal of my articles is never to cause fear.  Instead, we want to understand what is coming so that we can be prepared to fulfill the purpose for why we were put on this planet at this precise moment in history.

You were born for such a time as this, and a date with destiny awaits.

Who says inflation can’t pay off?

Ass inflation, that is. 

Certainly not Instagram influencer Andrea Vasile, who says she can bring in $500 to $5000 for every post she makes and that it’s her “honesty” about her fake plastic ass that sets her apart from other Instagram influencers, according to the New York Post.

“I am known for my honesty and not cutting corners. I am blunt about my plastic surgeries,” she says.

As if the photos didn’t give it away…

Vasile has amassed more than 3.1 million followers in just two years and says of her popularity: 

“I’m always trying to combine humor and sex appeal to make entertaining content.”

Yeah, we’re sure people follow her for her quick wit and sense of humor…

She rarely posts photos of her face, focusing primarily on her enhanced rear.

In addition to her Instagram, which is set to private, she also offers “exclusive content” for $6.99 per month. We’ll venture a guess that her “exclusive content” isn’t her analysis of geopolitical issues, but rather – more photos of her giant ass. 

Vasile says she has run a marketing agency since 2014 and has helped up-and-coming influencers who want to know how they can also make it big on Instagram. She claims to have studied law and earned a masters degree and cites her honest style and cutthroat marketing methods for success.

She concluded: “The worst [comment I’ve received] is one person telling me that I’m going to burn in hell, and when I do, it will smell like plastic.”

Via Greg Hunter’s USAWatchdog.com,

Money manager Peter Schiff says the Federal Reserve has already started a new money printing program that continues to expand the debt bubble and keep global markets propped up. This started abruptly last month in what is called the “repo market,” where the Fed provides liquidity for traders of short-term money or overnight funding.

Schiff says, “When the Fed was doing QE3, they were buying $85 billion worth of debt per month. They (Fed) just did $176 billion in three weeks, and they say they are not doing QE…”

“So, the Fed is monetizing more debt not doing QE than when they were doing QE, which means they are doing it and they are going to have to do more of it. The reason they are doing it is because the markets are finally trying to move interest rates higher because the Fed has been suppressing them.  They are artificially low, and these artificially low interest rates have done tremendous damage to the economy over the years. Now, rates are rising, and the Fed is trying to stop this from happening. They shouldn’t do this, but this is what they have to do to keep the bubble from imploding. This is why they have to go back to QE. If they didn’t, rates would be much higher, the stock market would be much lower, real estate prices would be coming down and we would be heading for another financial crisis.”

What is the end goal in all of this? Schiff contends, “The only goal our leaders have is to postpone the pain so they can get re-elected…”

“That’s the whole idea. Look, this is a gigantic time bomb; we just have to make sure that the fuse is longer. We have an election coming up, and the Fed Chair just wants to make sure they can keep everything going long enough to resign and have somebody else be the fall guy. Nobody cares about the long term health of the economy, and the plan is to delay the inevitable and pretend everything is good. . . . As far as the debt is concerned, the debt is never going to be repaid. We can’t repay it, and, in fact, nobody even believes we are going to repay it.”

So, what is the next move by central bankers? Schiff says, “It’s more politically expedient to take the printing route, especially because nobody believes they are going to destroy the currency…”

“They think they are going to print enough money to reduce the value of the debt enough to make everything go away. It’s like trying to get a little bit pregnant, which is impossible to do. So, once they start monetizing debt in that way, then that’s it. The dollar is going to get killed. That’s where we are headed. That’s the only thing that hasn’t happened yet. Gold has broken out. Gold is over $1,500 per ounce, and it is hitting record highs in most currencies. Not in the dollar, yet. The dollar is still relatively strong against other fiat currencies, but the fact it is this weak against gold shows you there is a lot of underlying weakness in the dollar that has yet to manifest . . . but that is going to happen. When the dollar starts to fall, that’s going to take the bond market down with it. Long term interest rates are ultimately going to rise when the dollar tanks.”

Source: Bloomberg

Schiff also says, “I think gold is undervalued relative to where it should be because so many people have too much confidence in central banks and fiat money…”

“They don’t realize they need to own gold. I think they are going to come to that epiphany soon, and when they do, the price of gold is going to explode...

Gold is going to be money again. There is no question in my mind that is going to happen.”

Schiff predicts President Trump will not get re-elected but not because of impeachment, but the failing economy. Schiff says, “The trade deficits are bigger than they have ever been. They are bigger than they were under Obama…”

“Manufacturing is already in recession, and it will be deeper in recession by the time the election comes. The numbers are the worst they have been since 2009.

Most blue collar voters who voted for Trump in 2016 will be worse off in 2020. They will have more debt, and they will have lower real wages if they even have jobs.

Now, who are they going to take a chance on, some socialist Democrat who is promising to punish the rich and take their money and give it to them?”

Join Greg Hunter as he goes One-on-One with money manager Peter Schiff, founder of Euro Pacific Capital and Schiff Gold.

*  *  *

To Donate to USAWatchdog.com Click Here. There is free information, articles and original analysis from Peter Schiff on Euro Pacific Capital and Schiff Gold.

The exponential growth in the leveraged loan market, in the last several years, created an enormous excess accumulation of sub-investment grade loans that are a ticking time bomb when the next recession strikes.

Late last year, leveraged loan markets froze, for at least a month, as Treasury yields dropped, due to the increasing threat of a global recession. An abundance of fake trade news and central bank easing throughout 2019 saved Wall Street and reopened the leveraged loan market earlier in the year, but it seems that cracks are starting to develop again with recession threats building for 2020. 

Bloomberg reports that 50 companies that have at least $40 billion of loans have lost about ten percentage points of face value in the last three months. 

An exodus of investors has been seen in the leveraged loan market late-summer into early fall as liquidity dries up. It’s mostly due to Treasury yields sinking, and end of cycle fears increasing, as a recession could emerge next year.

Some of the hardest-hit companies in the loan space in the last three months have been Amneal Pharmaceuticals, whose $2.7 billion loan due 2025 plunged about 80 cents on the dollar, and Seadrill Operating whose $2.6 billion loan maturing in 2021 only commands 53 cents on the dollar, said Bloomberg. 

In terms of losses, Bloomberg data shows Deluxe Entertainment Services Group has seen more than $600 million wiped out in its first lien loan that dropped 77 cents in the last three months to 12.5 cents.

Although $40 billion is a blip versus the $1.2 trillion leveraged loan market, it indeed points to a quiet meltdown developing.  

“People want the well-performing loans, and are more wary of taking chances on the situations that have turned negative,” said Andrew Sveen, co-director of loans at Eaton Vance Management.

One of the hardest-hit sectors in the loan market is energy, with $12 billion of loans falling more than ten cents on the dollar. Consumer and health care sectors are next, with collectively $13 billion in loans outstanding that are starting to become distressed. 

The deterioration of underwriting standards in the loan market has allowed companies who are susceptible to credit downgrades when the economy slows to obtain loans.

But that ‘ease of underwriting’ is a two-edged sword as the current weakness, prompting downgrades, will force managers to sell loans into already illiquid markets, since their portfolios (or CLOs in many cases) can’t hold these investments because of certain rating thresholds. 

The leveraged loan market is therefore comparable to the subprime mortgage market a decade ago. It’s a significant imbalance that will be corrected in the next recession and will amplify the next downturn.

With cracks developing in the loan space, the current meltdown is going unrecognized by most of Wall Street (which didn’t end well in 2008 or 2015 for stocks).

The accumulation of excessive leverage and high exposure to loans of non-financial companies adds to the uncertainties that corporate America, as highly leveraged as it is, could see an epic implosion as the next recession could arrive as early as 2020.